BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1373
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          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  







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               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: 







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          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.








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          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.
           







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           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 


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