BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 278
                                                                  Page  1

          Date of Hearing:   May 1, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                     AB 278  (Gatto) - As Amended:  April 4, 2013

          Policy Committee:                              Natural  
          ResourcesVote:9-0

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY  

          This bill places additional requirements on the Air Resources  
          Board (ARB) when determining the carbon intensity of  
          transportation fuels under its Low Carbon Fuel Standard (LCFS)  
          regulations or another scoring system.  Specifically, this bill  
          requires ARB to:

          1)Consider the GHG emissions associated with land use or other  
            significant indirect effects identified by the board,  
            including but not limited to, the impacts of potential or  
            actual deforestation and the impacts of increased food  
            shipping caused by food crop displacement.

          2)Identify, to the extent feasible, environmental laws and  
            practices of the jurisdiction from which the fuel originates  
            that may affect GHG emissions from the production and  
            transportation of fuel.

          3)Solicit comments, and consider and respond to evidence  
            regarding:

             a)   Significant effects upon food supply, food costs, and  
               food shipping caused by LCFS regulations.

             b)   Significant effects upon the local economy, including  
               job loss or worker displacement caused by the LCFS  
               regulations.

           FISCAL EFFECT  

          Significant start-up and on-going annual costs in the $1million  








                                                                  AB 278
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          to $2 million range (special fund) for the increased workload  
          associated with the expanded analysis for activities including:

             a)   The update of fuel pathways and carbon intensity scores.

             b)   Macroeconomic modeling of LCFS impacts on local  
               economies.

             c)   The creation of an inventory of foreign and state laws  
               and practices.

             d)    A new server and software. 



           
          COMMENTS

          1)Purpose.   According to the author, AB 278 will strengthen the  
            Low Carbon Fuel Standard by ensuring all carbon emissions are  
            accounted for in the Indirect Land Use Change formula,  
            currently used by CARB to help calculate the carbon intensity  
            of transportation fuels.  

          2)  Background.   The California Global Warming Solutions Act (AB  
            32, Núñez-Pavely, Chapter 488, Statutes of 2006) requires ARB  
            to adopt a statewide greenhouse gas (GHG) emissions limit  
            equivalent to 1990 levels by 2020, and to adopt rules and  
            regulations to achieve maximum technologically feasible and  
            cost-effective GHG emission reductions.  

            AB 32 also requires ARB to adopt early action measures to  
            reduce GHG emissions.  The transportation sector is  
            responsible for approximately 40% of California's total GHG  
            emissions.

            In 2007, Governor Schwarzenegger issued Executive Order  
            S-01-07, specifying a statewide goal to reduce the carbon  
            intensity of California's transportation fuels by at least 10%  
            by 2020.  The order required ARB to consider adopting a LCFS  
            to implement this goal, either as an early action measure or  
            in other regulatory proceedings.  In 2009, ARB adopted the  
            LCFS as a regulation to be phased-in beginning in 2010. 

            ARB must score all transportation fuels, renewable and  








                                                                  AB 278
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            non-renewable, on their carbon intensity. Through the Indirect  
            Land Use Change (ILUC) formula, ARB accounts for any indirect  
            emissions resulting from the production of renewable fuels.    
            A similar calculation is done to account for refining and  
            transportation emissions to score the carbon reduction for  
            foreign fossil fuels.



           
           

           Analysis Prepared by  :    Jennifer Galehouse / APPR. / (916)  
          319-2081