California carbon market overhaul gives billions to oil industry, cuts public climate funds

California's Air Resources Board approved new carbon market rules in late May 2026 that critics say undermine the state's climate goals. The rules give oil refineries free pollution permits that could exceed actual emissions, while cutting public investments for transit, clean water, and air quality by billions of dollars. UC Berkeley economists estimate the handouts could reduce utility rebates and climate program funding by up to $4 billion. The changes were promoted as an affordability measure, but analysts point out that oil companies already pass carbon costs to consumers even when they get free permits. The California Senate has introduced budget language to block the new rules unless the Board meets emission reduction and funding commitments. The article argues the regulator chose industry interests over climate mitigation and public investment.