BILL ANALYSIS                                                                                                                                                                                                    



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          Date of Hearing:  April 13, 2009

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Nancy Skinner, Chair
                    AB 19 (Ruskin) - As Amended:  December 1, 2008
           
          SUBJECT  :  Greenhouse gas emissions:  consumer product labeling.

           SUMMARY  :  Requires the Air Resources Board (ARB) to adopt a  
          program for the voluntary assessment, verification, and labeling  
          of the "carbon footprint" of consumer products.

           EXISTING LAW  :

          1)Requires ARB to adopt a statewide greenhouse gas (GHG)  
            emissions limit equivalent to 1990 levels by 2020 and adopt  
            regulations to achieve maximum technologically feasible and  
            cost-effective GHG emission reductions.  (AB 32 (Nunez),  
            Chapter 488, Statutes of 2006)

          2)Requires GHG emission labels on passenger cars beginning in  
            2009 which reflect the GHG emissions attributable to operation  
            of the car, but not the GHG emissions associated with its  
            manufacture, distribution and sale.

           THIS BILL  :

          1)Defines "carbon footprint" as the total amount of GHG  
            emissions that occur as a result of a product's lifecycle, or  
            as determined by the ARB to best implement this bill.  In  
            doing so, ARB may consider the emissions associated with raw  
            material extraction, production processing or manufacturing,  
            transportation, distribution, consumer use and disposal.

          2)Requires ARB to adopt a carbon labeling program for consumer  
            products as follows:

             a)   Establish a methodology for assessing, verifying, and  
               labeling the carbon footprint of a consumer product; ARB  
               can choose to initially establish a methodology for a  
               single product category if it determines it is feasible and  
               practical to do so.

             b)   Develop standardized criteria for third-party  
               verification if ARB determines this is necessary; ARB may  








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               develop "alternative means" of compliance.

             c)   Allow consumer product manufacturers who volunteer to  
               use carbon labels to determine the carbon footprint of  
               their product using ARB's methodology; manufacturers may  
               use this information on its packaging and advertising  
               consistent with ARB's labeling requirements.

             d)   Develop a standardized, easily understandable carbon  
               label.

          3)Authorizes ARB to adopt alternative carbon footprint  
            methodologies if it determines that "feasible measurement  
            methodologies" are not sufficiently accurate to compare two  
            products.  These alternatives include:

             a)   Average GHG emissions in a product category to  
               facilitate comparisons across categories.

             b)   Comparing a product's carbon footprint with that average  
               footprint of a comparable product within the same category.

             c)   A carbon footprint "score" that delineates the range of  
               error associated with a methodology.

          4)Authorizes ARB to contract for "cost-effective services"  
            necessary to implement the bill and may use data from "outside  
            sources" or existing models and labels to develop a  
            methodology.

          5)Requires manufacturers to pay for ARB's cost of reviewing and  
            validating their carbon labels.  ARB may assess an application  
            fee to pay for the costs of the carbon footprint program.

          6)Makes related findings and declarations.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :  According to the author's office, "A [carbon] label  
          would make assessing the carbon content of ice cream as easy as  
          counting its calories.  The law will harness market forces to  
          make reducing global warming emissions important to  
          manufacturers' bottom line.  Consumers benefit because they have  
          the information necessary to voluntarily reduce emissions  
          through the comparison and purchase of products with smaller  








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          carbon footprints."  Furthermore, the author believes that  
          "?without a clear state auditing standard for a label, as  
          private labels proliferate there will be confusion among  
          consumers and an unfair playing field for companies wishing to  
          sell climate friendly products."

           1)What's a "carbon footprint"?  

          A "footprint" has become a metaphor for the impact of humanity  
          as a whole on the environment.  The concept of measuring our  
          environmental impact by means of a footprint originated in the  
          early 1990s.  More recently, the concept has narrowed to focus  
          on the carbon emissions of energy use, transportation, housing,  
          consumer products, and other elements of lifestyle.  A full  
          accounting of these emissions on a lifecycle basis-via lifecycle  
          assessment or LCA-is the gold standard of measurement.  U.S. EPA  
          defines LCA as "A concept and methodology to evaluate the  
          environmental effects of a product or activity holistically, by  
          analyzing the whole life cycle of a particular product, process,  
          or activity."

          All goods and services produced by a company have an inherent  
          carbon footprint.  If quantified, these emissions on a  
          product-by-product basis can provide a significant indicator of  
          the company's carbon performance, can become a benchmark  
          criterion, and allow for more credible product differentiation.   
          According to researchers at Lawrence Berkeley National  
          Laboratory (LBL), up to 80 percent of the annual carbon  
          footprint of the average U.S. consumer can be attributed to the  
          purchase, use, and disposal of retail products.  About  
          two-thirds of these emissions typically result from a product's  
          manufacture; disposal of retail products also accounts for  
          significant emissions.

          2)Top-down and bottom-up LCA approaches to measure carbon  
            footprint
             
          There are two established LCA methodologies for estimating  
          carbon footprints: process analysis (PA), the more traditional  
          method, or environmental input/output (EIO).  The following  
          description of each is adapted from the Green Design Institute  
          at Carnegie Mellon University:


               For PA, one itemizes the inputs (materials and energy  








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               resources) and the outputs (emissions and wastes to the  
               environment) for a given step in producing a product.  So,  
               for a simple product, such as a paper drinking cup, one  
               might list the paper and glue for the materials, as well as  
               electricity or natural gas for operating the machinery to  
               form the cup for the inputs, and one might list scrap paper  
               material, waste glue, and low quality cups that become  
               waste for the outputs.



               However, for a broad lifecycle perspective, this same task  
               must be done across the entire lifecycle of the materials  
               for the cup and the use of the cup.  So, one needs to  
               identify the inputs, such as pulp, water, and dyes to make  
               the paper, the trees and machinery to make the pulp, and  
               the forestry practices to grow and harvest the trees.   
               Similarly, one needs to include inputs and outputs for  
               packaging the cup for shipment to the store, the trip to  
               the store to purchase the cups, and that result from  
               throwing the cup in the trash and eventually being  
               landfilled or incinerated.  Even for a very simple product,  
               this process-based LCA method can quickly spiral into an  
               overwhelming number of inputs and outputs to include.    
               Now, imagine doing this same process-based LCA for a  
               product such as an automobile that has over 20,000  
               individual parts, or a process such as electricity  
               generation.



          The primary methodological challenge with PA is defining the  
          boundary of the analysis: what processes or emissions will be  
          included and excluded.  For the paper cup, it may be reasonable  
          to exclude the emissions from producing the steel used to  
          manufacture the equipment that makes the cups.  This simplifies  
          an already-complicated process but it also can lead to  
          subjective underestimates of the true carbon footprint.  In  
          addition to being costly and time-consuming, the data underlying  
          PA can be proprietary and thus unavailable for public review or  
          replication.



               EIO models have been used by planners for decades to  








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               calculate the resources and supply-chain requirements to  
               support an increase in demand for an industrial output like  
               automobiles or food.  Model estimates show the indirect  
               increase in production, both for automobiles and for all  
               the other sectors that supply products, directly or  
               indirectly, to the automobile industry.  In general, each  
               sector contributes directly or indirectly to every other  
               sector. For example, an expansion in the automobile  
               production would require steel, electricity, petroleum, and  
               plastics.  By multiplying the economy-wide output changes  
               by the average pollution discharge associated with a unit  
               of production, researchers can estimate lifecycle emissions  
               due to a change in demand in a sector.



          The advantages of EIO models include their ability to estimate  
          the direct and indirect economy-wide effects to changes in  
          emissions, the use of publicly available data, and the existence  
          of transparent methodologies.  However, emission estimates only  
          reflect changes at the broad, sector level, which can represent  
          several industry types; this over-aggregation can lead to  
          uncertainties depending on how well a sector is modeled.  As  
          with any modeling exercise, the quality of the output is  
          contingent on the quality of the underlying data.  EIO models  
          rely on publicly available emissions data and economic data that  
          haven't been updated since 1997.  Finally and most importantly,  
          EIO models do not estimate lifecycle emissions beyond the  
          manufacturing stage.



           3)Should ARB defer to international labeling efforts?  



          While some LCA methodologies are robust and have been in  
          existence for decades they have only recently been used to  
          estimate carbon footprints.  Among several labeling efforts in  
          the U.S. and internationally, the United Kingdom (through an  
          independent entity called Carbon Trust) has embarked on the most  
          ambitious effort to date.  In 2007, it released a PA standard  
          (PAS 2050) for the voluntary assessment of GHG emissions from  
          goods and services.  Thus far, of the 100+ products that have  
          been certified under the standard, only about 20-30 products  








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          (e.g., potato chips, milk, oranges, light bulbs, paving stones,  
          and detergents) have a carbon label, which communicates a  
          standardized carbon score (e.g., 100 grams of CO2) for the  
          purposes of comparing products within the same category.  A  
          company that chooses to measures the footprint of a product must  
          commit to reduce the emissions associated with that product. 



          Despite the effort, the UK is currently considering whether to  
          communicate on a product label the emissions reductions achieved  
          by a company instead of its carbon score.  According to Carbon  
          Trust, a score of 100g CO2 is not entirely meaningful to  
          consumers or the media yet.  Additionally, companies are  
          somewhat loathe to subject themselves to unfavorable advertising  
          should their score be higher than their competitors.  These  
          developments have had the inadvertent effect of discouraging  
          companies from achieving the ultimate goal of labeling efforts:  
          reducing their actual emissions.



          In addition to the UK effort, the World Resources  
          Institute/World Business Council for Sustainable Development is  
          developing a standard for product and supply chain carbon  
          accounting and reporting.  The International Standards  
          Organization is developing a new international standard (due  
          March 2011) for product carbon footprinting and labeling.  

          Closer to home, the website coolcalifornia.org, developed in  
          partnership with ARB, California Energy Commission, U.C.  
          Berkeley, LBL, and the nonprofit Next10, is based on EIO  
          modeling and purports to allow households to measure "everything  
          they consume," including food, goods and services, household  
          energy and transportation and to compare their results to other  
          households in the same city, nationally, and globally.  In a  
          paper recently published on this approach, the authors found  
          that, on average, every $1,000 consumers spend on food releases  
          about one ton of CO2 into the atmosphere, and every $2,000 spent  
          on goods (motor vehicles, clothes, appliances, household  
          supplies, toys, furniture, etc.), also results in about one ton  
          of CO2.











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          Considering the above initiatives, this bill may divert  
          significant time and resources away from ARB's principal charge  
          of reducing GHG emissions under AB 32.  While this bill  
          authorizes ARB to rely on data from "outside sources" when  
          developing its standard, it remains to be seen whether a  
          California-specific standard is necessary.



           4)ARB-sponsored research  



          Even though ARB has no position this bill, it signaled an  
          interest in carbon labeling when it awarded a research grant to  
          LBL to develop a California-specific LCA model to estimate the  
          lifecycle GHG emissions, both inside and outside the state, of  
          about 20 retail products (e.g., cement, paint, bread, beer,  
          beef, soft drinks, cheese, milk, personal computers, flat screen  
          TVs, refrigerators, and furniture).  LBL researchers will also  
          estimate the lowest-achievable lifecycle GHG emission by product  
          based on best available technologies and practices at each  
          lifecycle stage.  Finally, and critically, the research will  
          develop an understanding of the technical potential of emissions  
          reductions via product standards or labels.  For example, LBL  
          researchers found that compared to the average lifecycle  
          emissions of personal computers, the technical emissions  
          reduction potential, from production through disposal, is 28  
          percent.  The ARB-sponsored research is expected to conclude  
          mid-2010.  This research, of course, could greatly inform the  
          implementation of this bill.



           5)Suggested Amendments  



          The author has agreed to the following technical and substantive  
          amendments that, among other things, align the development of  
          any carbon labeling protocol with the goals of AB 32, give  
          guidance to ARB when selecting a protocol, ensure that a label  
          complies with a protocol for the life of the label, require ARB  
          to consider harmonizing a protocol with existing carbon label  
          standards, and authorize ARB to vary or exclude particular  








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          emissions from a product's lifecycle under certain conditions.


             44572.  As used in this division the following terms have the  
          following meanings:
             (a) "Carbon footprint" means the total amount of emissions of  
           a  greenhouse gas, as defined in Section 38505, that occur as a  
          result of a  consumer  product's lifecycle  , or as determined by  
          the state board to best implement this division  .
             (b) "State board" means the State Air Resources Board.

           (c) "Lifecycle" includes a consumer product's emissions  
          boundaries such as raw material extraction, production,  
          processing or manufacturing, transportation, distribution,  
          storing, consumer use, and disposal.  


             44574.  (a)  (1)   In furtherance of the goals and objectives of  
          Health and Safety Code section 38500 et seq.,   T   t  he state board  
          shall develop and implement a program for the voluntary  
          assessment, verification, and labeling of the carbon footprint  
          of consumer products sold in this state.  In order to create   As  
          part of  this program, the state board shall  adopt   establish  
          standard methodologies   protocols  for assessing, verifying, and  
          labeling the carbon footprint of a consumer product  in order for  
          a consumer to, among other things, reliably compare greenhouse  
          gas emissions of different products within or across a product  
          category.  
           (2)  The state board shall only  develop a protocol   include a  
          product category in a standard  if it determines that it is  
          feasible and practical to do so.
           (3) In determining which protocols to develop, the state board  
          may use the following criteria:
           (A) total lifecycle greenhouse gas emissions of a product or  
          product category;
          (B) emissions impact of a product category in California and;
          (C) size or growth of the product market.
           The state board may choose to adopt a methodology for a single  
          product category before expanding the scope of the adopted  
          standard to other product categories.
             (b) The program shall do both of the following:
             (1) Allow a consumer product manufacturer  or distributor  , on  
          a voluntary basis, to determine the carbon footprint of the  
          product by applying the  criteria and standards   protocol   
          developed by the state board, and to include that information on  








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          the product, product packaging,  internet Website, product  
          manual, or   and  product advertising, consistent with the labeling  
          standards developed by the state board.
             (2) Develop a standardized, easily understandable, label that  
          communicates to consumers relevant information about the carbon  
          footprint of a consumer product. The label  may   shall only  be  
          issued to a company that meets,  and continues to meet for the  
          life of a label,  all of the obligations of the adopted  standard   
           protocol  for measuring a product's carbon footprint.   ARB may  
          specify a maximum life of a label in order to capture potential  
          changes in emissions associated with evolving supply chains,  
          technology, or other considerations.
             (c) The state board may use data from outside sources to  
          develop the  standards   protocols   required to be created by  
          subdivision (a),  including the use of existing models  and other  
          carbon labeling standards  ,  and labels  .   In order to minimize  
          costs for manufacturers or distributors, the state board shall  
          consider aligning any protocols with other carbon labeling  
          standards.   The state board may consult with  academics and  
          research institutions,  representatives of consumer product  
          manufacturers, consumer groups, and environmental groups, and  
          conduct public hearings and workshops, to inform the development  
          of the  standards   protocols  required to be established pursuant  
          to subdivision (a).
             (d) (1)  Notwithstanding subdivision (a),   T   t  he state board  
          shall determine the appropriate  lifecycle  boundaries in  
          determining and assessing the carbon footprint of a consumer  
          product  .   , which may include raw material extraction, production  
          processing or manufacturing, transportation, distribution,  
          consumer use, and disposal.  The state board may vary these  
          boundaries  or exclude a boundary  by product category  as it deems  
          reasonable and necessary but shall strive to ensure consistency  
          and comparability between product categories  . 
             (2) The state board may develop a  carbon footprint protocol  
          that is based on a   combination of   hybrid  life cycle  assessment  
          methodologies   analysis   methodology standard  by relying on  
          company measurements of energy use  , fuel consumption and other  
          direct contributions to greenhouse gas emissions, and secondary  
          or non-company specific sources of greenhouse gas emissions for  
          product inputs or raw materials provided by company suppliers.   ,  
          other greenhouse gas emission sources, and national averages, or  
          other available information for determining the carbon  
          footprint.
             (e) If the state board determines that feasible measurement  
          methodologies are not sufficiently accurate to allow for direct  








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          comparisons of the carbon footprint of two like products within  
          a
          product category, the state board may  elect to  develop  standards  
            protocols  for communicating  any or  all of the following:
             (1) The average greenhouse gas emissions in a product  
          category in order to allow consumers to compare across  
          categories.
             (2) Whether a product has a lower carbon footprint than the  
          average comparable product available in that category.
             (3) A specific carbon footprint score that delineates the  
          range of error produced by the  methodology   protocols  .
             44575.  The state board may adopt standardized criteria for  
          third-party verification of the carbon footprint of a consumer  
          product, if the state board determines that this kind of  
          verification
          is necessary, or the state board may develop an alternative  
          means of ensuring compliance with the  protocols adopted   labeling  
          standards created  pursuant to this chapter.
              44576.  The state board may contract for cost-effective  
          services necessary to implement this chapter.

           































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           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          American Federation of State, County and Municipal Employees,  
          AFL-CIO
          Audubon California
          Breathe California
          California League of Conservation Voters
          CarbonCounted
          Environment California
          Hero Arts Rubber Stamps, Inc.
          National Parks Conservation Association
          Open Hand Manufacturing, Inc.
          Santa Clara Valley Water District
          South Coast Air Quality Management District
          The Carbon Trust
          Xtracycle Inc.

           Opposition 
           
          Grocery Manufacturers Association
          TechAmerica

           
          Analysis Prepared by  :  Dan Chia / NAT. RES. / (916) 319-2092