BILL ANALYSIS                                                                                                                                                                                                    

                                                                      SB 32

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          32 (Pavley)

          As Amended  August 31, 2015

          Majority vote

          SENATE VOTE:  24-15

          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |Natural         |6-3  |Williams, Cristina    |Dahle, Hadley,      |
          |Resources       |     |Garcia, McCarty,      |Harper              |
          |                |     |Rendon, Mark Stone,   |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |Appropriations  |12-5 |Gomez, Bloom, Bonta,  |Bigelow, Chang,     |
          |                |     |Calderon, Nazarian,   |Gallagher, Jones,   |
          |                |     |Eggman, Eduardo       |Wagner              |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Rendon, Weber, |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |


                                                                      SB 32

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          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.  Prohibits ARB from implementing the next update of the  
          California Global Warming Solutions Act of 2006 (AB 32 (Nez),  
          Chapter 488, Statutes of 2006) Scoping Plan until ARB has taken  
          specified actions, including submitting the draft Scoping Plan  
          to the Legislature and waiting at least one year before adopting  
          the Scoping Plan.  Specifically, 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.


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             c)   Innovation in technology and energy, water, and resource  
               management practices.

             d)   Regional and international collaboration to adopt  
               similar GHG emissions reduction policies.

          4)Prohibits ARB from taking any action to implement the "next  
            update" of the AB 32 Scoping Plan unless ARB has:

             a)   Conducted an evaluation, with input from an independent  
               advisory committee, of the current and projected GHG  
               reduction actions other jurisdictions are taking, as well  
               as the cost-effectiveness of the various GHG reduction  
               strategies ARB has undertaken.

             b)   Submitted the draft Scoping Plan to the Joint  
               Legislative Budget Committee and appropriate policy  
               committees at least one year before adoption, and submitted  
               the final version at least 60 days before adoption.

          5)Requires the Legislature to hold at least one oversight  
            hearing on the draft and final Scoping Plans before adoption  
            by ARB.

          6)Authorizes the Legislature to act to modify, reject or delay  
            some or all of the Scoping Plan before its adoption.

          7)Requires ARB to submit an annual report including:

             a)   A list of regulatory policies that have been adopted and  


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               implemented by a state agency in furtherance of achieving  
               the GHG emissions limits adopted by ARB pursuant to AB 32.

             b)   The amounts, sources, and locations of GHG emissions  
               reductions achieved toward the statewide emissions limit.

          8)Requires ARB, in furtherance of approving statewide GHG  
            emissions limits, to consider historic efforts to reduce GHG  
            emissions and objectively seek, and account for,  
            cost-effective actions to reduce GHG emission across all  

          EXISTING LAW:

          1)Requires ARB, pursuant to 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,  
            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 carbon dioxide (CO2) equivalent per  
            year, as well as distributors of fuels, including gasoline,  
            diesel and natural gas.

          FISCAL EFFECT:  According to the Assembly Appropriations  


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          1)Unknown annual costs, at least in the hundreds of millions of  
            dollars, from various special funds for additional programs to  
            achieve the new required emissions reductions.
          2)Minor, absorbable costs for the ARB to set the 2030, 2040 and  
            2050 GHG targets (Cost of Implementation Account).


          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 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  


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          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%  
          Renewables 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), 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.  

          In 2005, Governor Schwarzenegger issued Executive Order (EO)  
          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  


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          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.

          According to the author:

               SB 32 sets an enforceable greenhouse gas reduction  
               target of 80% 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  
               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% below 1990 levels by 2030.

               By simply amending the existing AB 32 framework  


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               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.

          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.

          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, but it's unclear when ARB will  
          approve them.

          Analysis Prepared by:                                             


                                                                      SB 32

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                          Lawrence Lingbloom / NAT. RES. / (916) 319-2092