BILL ANALYSIS Ó
AB 1532
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( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1532 (John A. Pérez)
As Amended August 31, 2012
Majority vote
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|ASSEMBLY: |49-27|(May 29, 2012) |SENATE: |21-15|(August 31, |
| | | | | |2012) |
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Original Committee Reference: NAT. RES.
SUMMARY : Creates the Greenhouse Gas Reduction Fund Investment
Plan and Communities Revitalization Act (the Act) to set
procedures for the investment of regulatory fee revenues derived
from the auction of greenhouse gas (GHG) allowances pursuant to
the cap and trade program adopted by the Air Resources Board
(ARB) under the California Global Warming Solutions Act of 2006
(AB 32 (Nuñez and Pavley), Chapter 488, Statutes of 2006).
The Senate amendments delete the Assembly version of the bill,
and instead establish the Act to:
1)Require moneys from the Greenhouse Gas Reduction Fund (GHGR
Fund), which holds all moneys collected by ARB from the
auction of GHG allowances, be used to facilitate the
achievement of reductions of GHG emissions in the state and,
where applicable and to the extent feasible:
a) Maximize economic, environmental, and public health
benefits to the state;
b) Foster job creation by promoting in-state GHG emissions
reduction projects carried out by California workers and
businesses;
c) Complement efforts to improve air quality;
d) Direct investment toward the most disadvantaged
communities and households in the state;
e) Provide opportunities for businesses, public agencies,
nonprofits, and other community institutions to participate
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in and benefit from statewide efforts to reduce GHG
emissions; and,
f) Lessen the impacts and effects of climate change on the
state's communities, economy, and environment.
2)Authorize moneys appropriated from the GHGR Fund to be
allocated for the purpose of reducing GHG emissions in this
state through investments that may include any of the
following:
a) Funding to reduce GHG emissions through energy
efficiency, clean and renewable energy generation,
distributed renewable energy generation, transmission and
storage, and other related actions, including at public
universities, state and local public buildings, and
industrial and manufacturing facilities;
b) Funding to reduce GHG emissions through the development
of state-of-the-art systems to move goods and freight,
advanced technology vehicles and vehicle infrastructure,
advanced biofuels, and low-carbon and efficient public
transportation;
c) Funding to reduce GHG emissions associated with water
use and supply, land and natural resource conservation and
management, forestry, and sustainable agriculture;
d) Funding to reduce GHG emissions through strategic
planning and development of sustainable infrastructure
projects, including transportation and housing;
e) Funding to reduce GHG emissions through increased
in-state diversion of municipal solid waste from disposal
through waste reduction, diversion, and reuse;
f) Funding to reduce GHG emissions through investments in
programs implemented by local and regional agencies, local
and regional collaborative, and nonprofit organizations
coordinating with local governments; and,
g) Funding in research, development, and deployment of
innovative technologies, measures, and practices related to
programs and projects funded by the GHGR Fund.
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3)Require the Department of Finance (DOF), on behalf of the
Governor, and in consultation with ARB and any other relevant
state entity, to develop and submit a three-year investment
plan to the Legislature at the time of DOF's adjustments to
the proposed 2013-14 fiscal year budget.
4)Require, commencing with the 2016-17 fiscal year budget and
every three years thereafter, with the release of the
Governor's budget proposal, DOF to include updates to the
investment plan following the public process and interaction
with ARB, the Public Utilities Commission (PUC), and Climate
Action Team as specified in 8) through 10) below.
5)Require the investment plan to do all of the following:
a) Identify the state's near-term and long-term GHG
emission reduction goals and targets by sector;
b) Analyze gaps, where applicable, in current state
strategies to meeting the state's GHG emissions reduction
goals by sector; and,
c) Identify priority programmatic investments of moneys
that will facilitate the achievement of feasible and
cost-effective GHG emission reductions toward achievement
of GHG reduction goals and targets by sector.
6)Require ARB to hold at least two public workshops in different
regions of the state and one public hearing prior to DOF
submitting the investment plan.
7)Require ARB, prior to the submission of each investment plan,
to consult with the PUC to ensure the investment plan is
coordinated with, and does not conflict with or unduly overlap
with, activities under the oversight or administration of the
PUC undertaken pursuant to AB 32's market-based compliance
mechanisms (i.e., cap and trade) or other activities under the
oversight or administration of the PUC that facilitate GHG
emission reductions consistent with AB 32. The investment
plan shall include a description of the use of any moneys
generated by the sale of allowances received at no cost by the
investor-owned utilities pursuant to a market-based compliance
mechanism.
8)Require the Climate Action Team to provide information to DOF
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and ARB to assist in the development of each investment plan,
as specified.
9)Require the moneys in the GHGR Fund to be appropriate through
the annual Budget Act consistent with the investment plan
developed and submitted pursuant to this bill.
10)Require, upon appropriation, the moneys in the GHGR Fund to
be available to ARB and to administrating agencies for
administrative purposes carrying out the Act.
11)Require any repayment of loans, including interest payments
and all interest earnings on or accruing to any money,
resulting from the implementation of the Act to be deposited
in the GHGR Fund for the purposes of the Act.
12)Require DOF to submit an annual report to the Legislature on
the status and outcomes of projects funded.
13)Prohibit the state from approving allocations for a measure
or program using moneys appropriated from the Greenhouse Gas
Reduction Fund (GHGR Fund) except after determining, based on
the available evidence, that the use of the moneys further the
regulatory purpose of AB 32 and is consistent with law. If
any expenditure is determined by a court to be inconsistent
with law, the allocation for the remaining measures or
projects to shall be severable and not affected.
14)Prohibits the bill from becoming operative unless SB 535 (De
León) is enacted.
15)Precludes judicial review of the Governor's findings related
to linkage with other states and countries for the purpose of
implementing AB 32. This provision is separate from the Act.
EXISTING LAW :
1)Requires ARB, pursuant to AB 32, 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)Authorizes ARB to permit the use of market-based compliance
mechanisms to comply with GHG reduction regulations, to be
adopted by 2011 and operative by 2012, under limited
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circumstances once specified conditions are met.
3)Requires all moneys, excluding penalties and fines, collected
by ARB from the auction or sale of allowances pursuant to a
market-based compliance mechanism established pursuant to AB
32 to be deposited into the GHGR Fund.
4)Require, unless the Legislature passes a bill on or before
August 31, 2012, that becomes law specifying a process for the
establishment of the long-term spending strategy for moneys in
the GHGR Fund, DOF to submit to the Legislature, in bill
format, on or before January 10, 2013, a proposal that
provides a detailed spending plan for the expenditure of
moneys in the GHGR Fund that includes a) criteria and
requirements for use of these moneys; b) establishment of
program categories eligible for funding; c) the specification
of a public process that ARB shall use to develop the
strategy; and, d) the role of the Legislature in reviewing the
strategy.
AS PASSED BY THE ASSEMBLY , this bill:
1)Created the GHG Reduction Account (Account) within the Air
Pollution Control Fund.
2)Required all funds, excluding penalties and fines, collected
pursuant to the "Market-Based Compliance Mechanism" part of AB
32 to be deposited in the Account, and makes these funds
available, upon appropriation, for purposes of carrying out AB
32.
3)Required Account funds to be used to facilitate the
achievement of feasible and cost-effective GHG reductions in
this state consistent with AB 32 and, to the extent feasible,
achieve other specified complementary goals.
4)Authorized allocation of funds appropriated from the account
for a) investments in clean and efficient energy; b)
investments in low-carbon transportation and infrastructure;
c) investments in natural resource protection; and, d)
investments in research, development, and deployment of
innovative technologies, measures, and practices related to
programs and projects funded pursuant to the bill.
5)Provided ARB, and any other state agency identified by the
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Legislature, to administer funds appropriated from the Account
and carry out a program to allocate appropriated funds through
competitive grants, revolving loans, loan guarantees, loans,
or other appropriate funding measures.
6)Required, prior to the initial allocation of funds, that ARB
and other state agency administrators adopt guidelines to
establish funding criteria, a process to verify the
qualifications of recipients, and monitoring and auditing of
expenditures and outcomes.
7)Required ARB to adopt an investment plan every three years
which identifies and prioritizes expenditure of funds
appropriated from the Account.
FISCAL EFFECT : Unknown with latest amendments.
COMMENTS : The AB 32 Scoping Plan is a description of the
specific measures ARB and others must take to meet the objective
of AB 32: Reduce statewide GHG emissions to 1990 levels by
2020. The reduction measures identified in the Scoping Plan
must be proposed, reviewed, and adopted as individual
regulations by January 1, 2011, to become operative beginning on
January 1, 2012.
According to ARB, a total reduction of 80 million metric tons
(MMT), or 16% compared to business as usual, is necessary to
achieve the 2020 limit. Approximately 78% of the reductions
will be achieved through identified "regulatory" measures. ARB
proposes to achieve the balance of reductions necessary to meet
the 2020 limit (approximately 18 MMT) through a cap and trade
program.
In a cap and trade program, a limit, or cap is put on the amount
of pollutants (GHGs) that can be emitted. Each allowance equals
one metric ton of carbon dioxide equivalent. The total number
of allowances created is equal to the cap set for cumulative
emissions from all the covered sectors. These allowances may be
auctioned and/or freely given to companies or other groups. In
addition to allowances, emissions reductions from sources that
are outside the cap coverage, called offsets, could be
authorized. This would allow emissions in the capped sectors to
exceed the allowances issued. After initial distribution of
allowances-or in the use of offsets-compliance instruments may
be traded among entities. At the end of each compliance period,
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covered entities are required to turn in, or surrender, enough
compliance instruments to match their emissions during this time
period.
ARB has adopted a cap and trade program that applies to an
estimated 600 regulated entities engaged in stationary
combustion, cement manufacturing, cogeneration, petroleum
refining, hydrogen production, aluminum production, facility
operators calcining carbonates, carbon dioxide supplier or
transfer recipient, electricity generation, glass production,
iron and steel production, lime production, natural gas
transmission and distribution, nitric acid production, oil and
gas extraction field operation, production of industrial gases,
pulp and paper production, soda ash production, electricity
deliverers, transportation fuel deliverers, and natural gas
deliverers.
According to ARB, the first auction of allowances will take
place on November 14, 2012, and the auctions will be held
quarterly thereafter. Following the first auction, revenues
will be deposited in the Air Pollution Control Fund. ARB has
decided to hold a practice auction in August prior to the
November auction to ensure that all logistical and oversight
aspects of the program are fully operational prior to the launch
of the program. Allowing more time to launch and test the
allowance tracking system as well as the auction platform will
be beneficial to stakeholders, giving them more time to be
prepared, and ARB plans to hold workshops and stakeholder
training during this time to ensure everyone is ready and
familiar with both systems prior to the first auction.
Governor Brown's proposed 2012-13 budget assumes ARB will raise
$1 billion from the auctions for the budget year. The budget
proposes the creation of a new Greenhouse Gas Reduction Account
within the Air Pollution Control Fund. Five hundred million
dollars would be used to pay for unspecified GHG mitigation
activities previously funded by the General Fund. The remaining
$500 million would be devoted to investments in "(1) clean and
efficient energy, (2) low-carbon transportation, (3) natural
resource protection, and (4) sustainable infrastructure
development." After the first auction, the Governor would
submit an expenditure plan to the Assembly Appropriations
Committee, the Senate Appropriations Committee, and the Joint
Legislative Budget Committee no fewer than 30 days prior to
allocating any moneys. The Legislature would not be asked to
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approve the plan. ARB would then begin allocating funds based
upon the plan.
According to the Author:
There is no current statutory direction as to the
expenditure of the revenue from the auctions, whether for
eligible investments or criteria to use to differentiate
between potential projects, a process the state should use
to develop plans and programs for investment or direction
on how to ensure legislative oversight on the use of the
funds.
The Governor's proposal establishes a series of possible
funding areas that ARB may consider but does not specify
how the ARB shall administer the funds, allocate between
funding areas or decide between eligible project
applicants. The Governor's proposal also does not allow
for the legislature to have an adequate role in
establishing state investment priorities, criteria or
process and does not allow for a sufficient amount of time
for legislative review.
AB 1532 addresses the above issues by?establishing the
criteria and requirements for use of the auction revenue,
establishes the program categories eligible for funding and
defines a process that the ARB shall use to develop an
investment plan and the role of the legislature in
reviewing it.
This bill is contingent on the enactment of SB 535. SB 535
requires the Act's investment plans to allocate 1) a minimum of
25% of the available moneys in the GHGR Fund to projects that
provide benefits to identified disadvantaged communities; and,
2) a minimum of 10% of the available moneys in the fund to
projects located within identified disadvantaged communities.
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092
AB 1532
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FN:
0005913