BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 143|
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THIRD READING
Bill No: SB 143
Author: Rubio (D)
Amended: 5/10/11
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 4-2, 5/2/11
AYES: Simitian, Kehoe, Lowenthal, Pavley
NOES: Strickland, Blakeslee
NO VOTE RECORDED: Hancock
SENATE APPROPRIATIONS COMMITTEE : 6-2, 5/26/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Runner
NO VOTE RECORDED: Emmerson
SUBJECT : Air pollution: global warming
SOURCE : Author
DIGEST : This bill requires the Air Resources Board
(ARB), on or before July 1, 2012, to adopt methodologies
for determining the quantity of greenhouse gas (GHG)
emissions reduced through specified GHG emission reduction
programs. This bill requires ARB to adopt regulations
governing the creation of GHG emission reduction offsets
based on investments in those programs for purposes of
banking, trading, and using the offsets to comply with the
market-based compliance mechanism adopted by the ARB. This
bill requires the state board to credit persons who invest
in those programs with GHG emission offsets, based on a
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cost-effectiveness calculation determined by the state
board, with specified exceptions.
ANALYSIS : The California Global Warming Solutions Act of
2006 designates ARB as the state agency charged with
monitoring and regulating sources of emissions of GHGs.
The ARB is required to adopt a statewide GHG emissions
limit equivalent to the statewide GHG emissions level in
1990 to be achieved by 2020, and to adopt rules and
regulations in an open public process to achieve the
maximum technologically feasible and cost-effective GHG
emission reductions. ARB is authorized to adopt
market-based compliance mechanisms, as defined, meeting
specified requirements to be used for compliance with those
regulations.
This bill:
1. Requires ARB, by July 1, 2012, to adopt methodologies
for determining the quantity of GHG emissions reductions
resulting from implementation of voluntary energy
efficiency programs, distributed electricity generation
programs, and programs administered by the PUC or CEC
that may reduce GHG emissions. ARB must determine the
cost effectiveness in dollars per ton of GHG emissions
reduced for these programs and update those
determinations from time to time upon determining the
need for update.
2. Provides that beginning July 1, 2012, for the purposes
of the market-based compliance mechanism, a person may
invest in a program for which an emission reduction
methodology has been developed.
3. Requires that by July 1, 2012, ARB adopt regulations
creating GHG emission reduction offsets that may be
banked, traded, or used for compliance with the
market-based compliance mechanism.
4. Requires that a person who invests in a program, as
described by #1 above, be credited a quantity of GHG
emission offsets based on the size of the investment and
the cost effectiveness of the program.
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5. Notwithstanding #4 above, a person or entity shall not
be credited with a GHG emission offset pursuant to #4
for undertaking a project that is required by law or
regulation, or for which the person or entity has
received another GHG emission offset.
Comments
Status of Cap and Trade . ARB, on December 16, 2011,
adopted draft regulations for a proposed cap and trade
market-based compliance mechanism and is expected to
produce a final version of those regulations this Fall.
On March 17, 2011, the California Superior Court found ARB
had not properly considered alternatives to cap and trade
and thus failed to comply with the California Environmental
Quality Act (CEQA) and enjoined the ARB from proceeding
with cap and trade until the court determines it has fully
complied with CEQA.
Related legislation . SB 246 (De Le�n) defines "Compliance
offset" to mean a reduction in GHG, used for compliance
with an emissions limit, in a sector different from sectors
regulated by a GHG emission limit for which a market-based
compliance mechanism exists. This definition may conflict
with what "offsets" are used to mean in this bill as it
includes sectors for which market-based compliance
mechanisms exist.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Developing methodologies $790
Special*
and adopting regulations
Ongoing oversight unknown costs
Special*
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* Air Pollution Control Fund
The ARB indicates that it will need 10 additional
positions over six months to develop the complex
methodologies and regulations needed to implement the
bill.
SUPPORT : (Verified 5/20/11)
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OPPOSITION : (Verified 5/20/11)
Breathe California
California Apollo Alliance
Center for Biological Diversity
Coalition for Clean Air
Forests Forever
Natural Resources Defense Council
Planning & Conservation League
Sierra Club California
Union of Concerned Scientists
NOTE: The author's office indicated that the California
Rural Legal Assistance Foundation testified they
were taking a support if amended position but have
not provided a letter yet.
ARGUMENTS IN SUPPORT : According to the author, "SB 143
would provide an additional option to businesses that must
comply with AB 32 and need to utilize the Cap and Trade
program established by the �ARB]. This new option would
allow businesses to earn carbon credits by investing in
existing California programs that reduce greenhouse gas
emissions, including distributed electricity generation
programs. The bill would allow �ARB] to create an
incentive program to encourage investment in certain
programs or communities? SB 143 builds upon language in AB
32 which directs �ARB] to consider the other benefits of
regulations before them to implement AB 32. Providing an
'in state' option provides more robust benefits to our
state than credits earned through activities outside our
borders. For example, increased sales tax revenue, jobs,
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lower utility costs, and improved air quality. Further,
providing more options within the Cap and Trade program
ensures that credits are less vulnerable to manipulation in
the market."
ARGUMENTS IN OPPOSITION : The opposition is concerned
with double-counting and is working with the author's
office to address the concerns they have.
DLW:mw 5/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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