BILL ANALYSIS Ó
AB 26
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Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 26 (Bonilla) - As Amended: April 22, 2013
SUBJECT : California Global Warming Solutions Act of 2006:
Greenhouse Gas Reduction Fund
SUMMARY : Revises procedures for investment of revenues derived
from the auction of greenhouse gas (GHG) allowances pursuant to
the cap-and-trade program adopted by the Air Resources Board
(ARB) to add criteria related to job training and apply labor
standards to specified construction and maintenance work.
EXISTING LAW :
1)Requires ARB, pursuant to California Global Warming Solutions
Act of 2006 (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, under
limited circumstances once specified conditions are met.
3)Establishes the GHG Reduction Fund and requires all moneys,
except for fines and penalties, collected by ARB from the
auction or sale of allowances pursuant to a market-based
compliance mechanism (i.e., the cap-and-trade program adopted
by ARB under AB 32) to be deposited in the Fund and available
for appropriation by the Legislature.
4)Establishes the GHG Reduction Fund Investment Plan and
Communities Revitalization Act (AB 1532) to set procedures for
the investment of GHG allowance auction revenues. AB 1532
authorizes a range of GHG reduction investments and
establishes several additional policy objectives.
THIS BILL :
1)Amends AB 1532's funding criteria to:
a) Add the following additional policy objectives, where
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applicable and to the extent feasible:
i) Transition the state's workforce away from carbon
intensive project job skills to GHG reducing project job
skills.
ii) Reinvest on a regional basis to meet economic needs
resulting from climate change policy.
b) Authorize funding for apprenticeship and job training
programs associated with GHG reduction technologies.
c) Require the Investment Plan to allocate funding
consistent with statewide goals, including those described
in SB 375 (Steinberg), Chapter 728, Statutes of 2008.
2)Provides that construction, alteration, demolition,
installation, repair and maintenance work paid for in whole or
in part from the GHG Reduction Fund shall be considered
"public works," and therefore subject to prevailing wage laws.
3)Authorizes funding for refinery maintenance to reduce GHG
emissions if all work that falls within an "apprenticeable
occupation" is performed by "skilled journeypersons" and
"registered apprentices." Defines these terms for purposes of
this bill.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. According to ARB, a total reduction of 80 million
metric tons (MMT), or 16 percent compared to business as
usual, is necessary to achieve the 2020 limit. Approximately
78 percent of the reductions will be achieved through
identified direct regulations. ARB proposes to achieve the
balance of reductions necessary to meet the 2020 limit
(approximately 18 MMT) through a cap-and-trade program that
covers an estimated 600 entities. The first two quarterly
auctions of allowances in the cap-and-trade program were held
in November 2012 and February 2013. The next auction (the
last of the current fiscal year) is scheduled for May 16,
2013.
The 2012-13 Budget Act (AB 1464) authorized Department of
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Finance (DOF) to allocate at least $500 million from
cap-and-trade revenue, and make commensurate reductions to
General Fund expenditure authority, to support the regulatory
purposes of AB 32. AB 1532 (John A. Pérez) establishes a
long-term spending strategy for moneys in the Fund, including
procedures for deposit and expenditure of cap-and-trade
auction revenues pursuant to an investment plan.
Pursuant to AB 1532, DOF and ARB are developing a three-year
investment plan for the auction proceeds. The investment plan
will identify the state's GHG emission reduction goals and
priority programs for investment of proceeds to support
achievement of those goals. The Governor's proposed 2013-14
Budget includes a brief discussion of Administration
priorities for investment, emphasizing investments in the
transportation and energy sectors from which large reductions
in GHG emissions are possible. In addition, areas to be
examined during the planning process include sustainable
agriculture practices (including the development of
bioenergy), forest management and urban forestry, and the
diversion of organic waste to bioenergy and composting.
In February 2013, ARB released an investment plan "concept
paper" and held public workshops to solicit public input. A
draft investment plan will be considered by ARB on April 25,
2013. DOF will submit the final plan to the Legislature in
May 2013. Funding will be appropriated to state agencies by
the Legislature and Governor through the annual Budget Act,
consistent with the plan.
2)Author's statement:
Current statute does not address the need to look at
regional reinvestment when drafting the investment plan.
Certain communities in California will contribute
disproportionately to the monies flowing into the (Fund).
These communities are the ones which are home to large
emitters of carbon.
In addition, payments for auction allowances may result in
workforce impacts. We want to ensure that Cap and Trade
monies can be used for job retraining and apprenticeship
programs so that employees affected by these changes can
learn new skills to transition to the green economy. As we
slowly evolve our economy from carbon intensive strategies,
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we need to provide an avenue for workers to be transitioned
along with those strategies. By including this
(transitioning the state's workforce to GHG emission
reduction job skills) on the list of goals to be funded by
the GGRF, we are allowing for this to occur. AB 26 also
ensures that apprenticeship and job training programs are
included on the list of potential investments that may be
included in the investment plan.
Furthermore, we want to ensure that monies are allocated in
harmony with other state goals, such as reducing carbon
emissions through land use decisions.
Lastly, many of the projects to be funded are likely to be
construction related. As a state, we want to be sure that
we uphold our commitment to living wages. AB 26 clarifies
that construction, alteration, demolition, installation,
repair, and maintenance work paid for with (Fund) monies is
considered public work.
The bill also ensures that all refinery maintenance work
which is funded with (Fund) monies uses the tradespeople
who are best trained in safety. It is very important that
we utilize the best trained persons to ensure the safety of
all employees at refineries.
3)Refinery maintenance should not be funded by the Fund if it is
"business as usual." In applying labor standards to refinery
maintenance supported by the Fund, this bill suggests that
refinery maintenance should be eligible for funding from GHG
auction revenues. While it may be the case that refinery
maintenance can reduce GHG emissions, the author and the
committee may wish to consider whether "business as usual"
maintenance or work that is required by law or regulation
should be excluded from eligibility for funding.
4)Double referral. This bill has been double referred to the
Assembly Labor and Employment Committee for review of its
labor-related provisions.
AB 26
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REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
California Manufacturers and Technology Association
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092