BILL ANALYSIS Ó
AB 23
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Date of Hearing: March 23, 2015
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 23
(Patterson) - As Introduced December 1, 2014
SUBJECT: California Global Warming Solutions Act of 2006:
market-based compliance mechanisms: exemption
SUMMARY: Exempts distributors of fuels, including gasoline,
diesel and natural gas, and any other entities that were not
covered on January 1, 2013, from the cap-and-trade regulation
adopted by the Air Resources Board (ARB).
EXISTING LAW, pursuant to the California Global Warming
Solutions Act (AB 32):
1)Requires ARB to adopt a statewide greenhouse gas (GHG)
emissions limit equivalent to 1990 levels by 2020 and to adopt
rules and 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, once
specified conditions are met. ARB has adopted a cap-and-trade
regulation which applies to regulated entities engaged in
stationary combustion, cement manufacturing, cogeneration,
petroleum refining, hydrogen production, aluminum production,
facility operators calcining carbonates, carbon dioxide (CO2)
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supplier or transfer recipient, electricity generation, glass
production, iron and steel production, lime production,
natural gas transmission and distribution, nitric acid
production, oil and gas extraction field operation, production
of industrial gases, pulp and paper production, soda ash
production, electricity deliverers, transportation fuel
deliverers, and natural gas deliverers. The cap-and-trade has
covered (i.e., imposed a compliance obligation on) large
industrial facilities and electricity generators emitting more
than 25,000 metric tons of CO2 equivalent per year since
January 1, 2013. Distributors of fuels, including gasoline,
diesel and natural gas, have been covered since January 1,
2015.
THIS BILL:
1)Limits the compliance obligation under cap-and-trade to those
entities covered since January 1, 2013, thereby excluding
fuels and any other sources of GHG emissions that may be added
in the future.
2)Defines "compliance obligation" as the quantity of GHG
emissions for which a person or entity is required to submit
GHG emissions allowances or offsets to ARB pursuant to a
market-based compliance mechanism.
3)Applies retroactively from January 1, 2015.
4)Includes related findings and declarations.
5)Includes an urgency clause.
FISCAL EFFECT: Unknown
COMMENTS:
1)Background. According to ARB, a total reduction of 80 million
metric tons (MMT), or 16% compared to business as usual, is
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necessary to achieve AB 32's 2020 statewide limit.
Approximately 78% of the reductions will be achieved through
identified direct regulations. ARB proposes to achieve the
balance of reductions necessary to meet the 2020 limit
(approximately 18 MMT) through the cap-and-trade regulation.
Transportation fuels are included in cap-and-trade beginning
January 1, 2015.
2)Transportation fuels are the biggest source of emissions.
According to ARB, transportation constitutes almost 40% of all
carbon pollution produced in California, by far the largest
contributor to GHG emissions. Transportation fuels also
produce 80% of smog-causing pollution and more than 95% of
fine particle pollution from diesel engines. Reducing
emissions from the transportation sector is critical to
achieving the 2020 GHG limit required by AB 32, as well as
meeting ambient air quality standards and reducing localized
health impacts.
3)If not cap-and-trade, what then? It should be noted that
cap-and-trade is viewed by economists and many regulated
businesses as the most efficient way to reduce GHG emissions.
This bill exempts fuels from cap-and-trade, but it does not
exempt fuels from AB 32 or ARB's general authority, nor does
it relax the GHG reduction obligation necessary to meet the
statewide 2020 limit.
If GHG emissions from transportation fuels are not addressed
through cap-and-trade, those emissions are likely to be
addressed through direct regulatory measures on fuel
distributors and/or consumers, or placing additional reduction
obligations on other sources of GHG emissions, both of which
are likely to be more costly. The likely effect of this bill
would be to increase regulatory and consumer costs associated
with achieving AB 32's goals, whether at the pump, through
utility bills, or other areas of the economy.
REGISTERED SUPPORT / OPPOSITION:
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Support
California Fresh Fruit Association
City of Clovis
City of Hanford
City of Sanger
George Runner, Board of Equalization 1st District
Greater Fresno Area Chamber of Commerce
Howard Jarvis Taxpayers Association
Johnson Air
KernTax
Madera County Board of Supervisors
National Federation of Independent Business
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National Petroleum
Resources for Independence Central Valley
Tulare County Farm Bureau
Valley Taxpayer's Coalition
Western Growers Association
19 individuals
Opposition
American Lung Association in California
California League of Conservation Voters
California Municipal Utilities Association
Catholic Charities, Diocese of Stockton
Climate Parents
Climate Resolve
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Consumers Union
Environmental Defense Fund
Natural Resources Defense Council
Nature Conservancy
TransForm
Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)
319-2092