BILL ANALYSIS Ó SB 32 Page 1 Date of Hearing: July 13, 2015 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair SB 32 (Pavley) - As Amended June 1, 2015 SENATE VOTE: 24-15 SUBJECT: California Global Warming Solutions Act of 2006: emissions limit. SUMMARY: Requires the Air Resources Board (ARB) to approve statewide greenhouse gas (GHG) emissions limits equivalent to 40% below the 1990 level by 2030 and 80% below the 1990 level by 2050. EXISTING LAW: 1)Requires ARB, pursuant to California Global Warming Solutions Act of 2006 (AB 32), to adopt a statewide GHG emissions limit equivalent to the 1990 level by 2020 and adopt 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, SB 32 Page 2 2020, to comply with GHG reduction regulations, once specified conditions are met. Pursuant to this authority, 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 CO2 equivalent per year, as well as distributors of fuels, including gasoline, diesel and natural gas. THIS BILL: 1)Requires ARB to approve, based on the best available scientific, technological, and economic assessments, the following statewide limits on GHG emissions, including short-lived climate pollutants: a) 40% below the 1990 level by 2030. b) 80% below the 1990 level by 2050. 2)Authorizes ARB to approve an interim GHG emissions target to be achieved by 2040. 3)States the intent of the Legislature for the Legislature and appropriate agencies to adopt complementary policies that ensure the long-term emissions reductions adopted pursuant to the 2030 and 2050 limits advance all of the following: a) Job growth and local economic benefits in California. b) Public health benefits for California residents, particularly in disadvantaged communities. SB 32 Page 3 c) Innovation in technology and energy, water, and resource management practices. d) Regional and international collaboration to adopt similar GHG emissions reduction policies. FISCAL EFFECT: According to the Senate Appropriations Committee, minor and absorbable costs to the Cost of Implementation Account to ARB to set the 2050 target and unknown annual costs, at least in the hundreds of millions of dollars, from various special funds for additional programs to achieve the required emission reductions. COMMENTS: 1)Background. The 5th assessment report from the Intergovernmental Panel on Climate Change (IPCC) notes that atmospheric concentrations of global warming pollutants have risen to levels unseen in the past 800,000 years. Carbon dioxide concentrations have increased by 40% since pre-industrial times. There is broad scientific consensus that these global GHG emission increases are leading to higher air and water temperatures as well as rising sea levels. Sea level is expected to rise 17 to 66 inches by 2100, and the frequency of extreme events such as heat waves, wildfires, floods, and droughts is expected to increase. Pursuant to AB 32, ARB approved the first Scoping Plan in 2008. The Scoping Plan outlined a suite of measures aimed at SB 32 Page 4 achieving 1990-level emissions, a reduction of 80 million metric tons of CO2 (MMT CO2e). Average emission data in the Scoping Plan reveal that transportation accounts for almost 40% of statewide GHG emissions, and electricity and commercial and residential energy sector account for over 30% of statewide GHG emissions. The industrial sector, including refineries, oil and gas production, cement plants, and food processors, was shown to contribute 20% of California's total GHG emissions. The 2008 Scoping Plan recommended that reducing GHG emissions from the wide variety of sources that make up the state's emissions profile could best be accomplished through a cap-and-trade program along with a mix of other strategies including a low carbon fuel standard (LCFS), light-duty vehicle GHG standards, expanding and strengthening existing energy efficiency programs, and building and appliance standards, a 33% Renewable Portfolio Standard (RPS), and regional transportation-related GHG targets. Pursuant to authority under AB 32, the ARB adopted a Low Carbon Fuel Standard in 2009, and a cap-and-trade program, approved on December 13, 2011. ARB approved an update to the Scoping Plan on May 22, 2014. The update describes policies, actions, and strategies in the energy, transportation, fuels, agriculture, waste, and natural lands sectors as a means to continue emissions reductions in each of these sectors. The update also asserts that California is on track to meet the near-term 2020 GHG limit and is well positioned to maintain and continue reductions beyond 2020 as required by AB 32. CO2 remains in the atmosphere for centuries, which makes it the most critical GHG to reduce in order to limit long-term climate change. However, climate pollutants including methane, hydrofluorocarbons (HFCs), and soot (black carbon), SB 32 Page 5 are relatively short-lived (anywhere from a few weeks to 15 years), but have much higher global warming potentials than CO2. New research suggests that aggressively reducing these short-lived climate pollutants in the short-term, compared to only cutting CO2 emissions, can do more to slow sea level rise and other climate change impacts in the near-term. SB 605 (Lara, Chapter 523, Statutes of 2014) requires the ARB to complete a comprehensive strategy to reduce emissions of short-lived climate pollutants by January 1, 2016. 2)Executive Orders. In 2005, Governor Schwarzenegger issued Executive Order S-3-05 and called for GHG emissions reductions to 1990 levels by 2020 and 80% below 1990 levels by 2050. On April 29, 2015, Governor Brown issued Executive Order B-30-15, which established an interim statewide GHG emission reduction target to reduce GHG emissions to 40% below 1990 levels by 2030, "in order to ensure California meets its target of reducing greenhouse gas emissions to 80 percent below 1990 levels by 2050." The EO also directed all state agencies with jurisdiction over sources of GHG emissions to implement measures, pursuant to statutory authority, to achieve reductions of GHG emissions to meet the 2030 and 2050 GHG emissions reductions targets. 3)Author's statement: SB 32 sets an enforceable greenhouse gas reduction target of 80 percent below 1990 levels by 2050, the level identified by the international scientific community as necessary to stave off the worst effects of climate change on California's health and safety. The target is guided by science, but this bill provides the flexibility inherent in the existing AB 32 framework to adjust pathways to the goal along the way based on changing technological and economic conditions, and ongoing evaluations of policy efficacy. The legislation also identifies goals to ensure that SB 32 Page 6 greenhouse gas reductions advance job creation; public health improvement, especially in disadvantaged communities; innovation; and policy collaboration beyond our borders. To ensure that the state accomplishes our 2050 target through the most cost-effective pathway, SB 32 incorporates the Governor's midterm target of reducing climate pollution to 40 percent below 1990 levels by 2030. By simply amending the existing AB 32 framework without any major mechanical changes to the regulatory implementation process, SB32 ensures that the policy tools currently being utilized to achieve the existing 2020 greenhouse gas target remain available for the achievement of targets beyond 2020 - including, but not limited to, energy efficiency requirements for buildings and appliances, tailpipe emissions standards for mobile sources, power sector renewable portfolio and emissions performance standards, sustainable land use policies, fuel-related emissions standards, and market based mechanisms - to maximize the effectiveness of our climate policies overall. 4)What about-cap and-trade? In addition to requiring ARB to approve 2030 and 2050 statewide GHG emissions limits, this bill makes conforming changes to other sections of AB 32 that refer to the 2020 limit to reflect the commitment to continue the AB 32 program beyond 2020. However, the bill does not extend the "market-based compliance mechanism" provision, under which ARB has adopted a cap-and-trade regulation applicable through 2020. The cap-and-trade regulation is a key element in the regulatory program to achieve the 2020 limit and, through the auction of emissions allowances, produces revenues that are invested in programs to produce additional GHG emission reductions. SB 32 Page 7 5)When will the 2030 and 2050 limits be adopted? Unlike AB 32, which required ARB to approve the 2020 limit one year after the bill was enacted, this bill provides no deadline for ARB to approve the 2030 and 2050 limits. Because the 1990 level has already been determined by ARB and this bill prescribes the reduction percentages, there is little question about what the limits will be. The main question is when will ARB approve them? 6)Where will the emission reductions come from? The author and the committee may wish to consider amending this bill to require ARB to report annually regarding the amounts, sources and locations of GHG reductions achieved toward the statewide limits. 7)Related legislation. AB 1288 (Atkins), which is pending in the Senate Environmental Quality Committee, eliminates the December 31, 2020 limit on applicability of a market-based compliance mechanism under AB 32. REGISTERED SUPPORT / OPPOSITION: Support 350 Bay Area 350 Sacramento Access to Independence SB 32 Page 8 Added Edge Advanced Energy Economy (AEE) African American Farmers American Academy of Pediatrics American Cancer Society Cancer Action Network, California American College of Physicians, California Service Chapter American Farmland Trust American Heart Association American Lung Association in California American Stroke Association Annie's Apricus Asthma Coalition of Log Angeles County SB 32 Page 9 Audubon California Autodesk Azul Bagito Bay Area Air Quality Management District Baz Allergy, Asthma & Sinus Center Berkeley City Council Big Sur Land Trust Biodico Sustainable Biorefineries Bioenergy Association of California Biosynthetic Technologies Blue Sky Biochar Bonnie J. Adario Lung Cancer Foundation SB 32 Page 10 Breathe California Building Doctors Business for Innovative Climate & Energy Policy C&C Development Co. CALSTART California Bicycle Coalition California Biodiesel Alliance California Black Health Network California Catholic Conference California Climate and Agriculture Network California Conference of Directors of Environmental Health California Energy Efficiency Industry Council California Energy Storage Alliance SB 32 Page 11 California Equity Leaders Network California Green Business Network California Interfaith Power & Light California League of Conservation Voters California Municipal Utilities Association California Nurses Association Californians Against Waste California Pan Ethnic Health Network California Public Health Association California Ski Industry Association California Thoracic Society California Transit Association California Voices for Progress SB 32 Page 12 California Wind Energy Association CalTrout Catholic Charities, Diocese of Stockton Center for Biological Diversity Center for Climate Change and Health Center for Climate Change and Health; Public Health Institute Center for Climate Protection Central California Asthma Collaborative Ceres ChargePoint Circulate San Diego City and County of San Francisco City Heights Community Development Corporation SB 32 Page 13 City of Agoura Hills, Mayor Weber City of Calabasas, Mayor, Lucy Martin City of Lancaster, Mayor, Rex Parris City of Oxnard City of Santa Rosa City of Santa Monica, Mayor, Kevin McKeown City of Simi Valley, Mayor Huber City of Thousand Oaks City of West Hollywood, Mayor Horvath Clean Power Campaign Clean Power Finance Clean Tech San Diego Clean Water Action SB 32 Page 14 Cleveland National Forest Foundation Climate Action Reserve Climate Parents Climate Ready Solutions Climate Resolve Coalition for Clean Air Coastal Environmental Right Foundation Communitas Financial Planning Communications Workers of America, District 9, AFL-CIO Consumers Union County of Los Angeles, Public Health County of Los Angeles, Supervisor Kuehl County of Los Angeles, Supervisor Ridley-Thomas SB 32 Page 15 County of Los Angeles, Supervisor Solis County of Santa Barbara, Board of Supervisors Covanta Dignity Health Distance Learning Consulting Doctors for Climate Change Eagle Creek eBay Ecogate Endangered Habitats League Environment California Environmental Defense Action Fund (EDAF) Environmental Defense Fund SB 32 Page 16 Environmental Entrepreneurs EtaGen Friends Committee on Legislation of California Friends of the River Gap, Inc. Grand Boulevard Initiative Greenbelt Alliance Green Education, Inc. Harvest Power California Health Care Without Harm Health Officers Association of California House Kombucha Humane Society of the United States SB 32 Page 17 Klean Kanteen Land Trust of Santa Cruz County Large Scale Solar Association League of Women Voters of California League of Women Voters of Orange Coast Levy Strauss & Co. Liberty Hill Foundation Los Angeles Business Council MAAC Marin Agricultural Land Trust Marin Clean Energy Medical Advocates for Healthy Air Mercury Press International SB 32 Page 18 Moms Clean Air Force Mountains Recreation and Conservation Authority Move LA National Parks Conservation Association Natural Resources Defense Council Nature Conservancy Nextgen Climate North Face, The Pacific Forest Trust Patagonia, Inc. Patagonia Works Peninsula Open Space Trust Physicians for Social Responsibility, Los Angeles SB 32 Page 19 Physicians for Social Responsibility, San Francisco Planning and Conservation League Power2Sustain Progressive Asset Management Puma Springs Vineyards Public Health Institute Purple Wine & Spirits Quest RC Cubed Regional Asthma Management and Prevention Releaf San Diego 350 San Diego Housing Federation SB 32 Page 20 San Francisco Asthma Task Force Santa Clara County Medical Society Santa Clara Valley Open Space Authority Santa Clarita Organization for Planning and the Environment Sequoia Riverlands Trust Sidel Systems USA Sierra Business Council Sierra Club Silicon Valley Leadership Group SmartWool Sonoma County Agricultural Preservation and Open Space District Sonoma County Asthma Coalition Sonoma County Water Agency SB 32 Page 21 South Coast Air Quality Management District Southern California Public Power Authority Southwest Wetlands StopWaste Sustainable North Bay Symantec Corporation Tamalpais Nature Works TransForm TreePeople Trust for Public Lands U.S. Green Building Council, California Union of Concerned Scientists United States Representative, Adam Schiff SB 32 Page 22 United States Senator, Barbara Boxer Ventura County Board of Supervisors Voices for Progress Wakeland Housing and Development Corporation Waterplanet Alliance West Marin Environmental Action Committee 31 individuals Opposition African American Farmers of California Agricultural Council of California American Alliance Authority & Compliance American Alliance Drug Testing SB 32 Page 23 American Forest and Paper Association American Wood Council Associated Builders and Contractors of California Building Owners and Managers Association Brea Chamber of Commerce California Agricultural Aircraft Association California Association of Nurseries and Garden Centers California Building Industry Association California Business Properties Association California Cattlemen's Association California Chamber of Commerce California Concrete Pumpers Alliance California Construction Trucking Association SB 32 Page 24 California Cotton Ginners Association California Cotton Growers Association California Dairies Inc. California Farm Bureau Association California Fresh Fruit Association California Independent Oil Marketers Association California Independent Petroleum Association California League of Food Processors California Manufacturers & Technology Association California Taxpayers Association California Trucking Association Camarillo Chamber of Commerce Chambers of Commerce Alliance of Ventura and Santa Barbara Counties SB 32 Page 25 Coalition of American Latino Truckers Family Business Association Fullerton Chamber of Commerce Greater Bakersfield Chamber of Commerce Greater Fresno Chamber of Commerce Heavy-Haul Conference Inland Empire Economic Partnership International Council of Shopping Centers Irvine Chamber of Commerce Kern County Board of Supervisors Los Angeles County Business Federation NAIOP - Commercial Real Estate Development Association National Federation of Independent Business SB 32 Page 26 National Hmong American Farmers Nisei Farmers League Orange County Business Council Oxnard Chamber of Commerce Rancho Cordova Chamber of Commerce Redondo Beach Chamber of Commerce San Jose Silicon Valley Chamber of Commerce Santa Maria Valley Chamber of Commerce and Visitor Bureau Simi Valley Chamber of Commerce South Bay Association of Chambers of Commerce Southwest California Legislative Council Torrance Chamber of Commerce Valley Industry and Commerce Association SB 32 Page 27 Western Agricultural Processors Association Western Growers Association Western Plant Health Association Western States Petroleum Association Western Trucking Alliance Analysis Prepared by:Lawrence Lingbloom / NAT. 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