Article 2 - Industrial Decarbonization and Improvement of Grid Operations Program

California Public Resources Code — §§ 25662-25662.6

Sections (4)

Amended by Stats. 2025, Ch. 395, Sec. 7. (AB 1280) Effective January 1, 2026.

The commission shall establish and administer the Industrial Decarbonization and Improvement of Grid Operations Program to provide financial incentives for the implementation of eligible projects at eligible industrial facilities to provide significant benefits to the electrical grid, reduce emissions of greenhouse gases and health-harming pollutants, achieve the state’s clean energy goals, and exceed compliance requirements.

§ 25662.2

Amended by Stats. 2025, Ch. 395, Sec. 8. (AB 1280) Effective January 1, 2026.

(a)The commission may establish project and industrial facility eligibility guidelines for purposes of this article.

(b)The eligibility guidelines established pursuant to subdivision (a) shall be consistent with all of the following requirements:

(1)“Eligible industrial facility” shall include, but not be limited to, a facility involved with manufacturing, production, and processing of materials, such as chemicals, metals, food and beverages, and nonmetallic minerals, including cement, glass, electronics, and pharmaceuticals, and related support facilities.

(2)(A) “Eligible project” shall include, but not be limited to, the purchase and deployment of advanced technologies and equipment that is capable of doing at least one of the following:

(i)Enhance electrical grid reliability and enable industrial facility participation in utility load reduction programs, such as an emergency load reduction program.

(ii) Electrify processes that use gas or other fossil fuels to produce heat for industrial processes.

(iii) Incorporate energy storage, including thermal energy storage, or renewable energy resources.

(iv) Increase energy efficiency.

(v)Develop and deploy novel decarbonization technologies and strategies, including carbon capture of process emissions for use in products, such as carbonate mineralization and carbon curing of concrete that reduces or eliminates the emissions of greenhouse gases, except geologic storage.

(B) “Eligible project” shall not include a project to benefit an oil production, processing, or refining facility, to benefit a fossil gas production, processing, or refining facility, or to use captured carbon for enhanced oil and gas recovery.

2027, a project that involves the performance of work by contractors in the construction industry shall be eligible for a financial incentive pursuant to this article only if the work is performed pursuant to a project labor agreement that, at a minimum, meets the requirements of Section 2500 of the Public Contract Code.

(D) A project shall only be eligible for a financial incentive pursuant to this article if the project will use technologies that exceed the best available control technology, as defined in Section 40405 of the Health and Safety Code, if applicable.

(E) For applications received after January 1,

2027, an eligible project for a facility that has a record of air permit violations shall separately develop a plan for pollution remediation, including for ecological and public health harms.

§ 25662.4

Amended by Stats. 2025, Ch. 395, Sec. 9. (AB 1280) Effective January 1, 2026.

(a)In providing financial incentives pursuant to this article, the commission shall give preference to an eligible project that does one or more of the following:

(1)Provides significant benefits to the electrical grid, especially during net peak periods.

(2)Maximizes the reduction of the emissions of greenhouse gases.

(3)Reduces air pollution in under-resourced communities.

(4)Is located in an under-resourced community, as defined in Section 71130, or in an area out of compliance with the applicable

federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.) deadlines in

nonattainment areas.

(5)Develops a community benefit fund or agrees to pursue a community benefits agreement with the surrounding community and other affected stakeholders.

(b)In providing financial incentives pursuant to this article, the commission shall prioritize an eligible project that reduces demand during net peak periods.

(c)(1) The commission shall consult with the State Air Resources Board to ensure that financial incentives provided pursuant to this article reduce the emissions of greenhouse gases under the statewide greenhouse gas emission limits in furtherance of the state’s greenhouse gas reduction targets, to the extent feasible under the State Air Resources

Board’s regulatory programs.

(2)To comply with the requirements of this subdivision, the commission may require a recipient of a financial incentive to surrender to the State Air Resources Board the number of annual allowances allocated at no cost to the eligible industrial facility pursuant to the market-based compliance mechanism developed pursuant to Part 5 (commencing with Section 38570) of Division 25.5 of the Health and Safety Code equivalent to the greenhouse gas emissions reduced by the eligible project.

(d)A recipient of a financial incentive pursuant to this article shall not receive more than 20 percent of the moneys allocated pursuant to this article.

§ 25662.6

Added by Stats. 2022, Ch. 251, Sec. 12. (AB 209) Effective September 6, 2022.

An eligible project that receives a financial incentive pursuant to this article is ineligible for a financial incentive pursuant to the Food Production Investment Program (Article 3 (commencing with Section 25663)).