We’ve written extensively about how relying on imported gasoline is a bad strategy for California – raising prices at the pump, sending jobs and tax revenues overseas, and creating unnecessary supply risks. 

But there’s another negative consequence that has received very little attention: importing more fuel also directly undermines the state’s climate investments. 

After all, California’s signature Cap-and-Invest program only applies to in-state refineries. Foreign and out-of-state fuel producers don’t pay emission allowances into the state’s Greenhouse Gas Reduction Fund (GGRF), which supports a multitude of climate, housing and transit programs.

It’s an important dynamic with serious policy implications. One analysis estimates that California refineries are set to contribute $2.8 billion to $4.6 billion to the GGRF over the next 10 years. [i] Under a gasoline import strategy, those funds would disappear without generating any emissions benefit as production moves out of state.

Unfortunately, those calling for additional refinery closures and greater reliance on fuel imports often disregard how those policies would hurt climate investments.

• An April 2026 event hosted by The Climate Center featured a moderator who claimed that “[t]he policies driving refinery closures are a success” and a panelist who asserted “I don’t think it is in the best interest of California to prolong the life of refineries.” The hour-plus discussion contemplated turning more refineries into import terminals, but the fiscal impact of that proposal – less money for the GGRF – was not raised. 

• In a May 2026 Assembly hearing, one panelist told legislators “we are going to have fewer refineries, and the solution is imports” while another hailed imports as beneficial to California since overseas refineries often have lower production costs. Neither recognized how increasing imports could impact the GGRF – or the fact that out-of-state refineries have lower costs in part because they don’t have to purchase Cap-and-Invest allowances.

• Even state policymakers have failed to make the connection. At a February 2026 Senate hearing, California Energy Commission Vice Chair Siva Gunda called for legislators to “think about how do you pivot from a full in-state refining capacity to a storage capacity plus import structure.” In a previous hearing, Gunda warned that “we’ll have a lot more dependency on imports.” In sum, Gunda’s testimony has normalized a shift toward imports without recognizing the associated revenue impact of that shift. 

California can’t have it both ways. If policymakers truly want to preserve the climate investments funded by Cap-and-Invest, they should think carefully before pushing more of the industrial activity that funds the program out-of-state.

Protecting California’s remaining refineries is an energy security imperative – and a fiscal one, too.

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[i] Capitol Matrix Consulting estimate based on California Air Resources Board (CARB) methodologies. Analysis assumes: 1) an industry-wide emission total of 22.9 million metric tons, based on 2021-2024 emission reports; 2) a Cap Adjustment Factor of 0.494 in 2031 declining to 0.279 in 2035, as proposed by CARB; 3) refiners utilize 90% of the allowances provided under the Manufacturing Decarbonization Incentive Allocation; 4) a low-end allowance price equal to the floor price; and 5) a high-end allowance price equal to the mid-point between the floor price and the allowance price containment reserve tier 1 (APCR1) price, consistent with CARB assumptions in its April 2024 Standardized Regulatory Impact Analysis (SRIA) of the Cap-and-Invest program.