BILL NUMBER: AB 2563 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 29, 2012
INTRODUCED BY Assembly Member Smyth
FEBRUARY 24, 2012
An act to add Part 8 (commencing with Section 38600) to Division
25.5 of the Health and Safety Code, relating to climate change, and
declaring the urgency thereof, to take effect immediately.
LEGISLATIVE COUNSEL'S DIGEST
AB 2563, as amended, Smyth. California Global Warming Solutions
Act of 2006: offsets.
The California Global Warming Solutions Act of 2006 requires the
State Air Resources Board to adopt regulations to require the
reporting and verification of emissions of greenhouse gases and to
monitor and enforce compliance with the reporting and verification
program, and requires the state board to adopt a statewide greenhouse
gas emissions limit equivalent to the statewide greenhouse gas
emissions level in 1990 to be achieved by 2020. The act requires the
state board to adopt rules and regulations in an open public process
to achieve the maximum technologically feasible and cost-effective
greenhouse gas emission reductions. The act authorizes the state
board to include the use of market-based compliance
mechanisms.
This bill would , if the state board uses its
authority to include the use of market-based compliance mechanisms,
require the state board to consider adopting specified
compliance offset protocols. The bill would require the state board
to review annually the offset protocol process and to consider the
implications of international, national, state, and local regulation
of offsets on the ability to create offsets and sector-based offsets.
If the state board adopts regulations regarding offset credits, the
bill would require those regulations to permit offset credits to
account for not less than 15% of a covered entity's compliance
obligation and would require sector-based offset credits to be able
to account for up to 4% of a covered entity's compliance obligation.
The bill would require the state board to consider additionality only
in the context of greenhouse gases. The bill would require the state
board to compile specified reports by specified dates
adopt a specified process for the review and consider
ation of new offset protocols and, commencing in 2012 and continuing
annually thereafter, use that process to review and
consider new offset protocols. The bill would require the state
board, no later than July 1, 2013, to present at a state board
meeting an economic assessment of the role of offsets in reducing the
cost of complying with the act for the state's economy and a report
considering the advantages and disadvantages of an expanded supply of
offsets .
This bill would declare that it is to take effect immediately as
an urgency statute.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) The California Global Warming Solutions Act of 2006 (Division
25.5 (commencing with Section 38500) of the Health and Safety Code)
requires the state to reduce greenhouse gas emissions to 1990 levels
by 2020.
(b) On October 20, 2011, the State Air Resources Board adopted the
final cap-and-trade regulation pursuant to the act, to become
effective January 1, 2012, as required by that act, and also adopted
Resolution 11-32 to require that its executive officer develop
implementation documents laying out the process for the review and
consideration of new offset protocols.
(c) The cap-and-trade regulation is part of the state's global
warming scoping plan and is intended to provide covered entities
under the act the flexibility to seek out and implement the
lowest-cost options to reduce greenhouse gas emissions and will
provide an estimated 20 percent of the emission reductions required
to achieve 1990 emission levels by 2020, as required by the act.
(d) The cap-and-trade regulation allows offset credits to be used
as a means by which parties subject to the regulation can lower their
cost to comply with the regulation while still ensuring a reduction
of greenhouse gas emissions and caps the use of offset credits at no
more than 8 percent of a covered entity's compliance obligation
within each compliance period.
(e) The State Air Resources Board has adopted four compliance
offset protocols for use in the United States: Livestock Manure
projects, Urban Forests projects, Ozone Depleting Substances
Destruction projects, and Forests projects.
(f) The four adopted protocols, as currently written, are not
expected to supply the number of offsets necessary to allow companies
to fully utilize the carbon dioxide offset provisions within the
State Air Resources Board's cap-and-trade regulation's first of three
compliance years between 2013 through 2015. More protocols will need
to be approved to supply real, measurable, additional, and
verifiable offsets in additional categories related to, for example,
landfill gas reductions, coal mine gas reductions, improved or
maintained agriculture yields with less greenhouse gas emissions,
recycling, and others.
(g) To encourage the types of additional, real, measurable, and
verifiable carbon dioxide reductions required by the act, it is
imperative that the State Air Resources Board develop a new protocol
review process that can provide market certainty for project
developers and regulated entities on offsets, which will help provide
additional cost-containment benefits to the state's residents and
ensure investors are focused on projects with the highest
environmental integrity.
(h) A state comprehensive protocol review process would provide
more certainty for carbon dioxide offset suppliers and purchasers to
invest in environmentally worthwhile projects that meet certain
criteria under the act.
SECTION 1. SEC. 2 . Part
8 (commencing with Section 38600) is added to Division 25.5 of the
Health and Safety Code, to read:
PART 8. Offsets
38600. (a) On or before September 1, 2012, and in
accordance with Section 38571, if the state board has
exercised its authority pursuant to subdivision (a) of Section 38570,
the state board shall consider adopting compliance
offset protocols for the verification of each , in
accordance with Section 38571, adopt a process for the review and
consideration of new offset protocols. The process shall include, but
not be limited to, all of the following:
(1) Projects for methane collection at mines, landfills, and
natural gas systems.
(2) Projects involving fugitive emissions from the oil and gas
sector that reduce greenhouse gas emissions that would otherwise have
been flared or vented.
(3) Projects for nonlandfill projects that involve collection,
combustion, or avoidance of emissions from organic waste streams that
would have otherwise emitted methane into the atmosphere, including,
but not limited to, composting projects.
(4) Projects for forest management resulting in an increase in
forest carbon stores, including, but not limited to, harvested wood
products.
(5) Projects for forest-based manufactured products.
(6) Projects involving recycling and waste minimization.
(7) Projects to abate the production of nitrous oxide at
stationary sources not subject to regulation under this division.
(8) Projects for biochar production and use.
(9) Projects relating to agricultural, grassland, and rangeland
sequestration and management practices, including all of the
following:
(A) Altered tillage practices, including, but not limited to, the
avoided abandonment of conservation practices.
(B) Winter cover cropping, continuous cropping, and other means to
increase biomass returned to soil in lieu of planting followed by
fallowing.
(C) The use of technology or practices to improve the management
of nitrogen fertilizer use, including, but not limited to, slow and
controlled-release fertilizers, such as absorbed, coated, occluded,
or reacted fertilizers, and stabilized nitrogen fertilizers, such as
including urease, nitrification inhibitors, and nitrogen stabilizers,
that are recognized by state regulators of fertilizers.
(D) Reduction in methane emissions from rice cultivation.
(E) Reduction in carbon emissions from organically managed soils
and farming practices used on certified organic farms.
(F) Resource-conserving crop rotations.
(G) Practices that will increase the sequestration of carbon in
soils on cropland, hayfields, native and planted grazing land,
grassland, or rangeland.
(10) Projects for changes in carbon stocks attributed to land
management change, including all of the following:
(A) Improved management or restoration of forest land, cropland,
grassland, and rangeland, including, but not limited to, grazing
practices.
(B) Reduced deforestation.
(C) Management and restoration of peatland or wetland.
(D) Urban tree-planting, landscaping, greenway construction, and
maintenance.
(E) Projects to restore or prevent the conversion, loss, or
degradation of vegetated marine coastal habitats.
(11) Projects that reduce the intensity of greenhouse gas
emissions per unit of agricultural production.
(b) If the state board adopts an offset protocol process pursuant
to this division, the state board shall review annually the offset
protocol process and shall consider the implications of
international, national, state, and local regulation of offsets on
the ability to create offsets and sector-based offsets.
(c) If the state board adopts regulations regarding offset credits
pursuant to this division, both of the following shall apply:
(1) Those regulations shall permit offset credits to account for
not less than 15 percent of a covered entity's compliance obligation.
(2) Those regulations shall permit sector-based offset credits to
account for not less than 4 percent of a covered entity's compliance
obligation.
(d) If the state board adopts regulations regarding additionality
pursuant to this division, the state board shall consider
additionality only in the context of greenhouse gases.
(e) If the state board adopts an offset protocol process pursuant
to this division, the state board shall present at a board meeting no
later than July 1, 2013, an economic assessment of the role of
offsets in reducing the cost of complying with this division for the
state's economy and a report considering the advantages and
disadvantages of an expanded offset supply.
(f) (1) The state board shall provide, no later than January 1,
2013, a report to the appropriate committees of the Legislature on
the current and future supply potential for each compliance offset
protocol reviewed pursuant to subdivision (a), including, but not
limited to, proposed and rejected compliance offset protocols.
(2) The requirement for submitting a report imposed under this
subdivision is inoperative on January 1, 2017, pursuant to Section
10231.5 of the Government Code.
(3) A report to be submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
(g) (1) The state board shall provide, no later than July 1, 2013,
a report to the appropriate committees of the Legislature on which
compliance offset protocols and offset projects could be used for
early action purposes in the first compliance period and identify
opportunities to increase the potential for additional greenhouse gas
reductions through offset project opportunities.
(2) The requirement for submitting a report imposed under this
subdivision is inoperative on July 1, 2017, pursuant to Section
10231.5 of the Government Code.
(3) A report to be submitted pursuant to this subdivision shall be
submitted in compliance with Section 9795 of the Government Code.
(1) A schedule, to be posted online, that depicts the timeline the
members of the state board will rely on in 2012, and annually
thereafter, to review and consider the adoption of new offset
protocols submitted to the state board.
(2) An online tracking system that will allow the public to track
the progress of new offset protocols submitted to the state board for
review and consideration.
(3) A point of contact at the state board for entities that have
submitted new offset protocols to the state board for review and
consideration.
(4) An explanation of how the review and consideration process
will accommodate public review and comments on new offset protocols
under consideration.
(5) The criteria for how new offset protocols are accepted,
rejected, or delayed regarding social, environmental, and financial
impacts.
(b) Commencing in 2012, and continuing annually thereafter, if the
state board has exercised its authority pursuant to subdivision (a)
of Section 38570, the state board shall use the process adopted
pursuant to subdivision (a) to review and consider new offset
protocols.
(c) No later than July 1, 2013, the state board shall present at a
state board meeting an economic assessment of the role of offsets in
reducing the cost of complying with this division for the state's
economy and a report considering the advantages and disadvantages of
an expanded supply of offsets.
SEC. 2. SEC. 3 . This act
is an urgency statute necessary for the immediate preservation of
the public peace, health, or safety within the meaning of Article IV
of the Constitution and shall go into immediate effect. The facts
constituting the necessity are:
In order to obtain additional flexibility, certainty, and
accountability with regard to the implementation of compliance offset
protocols by the State Air Resources Board under the California
Global Warming Solutions Act of 2006, it is necessary for this act to
take effect immediately.