Carbon Dioxide Removal Purchase Program.

The core mechanism changed from purchasing carbon dioxide removal credits generated by projects to administering a competitive grant process that funds eligible projects directly. The $50 million total funding amount remains the same, but it is now deployed as grants toward projects rather than as credit purchases.

Multiple deadlines were extended: the survey of carbon dioxide removal projects moved from June 30, 2026 to January 1, 2028; guidelines adoption moved from June 30, 2026 to January 1, 2028. The annual reporting requirement now has an explicit end date of December 31, 2035.

Added a provision that all funds shall be available for encumbrance or expenditure until June 30, 2035, and available for liquidation until June 30, 2035. This clarifies the fiscal window for spending program money.

Removed the requirement for a maximum carbon dioxide removal credit price per ton, which is no longer relevant under the grant model. Also removed the requirement that purchases be made on behalf of the state board or another state agency with an associated memorandum of understanding.

Added a requirement that bids include the total amount to be paid and the total number of tons to be removed during the contract term, consistent with the permanent retirement provision. This gives the state board a clearer framework for evaluating grant applications.

Added exemptions from Chapter 3.5 of Part 1 of Division 3 of Title 2 of the Government Code (administrative procedure requirements) in three separate places: for guidelines and standards under Section 39945.2, for criteria under Section 39945.3, and for guidelines under Section 39945.4. This allows the state board to develop program rules without following full administrative procedure.

The consistency requirement for program guidelines was changed from alignment with Section 39741.1 (the Carbon Capture, Removal, Utilization, and Storage Program provisions in the Health and Safety Code) to alignment with Part 8 of Division 34 of the Public Resources Code.

The definition of 'additional' was simplified from 'a carbon dioxide removal exceeds any removal that is required by law or regulation or that would otherwise occur in a conservative business-as-usual scenario' to simply 'a carbon dioxide removal that would not otherwise have occurred.'

The bill text was reformatted from a traditional enrolled legislative document (with page numbers, signature blocks for the Secretary of the Senate, Chief Clerk of the Assembly, Private Secretary of the Governor, and Governor) into a web page layout with navigation elements, a version history dropdown, a status timeline showing passage dates, and a publication timestamp of 09/18/2025 02:00 PM.

Total program funding reduced from $80,000,000 to $50,000,000. Up to 10% of that amount may be used for administrative costs in establishing the program.

Maximum spending in any one project category reduced from $40,000,000 to $25,000,000.

Maximum spending per individual project sponsor reduced from $20,000,000 to $12,500,000.

New Section 39945.5 makes implementation of the entire chapter contingent upon an appropriation by the Legislature for purposes of the program.

The program mechanism shifted from the state board directly purchasing carbon dioxide removal credits to administering a competitive grant process. Eligible projects must now demonstrate the ability to secure third-party carbon removal purchases in an amount at least equal to the state funding provided.

New requirement that funded projects permanently retire from future credit issuance a total number of tons of CO2 removal equal to the total number of tons funded by the state board. The retirement is made on behalf of the State of California and may be used to help state agencies meet climate goals.

Guidelines must now include a requirement that eligible projects result in CO2 removals verified by an independent third-party verifier using appropriate, industry-standard protocols.

Survey and guidelines adoption deadlines extended from June 30, 2026 to include January 1, 2028 as an additional milestone before annual reporting begins.

New definition of 'Program' added. Definition of 'Additional' expanded to include the phrase 'that would not otherwise have occurred.'

Payment structure changed: the second payment is now triggered by 'initial verification' of carbon dioxide removal (defined as verification by an independent third-party verifier that a specified quantity has been completed and has adequate mechanisms to meet the minimum duration requirement) rather than simply 'delivery' of credits.

Assembly Member Davies added as coauthor, reflecting Assembly engagement with the bill.

Program administration transferred from the State Energy Resources Conservation and Development Commission to the State Air Resources Board. The code placement moved from Chapter 7.9 of Division 15 of the Public Resources Code to Chapter 8.5 of Part 2 of Division 26 of the Health and Safety Code.

Total carbon dioxide removal credit purchase amount reduced from $80,000,000 to $50,000,000 over the period July 1, 2026 through December 31, 2035.

Per-project-category cap reduced from $40,000,000 to $25,000,000, and per-individual-sponsor cap reduced from $20,000,000 to $12,500,000.

Three new definitions added: 'Agricultural biomass resources' (crop, orchard, vineyard, or other agricultural residue, excluding crops grown for energy or edible produce), 'Biomass carbon removal and storage' (long-term storage of biochar and bio-oil from agricultural or forest biomass), and 'Forest biomass resources' (material removed for wildfire mitigation, forest restoration, or public safety).

The biomass feedstock prohibition was narrowed to allow biomass carbon removal and storage as an eligible project type. Previously all biomass feedstock use was prohibited except for residue and waste products; now biomass carbon removal and storage (biochar, bio-oil) is explicitly permitted as a distinct category.

Payment structure for credit purchases was refined: the transactional process must now include payment in advance or up to half the total payment in advance with at least half paid on delivery of credits, rather than simply 'payment in advance or on delivery.'

The State Air Resources Board was removed from the list of agencies the administering body must consult with, since ARB is now the administering agency itself.

The agency responsible for establishing and administering the Carbon Dioxide Removal Purchase Program was changed from the State Energy Resources Conservation and Development Commission to the State Air Resources Board. The code placement moved from Division 15 of the Public Resources Code (Section 25690) to Part 2 of Division 26 of the Health and Safety Code (Section 39945).

The deadline for completing $80 million in carbon dioxide removal credit purchases was extended from December 31, 2030 to December 31, 2035, giving the program five additional years.

A new guideline requirement was added prohibiting the use of biomass feedstock for carbon dioxide removal, with an exception for biomass produced as residue or a waste product, including agricultural residue and byproducts of sustainable forest management.

A new prioritization criterion was added requiring the state board to consider the potential of a project to deliver credits and complete associated carbon dioxide removals on or before December 31, 2035.

The definition of 'carbon dioxide removal' was expanded to include storage, specifying that storage may occur in geological, biobased, or ocean reservoirs or in value-added products such as low-carbon concrete.

A new definition was added for 'Energy Commission' meaning the State Energy Resources Conservation and Development Commission, since it is no longer the primary administering agency but remains a consultation partner.