BILL NUMBER: AB 2563	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 30, 2012
	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,
 would  require the state board  , on or before January
1, 2013,  to adopt a specified process for the review and
consideration 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  that can be used
to certify high   -quality offset credits that are
additional, real, measurable, and verifiable as required by the
California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code) 
: 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   generate the volume
of offset credits necessary to supply the full amount of useable
credits under the cap-and-trade regulation between 2013 and 2020.
More protocols will need to be approved to supply real, measurable,
additional, and verifiable offsets in additional categories of
uncapped emissions, including, for example, improved or maintained
agriculture yields with less greenhouse gas emissions, recycling,
organic composting, landfill gas reductions, coal mine gas
reductions, and others for both Phases I and II  .
   (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   facilitate the future
adoption of offset protocols that achieve additional, real,
measurable, and verifiable carbon dioxide reductions, as required by
the California Global Warming Solutions Act of 2006 (Division 25.5
(commencing with Section 38500) of the Health and Safety Code), and
to provide offset market certainty for project developers and
regulated entities, an offset protocol review and approval process
should be adopted by the State Air Resources Board  .
   (h)  A   While a  state comprehensive
 offset  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   California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with Section
38500) of the Health and Safety Code), it is the intent of the 
 Legislature that only high   -quality offset credits
that represent rigorously evaluated offset protocols and that meet
the statutory requirements of the California Global Warming Solutions
Act of 2006 (Division 25.5 (commencing with Section 38500) of the
Health and Safety Code) be allowed for compliance with the
cap-and-trade regulation  .
  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, 
January 1, 2013,  if the state board has exercised its
authority pursuant to subdivision (a) of Section 38570, the state
board shall, 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) 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   for
review and consideration of adoption of new offset protocols
submitted to the state board. This schedule shall be updated annually
 .
   (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.  
   (5) An explanation of the criteria used for consideration of new
offset protocols, including, but not limited to, a description of the
standards for protocol approval, rejection, and delay. This
description also shall include, to the extent feasible, a description
of the social, environmental, and financial impacts analysis used in
making offset protocol decisions as well as a forecast of potential
supply and expected development costs. 
   (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. 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.