BILL ANALYSIS Ó SB 605 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Jerry Hill, Chair 2013-2014 Regular Session BILL NO: SB 605 AUTHOR: Lara and Pavley AMENDED: August 18, 2014 FISCAL: Yes HEARING DATE: August 25, 2014 URGENCY: No CONSULTANT: Rebecca Newhouse SUBJECT : SHORT-LIVED CLIMATE POLLUTANTS SUMMARY : Existing law , under the California Global Warming Solutions Act of 2006 (CGWSA): 1) Requires the California Air Resources Board (ARB) to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation, and sets certain requirements in adopting the regulations. ARB may include the use of market-based mechanisms to comply with these regulations. (Health and Safety Code §38500 et seq.). 2) Requires ARB to prepare and approve a Scoping Plan by January 1, 2009, for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources or categories of sources of GHGs by 2020. ARB must 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, using the best economic models, emissions estimation techniques, and other scientific methods. The plan must be updated at least once every five years. (§38561). This bill, as approved by the Senate Environmental Quality Committee on May 1, 2013 : 1) Requires ARB, when updating its AB 32 Scoping Plan, to: a) Prioritize and emphasize measures and actions resulting SB 605 Page 2 in GHG emissions reductions that create jobs within the state and reduce co-pollutants in regions of the state most impacted by toxic and criteria air pollutants. b) Prioritize and emphasize current regulations and actions, and recommend additional measures and actions that can be implemented beginning no later than December 31, 2015, to achieve the maximum, technologically feasible, and cost-effective reductions in short-lived climate pollutants with high global warming potentials. c) Limit the use of offsets, to the maximum extent feasible, to those offsets originating and achieved within the state. d) Include a plan that achieves the GHG emissions goals established pursuant to AB 32 to be implemented in the event any of ARB's regulatory measures are not projected to result in the emissions reductions necessary to meet the established goals. e) Consider the use of special funds authorized to be expended for the purposes of GHG emissions reductions. 2) Requires ARB to submit these Scoping Plan criteria to the Joint Legislative Budget Committee (JLBC). If, after 30 days of receipt, JLBC has not made a finding on the submitted elements, the updated Scoping Plan shall be deemed concurred. 3) Provides if ARB updates the Scoping Plan prior to January 1, 2014, ARB must revise the Scoping Plan to incorporate the requirements established by this bill. 4) Defines "offset" to mean a quantified unit of GHG emission that is reduced, avoided, or permanently sequestered in a sector not regulated by a market-based compliance mechanism adopted by ARB. This bill, as it passed out of the Assembly on August 20, 2013 removes the provisions above relating to updating the Scoping Plan and instead requires the ARB to develop and implement a short-lived climate pollutant strategy. Specifically, the bill does the following: SB 605 Page 3 1) Requires ARB to complete a short-lived climate pollutant (SLCP) strategy by January 1, 2016. 2) States that the requirements of this bill are notwithstanding the 2020 statewide greenhouse gas (GHG) emissions limit required by the California Global Warming Solutions Act of 2006 (also known as AB 32). 3) Requires ARB to: a) Complete an inventory of sources and emissions of SLCPs based on available data. b) Identify research needs to identify any data gaps. c) Identify existing and potential new control measures. d) Prioritize the development of new measures that offer co-benefits by improving water quality or reducing air pollutants that impact community health and benefit identified disadvantaged communities. e) Coordinate with other state agencies and air districts to develop and implement measures identified in the SLCP strategy. 4) Requires ARB to consult with experts on SLCPs on specified topics. 5) Requires ARB to hold at least one public workshop during development of the SLCP strategy. 6) Defines "short-lived climate pollutant" as an agent that has a relatively short lifetime in the atmosphere and a climate-warming influence that is more potent than carbon dioxide. 7) Provides that the bill does not affect the existing authority of a state agency to adopt and implement rules and regulations that result in the reduction of GHGs or SLCPs to the extent authorized or required by existing law. SB 605 Page 4 COMMENTS : 1) Back on a 29.10 . SB 605 was amended in the Assembly Appropriations Committee and subsequently referred back to committee in accordance with Senate Rule 29.10. As passed by the Senate Environmental Quality Committee, the bill required the ARB to update the Scoping Plan, as specified. The amendments to SB 605 in the Assembly differ from that version of the bill by significantly expanding the scope of bill to require ARB to develop a comprehensive short-lived climate pollutant strategy and to implement that strategy. 2) Background . In 2006, AB 32 required the ARB to develop a Scoping Plan that describes the approach California will take to reduce GHG emissions to achieve the goal of reducing emissions to 1990 levels by 2020. The Scoping Plan was first approved by the Board in 2008 and must be updated every five years to evaluate the mix of AB 32 policies to ensure that California is on track to achieve the 2020 GHG reductions goal. The 2008 Scoping Plan outlines a suite of measures aimed at achieving 1990-level emissions of 427 million metric tons of carbon dioxide equivalent (MMTCO2e) in 2020, a reduction of about 80 MMTCO2e from California's 2020 "business-as-usual" GHG emissions projection. The emissions reductions measures outlined in the plan include a cap-and-trade program, the low carbon fuel standard (LCFS), light-duty vehicle GHG standards, energy efficiency actions, the Renewable Portfolio Standard, regional transportation-related GHG targets, as well as a variety of other actions and programs recommended to achieve the 2020 goal. Updated Draft Scoping Plan . ARB released a draft of the updated Scoping Plan October 2013, and on May 22, 2014, the first update to the Scoping Plan was approved by the board. The update asserts that California is on track to meet the near-term 2020 greenhouse gas limit and is well positioned to maintain and continue reductions beyond 2020 as required by AB 32. The updated Scoping Plan describes policies, actions, and SB 605 Page 5 strategies in the energy, transportation, fuels, agriculture, waste, and natural lands sectors as a means to continue emission reductions in each of these sectors. The draft also emphasizes the need for California to establish a mid-term statewide emission reduction target "informed by climate science, to frame the additional suite of policy measures, regulations, planning efforts, and investments in clean technologies that are needed to continue driving down emissions." The updated Scoping Plan includes a summary of the recent climate science, including short-lived climate pollutants. Scientific research indicates that an increase in the global average temperature of 2?C (3.6?F) above pre-industrial levels, which is only 1.1?C (2.0?F) above present levels, poses severe risks to natural systems and human health and well-being. However, even with 2?C stabilization, sea level rise of several meters beyond 2100 is likely. To have a good chance of avoiding temperatures above those levels, studies have focused on a goal of stabilizing the concentration of heat-trapping gases in the atmosphere at or below the 450 parts per million (ppm) CO2-equivalent. In early May 2013, the Mauna Loa monitoring station located at the top of Hawaii's Mauna Loa volcano, recorded CO2 of 400 ppm (measured at 316 ppm when the station made its first measurements in 1958). Short-lived Climate Pollutants . The updated Scoping Plan notes that ARB will develop a short-lived climate pollutant strategy by 2015 that will include an inventory of sources and emissions, the identification of additional research needs, and a plan for developing necessary control measures. CO2 remains in the atmosphere for centuries, which makes it the most critical greenhouse gas to reduce in order to limit long-term climate change. However, climate pollutants including methane, tropospheric ozone, hydrofluorocarbons (HFCs), and soot (black carbon), are relatively short-lived (anywhere from a few weeks to 15 years), but have much higher global warming potentials than CO2. SB 605 Page 6 New research suggests that black carbon is the second largest man-made contributor to global warming and its influence on the climate has been greatly underestimated. Another recent study published in the journal Nature Climate Change found that reducing emissions of short-lived climate pollutants, including soot and methane, by 30 to 60% by 2050 would slow the annual rate of sea level rise by about 18% by 2050. In addition, the study found that, compared to just cutting CO2 emissions, reducing the release of short-lived climate pollutants would do more to slow sea level rise before 2050, but that lowering CO2 emissions would be required to limit warming and warming-related impacts beyond that point. According to the updated Scoping Plan, the three short-lived climate pollutants with the greatest implications for California are the following: a) Black carbon: Black carbon, a component of soot, also known as PM 2.5, comes from diesel engines and incomplete burning of carbon sources. Wildfires contribute almost 50% of the total black carbon emissions in the state. In addition to being a powerful global warming pollutant, black carbon is associated with numerous negative health impacts and is designated a potential human carcinogen. Black carbon is not listed under AB 32 as a greenhouse gas subject to AB 32 regulations. However, due to known health and air quality impacts, ARB adopted truck and bus regulations in 2008 to control diesel PM emissions. ARB also administers the Carl Moyer Program, which provides grants to fund "cleaner than required" engine upgrades or retrofits that reduce PM 2.5 and other pollutants. b) Methane: Methane (CH4) is the principal component of natural gas and is also produced biologically under anaerobic conditions in ruminants, landfills, and waste handling. Atmospheric methane concentrations have been increasing as a result of human activities related to agriculture, fossil fuel extraction and distribution, and waste generation and processing. Many emissions sources of methane are unregulated (e.g. methane from dairy production and fugitive methane emissions from landfills and natural gas distribution) and recent scientific reports indicate SB 605 Page 7 that the US Environmental Protection Agency has underestimated methane emissions by as much as 50%. ARB staff plans to bring to the Board's consideration in late 2014 proposed regulations to reduce fugitive methane emissions from storage tanks, well stimulation, pneumatic devices, and leaking components. c) Hydrofluorocarbons (HFC): HFCs are synthetic gases used in refrigeration, air conditioning, insulation foams, solvents, aerosol products, and fire protection. They are primarily produced for use as substitutes for ozone-depleting substances which are currently being globally phased out. Currently, HFCs are a small fraction of the total climate forcing (<1%), but their emissions are growing relatively more rapidly than those of CO2. ARB has implemented several measures to reduce HFC emissions including low-global warming potential (GWP) requirements for aerosol propellants, a deposit-return recycling program for small cans of air conditioner refrigerant and a refrigerant management program. Under the cap-and-trade regulation, offsets may be used to satisfy up to 8 percent of a covered entity's compliance obligation. To date, ARB has adopted four protocols, including a protocol on emission reductions associated with destruction of ozone-depleting substances. 3) Scope of strategy . ARB currently has broad authority under AB 32 to regulate greenhouse gas emissions, including several short-lived climate pollutants such as methane, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride. AB 32 does not include the significant and potent climate pollutants black carbon, or tropospheric ozone, as greenhouse gasses under the Act. Under AB 32, this broad authority becomes less clear after 2020, as the law specifies that the 2020 statewide GHG emissions limit remains in effect unless amended or repealed. The statute also expresses the Legislature's intent that the 2020 GHG limit continue in existence and be used to maintain SB 605 Page 8 and continue reductions in emissions of GHGs beyond 2020. Therefore, it is not clear that the statute grants authority to the ARB to continue emissions reductions, and measures designed to achieve further emissions reductions beyond the 2020 GHG limit, after 2020. SB 605 creates a new chapter in the code outside of AB 32 that requires ARB, no later than January 1, 2016, to develop a comprehensive strategy to reduce emissions of short-lived climate pollutants in the state notwithstanding the 2020 GHG emissions limit specified in AB 32. Therefore, the strategy required by SB 605 to reduce short-lived climate pollutants is not constrained by the AB 32 framework that potentially limits ARB authority post 2020. In this way, the strategy may extend well into post-2020 territory and plan for significant reductions in short-lived climate pollutants beyond what is required for the 2020 emissions reduction goal. Additionally, SB 605 significantly broadens what would be considered a short-lived climate pollutant (capturing black carbon, tropospheric ozone and others), as compared to what is included under AB 32, for the purposes of the short-lived climate pollutant strategy and implementing the strategy required by the bill. 4) Expansion of ARB authority ? SB 605 requires, that as part of developing the comprehensive short-lived climate pollutant strategy, that ARB "coordinate with other state agencies and districts to develop and implement measures identified as part of the comprehensive strategy." In this way, the bill sets up a confusing framework, as the strategy must be completed no later than January 1, 2016, and ARB in the development of the strategy must already be implementing the strategy. This requirement in the bill to implement measures identified in the strategy to reduce short-lived climate pollutants is arguably authority that ARB already has under AB 32, prior to 2020. However, because of the fact the strategy can go well beyond the 2020 regime, it is unclear whether the bill expands ARB's authority to implement GHG reduction measures post-2020. The author states that SB 605 does not increase or decrease the existing regulatory authority of ARB to regulate short-lived climate pollutants, but merely binds them to a SB 605 Page 9 pre-2016 deadline to complete their strategy development, and adds key legislative parameters to structure that process, including requirements for interagency coordination, improved emissions data, and public transparency. The author may wish to clarify the language in the bill regarding timing for implementing this strategy in clean-up legislation next year, should this bill become law. 5) Support and Opposition . Supporters of the bill state that SB 605 would put a much needed priority on reducing short-lived climate pollutants, which have been scientifically proven to trigger short-term climate warming as well as have negative public health impacts, particularly in low-income communities. Opponents state that the bill will result in duplicative regulations that will drive up cost with regard to environmental or health benefits, and that SB 605 does not include a requirement that emission reduction strategies maximize cost-effectiveness and technological feasibility, which is an important component needed to ensure that the state gets the biggest bang for the buck when choosing to create new regulations. SOURCE : Senator Lara SUPPORT : Coalition for Clean Air Environmental Defense Fund Natural Resources Defense Council Sierra Club OPPOSITION : Agricultural Energy Consumers Association California Chamber of Commerce California Cotton Ginners Association California Cotton Growers Association California Council for Environmental and Economic Balance California Farm Bureau Federation California Independent Petroleum Association California League of Food Processors California Manufacturers and Technology SB 605 Page 10 Association California Poultry Federation Nisei Farmers League Western Agricultural Processors Association Western Growers Association Western States Petroleum Association