BILL ANALYSIS
AB 376
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Date of Hearing: May 20, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 376 (Nava) - As Amended: May 6, 2009
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill places disclosure requirements on a person who sells
voluntary greenhouse gas emission (GHG) offsets. Specifically,
this bill:
1)Requires, as of January 1, 2010, a person who sells a
voluntary GHG offset in California to include in any marketing
materials specified information, such as the geographic
location of the offset project, the duration of the effect of
the offset, the name of the certification body or governmental
protocol under which the offset was certified, and the name of
the registry with which the offset is registered.
2)Prohibits, as of January 1, 2011, any protocol, certification
body, or registry from being used to support a voluntary
offset marketing claim unless the protocol, certification
body, or registry has first been validated by the Air
Resources Board (ARB), with certain exception.
3)Requires, as of January 1, 2011, a person who sells offsets to
ensure that each offset has a unique serial number that is
registered with one and only one registry.
4)Makes any person who violates any provision of this bill
liable for a civil penalty of up to $10,000 per violation.
FISCAL EFFECT
Unknown, but potentially significant ongoing costs to ARB, as
much as hundreds of thousands of dollars annually, to validate
offset protocols, certification bodies, and registries. For
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example, if ARB were to dedicate two staff to this purpose,
annual costs would total approximately $350,000. (Air Pollution
Control Fund)
COMMENTS
1)Rationale. The author notes that there are a large number of
voluntary carbon offset project types and providers for
consumers to choose from, but no standards or regulations
governing how those offsets are marketed or tracked. To
buttress his argument, the author refers to a recent purchase
by the U.S. House of Representatives of what were revealed by
a journalistic investigation to be bogus GHG offsets. The
author contends that such standards and regulations will
increase the value of offsets and allow consumers to make more
informed decisions.
2)Background.
a) AB 32 (N??ez, Chapter 455, Statutes of 2006) requires
California to limit its emissions of GHGs so that, by 2020,
those emissions are equal to what they were in 1990. To
that end, AB 32 requires ARB to quantify the state's 1990
GHG emissions and to adopt, by January 1, 2009, a "scoping
plan" that describes the board's plan for achieving the
maximum technologically feasible and cost-effective
reductions of GHG emissions reductions by 2020. In keeping
with AB 32, ARB adopted its AB 32 scoping plan in December
of 2008.
Consistent with AB 32, the scoping plan includes both
direct regulatory measures and market-based compliance
mechanisms. Direct regulatory requirements of the type that
have typified California's regulation of environmental
quality, such as efficiency and emissions standards,
account for over three-quarters of the plan's GHG emissions
reductions. About 20% of the scoping plan's GHG reductions
result from a cap-and-trade market in which regulated
emissions sources buy and sell credits that give the holder
the right to emit a quantity of GHGs.
b) ARB's Scoping Plan Doesn't Provide for Voluntary
Offsets. ARB states that no more than 49% of the
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cap-and-trade program emissions reductions will be allowed
from offsets. In the context of the scoping plan,
"offsets" mean projects that reduce GHG emissions in lieu
of emissions reductions by a capped emissions sources. The
scoping plan makes no provisions for, nor prohibitions
against, voluntary offsets such as those described in this
bill.
c) Voluntary Carbon Markets Is Active. There are many
voluntary carbon markets. The best known in North America
may be the Chicago Climate Exchange (CCX). CCX is a
private market in which emitting members make a voluntary,
legally binding commitment to meet annual GHG reduction
targets. The market includes offset projects that are
verified by a third party and registered with a unique
serial number. The CCX is only one of many voluntary
carbon markets in operation around the world, and such
markets are proliferating.
3)Related Legislation. AB 1404 (de Leon) limits the ARB's use
of offsets to achieve required reductions GHGs.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081