BILL ANALYSIS Ó AB 1288 Page 1 ASSEMBLY THIRD READING AB 1288 (Atkins) As Introduced February 27, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+--------------------+----------------------| |Natural |6-3 |Williams, Cristina |Dahle, Hadley, Harper | |Resources | |Garcia, McCarty, | | | | |Rendon, Mark Stone, | | | | |Wood | | | | | | | |----------------+------+--------------------+----------------------| |Appropriations |12-5 |Gomez, Bonta, |Bigelow, Chang, | | | |Calderon, Daly, |Gallagher, Jones, | | | |Eggman, |Wagner | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | | | |Quirk, Rendon, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Eliminates the December 31, 2020, limit on applicability AB 1288 Page 2 of a market-based mechanism to reduce greenhouse gas (GHG) emissions that may be adopted by the Air Resources Board (ARB). EXISTING LAW, pursuant to the California Global Warming Solutions Act [AB 32 (Núñez), Chapter 488, Statutes of 2006]: 1)Requires ARB to adopt a statewide 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, applicable from January 1, 2012, to December 31, 2020, to comply with GHG reduction regulations, once specified conditions are met. ARB has adopted a cap-and-trade regulation which applies to large industrial facilities and electricity generators emitting more than 25,000 metric tons of carbon dioxide (CO2) equivalent per year, as well as distributors of fuels, including gasoline, diesel and natural gas. FISCAL EFFECT: According to the Assembly Appropriations Committee, minor, absorbable costs for ARB to continue its cap-and-trade program beyond 2020. COMMENTS: According to ARB, a total reduction of 80 million metric tons (MMT), or 16% compared to business as usual, is 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. AB 1288 Page 3 The cap and trade program was officially launched in 2013. The cap and trade program provides a mechanism for specific industry sectors with high GHG emissions to meet their GHG reduction requirements in a cost-effective manner. Through the program, an overall limit is placed on carbon emissions (the cap) and, in turn, regulated entities can acquire allowances through a variety of mechanisms including participating in carbon auctions to purchase allowances. Entities can use allowances to help meet their GHG reduction requirements or trade allowances to others if they are able to cost-effectively lower their own emissions (the trade). Each year the cap is reduced and only a specific amount of allowances are available for purchase. Funding generated from the sale of allowances is invested into programs that reduce GHG emissions. Currently, the cap and trade program developed by ARB only includes emissions reduction requirements through 2020. Analysis Prepared by: Lawrence Lingbloom / NAT. RES. / (916) 319-2092 FN: 0000725