BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            AB 1496
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          |Author:    |Thurmond                                             |
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          |Version:   |5/6/2015               |Hearing      |7/1/2015        |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Rebecca Newhouse                                     |
          |           |                                                     |
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          SUBJECT:  Methane emissions.

            ANALYSIS:
          
          Existing law:  
          
          1) Under the California Global Warming Solutions Act of 2006  
             (Health and Safety Code (HSC) §38500 et seq.):

             a)    Defines methane, CO2, and other chemicals as a  
                greenhouse gas (GHG);

             b)    Requires the California Air Resources Board (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;

             c)    Requires ARB to adopt GHG emissions reductions measures  
                by regulation to achieve the 2020 GHG limit;

             d)    Requires ARB to adopt regulations to require the  
                reporting and verification of statewide GHGs.

          2) Requires ARB to complete, by January 1, 2016, a comprehensive  
             strategy to reduce emissions of short-lived climate  
             pollutants in the state. 

          3) Requires ARB to adopt state ambient air quality standards for  
             California in consideration of public health, safety, and  
             welfare, and requires that the standards relating to health  







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             effects shall be based upon the recommendations of the Office  
             of Environmental Health Hazard Assessment (OEHHA). (HSC  
             §39606)

          4) Requires local air districts to adopt and enforce rules to  
             achieve and maintain the state and federal ambient air  
             quality standards in all areas affected by emissions sources  
             under their jurisdiction. (HSC §40001)

          This bill requires ARB to do all of the following:

          1) Monitor and measure high-emission methane hot spots in the  
             state using the best available scientific and technical  
             methods, in consultation with local air districts that  
             monitor methane.

          2) Perform a life-cycle GHG analysis of natural gas produced and  
             imported into the state using the best available scientific  
             and technical methods.

          3) Update GHG emission factors for electric generation with  
             natural gas and the use of natural gas as a transportation  
             fuel. 

          4) Review the most recent available scientific data and reports  
             on atmospheric reactivity of methane as a precursor to the  
             formation of photochemical oxidants and evaluate whether  
             methane should be reclassified as a contributor to the  
             formation of air pollution.

            Background
          
          1) Methane and short-lived climate pollutants. Methane (or CH4)  
             is the principal component of natural gas and is also  
             produced biologically 
             under anaerobic conditions in ruminant animals, landfills and  
             waste handling. Methane is termed a short-lived climate  
             pollutant (SLCP), as it has a much shorter lifetime in the  
             atmosphere than CO2, but has a much higher global warming  
             potential.  According to the US Environmental Protection  
             Agency (US EPA), methane is 20-30 times more effective than  
             CO2 in trapping heat in the atmosphere over a 100-year  
             period.  SCLPs, including methane, are responsible for 30-40%  
             of global warming to date. 








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          2) Methane sources.  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.  According to ARB's updated  
             scoping plan, the state's largest anthropogenic  
             methane-producing sources are enteric fermentation  
             (eructation, or belching by animals), manure management,  
             landfills, natural gas transmission, and wastewater  
             treatment.  Methane emissions also come from  
             non-anthropogenic sources such as wetlands, oceans, and  
             forests.  Methane gas from oil and gas production and  
             distribution is a growing source of emissions in many  
             countries, including the United States, due to increased  
             exploration and use of natural gas for energy. 

             Fugitive methane.  A growing body of evidence suggests that  
             the US EPA has underestimated methane emissions nationwide,  
             possibly by as much as 50%.  Additionally, several recent  
             analyses of atmospheric measurements suggest that actual  
             methane emissions in the state may be 30 to 70% higher than  
             estimated in ARB's emission inventory.

             SB 605 (Lara, Chapter 523, Statutes of 2014) directs ARB to  
             develop a comprehensive short-lived climate pollutant  
             strategy by January 1, 2016.  In developing the strategy, ARB  
             is required to complete an inventory of sources and emissions  
             of SLCPs in the state based on available data, identify  
             research needs to address data gaps and existing and  
             potential new control measures to reduce emissions.  In May  
             of this year, ARB released a short-lived climate pollutant  
             concept paper.

             According to the concept paper, methane is the second largest  
             component of GHG emissions in California, and methane  
             emissions are on the rise.  The paper notes that California  
             "has taken important steps to reduce methane emissions from  
             all of its major sources, but more needs to be done to more  
             fully control methane emissions, especially from organic  
             waste streams going to landfills and at dairies."  The  
             concept paper identifies the following steps as necessary to  
             significantly reduce methane emissions in the state:

                       Minimize fugitive methane emissions from all  








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                  infrastructure and equipment;

                       Effectively eliminate disposal of organic  
                  materials at landfills;

                       Significantly reduce methane emissions from  
                  dairies;

                       Maximize resource recovery from wastewater  
                  treatment facilities.

             The concept paper also notes that, "coordinated research  
             efforts between ARB and the California Energy Commission to  
             refine emission estimates have led to the development of the  
             only subnational methane monitoring network in the world.  In  
             addition, researchers at ARB and at NASA's Jet Propulsion  
             Laboratory are currently collaborating to identify large 'hot  
             spot' methane sources in the San Joaquin Valley."

          1) AB 32 and methane.  ARB has broad authority to regulate  
             methane as a GHG under AB 32 and create programs and  
             implement measures to reduce GHGs in the state to achieve the  
             statewide 2020 GHG emissions goal.

             ARB has implemented several programs that target methane  
             emissions, or provide incentives for the use of renewably  
             generated methane.

             Mandatory GHG reporting: AB 32 requires ARB to monitor and  
             verify GHG emissions from electricity production and  
             manufacturing throughout the state, as well as suppliers of  
             fuel (including natural gas) and operators of natural gas  
             pipelines, if the amount of fuel combusted in the state is  
             over 10,000 metric tons of CO2 equivalents.  Fugitive GHG  
             emissions from landfills and emissions from agriculture are  
             exempt from the reporting requirement. 

             Methane from landfills: Effective June 17, 2010, ARB approved  
             a regulatory measure as an AB 32 discrete early action  
             measure that requires owners and operators of certain  
             uncontrolled municipal solid waste landfills to install gas  
             collection and control systems, and requires existing and  
             newly installed gas and control systems to operate in an  
             optimal manner.  








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             Cap-and-Trade Program.  Pursuant to AB 32, ARB adopted a  
             cap-and-trade program that places a "cap" on aggregate GHG  
             emissions from large GHG emitters, which are responsible for  
             approximately 85% of the state's GHG emissions.  The cap  
             declines over time, eventually reaching the target emission  
             level in 2020.  Large emitters must obtain compliance  
             instruments equal to their emissions in that period.   
             Compliance instruments include allowances and offsets, where  
             allowances are generated by the state in an amount equal to  
             the cap, and offsets result from emissions reductions  
             achieved in an uncapped sector and are quantified and  
             verified using an ARB approved compliance offset protocol.   
             Although GHG emissions, including methane, from landfills and  
             agricultural sources are not covered under the cap, ARB has  
             adopted offset protocols for five project types including  
             dairy digesters to capture fugitive methane emissions, and an  
             offset protocol for capturing would-be fugitive emissions of  
             methane from coal mines. 
              
             LCFS: Pursuant to their authority under AB 32, ARB adopted  
             the LCFS in 2009, which requires transportation fuel  
             suppliers in the state to meet certain average annual carbon  
             limitations.  The program ultimately requires a 10% reduction  
             in the carbon intensity of a particular fuel by 2020.  The  
             carbon intensity measures the net carbon emissions of the  
             entire life-cycle of the fuel, including carbon emitted  
             during production, refining, and transportation, and  
             conversion of the fuel to useable energy.  Fuel suppliers can  
             meet the standard by reducing the carbon intensity of their  
             fuels, or by purchasing credits from other suppliers of other  
             fuels that have carbon intensities below state requirements.   
             Methane created from organic feedstock, or biomethane,  
             already meets the 10% reduction requirement in 2020, the fuel  
             qualifies for credits under the program.

          2) Leaks from natural gas system. In an effort to address  
             systemic natural gas leaks from an aging infrastructure as  
             well as address climate impacts due to methane, SB 1371  
             (Leno, Chapter 525, Statutes of 2014) requires the Public  
             Utilities Commission (PUC), in consultation with ARB, to open  
             a proceeding to adopt rules and procedures that minimize  
             natural gas leaks from PUC-regulated gas pipeline facilities.  
              SB 1371 requires the rules and procedures include procedures  








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             for the development of metrics to quantify the volume of  
             emissions from leaking gas pipeline facilities, and for  
             evaluating and tracking leaks geographically and over time  
             that may be incorporated into ARB's mandatory GHG emission  
             reporting.  SB 1371 also requires, to the extent feasible,  
             the owner of each commission-regulated gas pipeline facility  
             that is an intrastate transmission or distribution line to  
             calculate and report to the commission and ARB a baseline  
             systemwide leak rate, along with any data and computer models  
             used in making that calculation.

          3) Ambient air quality standards, ozone, and methane. Smog is  
             formed from the reaction of oxides of nitrogen (NOx) with  
             volatile organic compounds (VOCs) to produce ground-level  
             ozone, or tropospheric ozone.  Ozone has a number of negative  
             health effects including irritated respiratory system,  
             reduced lung function, aggravated asthma and inflammation and  
             damage of the lining of the lung.  Active children are the  
             group at highest risk from ozone exposure. In addition to  
             negative public health impacts, ozone itself is a powerful  
             SCLP.

             Under the federal Clean Air Act, the US EPA established  
             National Ambient Air Quality Standards (NAAQS) that apply for  
             outdoor air throughout the country.  These standards exist  
             for several air pollutants due to their negative impact on  
             public health above specified concentrations, including  
             ozone.  ARB has also adopted state ambient air quality  
             standards for various air pollutants that are, in some cases,  
             more stringent than federal standards. Local air districts  
             are required to adopt and enforce rules to achieve and  
             maintain the state and federal ambient air quality standards.  


             To comply with the standards for ozone, local air districts  
             have regulations limiting emissions of NOx and VOCs for  
             stationary sources located in their jurisdiction.  These  
             local air district requirements have cut in half the  
             emissions of VOCs and NOX, and significantly reduced ozone  
             concentrations throughout California.  However, ARB's  
             short-lived climate pollutant concept paper notes that,  
             "because the regulatory definition of VOCs does not include  
             methane due to its relatively low reactivity and lack of  
             impact on regional ozone production, methane emissions have  








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             not fallen at similar rates as VOCs over the past decades."

             The concept paper also states that although methane is not a  
             large contributor to regional ground-level ozone levels,  
             regional methane emissions which are fairly well-mixed in the  
             atmosphere contribute to the global abundance of methane,  
             which in turn contributes to global background levels of  
             ozone.  About two-thirds of the rise in global levels of  
             tropospheric background ozone can be attributed to methane  
             emissions.   

            Comments
          
          1) Purpose of Bill.  According to the author, "California is an  
             established leader in cutting edge climate policy.  From the  
             renewable portfolio standard to the first-of-its-kind  
             cap-and-trade carbon reduction system, California has  
             pioneered policies to reduce human and industrial impacts on  
             the climate and our environment.  However, the state has not  
             yet established comprehensive policies or monitoring systems  
             to regulate methane emissions, a volatile short-lived climate  
             pollutant, the emissions rates of which continue to grow  
             unchecked.  Without extra effort to reduce methane and other  
             short-lived climate pollutants, our ambitious goals and  
             measures to curb carbon dioxide emissions may not be  
             sufficient to slow the progress of climate change."

          2) In-state versus out-of-state leaks.  The bill attempts to  
             address several concerns with methane emissions, including  
             data gaps concerning hot spot sources in the state, and the  
             accounting of GHG emissions from natural gas coming in from  
             out-of-state.  The latter concern arises from recent evidence  
             of systemic underestimates of natural gas emissions  
             nationwide due to leaks in natural gas system infrastructure.  
              Since California imports 90% of its natural gas, more  
             accurate life-cycle GHG emission estimates are an important  
             step towards better understanding the climate impacts of  
             these imports.  However, these updated analyses of life-cycle  
             emissions may be somewhat limited in the data or information  
             available, as many of these leaks occur outside the state's  
             jurisdiction.  

             Additionally, pursuant to AB 1257 (Bocanegra, Chapter 749,  
             Statutes of 2013) the CEC is working on an evaluation of  








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             life-cycle GHG emissions from the production, transportation,  
             and use of natural gas as a component of their report on  
             maximizing benefits obtained from natural gas as an energy  
             source.

             In order to account for the fact that ARB may need to  
             consult, or work with, various entities to obtain the  
             necessary information, the bill should be amended to require  
             ARB to consult with federal and state agencies, independent  
             scientific experts, and any other appropriate entities, to  
             gather or acquire the necessary information for purpose of  
             carrying out a life-cycle greenhouse gas emission analysis of  
             natural gas produced and imported into the state.

          3) Emission factors?  The bill requires ARB to update GHG  
             emission factors for electric generation with natural gas.   
             It is unclear what "emission factors" refers to in regard to  
             electric generation, and which subset of ARB regulations and  
             programs this might impact.  

             Instead of referencing emission factors, an amendment is  
             needed to require ARB to update relevant policies and  
             programs based on updated life-cycle analysis information for  
             imported natural gas and in-state monitoring of methane  
             hot-spots required by AB 1496. 

          4) Methane as a contributor to air pollution. Methane is not  
             regulated by ARB and local air districts as a contributor to  
             regional ozone levels, since they note that methane reacts  
             relatively slowly and is easily dispersed, and is thought to  
             contribute primarily to background levels of ozone, instead  
             of regional ground-level ozone.  This bill would require that  
             ARB review, in consultation with independent scientific  
             experts, recent data on the atmospheric reactivity of methane  
             as a precursor to the formation of photochemical oxidants and  
             evaluate whether methane should be reclassified as a  
             contributor to the formation of air pollution.

             As ARB has cited studies linking methane emissions to  
             background tropospheric ozone levels in their recent reports,  
             it is likely that the result of a review of current  
             scientific information, as required in this bill, will  
             reaffirm that finding.  However, an evaluation of recent data  
             on methane atmospheric reactivity may also provide other  








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             insights or a more comprehensive understanding of how methane  
             emissions throughout the state and elsewhere affect ozone  
             levels in California. 

          5) Aligning with SB 605.  As noted in the background, SB 605  
             (Lara) requires ARB to complete a short-lived climate  
             pollutant strategy by January 1, 2016.  This bill gives ARB  
             added authority to monitor and measure methane hot-spots  
             within the state, thereby providing the state with more  
             accurate information regarding significant methane sources.   
             Better information regarding what sources are acting as  
             hot-spots and information on where those sources are located  
             as a result of this bill may complement efforts put forth in  
             the short-lived climate strategy to prioritize, target and  
             reduce those emissions.
            
          Related/Prior Legislation

          SB 605 (Lara and Pavley, Chapter 523, Statutes of 2014) requires  
          ARB to develop a short-lived climate pollutant strategy by  
          January 1, 2016. 
            
          SB 1371 (Leno, Chapter 525, Statutes of 2014) requires PUC to  
          open a proceeding to adopt rules and procedures that minimize  
          natural gas leaks from PUC-regulated gas pipeline facilities,  
          with the goal of reducing GHG emissions.

          AB 1257 (Bocanegra, Chapter 749, Statutes of 2013) requires CEC,  
          beginning November 2015, to report on strategies to maximize  
          benefits from natural gas as an energy source, and include an  
          evaluation of the benefits and economic cost of proposed  
          strategies, including evaluating the life-cycle greenhouse gas  
          emissions from production, transportation, and use of natural  
          gas, in consultation with ARB.

            SOURCE:          Clean Power Campaign
           
           SUPPORT:               

          Californians Against Waste
          California League of Conservation Voters 
          Coalition for Clean Air
          West Marin Environmental Action Committee









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            OPPOSITION:    

          Independent Energy Producers Association
           
           ARGUMENTS IN  
          SUPPORT:    Supporters state that methane is a potent 
          greenhouse gas with 20 to 30 times the warming power of carbon  
                         dioxide over a 
          100-year period. Supporters argue that despite the fact that ARB  
                         has recognized 
          the greenhouse gas potential of short-lived climate pollutants  
                         and the importance of 
          reducing methane, methane has been overlooked in the state's  
                         greenhouse gas 
          reduction policies to date. Supporters also state that methane  
                         helps create ozone, 
          which impacts local air quality and community health.  
           
           ARGUMENTS IN  
          OPPOSITION:    The Independent Energy Producers
          Association (IEPA) states that it is unclear what "emission  
          factors" will be updated
          as a result of the life-cycle analysis required by the bill, and  
                         that IEPA has 
          concerns with any attempt to create new emission factors or  
                         standards by which 
          natural gas generating facilities will have to comply.  IEPA is  
                         concerned that AB 
          1496 presupposes outcomes from natural gas electric generators  
                         before the 
          research has been conducted, and that multiple sectors of the  
                         economy, not just 
          electric generation, are responsible for methane emissions.

                                          
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