BILL ANALYSIS Ķ
AB 2348
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Date of Hearing: April 7, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2348 (Stone) - As Introduced: February 21, 2014
SUBJECT : Natural Resources Climate Improvement Program
SUMMARY : Creates the Natural Resources Climate Improvement
Program (NRCIP), to be administered by the Air Resources Board
(ARB) in coordination with the Natural Resources Agency (NRA),
to assist in the development and implementation of
highly-leveraged, regionally integrated natural resources
projects that maximize greenhouse gas (GHG) emissions reductions
or sequestration.
EXISTING LAW :
1)Requires ARB, pursuant to the California Global Warming
Solutions Act of 2006 (AB 32 (Nuņez and Pavley), Chapter 488,
Statutes of 2006), to adopt a statewide GHG 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)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 Greenhouse Gas Reduction Fund
(GHGR Fund).
4)Creates the Greenhouse Gas Reduction Fund Investment Plan and
Communities Revitalization Act (AB 1532 (Perez), Chapter 807,
Statutes of 2012) to set procedures and develop plans for the
investment of the moneys deposited into the GHGR Fund.
5)Requires the investment plans developed pursuant to AB 1532 to
allocate: a) a minimum of 25 percent of the available moneys
in the GHGR Fund to projects that provide benefits to
identified disadvantaged communities; and, b) a minimum of 10
percent of the available moneys in the GHGR Fund to projects
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located within identified disadvantaged communities.
6)Creates the Wildlife Conservation Board (WCB) which selects,
authorizes, and allocates funds for the purchase of land
suitable for recreation purposes and the preservation,
protection, and restoration of wildlife habitat.
7)Creates 10 state conservancies (Baldwin Hills Conservancy,
California Tahoe Conservancy, Coachella Valley Mountains
Conservancy, Sacramento-San Joaquin Delta Conservancy, San
Diego River Conservancy, San Gabriel and Lower Los Angeles
Rivers & Mountains, Conservancy, San Joaquin River
Conservancy, Santa Monica Mountains Conservancy, Sierra Nevada
Conservancy, State Coastal Conservancy) with various
responsibilities generally related to protecting and enhancing
natural resources, which can involve issuing grants and
acquiring property.
8)Pursuant to Executive Order S-13-08 (Schwarzenegger), ordered
NRA, through the Climate Action Team, to coordinate with
local, regional, state and federal public and private entities
to develop, by 2009, a state Climate Adaptation Strategy.
Ordered the strategy to summarize the best known science on
climate change impacts to California, assess California's
vulnerability to the identified impacts, and outline solutions
that can be implemented within and across state agencies to
promote resiliency. (The Climate Adaptation Strategy was
updated in 2013.)
THIS BILL :
1)Creates the NRCIP, to be administered by ARB in coordination
with NRA, to assist in the development and implementation of
highly-leveraged, regionally integrated natural resources
projects that maximize GHG emissions reductions or
sequestration.
2)Requires moneys from the GHGR Fund to be available, upon
appropriation by the Legislature, to ARB to implement the
NRCIP.
3)Requires ARB, in coordination with NRA, to develop guidelines
for the implementation of NRCIP consistent with AB 32 and AB
1532. Requires the guidelines to do all of the following:
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a) Ensure that project investments funded by the NRCIP
utilize consistent accounting and modeling approaches to
estimate and monitor GHG emissions and reductions over
time;
b) Promote innovative natural resources projects that
protect existing GHG emissions sinks or assist with the
enhancement of other climate-related projects in the
transportation and energy sectors that can be replicated
regionally;
c) Promote projects based on the potential to increase
climate benefits and reduce extreme weather events,
including, but not limited to, the risk of fire, flood,
water supply, sea-level rise, and urban heat island effect
associated with climate change;
d) Promote projects that assist the state in reaching its
climate goals beyond 2020, consistent with AB 32's GHG
emission goals; and,
e) Prioritize projects that are consistent with, and assist
in, the implementation of county or regional land use GHG
emissions reduction plans or programs, including any of the
following:
i) A sustainable communities strategy;
ii) A local or regional plan to reduce GHG emissions;
iii) A local or regional climate adaptation plan;
iv) A natural community conservation plan and a habitat
conservation plan;
v) Ensure projects are consistent with AB 1532's
investment plan;
vi) Promote investments in projects that include
cobenefits, including state and federal air quality
goals;
vii) Ensure projects funded pursuant to the NRCIP
maximize moneys appropriated, provide environmental
benefits, create jobs for residents, and do not conflict
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with other areas of law;
viii) Promote the use of the best climate science and GHG
emissions reduction analytics; and,
ix) Promote project consistency with the 2009 California
Climate Adaptation Strategy and its most recent update,
adopted pursuant to Executive Order S-13-2008.
4)To provide greater coordination among state agencies, boards,
and departments, requires NRA, in coordination with ARB, to do
all of the following:
a) Provide updates to the Strategic Growth Council on
critical issues related to climate change;
b) Identify and notify state conservancies and the WCB
regarding major infrastructure projects that would impact
project planning and implementation;
c) Identify and conduct climate research to assist with the
state's understanding on how to reduce or sequester GHG
emissions in the natural resources sector;
d) Promote state implementation of the Climate Adaptation
Strategy, adopted pursuant to Executive Order S-13-2008;
and,
e) Provide technical assistance grants to project
applicants from disadvantaged communities applying for
funding from the state conservancies or WCB.
5)Requires state conservancies and WCB to identify, develop, and
implement projects within their jurisdictions consistent with
the NRCIP guidelines, including any of the following:
a) Management and restoration of public lands to increase
carbon sequestration and reduce GHG emissions;
b) Development and implementation of projects and programs
that encourage or provide incentives for increased carbon
sequestration or reduced GHG emissions related to the use
or management of natural resources on private lands;
c) Provide incentives for the protection of agricultural
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and open space lands to reduce GHG emissions and preserve
carbon sequestration potential;
d) Fund investments in projects that use natural systems,
including forests, wetlands, sustainable agriculture, and
urban forests, to reduce GHG emissions or increase the
sequestration of carbon to mitigate the impacts of GHG
emissions and create greater climate resiliency;
e) Fund the research and development of methods to increase
carbon sequestration and decrease GHG emissions related to
the use and management of natural resources and of methods
to measure and verify these climate benefits; and,
f) Encouraging the diversion of organic waste to bioenergy
and composting.
6)In evaluating potential NRCIP projects to be funded, the state
conservancies and WCB shall give priority to projects that
demonstrate one or more of the following characteristics:
a) Regional implementation;
b) The ability to leverage additional public and private
funding;
c) The potential for cobenefits or multibenefit attributes;
d) The potential for the project or program to be
replicated;
e) The use of existing programs; and,
f) Consideration of geographic and socioeconomic issues.
FISCAL EFFECT : Unknown
COMMENTS :
1)The Cap-and-Trade Program . The goal of AB 32 is to reduce GHG
emissions to 1990 levels by 2020. The cap-and-trade program
is a key element in this plan. It sets a statewide limit or
cap on the sources of GHGs and establishes a financial
incentive for long-term investments in cleaner fuels and more
efficient energy use. Currently, GHG emissions from
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electricity and large industrial sources are subject to the
cap. Starting in 2015, fuel distributors will be subject to
the cap. As part of the program, ARB will allocate free
allowances to the state's large industrial emitters as well as
the state's electric utilities to reduce the economic impact
of the cap-and-trade program.
ARB has conducted six quarterly auctions since November 2012
of GHG emission allowances as part of the market-based
compliance mechanism. These auctions resulted in
approximately $663 million in proceeds to the state (auctions
will continue to occur quarterly).
California's cap-and-trade program is expected to raise
billions of dollars in auction revenues from 2012 through
2020. The actual amount of revenue that will be raised is
difficult to predict, particularly because of the uncertainty
about future allowance prices and the number of allowances
that may be sold. Using ARB's floor and ceiling prices for
allowances, and assuming that ARB provides 60 percent of all
allowance for free, the total cap-and-trade revenues from all
auctions through 2020 could range from $12 billion to $45
billion. According to the Legislative Analyst's Office,
several economists who have evaluated California's
cap-and-trade program have estimated that, over the life of
the program, average allowance price may be in the $15 to $20
range. If this were to occur, total revenue for the program
through 2020 could be roughly $15 billion.
2)2014-15 Cap-and-Trade Auction Revenue Expenditure Plan . The
Governor's 2014-15 budget includes the first expenditure plan
for cap-and-trade revenues (aside from the small amount
provided in 2013-14 for the Office of Environmental Health
Hazard Assessment to identify disadvantage communities). The
plan proposes to spend $850 million in 2014-15 on three
different types of programs: a) sustainable communities and
clean transportation (which includes, among other things, $250
million for high speed rail projects); b) energy efficiency
and clean energy; c) and, natural resources and waste
diversion. Under the "natural resources and waste diversion"
expenditures, the Governor proposes to spend $50 million on
fire prevention and urban forestry, $30 million on wetlands
restoration, and $30 million on waste diversion.
3)Author's Statement . According to the author:
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To achieve California's climate goals, the state needs
to invest cap-and-trade auction revenue funds on
projects that maximize [GHG] emission reductions.
The overall reduction of GHG emissions needs to occur
from a variety of sectors, including transportation,
energy, water and natural resources. California does
not have an existing program that prioritizes the
reduction of GHG reductions from natural resources
projects.
4)The Bill's Purpose . The purpose of this bill is to establish
a program that creates guidelines for the state conservancies
and WCB for natural resources projects that maximize GHG
emission reductions or sequestration. These guidelines could
then be used to invest in projects with cap-and-trade auction
revenues. To make this point clear, the author and the
committee may wish to consider amendments at the beginning of
the bill that expressly state this purpose .
5)Who Should Lead ? This bill makes ARB the lead agency for the
purposes of developing the NRCIP. The bill requires ARB to
consult with NRA. Since the state conservancies and WCB are
under the jurisdiction of NRA, it seems more appropriate to
have NRA act as the lead agency, with ARB being consulted.
The author and the committee may wish to consider amendments
that make this change .
6)Other Amendments . The committee staff suggests technical and
clarifying amendments, including striking surplus and/or
duplicative language. A draft of all proposed amendments will
be available at the hearing.
7)Similar Legislation . This bill is the same as SB 1268
(Beall), which is set for a hearing at the Senate Natural
Resources and Water Committee on April 8, 2014.
Support
Audubon California
The Big Sur Land Trust
Bolsa Chica Land Trust
California Association of Local Conservation Corps
California Association of Resource Conservation Districts
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Cauchuma Resource Conservation District
Land Trust of Santa Cruz County
Marin Agricultural Land Trust
Mountain Recreation and Conservation Authority
Peninsula Open Space Trust
Resource Conservation District of Santa Cruz County
Sonoma County Agricultural Preservation and Open Space District
Tahoe Fund
Opposition
California Chamber of Commerce
California League of Food Processors
California Manufactures and Technology Association
California Taxpayers Association
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092