BILL ANALYSIS                                                                                                                                                                                                    

                                                                      SB 32  

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          Date of Hearing:  August 3, 2016


                               Lorena Gonzalez, Chair

          SB 32  
          (Pavley) - As Amended June 30, 2016

          |Policy       |Natural Resources              |Vote:|6 - 2        |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill requires the Air Resources Board (ARB) to approve  
          statewide greenhouse gas (GHG) emissions limits equivalent to  
          40% below 1990 levels by 2030.  Specifically, this bill: 

          1)Requires ARB to approve the 2030 emission limit in a public  
            hearing, based on the best available scientific,  
            technological, and economic assessments.


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          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)Requires ARB to annually report to the Legislature, beginning  
            January 1, 2018, on GHG emissions reductions achieved towards  
            the 2030 limit.

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

          5)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.

          6)Provides the provisions of this bill are only operative if AB  
            197 (E. Garcia) is enacted and becomes law on or before  
            January 1, 2017.

          FISCAL EFFECT:

          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.


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          2)Minor, absorbable costs for the ARB to set the 2030 target  
            (Cost of Implementation Account).


          1)Purpose.  According to the author, there are three major  
            problems this bill is attempting to solve: a) dangerous  
            climate pollution; b)an uncertain investment environment for  
            clean energy businesses; and c) an inequitable distribution of  
            both the consequences of climate change and the benefits of  
            the state's policy to address it.  This bill addresses those  
            concerns by setting an achievable target to provide  
            accountability and certainty.

          2)Background.  The California Global Warming Solutions Act of  
            2006 (AB 32) requires ARB to adopt a statewide GHG emissions  
            limit equivalent to 1990 levels by 2020, and to adopt  
            regulations, including market-based compliance mechanisms, to  
            achieve maximum technologically feasible and cost-effective  
            GHG emission reductions.  

            As part of the implementation of AB 32 market-based compliance  
            measures, ARB adopted a cap-and-trade program that caps the  
            allowable statewide emissions and provides for the auctioning  
            of emission credits, the proceeds of which are quarterly  
            deposited into the Greenhouse Gas Reduction Fund (GGRF)  
            available for appropriation by the Legislature.  

          3)AB 32 Scoping Plan Update.  ARB approved an update to the AB  
            32 Scoping Plan on May 22, 2014.  The update asserts that  
            California is on track to meet the near-term 2020 greenhouse  


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            gas limit and is well positioned to maintain and continue  
            reductions beyond 2020 as required by AB 32.  The update  
            emphasizes the need for California to establish a mid-term  
            statewide emission reduction target informed by climate  
            science.  Consistent with this recommendation, this bill  
            provides a mid-term statewide emission reduction target of 40%  
            below 1990 levels by 2030.

            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 the implementation of SB 350 (increase retail  
               sales of renewable electricity to 50% by 2030, and double  
               the energy efficiency savings in electricity and natural  
               gas end uses by 2030).  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 on GHG emissions.  It would have no cap-and-trade  
               regulation post-2020 and no statewide limit on GHG  

               Concept 3 focuses on transportation-oriented policy aimed  
               at ambitious reductions in vehicle miles traveled (VMT) and  
               increased numbers of zero-emission and plug-in vehicles by  
               2030.  It would not continue cap-and-trade regulation  

               Concept 4 includes the same complementary policies as  


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               Concept 1, but in lieu of a cap-and-trade program, suggests  
               a carbon tax.

          4)Beyond 20-20.  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. 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.

            ARB staff is currently developing a proposal to amend the  
            cap-and-trade regulation to extend the program beyond 2020,  
            broaden the program through linkages with other jurisdictions,  
            comply with the federal Clean Power Plan, and generally  
            enhance ARB's ability to oversee and implement the regulation.  
             ARB plans to consider the amendments at a hearing in  
            September 2016 and vote at a hearing in spring 2017. 

            ARB contends the amendments are consistent with their existing  
            authority to meet the 2020 statewide GHG emissions limit and  
            maintain and continue emissions reductions beyond 2020.   ARB  
            views a post-2020 Cap-and-Trade program as essential to  
            meeting these requirements. 

            In contrast, Legislative Counsel Diane Boyer-Vine issued an  
            opinion in April, 2016, stating that the governor, and by  
            extension the ARB, do not have the authority to extend the AB  
            32 past 2020 without legislative action.   


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          5)Prior Hearing in this Committee.  This committee passed a more  
            expansive version of this bill on August 28, 2015 that  
            included 2050 GHG emissions reduction targets and other  
            provisions relating to job growth, public health and regional  
            and international collaboration.  This bill failed on the  
            Assembly floor on September 8, 2015, and was amended and  
            returned to Assembly Natural Resources for further action.

          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)