BILL ANALYSIS Ó SB 237 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator S. Joseph Simitian, Chairman 2010-2011 Regular Session BILL NO: SB 237 AUTHOR: Wolk AMENDED: As Amended March 29, 2011 FISCAL: Yes HEARING DATE: April 4, 2011 URGENCY: No CONSULTANT: Caroll Mortensen SUBJECT : GREENHOUSE GAS EMISSION REDUCTIONS: AGRICULTURE SUMMARY : Existing law : 1)Under the California Global Warming Solutions Act of 2006 (CGWSA): a) Requires the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020. ARB must adopt regulations for reporting and verification of GHG emissions, monitoring and compliance with the program, and achieving GHG emission reductions from sources or categories of sources by January 1, 2011, to be operative on January 1, 2012, subject to certain requirements. (Health and Safety Code §38500 et seq.). b) Requires ARB to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources or categories of sources of GHGs by 2020. ARB must evaluate the total potential costs and total potential economic and noneconomic benefits of the plan for reducing GHGs to the state's economy, and public health, using the best economic models, emission estimation techniques, and other scientific methods. The plan must be updated at least once every five years. (§38561). c) Requires ARB to adopt GHG emission limits and emission SB 237 Page 2 reduction measures by regulation on or before January 1, 2011, and meet certain requirements in adopting the regulations. ARB may include the use of market-based mechanisms to comply with these regulations. (§§38562, 38570). d) Requires state agencies to consider and implement strategies to reduce their greenhouse gas emissions. (§38592). 2)Under Executive Order S-3-05, directs the Secretary of the California Environmental Protection Agency to coordinate with the Secretary of the Business, Transportation and Housing Agency; Secretary of the Department of Food and Agriculture; Secretary of the Resources Agency; Chairperson of the Air Resources Board; Chairperson of the Energy Commission; and President of the Public Utilities Commission. This Climate Action Team works to coordinate statewide efforts to implement global warming emission reduction programs and the state's Climate Adaptation Strategy. 3)Under the Food and Agriculture Code, establishes the California Department of Food and Agriculture (CDFA) which is responsible for promoting, protecting, and furthering the economy of the state's agricultural industry, including identifying, studying, and recommending solutions to agribusiness problems so that adequate supplies of food and fiber will be available and the industries involved will be economically sound. This bill , under the CGWSA, adds a new part that: 1) States that the purpose of this new part is to ensure that California maximizes its opportunities to achieve voluntary GHG reductions in the state's agricultural section while also achieving environmental cobenefits. 2) Defines "Environmental cobenefits", "Farm product", "Processor", and "Producer". 3) Establishes the California Agriculture Climate Benefits Advisory Committee (advisory committee) consisting of 12 members appointed by an unspecified agency from nominations SB 237 Page 3 from interested persons or organizations; five producers, two of which shall be organic producers; three higher education researchers knowledgeable in agriculture and climate change; and three nonprofit organizations knowledgeable in agriculture and climate change and one processor. There are also five ex-officio members, one each from CDFA, Department of Conservation, ARB, United States Department of Agriculture, Natural Resources Conservation Service, and US EPA Region 9. 4) Specifies a three-year term limit for members of the committee and describes a system for members to designate their alternates and other administrative requirements for members. 5) Establishes eligible uses for moneys, in addition to costs to administer this part, allocated to the agricultural sector from revenue generated from market-based compliance mechanisms for the reduction of emissions of greenhouse gases for grants as follows: a) Research and demonstration projects that reduce GHG emissions, sequester atmospheric carbon, or assist the agricultural sector to adapt to global warming through the use of agricultural technologies, practices, or farming systems and that also provide environmental cobenefits. b) Technical assistance to develop outreach and training programs for agriculture producers to adopt agricultural technologies, practices or farming systems to reduce GHG emissions, sequester atmospheric carbon or assist producers in adapting to global warming while providing environmental cobenefits. c) Financial incentives to producers to reduce GHG emissions, sequester atmospheric carbon or assist producers in adapting to global warming while providing environmental cobenefits. d) Research and demonstration projects, technical assistance, and financial incentives for processors to reduce greenhouse gas emissions from their activities through energy efficiency, renewable energy or SB 237 Page 4 processing efficiencies. 6) Requires the undetermined agency to consider input from the advisory committee on establishing criteria for grant proposals, reviewing grant proposals, meeting recommendations on grant approval, and making recommendations on implementation. 7) Specifies that grant proposals for research and demonstration projects that include multiple co-applicants including at least one producer shall receive priority. 8) Limits the imposition of a matching fund requirement that exceeds 25 percent of the total state award for research and demonstration projects and technical assistance projects for processors. 9) Makes findings and declarations regarding GHG emissions and California agriculture. COMMENTS : 1)Purpose of Bill . According to the author, the CGWSA recognizes that climate change will have detrimental effects on some of the state's largest industries, including agriculture. Much is at stake - California agriculture contributes $35 billion annually to California's economy and supplies more than half of the country's fruit and vegetables. In a state where water is already scarce, climate change scenarios predict that water supplies will become increasingly constrained. Warming temperatures also threaten to shift the kinds of crops that can be grown in the state. Statewide, the impact of climate change on California agriculture could hamper food and fiber production. At the same time, agriculture can help reduce GHG emissions and meet California's AB 32 objectives. Research funded by the California Energy Commission suggests that some agricultural practices not only reduce GHGs, but may also sequester atmospheric carbon in the soil. SB 237 Page 5 2)Background . Many of the possible agricultural practices to reduce GHG emissions and sequester carbon can offer environmental cobenefits. For example, cover cropping, improved soil management and conservation tillage can improve air and water quality, contribute to wildlife habitat values and reduce GHG emissions and sequester carbon. a) Climate Action Team Activities and Agriculture . According to the Climate Action Team (CAT) 2009 report, "Agriculture Sector Write-Up for Public Distribution AB 32 Scoping Plan", the agriculture sector is unique in that nearly 82 percent of all GHG emissions from the sector involve biological processes. Sources which do not involve biological systems are energy use/fuel combustion and agricultural burning. These sources account for approximately 5 million metric tons of carbon dioxide (MMTCO2E) of the total 28 MMTCO2E emitted by the sector. The report also notes that " . . .there are gaps in scientific knowledge and scientific uncertainty in existing data on greenhouse gas emissions resulting from the complex biological process of agro-ecosystems making the identification of real, permanent, additional, verifiable and enforceable reduction measures difficult to immediately implement. Research on understanding these systems, emissions, and rigorous quantification methodologies are needed to achieve the full reduction potential from this sector." Further, the report recognizes that because of the complex nature of the biological functioning of agro-ecosystems, emission reduction projects can often result in multiple cobenefits. Cobenefits include reductions in criteria and toxic pollutants; reduced impacts on soil, water, groundwater and watershed quality; reduced chemical inputs to soil, agro-ecosystem functioning, soil quality, erosion control and habitat enhancement; improved animal health, animal productivity; increased use of renewable fuel sources and reduced dependence on energy imports. 3)What's next for CGWSA and Agriculture? The CAT report cites SB 237 Page 6 that the goals for the agriculture section in terms of GHG mitigation are very uncertain at this point. Much must be learned to allow for the development of potential quantification methodologies. The report refers to the need for research to reduce uncertainties related to the quantification of GHG emissions and potential emission reductions including life cycle analysis for soil carbon sequestration activities. It also lays out areas for further work including the need for more research, incentive programs and technical assistance to further the work in this area. All these efforts are consistent with the intent of this bill. 4)Who will implement this new requirement? This bill does not designate a lead agency that will establish the Advisory Committee and lead the efforts specified in this bill. In a similar bill last year (see Previous Legislation below), the CDFA was the lead agency; however the responsibility could also be given to the ARB or the Department of Conservation. The author is working with stakeholders and the Administration to make that determination. 5)Previous Legislation . In 2009, the Committee heard SB 1241 by the same author. SB 237 is similar to that measure. SB 1241 was held in the Senate Appropriations Committee. SOURCE : The California Climate and Agriculture Network SUPPORT : Audubon California Californians Against Waste Center for Land-Based Learning Clean Water Action Community Alliance with Family Farmers Ecological Farming Association Full Belly Farm Hedgerow Farms National Center for Appropriate Technology Organic Farming Research Foundation Sierra Orchards Soil Born Farm Urban Agriculture and Education Project Wild Farm Alliance OPPOSITION : None on file SB 237 Page 7