BILL ANALYSIS Ó
AB 1532
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Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1532 (John A. Perez) - As Amended: May 01, 2012
Policy Committee: Natural
ResourcesVote:5-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes the Greenhouse Gas Reduction Account
(GHGRA) to receive regulatory fee revenue from the auction of
greenhouse gas emission allowances and directs eligible uses of
those revenues. Specifically, this bill:
1)Creates the GHGRA within the Air Pollution Control Fund.
2)Directs all greenhouse gas emission allowance auction revenue
to the GHGRA.
3)Limits use of money in the GHGRA to purposes consistent with
the requirements of the Sinclair Paint decision that
facilitate cost-effective reductions of greenhouse gas
emissions.
4)Charges the Air Resources Board (ARB) and any other state
agency identified by the Legislature with implementing a
program, pursuant to guidelines adopted by the board, of
grants, revolving loans, loan guarantees, loans or other
funding measures to achieve greenhouse gas reductions by
investments in the following categories:
a) Clean and efficient energy.
b) Low-carbon transportation and infrastructure.
c) Natural resource protection.
d) Research, development and deployment of innovative
technologies and measures.
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5)Requires ARB to adopt, every three years, an investment plan,
to include an investment plan prepared by the Public Utilities
Commission (PUC), of anticipated expenditures from the GHGRA.
FISCAL EFFECT
Costs to develop and implement the financial assistance program
created by this bill are unknown but certainly will be
substantial and likely will vary, somewhat proportionally, with
the amount of revenue deposited into the GHGRA and available for
program use. ARB estimates annual revenue from the auction of
greenhouse gas emission allowances to range from $2 billion to
$5 billion in 2013, with that amount increasing to between $17
billion and $67 billion in later years.
ARB estimates it will cost approximately $9.3 million in 2012-13
and in 2013-14, and approximately $13.5 million in 2014-15, to
develop and administer the financial assistance program required
by this bill, with costs growing in future years as ARB
administers substantially greater amounts of funds. ARB
activities will include establishing funding allocation
guidelines; developing a triennial investment plan; allocating
program funds; reporting to the Legislation on program
activities; and providing general administrative services. ARB
cautions that its costs may rise substantially in future years
as GHGRA funding increases and as its role becomes better
defined (GHGRA).
Other agencies, including, but likely not limited, to the PUC,
which the bill explicitly requires to develop an investment,
also will experience costs in implementing the program required
by this bill. While unknown, these cost will likely be
substantial, though less than ARB's (GHGRA).
For perspective on the magnitude of the costs estimates provided
above, it is worth considering recent, voter-approved bond
measures that limited administrative costs to no more than 5% of
bond proceeds. If 5% of greenhouse gas emission allowance
auction revenues were to go to program administration, then
costs to administer a program using auction revenue would be
between $100 million and $250 million in 2012-13 and $850
million and $3.35 billion in later program years.
COMMENTS
AB 1532
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1)Rationale. The author intends this bill to provide statutory
direction for the expenditure of greenhouse gas regulatory fee
revenue.
2)Background . AB 32 (Núñez, 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. The
remainder of the plan's GHG emissions reductions-about
20%-result from a cap-and-trade market in which regulated
emissions sources-mainly large industrial sources and
electricity generators--buy and sell emissions allowances that
give the holder the right to emit a quantity of GHGs.
ARB will issue emissions allowances through quarterly auctions
at which time a portion of these allowances will be made
available for purchase. For 2012-13, ARB's auctions are
estimated to generate roughly $660 million to upwards of $3
billion (though ARB's recent communications estimate auction
revenue will generate between $2 billion and $5 billion in
2012-13). The Governor's budget for 2012-13 assumes that the
state will receive $1 billion from such auctions.
3)Support . This bill is supported by the Natural Resources
Defense Council, Environmental Defense Fund and a long list of
nonprofit and community-based groups supportive of AB 32's GHG
reduction goals, and Waste Management.
4)Opposition . This bill is opposed by the California Chamber of
Commerce and other industry groups who contest the legal
authority of ARB to raise and distribute revenue through the
use of an auction mechanism. These opponents contend it is
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premature for the Legislature to allocate cap-and-trade
revenue when questions about the legality of the auction
program remain.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081