BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 21| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 21 Author: Perea (D), et al. Amended: 5/5/15 in Assembly Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 6/17/15 AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 73-0, 5/18/15 - See last page for vote SUBJECT: California Global Warming Solutions Act of 2006: scoping plan SOURCE: Author DIGEST: This bill revises the list of energy-related matters upon which the California Air Resources Board (ARB) must consult with other relevant state agencies when preparing the AB 32 Scoping Plan and adds cost-effectiveness considerations to AB 32 intent language. ANALYSIS: Existing law, under the California Global Warming Solutions Act of 2006 (Health and Safety Code §38500 et seq.): 1) Requires the ARB to determine the 1990 statewide greenhouse AB 21 Page 2 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. 2) Requires the ARB to prepare and approve a scoping plan by January 1, 2009, and once every five years thereafter, for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources or categories of sources of GHGs by 2020, and requires the ARB to consult with all state agencies with jurisdiction over sources of GHGs, including the Public Utilities Commission (PUC) and the State Energy Resources Conservation and Development Commission (CEC) on all elements of its plan that pertain to energy-related matters, as specified, to ensure that the ARB's GHG reduction activities are complementary, non-duplicative, and can be implemented in an efficient and cost-effective manner. This bill: 1)Specifies legislative intent that the ARB design emissions reduction measures meet the statewide emissions limit for GHG in a manner that cleans the environment in ways that are cost effective for California residents. 2)Requires the ARB to also consult with relevant state agencies, including the PUC and CEC, in developing all elements of its Scoping Plan that pertain to energy efficiency, and the facilitation of the electrification of the transportation sector. Background 1) Climate change. The fifth assessment report from the Intergovernmental Panel on Climate Change notes that atmospheric concentrations of global warming pollutants have risen to levels unseen in the past 800,000 years. Carbon dioxide concentrations have increased by 40% since pre-industrial times. There is broad scientific consensus that these global GHG emission increases are leading to AB 21 Page 3 higher air and water temperatures as well as rising sea levels. Sea level is expected to rise 17 to 66 inches by 2100, and the frequency of extreme events such as heat waves, wildfires, floods, and droughts is expected to increase. 2) The Global Warming Solutions Act of 2006. The Global Warming Solutions Act of 2006, AB 32 (Núńez and Pavley, Chapter 488, Statutes of 2006), requires the ARB to determine the 1990 statewide GHG emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020. AB 32 requires the ARB, among other things, to: Inventory GHG emissions in California. Implement regulations that achieve the maximum technologically feasible and cost-effective reduction of GHG emissions and impose fees for administrative implementation costs. Identify and adopt regulations for discrete early action measures. Prepare and approve a scoping plan to achieve the maximum technologically feasible and cost-effective reduction of GHG emissions by 2020, to be updated every five years. The statute also specifies that the ARB may include market-based compliance mechanisms in the AB 32 regulations, after considering the potential for direct, indirect, and cumulative emission impacts from these mechanisms. 1) AB 32 Scoping Plan. Pursuant to AB 32, the ARB approved the first Scoping Plan in 2008. The Scoping Plan outlined a suite of measures aimed at achieving 1990-level emissions, a reduction of 80 million metric tons of carbon dioxide equivalent (MMTCO2e). Average emission data in the Scoping Plan reveal that transportation accounts for almost 40% of statewide GHG emissions, and electricity and commercial and residential energy sector account for over 30% of statewide AB 21 Page 4 GHG emissions. The industrial sector, including refineries, oil and gas production, cement plants, and food processors, was shown to contribute 20% of California's total GHG emissions. The 2008 Scoping Plan recommended that reducing GHG emissions from the wide variety of sources that make up the state's emissions profile could best be accomplished through a cap-and-trade program along with a mix of other strategies including a low carbon fuel standard (LCFS), light-duty vehicle GHG standards, expanding and strengthening existing energy efficiency programs, and building and appliance standards, a 33% Renewable Portfolio Standard (RPS), and regional transportation-related GHG targets. Pursuant to authority under AB 32, the ARB adopted a Low Carbon Fuel Standard in 2009, and a cap-and-trade program, approved on December 13, 2011. Of the 80 MMTCO2e of GHG emissions reductions required to reach the 2020 AB 32 target, four programs are estimated by the ARB to result in the largest emissions reductions, including cap and trade, LCFS, energy efficiency measures and the RPS. Together, they are projected to result in 70% of the total emissions reductions necessary to meet the 2020 goal. The measures that make up the other 30% include the Advanced Clean Cars program, which sets GHG emissions standards for passenger vehicles, the Sustainable Communities and Climate Protection Act of 2008, created by SB 375 (Steinberg, Chapter 728, Statutes of 2008), which requires the ARB to set regional targets for GHG emissions reductions from passenger vehicle use, programs for the reduction of high global warming potential gasses, and others. Scoping Plan update. The ARB approved an update to the Scoping Plan on May 22, 2014. The update describes policies, actions, and strategies in the energy, transportation, fuels, agriculture, waste, and natural lands sectors as a means to continue emissions reductions in each of these sectors. The update also asserts that California is on track to meet the near-term 2020 GHG limit and is well positioned to maintain and continue reductions beyond 2020. AB 21 Page 5 2) Zero emission vehicles (ZEVs). The ARB's ZEV regulation requires that by 2025 about 15% of new car sales will be zero emission and requires automakers to produce and sell ZEVs, which include plug-in electric vehicles and fuel cell vehicles, in order to achieve this mandate. Automakers may also produce and sell vehicles that are partially zero emission or help transition to ZEVs in order to meet the mandate. The goal of the regulation is to ensure that there will be 1.5 million ZEVs on the road by 2025 in line with Governor Brown's Executive Order B-16-2012, which directed that the ARB and other state agencies establish benchmarks to achieve over 1.5 million ZEVs will be on California roads by 2025. 3) Executive Order. On April 29, 2015, Governor Brown issued Executive Order B-30-15, which established an interim statewide GHG emission reduction target to reduce GHG emissions to 40% below 1990 levels by 2030, "in order to ensure California meets its target of reducing greenhouse gas emissions to 80 percent below 1990 levels by 2050." The Order also directed all state agencies with jurisdiction over sources of GHG emissions to implement measures, pursuant to statutory authority, to achieve reductions of GHG emissions to meet the 2030 and 2050 GHG emissions reductions targets. Comments Purpose of Bill. According to the author, "In order to ensure the scoping plan asses all major aspects of energy-related matters including meeting long-term goals, it should include energy efficiency and the facilitation of the electrification of the transportation sector. There is a clear need and desire to increase energy efficiency and the amount of electric vehicles on our roads by California's leadership. For example, the Governor has announced ambitious policy goals of 1.5 million electric vehicles on California roads by 2025 and the need to double the efficiency in existing buildings by 2030. In order to achieve them, there must be a comprehensive strategy that is thoroughly analyzed to ensure those goals are met." Related/Prior Legislation AB 21 Page 6 SB 32 (Pavley, 2015) requires ARB to approve statewide GHG emissions limits of 40% below the 1990 GHG emissions level, to be achieved by 2030, and 80% below the 1990 GHG emissions level, to be achieved by 2040. SB 32 is currently in the Assembly Natural Resources Committee. SB 350 (De León, 2015) establishes the following goals to be achieved by 2030: 1) 50% reduction in petroleum use, 2) doubling of the energy efficiency in existing buildings, and 3) generating 50% of total retail sales of electricity from renewable resources. SB 350 is currently in the Assembly Utilities and Commerce Committee. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No SUPPORT: (Verified6/29/15) Agricultural Council of California California Asian Pacific Chamber of Commerce California Business Properties Association California Business Roundtable California Chamber of Commerce California Grocers Association California Independent Oil Marketers Association California Manufacturers and Technology Association California Retailers Association California Taxpayers Association Industrial Environmental Association Pacific Merchant Shipping Association Western States Petroleum Association OPPOSITION: (Verified6/29/15) None received ARGUMENTS IN SUPPORT: Supporters note that it is important AB 21 Page 7 that California consider the cost effectiveness of various emissions reduction measures, and they note that AB 21 adds an important criterion to help ensure that California investments in GHG emission reductions make the best use of the funding made available. ASSEMBLY FLOOR: 73-0, 5/18/15 AYES: Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Lackey, Levine, Linder, Low, Maienschein, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Travis Allen, Harper, Kim, Lopez, Mathis, Mayes, Melendez Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108 8/20/15 14:25:57 **** END ****