BILL ANALYSIS AB 32 Page 1 Date of Hearing: April 6, 2005 ASSEMBLY COMMITTEE ON APPROPRIATIONS Judy Chu, Chair AB 32 (Pavley) - As Amended: March 31, 2005 Policy Committee: Natural Resources Vote: 6-2 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires the California Climate Action Registry (CAR), a legislatively-established public benefit nonprofit corporation administered jointly by the Resources Agency and the CalEPA, to adopt procedures and protocols relating to greenhouse gas emissions and to projects designed to reduce these emissions for the following activities: 1)Oil and natural gas exploration, extraction, processing, refining, transmission and distribution. 2)Cement production. 3)Municipal solid waste and industrial waste hauling and disposal. FISCAL EFFECT Moderate costs, about $210,000 in FY 2005-06, to the CAR to develop the specified procedures and protocols. These costs will probably be equally covered by revenues generated by fees paid to the CAR by companies in the affected industries who voluntarily participate in the registry process and by grants awarded by the California Energy Commission. (Energy Resources Programs Account and the CAR registration account.) COMMENTS 1)Rationale . The author believes the CAR should focus on developing procedures and protocols to establish a greenhouse gas inventory and to evaluate projects designed to reduce AB 32 Page 2 those emissions resulting from activities in the oil and natural gas industry, the cement production industry and the hauling and disposal of municipal solid waste. In addition, representatives of those industries are interested in participating in the registry so that the industries' efforts to reduce greenhouse emissions are reflected in the baseline emissions that may someday be established by state, federal or international requirements. 2)Background . The CAR was established by SB 1771 (Sher) - Chapter 1018, Statutes of 2000. The registry's purpose is to help companies and other entities with industrial operations in California establish greenhouse gas emissions baselines against which any future emission reduction requirements may be applied. The CAR encourages voluntary industry actions to increase energy efficiency and decrease greenhouse gas emissions. In return, the State of California pledges to make its best effort to ensure participants receive appropriate credit for early actions. Registry participants include businesses, nonprofit organizations, local governments, and state agencies. 3)Procedures and Protocols . The CAR has developed a general protocol and several industry-specific protocols to help participants establish a greenhouse gas emission inventory. The CAR requires participants to report only carbon dioxide emissions for the first three years, with the emissions of the five other greenhouse gases covered by the Kyoto Protocol required to be reported after three years. 4)Opposition in the Natural Resources Committee focused on the state subsidy provision that was removed by the author with the March 31st amendments. Analysis Prepared by : Steve Archibald / APPR. / (916) 319-2081