BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1288 (Atkins) - California Global Warming Solutions Act of
2006: regulations
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|Version: February 27, 2015 |Policy Vote: E.Q. 5 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1288 would explicitly allow the Air Resources Board
(ARB) to continue using market-based regulations to reduce
greenhouse gas (GHG) emissions beyond 2020.
Fiscal
Impact:
Potential ongoing costs of $6.5 million annually beginning in
2020 from the Cost of Implementation Account (special) for the
ARB to continue to administer the Cap-and-Trade program beyond
2020.
Potential ongoing costs in the low millions of dollars to the
Cost of Implementation Account (special) for the contract with
the Western Climate Initiative, Inc. to support the
cap-and-trade auctions.
Potential ongoing auction revenues in the billions of dollars
to the GHG Reduction Fund (special)
AB 1288 (Atkins) Page 1 of
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Background: The California Global Warming Solutions Act of 2006 (referred
to as AB 32, HSC §38500 et seq.) requires the California Air
Resources Board (ARB) to determine the 1990 statewide greenhouse
gas (GHG) emissions level, to approve a statewide GHG emissions
limit equivalent to that level that will be achieved by 2020,
and to adopt GHG emissions reductions measures by regulation.
ARB is also authorized to adopt a system of market-based
declining annual aggregate emission limits for sources or
categories of sources that emit GHGs, applicable from January 1,
2012, to December 31, 2020, inclusive. This program is known as
the cap-and-trade program (HSC §38562).
AB 32 specifies that the statewide GHG emissions limit remains
in effect unless otherwise amended or repealed and that it is
the Legislature's intent that the emissions limit be used to
maintain and continue in GHG emissions reductions beyond 2020.
Proposed Law:
This bill would delete the specification that the
cap-and-trade program regulations are to be applicable from
January 1, 2012 to December 31, 2020.
Related
Legislation: SB 32 (Pavley) would require the ARB to approve a
GHG emission limit that is equivalent to 80% below the 1990
level to be achieved by 2050. SB 32 is awaiting consideration by
the Assembly Appropriations Committee.
Staff
Comments: While existing law clearly allows the AB 32 GHG
emissions limits to remain in effect beyond 2020, the language
in HSC §38562 is unclear on whether the cap-and-trade program
can exist past 2020. This bill would explicitly give ARB the
authority to continue the cap-and-trade program.
Staff notes that ARB in 2014-15 had approximately $6.5 million
in personnel and operations costs to run the cap-and-trade
program. Additionally, the state contracts with the Western
Climate Initiative, Inc. (WCI) to administer the compliance
tracking system, the auction platform, financial services
necessary to support the auction, and market monitoring. The WCI
contract was $4 million total for 2014 and 2015. By clarifying
AB 1288 (Atkins) Page 2 of
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ARB's authority to run the cap-and-trade program past 2020, this
bill would make these costs permanent.
The assured continuance of the cap-and-trade program also will
lead to future revenues to the GGRF. There is a high degree of
uncertainty regarding future revenues; however, as a reference
point, in this year's May Revision, the administration assumed
$1.35 billion in auction revenues in FY 2014-15 and $2 billion
in FY 2015-16. These revenues are deposited into the Greenhouse
Gas Reduction Fund and must be spent in to reduce GHG emissions
consistent with AB 32.
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