BILL ANALYSIS                                                                                                                                                                                                    

                                                                      SB 32

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          32 (Pavley)

          As Amended  June 30, 2016

          Majority vote

          SENATE VOTE:  24-15

          |Committee       |Votes|Ayes                   |Noes               |
          |                |     |                       |                   |
          |                |     |                       |                   |
          |                |     |                       |                   |
          |Natural         |6-2  |Williams, Cristina     |Hadley, Harper     |
          |Resources       |     |Garcia, Gomez,         |                   |
          |                |     |McCarty, Mark Stone,   |                   |
          |                |     |Wood                   |                   |
          |                |     |                       |                   |
          |Appropriations  |11-4 |Gonzalez, Bloom,       |Bigelow, Chang,    |
          |                |     |Bonilla, Bonta,        |Jones, Obernolte   |
          |                |     |Eggman, Eduardo        |                   |
          |                |     |Garcia, Quirk,         |                   |
          |                |     |Santiago, Weber, Wood, |                   |
          |                |     |McCarty                |                   |
          |                |     |                       |                   |
          |                |     |                       |                   |


                                                                      SB 32

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          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.  Specifically, 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 short-lived  
            climate pollutants (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  
            (Nez), Chapter 488, Statutes of 2006, to reflect the  
            addition of a 2030 target, except for the market-based  
            compliance mechanism authority.

          4)Require ARB to prepare an annual report detailing the amounts,  
            sources, and locations of GHG emissions reductions achieved  
            toward the statewide emissions limits.

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

          6)Provides the bill becomes operative only if AB 197 (Eduardo  
            Garcia) of the current legislative session is enacted and  
            becomes effective on or before January 1, 2017.

          EXISTING LAW:   


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          1)Requires ARB, pursuant to California Global Warming Solutions  
            Act of 2006 [AB 32 (Nez), 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  

          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 CO2 equivalent per year, as well as  
            distributors of fuels, including gasoline, diesel and natural  

          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 SLCPs in the state.

          FISCAL EFFECT:  According to the Assembly Appropriations  

          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 ARB to set the 2030 target (Cost  
            of Implementation Account).

          COMMENTS:  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  


                                                                      SB 32

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          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  

          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  
          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 in 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  


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          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.

          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% 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, 2016, 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 vehicle-miles traveled (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 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  


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          would not include a statewide limit on GHG emissions, and it is  
          unknown how the monies generated by a carbon tax would be used.

          According to the author, this bill attempts to solve three major  
          problems:  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. 

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