BILL ANALYSIS AB 1373 Page 1 ASSEMBLY THIRD READING AB 1373 (Skinner) As Amended June 2, 2009 Majority vote NATURAL RESOURCES 6-3 APPROPRIATIONS 12-5 ------------------------------------------------------------------- |Ayes:|Skinner, Brownley, |Ayes:|De Leon, Ammiano, Charles | | |Chesbro, | |Calderon, Davis, Fuentes, | | |De Leon, Hill, Huffman | |Hall, John A. Perez, Price, | | | | |Skinner, Solorio, | | | | |Torlakson, Krekorian | | | | | | |-----+--------------------------+-----+----------------------------| |Nays:|Gilmore, Knight, Logue |Nays:|Nielsen, Duvall, Harkey, | | | | |Miller, | | | | |Audra Strickland | ------------------------------------------------------------------- SUMMARY : Requires the California Energy Commission (CEC), on or before December 1, 2011, to assess, in consultation with the State Air Resources Board (ARB) the potential to reduce the use and emissions of high-global warming potential (GWP) compounds in stationary refrigeration and air-conditioning industry in California. Specifically, this bill : 1)Requires the CEC, as part of its 2011 update to the energy efficiency standards, to assess, in consultation with ARB, the potential to optimize the efficiency of stationary cooling technology while significantly reducing the use and emissions of high-GWP compounds in stationary refrigeration and air-conditioning industry in California on or before December 1, 2011, so long as existing staff and funds are available. 2)Defines "high-GWP" to mean a global warming potential that is greater than 150 carbon dioxide equivalents. 3)Defines "low-GWP" to mean a global warming potential that is less than or equal to 150 carbon dioxide equivalents. 4)Specifies that the assessment include: a) An analysis of the energy efficiency of reduced high-GWP charge systems and dedicated low-GWP systems for stationary refrigeration and air conditioning, and an assessment of the AB 1373 Page 2 nexus between their energy efficiency and life cycle greenhouse gas emissions, including direct and indirect emissions; b) An analysis of the current technological status of stationary refrigeration and air conditioning systems using reduced high-GWP charge and dedicated low-GWP materials and their potential for use in California; c) An analysis of economic costs and safety of high-GWP materials, reduced high-GWP charge systems, and dedicated low-GWP systems for stationary refrigeration and air-conditioning; d) Identification of existing laws, codes, regulations and incentive programs pertinent to the safety and energy efficiency of stationary refrigeration and air conditioning; and an analysis of how they can be modified to promote the use of reduced high-GWP charge and dedicated low-GWP systems; and, e) An analysis of the potential for new incentive programs and pilot programs. 5)Requires the CEC, on or before January 1, 2012, to submit the study to the Legislature. 6)Authorizes ARB to develop incentive, pilot, and worker training programs to encourage the use reduced high-GWP charge and low-GWP systems beginning December 1, 2011. 7)Authorizes ARB to use funds generated from fees assessed on high-GWP refrigerants to develop programs to reduce or prevent the emissions of high-GWP compounds beginning on January 1, 2010. 8)Provides that the ARB is responsible for implementing any findings of the above study pursuant to its authority under the Global Warming Solutions Act of 2006. 9)Provides that the bill does not limit the existing authority of a state agency to adopt or implement regulations, including regulations pertaining to stationary refrigeration and air-conditioning equipment. EXISTING LAW requires: AB 1373 Page 3 1)ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. 2)CEC to adopt and periodically update lighting, insulation climate control system, and other building design and construction standards (known as Title 24 standards) that increase the efficiency in the use of energy and water for new residential and new nonresidential buildings. FISCAL EFFECT : According to the Assembly Appropriations Committee, minor, absorbable costs to CEC to complete the assessment; cost pressure amounting to several hundred thousands of dollars annually, to CEC and ARB to implement programs to encourage use of low global warming potential refrigerants. COMMENTS : According to the author's office, California's commercial refrigerators and air conditioners leak high GWP gases that are typically 1,500 and 4,000 times more powerful than carbon dioxide in contributing to global warming. According to the ARB, the 200,000 individual facilities that are estimated to use these substances in California release the equivalent of 32 million metric tons (MMT) of carbon dioxide (CO2), roughly equal to the CO2 emissions of nearly six million cars. The author states that while the commercial refrigeration and air-conditioning industry in Europe and Australia have already begun installing systems using climate friendly low-GWP refrigerants, the United States (U.S.) market has lagged. These systems, using "natural" refrigerants like CO2, hydrocarbon and ammonia, have low GHG emissions and have the potential to use less energy. As shown by the lack of market adoption of alternative, climate-friendly systems in the state, California lacks the incentives and regulatory structure to facilitate large-scale adoption of low-GWP refrigerants. High-GWP gases are used as refrigerants in a wide variety of stationary air conditioning and refrigeration equipment such as chillers, supermarket systems, industrial process refrigeration, refrigerated vending machines. They include: chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs), ozone depleting substances (ODS) that are regulated under the U.S. Clean Air Act; and hydrofluorocarbons (HFCs), non-ozone depleting substitutes, but like the CFCs and HCFCs, are potent global warming gases. AB 1373 Page 4 Leaks from these systems are commonplace and their leak rates are estimated to range from 35-100% depending on the system. For large systems, both direct (leaks from vibration, thermal expansion, and ruptures) and indirect (inefficient energy use, lack of heat recovery) CO2-equivalent emissions amount to approximately five MMT/year. A single, significant leaking system can emit over 7,000 metric tons of emissions. According to the ARB, total emissions from this sector are expected to grow to over 35 MMT by 2020. Federal Clean Air Act regulations prohibit the intentional release of ODS refrigerants, require the repair, retrofit, or replacement of certain equipment, set certification requirements for equipment and technicians, and restrict the sale of refrigerants to certified technicians. In addition to federal record-keeping requirements, the South Coast Air Quality Management District (SCAQMD) imposes a reporting requirement for certain systems containing more than 50 lbs of an ODS. Despite these restrictions, US EPA estimates that there are significant and preventable emissions of these high-GWP gases from refrigeration and air-conditioning systems due to improper maintenance, service, and disposal practices, and the continued reliance on older, inefficient equipment. Moreover, these restrictions do not apply to HFCs. In a regulation set to take effect in January 2010, ARB is proposing to build on existing regulations by controlling emissions from all high-GWP refrigerants via reporting, leak tests, repair requirements, best practices for installation and servicing, sale restrictions, safe disposal. This measure is projected to reduce emissions by 15 MMT by 2020, leaving about 16 million MMT of emissions uncontrolled. In order to encourage use of low-GWP alternatives, ARB is also proposing to impose a mitigation fee on every pound of refrigerant sold in California. Given the large deficit of emissions unaccounted for in ARB's regulation, this bill takes the first step towards encouraging the adoption of climate-friendly refrigerants in California. Low-GWP refrigerants such as ammonia, hydrocarbons, and even carbon dioxide have been used in Europe, Australia, and Japan for many years and they are now being used in applications that previously favored high-GWP refrigerants. While concerns about safety, toxicity, and efficacy have limited their use in North America new technology and advancements are beginning to minimize or eliminate these concerns. AB 1373 Page 5 This bill requires the CEC to assess the potential to dramatically reduce the use and emissions of high-GWP compounds through the use of market incentives, pilot programs, and other mechanisms. The author acknowledges that factors such safety, available technology, energy efficiency tradeoffs, and cost-effectiveness must be considered in detail in order to ensure an orderly transition to low-GWP refrigerants. Analysis Prepared by : Dan Chia / NAT. RES. / (916) 319-2092 FN: 0001390