BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       AB 1496|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 1496
          Author:   Thurmond (D), et al.
          Amended:  9/2/15 in Senate
          Vote:     21  

           SENATE ENVIRONMENTAL QUALITY COMMITTEE:  5-1, 7/1/15
           AYES:  Wieckowski, Hill, Jackson, Leno, Pavley
           NOES:  Bates
           NO VOTE RECORDED:  Gaines

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 8/27/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           ASSEMBLY FLOOR:  57-18, 6/2/15 - See last page for vote

           SUBJECT:   Methane emissions


          SOURCE:    Clean Power Campaign

          DIGEST:   This bill requires the California Air Resources Board  
          (ARB) to 1) monitor high-emission methane hot-spots in the  
          state, 2) consult with specified entities to gather information  
          for purposes of carrying out life-cycle GHG emissions analyses  
          of natural gas imports, 3) update relevant policies and programs  
          based on those updated life-cycle analyses, and 4) review  
          scientific information on atmospheric reactivity of methane as a  
          precursor to the formation of photochemical oxidants.

          Senate Floor Amendments of 9/2/15 specify that ARB is  
          authorized, and not required, to evaluate whether methane should  
          be reclassified as a contributor to the formation of air  
          pollution, upon completion of a review of the most recent  
          available scientific information.








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          ANALYSIS:
               
          Existing law:  

          1)Provides that under the California Global Warming Solutions  
            Act of 2006 (Health and Safety Code (HSC) §38500 et seq.):

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

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

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

          1)Requires the ARB to complete, by January 1, 2016, a  
            comprehensive strategy to reduce emissions of short-lived  
            climate pollutants (SLCPs) in the state.  (HSC §39730)

          This bill requires the 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, using the best available and cost-effective  
            scientific and technical methods.

          2)Consult with specified entities to gather or acquire the  
            necessary information for the purpose of carrying out a  
            life-cycle GHG emissions analysis of natural gas produced and  
            imported into the state using the best available and  
            cost-effective scientific and technical methods.

          3)Update relevant policies and programs to incorporate the  
            updated life-cycle GHG emissions analysis of natural gas  








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            produced and imported into the state.

          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 authorizes ARB, upon  
            completion of that review, to 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 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.  SLCPs, including methane,  
            are responsible for 30-40% of global warming to date. 

          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 the 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 the ARB's emission inventory.








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            SB 605 (Lara, Chapter 523, Statutes of 2014) directs the ARB  
            to develop a comprehensive SLCP strategy by January 1, 2016.   
            In developing the strategy, the 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, the ARB released a SLCP  
            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 several steps as necessary to significantly reduce  
            methane emissions in the state, including a) minimizing  
            fugitive methane emissions from all infrastructure and  
            equipment, b) effectively eliminate disposal of organic  
            materials at landfills, c) significantly reduce methane  
            emissions from dairies, and d) maximizing 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."

          3)AB 32 and methane.  The 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.

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









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            Mandatory GHG reporting.  AB 32 requires the 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, the 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.  

            Cap-and-trade program.  Pursuant to AB 32, the 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, the 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. 

            Low Carbon Fuel Standard (LCFS).  Pursuant to their authority  
            under AB 32, the 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  








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            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.

          4)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 the ARB, to open a  
            proceeding to adopt rules and procedures that minimize natural  
            gas leaks from PUC-regulated gas pipeline facilities.  SB 1371  
            also requires the rules and procedures include procedures 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 the ARB's mandatory GHG emission reporting.   


          5)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 SLCP.

            Under the federal Clean Air Act, the US EPA established  
            National Ambient Air Quality Standards 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.  The 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  








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            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, the ARB's SLCP 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 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.  

          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."

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No

          According to the Senate Appropriations Committee:








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           Ongoing annual staffing costs of $350,000 and a $700,000  
            contract with the Jet Propulsion Lab to the Cost of  
            Implementation Account (special) to identify and monitor  
            high-emission methane hot spots.

           Ongoing annual staffing costs of $350,000 and a $150,000  
            contract to the Cost of Implementation Account (special) to  
            conduct a life-cycle GHG emission analysis of natural gas  
            produced in and imported into the state.


          SUPPORT:   (Verified9/3/15)


          Clean Power Campaign (source)
          Azul
          Californians Against Waste
          California League of Conservation Voters 
          Clean Water Action
          Coalition for Clean Air
          Environment California
          Environmental Working Group
          Natural Resources Defense Council
          Sierra Club California
          West Marin Environmental Action Committee


          OPPOSITION:   (Verified9/3/15)


          Agricultural Council of California
          Association of California Egg Farmers
          California Chamber of Commerce
          California Dairies, Inc.
          California Farm Bureau Federation
          California Grain and Feed Association
          California Independent Petroleum Association
          California Manufacturers and Technology Association
          Independent Energy Producers Association
          Milk Producers Council
          Pacific Egg and Poultry Association








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          Western United Dairymen


          ARGUMENTS IN SUPPORT:     Supporters state that methane is a  
          potent GHG with 20 to 30 times the warming power of CO2 over a  
          100-year period.  Supporters argue that despite the fact that  
          ARB has recognized the GHG potential of SLCP and the importance  
          of reducing methane, methane has been overlooked in the state's  
          GHG reduction policies to date.  Supporters also state that  
          methane helps create ozone, which impacts local air quality and  
          community health.  


          ARGUMENTS IN OPPOSITION:     The California Chamber of Commerce,  
          the California Farm Bureau Federation, the California  
          Manufacturers and Technology Association, and the California  
          Independent Petroleum Association state that they are in  
          opposition because AB 1496 is duplicative, as ARB is already  
          conducting a number of the research efforts identified in this  
          bill, and because AB 1496 presupposes the outcome of a  
          recommended study required by this bill by specifying the  
          conclusion that should be assessed.

          ASSEMBLY FLOOR:  57-18, 6/2/15
          AYES:  Alejo, Baker, Bloom, Bonilla, Bonta, Brown, Burke,  
            Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh,  
            Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia,  
            Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger  
            Hernández, Holden, Irwin, Jones-Sawyer, Lackey, Levine, Lopez,  
            Low, Maienschein, McCarty, Medina, Mullin, Nazarian,  
            Obernolte, O'Donnell, Perea, Quirk, Rendon, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber,  
            Williams, Wood, Atkins
          NOES:  Achadjian, Travis Allen, Bigelow, Brough, Beth Gaines,  
            Gallagher, Harper, Jones, Kim, Linder, Mathis, Melendez,  
            Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
          NO VOTE RECORDED:  Chang, Chávez, Dahle, Grove, Mayes

          Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108
          9/3/15 14:37:41










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