BILL ANALYSIS                                                                                                                                                                                                    



                                                                      SB 32


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          Date of Hearing:  June 27, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          SB  
          32 (Pavley) - As Amended June 10, 2016


          SENATE VOTE:  24-15


          SUBJECT:  California Global Warming Solutions Act of 2006:   
          emissions limit


          SUMMARY:  Requires the Air Resources Board (ARB) to approve a  
          statewide greenhouse gas (GHG) emissions limit equivalent to 40%  
          below the 1990 level by 2030.


          EXISTING LAW:   


          1)Requires ARB, pursuant to California Global Warming Solutions  
            Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], 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,  








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            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.



          3)Requires ARB, pursuant to SB 605 (Lara), Chapter 523, Statutes  
            of 2014, to complete, by January 1, 2016, a comprehensive  
            strategy to reduce emissions of short-lived climate pollutants  
            (SLCPs) in the state.

          THIS BILL:


          1)Requires ARB to approve in a public hearing, based on the best  
            available scientific, technological, and economic assessments,  
            a statewide limit on GHG emissions, including SLCPs, that is  
            equivalent to 40% below the 1990 level, to be achieved by  
            2030.





          2)Requires ARB to consider historic efforts to reduce GHG  
            emissions and objectively seek and account for cost-effective  
            actions to reduce GHG emissions across all sectors.





          3)Makes conforming amendments to other provisions of AB 32 to  
            reflect the addition of a 2030 target, except for the  
            market-based compliance mechanism authority.








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          4)States that the provisions of the bill are severable.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee (prior version):


          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).


          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  
            achieving 1990-level emissions, a reduction of 80 million  
            metric tons of CO2 (MMT CO2e).  Average emission data in the  








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            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),  
            are relatively short-lived (anywhere from a few weeks to 15  
            years), but have much higher global warming potentials than  








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            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)Post-2020 Executive Actions.  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 order 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 reduction targets.


            On June 17, ARB released a "2030 Target Scoping Plan Update  
            Concept Paper."  The paper includes four potential high-level  
            concepts for achieving a 40% GHG reduction by 2030.  Concept 1  
            calls for enhancements to existing, successful programs and  
            implementation of SB 350.  It suggests investment of funds  
            from the cap-and-trade program in areas that would further the  
            goals of AB 32.  Concept 2 extends the actions in Concept 1 to  
            specifically address the industrial sector through industrial  
            facility caps.  It would have no cap-and-trade regulation  
            post-2020 and no statewide limit on GHG emissions.  Concept 3  
            focuses on transportation-oriented policy aimed at ambitious  
            reductions in VMT and increased number of zero-emission and  
            plug-in vehicles by 2030.  It would not continue cap-and-trade  
            regulation post-2020.  Concept 4 includes the same  








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            complementary policies as Concept 1, but in lieu of a  
            cap-and-trade program, suggests a carbon tax applied at a  
            value predetermined by a method such as economic modeling or  
            the use of United States Environmental Protection Agency (US  
            EPA) social cost of carbon.  It is not clear if this scenario  
            would ultimately achieve the 2030 target because it would not  
            include a statewide limit on GHG emissions, and it is unknown  
            how the monies generated by a carbon tax would be used.  


          3)Author's statement:


               There are three major problems this bill is attempting to  
               solve: dangerous climate pollution, an uncertain investment  
               environment for clean energy businesses, and an inequitable  
               distribution of both the consequences of climate change and  
               the benefits of the state's policy to address it.


               First, it will bring the state's economy-wide climate  
               pollution targets in line with the mandates of the  
               scientific community, by increasing the limits the state  
               imposes on the biggest polluters.  Second, it will send a  
               clear signal to the market, that will allow for business  
               certainty and predictability, so that California companies  
               can continue building jobs for the clean energy economy.   
               And third, as part of a broader legislative package to  
               ensure that the state makes investments where they are  
               needed most, it serves as the foundation for the next  
               chapter of California's leadership in environmental  
               justice. 


               Executive Order S-03-05 established a target to reduce GHG  
               emissions, by 2050, to 80 percent below 1990 levels.  On  
               April 29, 2015, Governor Brown issued Executive Order  
               B-30-15 establishing a midterm target to reduce GHG  
               emissions, by 2030, to 40 percent below 1990 levels.   








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               Neither executive order has been codified into statute.   
               While ARB retains authority under existing law to adopt a  
               variety of regulatory mechanisms to reduce greenhouse gas  
               emissions and short lived climate pollutants beyond 2020,  
               codifying a 2030 pollution reduction target provides broad  
               market certainty to businesses investing in emissions  
               reductions technologies, practices and projects, which  
               often require multi-year planning horizons to finance  
               cost-effectively?Existing law would be strengthened by  
               providing additional certainty regarding the Legislature's  
               long term commitment to decoupling economic growth from  
               pollution.  


               In May 2014, the ARB identified a number of cost-effective,  
               technologically feasible pathways to emissions reductions  
               required by 2030, 2040 and 2050 to adequately protect the  
               health, safety and welfare of Californians from the  
               mounting costs of unabated climate change.  However, the  
               Legislature has not yet given direction to shape future  
               reduction strategies.


               Setting clear, achievable climate pollution reduction  
               targets in law and identifying priorities to guide  
               implementation will provide critical accountability, as  
               well as certainty to businesses investing for the long term  
               in California.


          4)What about cap-and-trade?  In addition to requiring ARB to  
            approve a statewide GHG emissions limit for 2030, 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  








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            auction of emissions allowances, produces revenues that are  
            invested in programs to produce additional GHG emission  
            reductions.


          5)Where will the emission reductions come from?  The author and  
            the committee may wish to consider restoring an amendment the  
            author agreed to when the committee approved this bill last  
            July to require ARB to report annually regarding the amounts,  
            sources, and locations of GHG reductions achieved toward the  
            statewide limits.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          350 Bay Area


          350 Sacramento


          Access to Independence


          Added Edge


          Advanced Energy Economy (AEE)


          African American Farmers










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          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


          Audubon California


          Autodesk


          Azul










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          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


          Bolsa Chica Land Trust


          Bonnie J. Adario Lung Cancer Foundation


          Breathe California


          Building Doctors










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          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


          California Equity Leaders Network


          California Green Business Network










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          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 Resource Conservation Districts


          California Service Chapter, American College of Physicians


          California Ski Industry Association


          California Thoracic Society


          California Transit Association


          California Urban Forests










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          California Voices for Progress


          California Wind Energy Association


          Calpine Corporation


          CALPIRG


          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










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          Circulate San Diego


          City and County of San Francisco


          City Heights Community Development Corporation


          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










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          Clean Power Finance


          Clean Tech San Diego


          Clean Water Action


          Cleveland National Forest Foundation


          Climate Action Reserve


          Climate Parents


          Climate Ready Solutions


          Climate Resolve


          Coalition for Clean Air


          Coalition for Renewable Natural Gas


          Coastal Environmental Right Foundation


          Communitas Financial Planning


          Communications Workers of America, District 9, AFL-CIO










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          Consumers Union


          County of Los Angeles, Public Health


          County of Los Angeles, Supervisor Kuehl


          County of Los Angeles, Supervisor Ridley-Thomas


          County of Los Angeles, Supervisor Solis


          County of Santa Barbara, Board of Supervisors


          County of Ventura


          Covanta


          Dignity Health


          Distance Learning Consulting


          Doctors for Climate Change


          Eagle Creek


          East Bay Municipal Utility District










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          eBay


          Ecogate


          El Proyecto del Barrio, Inc.


          Endangered Habitats League


          Environment California


          Environmental Defense Action Fund (EDAF)


          Environmental Defense Fund


          Environmental Entrepreneurs


          EtaGen


          Friends Committee on Legislation of California


          Friends of the River


          Gap, Inc.


          Grand Boulevard Initiative










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          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


          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.










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          Liberty Hill Foundation


          Los Angeles Business Council


          Los Angeles County Supervisor Hilda L. Solis


          Lyft


          MAAC


          Marin Agricultural Land Trust


          Marin Clean Energy


          Medical Advocates for Healthy Air


          Mercury Press International


          Moms Clean Air Force


          Mountains Recreation and Conservation Authority


          Move LA


          National Parks Conservation Association










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          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


          Physicians for Social Responsibility, San Francisco


          Planning and Conservation League


          Power2Sustain


          Progressive Asset Management










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          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


          San Francisco Asthma Task Force


          Santa Clara County Medical Society


          Santa Clara Valley Open Space Authority


          Santa Clarita Organization for Planning and the Environment










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          Save the Redwoods League


          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


          South Coast Air Quality Management District


          Southern California Edison


          Southern California Public Power Authority










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          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


          United States Senator, Barbara Boxer


          Ventura County Board of Supervisors










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          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


          American Forest and Paper Association


          American Wood Council


          Apartment Association California Southern Cities
                                 







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          Apartment Association of Greater Los Angeles


          Apartment Association of Orange County


          Associated Builders and Contractors of California


          BOMA California


          Building Owners and Managers Association


          Brea Chamber of Commerce


          California Agricultural Aircraft Association


          California Apartment Association


          California Association of Nurseries and Garden Centers


          California Building Industry Association


          California Business Properties Association


          California Cattlemen's Association


          California Chamber of Commerce








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          California Concrete Pumpers Alliance


          California Construction Trucking Association


          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 Political Consulting Group


          California Small Business Association








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          California Taxpayers Association


          California Trucking Association


          Camarillo Chamber of Commerce


          Chambers of Commerce Alliance of Ventura and Santa Barbara  
          Counties


          Coalition of American Latino Truckers


          East Bay Rental Housing Association


          Family Business Association


          Fullerton Chamber of Commerce


          Greater Bakersfield Chamber of Commerce


          Greater Fresno Chamber of Commerce


          Greater Riverside Chambers of Commerce


          Heavy-Haul Conference










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          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


          National Hmong American Farmers


          Nisei Farmers League


          North Orange County Chamber


          North Valley Property Owners


          Orange County Business Council


          Oxnard Chamber of Commerce










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          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


          SBAPA


          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


          Western Agricultural Processors Association


          Western Growers Association


          Western Plant Health Association










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          Western States Petroleum Association


          Western Trucking Alliance




          Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)  
          319-2092