BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: AB 1496 ----------------------------------------------------------------- |Author: |Thurmond | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |5/6/2015 |Hearing |7/1/2015 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Rebecca Newhouse | | | | ----------------------------------------------------------------- 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 AB 1496 (Thurmond) Page 2 of ? 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. AB 1496 (Thurmond) Page 3 of ? 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 AB 1496 (Thurmond) Page 4 of ? 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. AB 1496 (Thurmond) Page 5 of ? 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 AB 1496 (Thurmond) Page 6 of ? 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 AB 1496 (Thurmond) Page 7 of ? 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 AB 1496 (Thurmond) Page 8 of ? 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 AB 1496 (Thurmond) Page 9 of ? 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 AB 1496 (Thurmond) Page 10 of ? 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. -- END --