BILL ANALYSIS �
AB 2563
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Date of Hearing: August 8, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2563 (Smyth) - As Amended: June 27, 2012
Policy Committee: Natural
ResourcesVote:7-0
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the Air Resources Board (ARB), on or before
January 1, 2013, to adopt a process for the review and
consideration of new offset protocols for compliance with the
state greenhouse gas emissions reduction law, AB 32. The
process is to include:
a)A regularly updated schedule, posted on ARB's website, of the
timeline for review and consideration of new offset protocols
submitted to ARB.
b)An online system that allows the public to track the progress
of new offset protocols under review by ARB.
c)A point of contact at ARB for entities interested in the
review process.
d)An explanation of how the process will accommodate public
input and comments.
e)An explanation of the criteria used for consideration of new
offset protocols.
The bill also requires ARB to use the process adopted pursuant
to the requirements of this bill to review and consider new
offset protocols.
FISCAL EFFECT
1)One-time costs of several hundred thousand dollars-equivalent
to three fulltime positions-to ARB in 2012-13 to develop the
protocol review and consideration process (special fund).
2)Ongoing costs in the range of $125,000 to $250,000-equivalent
to one to two full time positions, or some fraction thereof-to
AB 2563
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update the protocol review schedule, maintain online
resources, and serve as a public contact (special fund).
COMMENTS
1)Rationale. The author intends this bill to provide a process
by which ARB selects protocols that ensure offsets credits
represent projects that provide real environmental benefits
and meet the requirements of the law.
2)Background. 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. The
remainder of the plan's GHG emissions reductions-about
20%-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.
More recently, ARB adopted, pursuant to AB 32, a cap-and-trade
regulation that allows, but does not require, the use of
offsets. (Offsets refer to projects that reduce GHG emissions
by sources not subject to a cap-and-trade program's GHG
emissions cap.) ARB states that no more than 49% of the
cap-and-trade program emissions reductions will be allowed
from offsets. ARB recognizes only offsets generated by
sources that adhere to an offset protocol adopted by ARB. To
date, ARB has adopted protocols for the following four project
types: livestock manure management, ozone depleting
substances, urban forestry, and U.S. forestry.
Offsets have the potential to result in a reduction in overall
GHGs, but at a cost that is lower than if only regulated
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emissions sources directly realized those reductions
themselves. Use of offsets, however, is controversial. It
can be difficult to verify that offsets represent a real
reduction in GHG emissions and to verify that the emissions
reductions represented by the offset are truly
additional-meaning they would not have occurred absent the
payment made by the regulated emission source. These
difficulties become more pronounced as the eligible geographic
location of potential offset projects is broadened. In
addition, offsets allow an emissions source to avoid reducing
its own emissions, a fact that some find objectionable.
3)Support. This bill is supported by SA Recycling (sponsor),
Environmental Defense Fund and industry groups who could
benefit from the use of offsets for AB 32 compliance.
4)At the time this analysis was prepared, there was no
opposition formally registered against this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081