BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair SB 605 (Lara) - California Global Warming Solutions Act of 2006: scoping plan. Amended: May 8, 2013 Policy Vote: EQ 7-2 Urgency: No Mandate: No Hearing Date: May 23, 2013 Consultant: Marie Liu SUSPENSE FILE. AS PROPOSED TO BE AMENDED. Bill Summary: SB 605 would make various new requirements of the next scoping plan prepared by the Air Resources Board (ARB) and require that the scoping plan be approved by the Joint Legislative Budget Committee. Fiscal Impact: Annual limited-term costs of $1.7 million and 11.2 PYs from the Cost of Implementation Account (COI) within the Air Pollution Control Fund (special fund) for FY 2013-14, FY 2014-15, and FY 2015-16 for additional information to be incorporated into the 2013 scoping plan. Annual ongoing costs of $1.7 million and 11.2 PYs from the COI starting in FY 2013-14 for to incorporate additional information into future scoping plans. Background: The California Global Warming Solutions Act of 2006 (AB 32 (Nunez/Pavley) Chapter 488/2006) requires the state's greenhouse gas (GHG) emissions to be reduced to 1990 levels by 2020. ARB is required to adopt GHG emissions reduction measures by regulation and may include the use of market-based mechanisms to comply with these regulations. The implementation of AB 32 is guided by a scoping plan prepared and approved by ARB. The first scoping plan was required to be adopted by January 1, 2009 and updated at least once every five years. ARB is required to 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. The current scoping plan outlines achieving GHG emission reductions through a cap-and-trade program, the low carbon fuel standard, light-duty vehicle GHG standards, energy efficiency actions, the Renewable Portfolio Standard, regional SB 605 (Lara) Page 1 transportation-related GHG targets, and a variety of other actions and programs. Proposed Law: This bill would require the ARB to include in the next scoping update: A prioritization and emphasis on measures that result in GHG emissions while creating jobs within the state and reducing co-pollutants. A prioritization and emphasis on current regulations and actions and additional measures to achieve the maximum, technologically feasible, and cost-effective reductions in short-lived climate pollutants with high global warming potential. Requirement that offsets originate and be achieved within the state to the maximum extent feasible. A plan that achieves the GHG emission goal that would be implemented in the event that current measures do not result in the GHG reductions necessary. Consideration of the use of special funds that are authorized to be expended for the purposes of GHG reductions for reductions from sources within the state. The scoping plan update would be required to be approved by the Joint Legislative Budget Committee in consultation with the appropriate Legislative Committees. If ARB completes an update prior to January 1, 2014, this bill would require the ARB to revise the update to comply with these new requirements. Staff Comments: This bill would require ARB to include a substantial amount of new information into future scoping plans. ARB estimates that it would need an additional 11.2 PYs and $1.7 million ongoing to meet the additional requirements under this bill. However, given the timing of this bill and the planned 2013 scoping plan update, there may be additional costs. The first scoping plan was adopted in 2008 and thus ARB is planning completing its update in 2013. A preliminary draft is scheduled to be released in summer 2013 and the Board anticipates considering adoption of the update in the fall. Even if the ARB began to adjust the scoping plan per this bill after the Governor's signature, should it pass the Legislature, much of SB 605 (Lara) Page 2 the work to create the update will have already been completed. This bill would explicitly require ARB to revise the update if an update is adopted prior to January 1, 2014. ARB estimates that this would result in the need for 11.2 PYs and $1.7 million for three years. Proposed Author Amendments: Remove the requirement for the Legislature to approve the update to the strategic plan and specify that the backup plan for GHG emissions is a backup in the event that any of the GHG measures fail.