BILL ANALYSIS Ó
SB 605
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Date of Hearing: August 21, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 605 (Lara) - As Amended: July 3, 2013
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill appropriates up to $125 million in cap and trade
auction revenue for programs in disadvantaged communities, and
limits the use of offsets to programs located in California.
This bill revises AB 32 implementation by requiring the Air
Resources Board (ARB) to include additional information in AB 32
scoping plans. Specifically, this bill requires ARB to:
1)Prioritize green house gas (GHG) emission reductions that
create jobs within the state and reduce co-pollutants in the
regions of the state most impacted by air pollutants.
2)Focus on measures to reduce short-lived climate pollutants
with high global warming potentials.
3)Submit scoping plans to the Joint Legislative Budget Committee
for approval.
FISCAL EFFECT
Increased annual costs in the several million dollar range from
the Cost of Implementation Account (COI) within the Air
Pollution Control Fund to update current offset requirements,
revise the 2013 scoping plan, and develop future scoping plans
to include the additional required information.
COMMENTS
1)Rationale. AB 32 (Núñez), Chapter 455, Statutes of 2006)
requires California to limit its emissions of GHGs so that, by
2020, those emissions are equal to what they were in 1990.
SB 605
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The stated goal in the initial AB 32 scoping plan is to
achieve 20% of the necessary reductions from a cap-and-trade
market in which regulated emissions sources buy and sell
credits that give the holder the right to emit a quantity of
GHGs.
The 2013-14 Budget Act loaned the first $500 million in
auction revenue to the GF and did not appropriate any funds in
excess of the loan.
If cap and trade auction proceeds exceed $500 million, this
bill appropriates up to $125 million for projects located
within and benefitting disadvantaged communities.
2)Previous Legislation.
a) AB 1532 (J. Perez, 2012) created the Greenhouse Gas
Reduction Fund Investment Plan and Communities
Revitalization Act to set procedures for the investment of
revenues derived from the auction of GHG allowances
pursuant to the cap and trade program. AB 1532
established a long-term spending strategy for cap-and-trade
auction revenues and the Department of Finance and ARB
developed a three-year investment plan for the auction
proceeds.
b) SB 535 (De León, Statutes of 2012) requires the
investment plan to allocate (1) a minimum of 25 percent of
the available moneys in the fund to projects that provide
benefits to identified disadvantaged communities and (2) a
minimum of 10% of the available moneys in the fund to
projects located within identified disadvantaged
communities.
SB 605 further bypasses the investment plan process by
proposing to spend the first $125 million above the loan
amount entirely in disadvantaged communities. It is
unclear whether this appropriation would count toward, or
bypass, the funding levels required by SB 535.
1)Offsets. ARB's cap-and-trade regulation allows, but does not
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require, the use of offsets to meet a limited portion of
regulated entities' compliance obligation. Each regulated
entity may meet up to eight percent of their total compliance
obligations with offsets, which is equivalent to approximately
50% of their GHG reduction obligation.
Concerns have been raised that limiting offsets to California
sources will severely constrain supply and defeat the
cost-containment objective.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081