BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 143 (Rubio)
Hearing Date: 05/26/2011 Amended: 05/10/2011
Consultant: Brendan McCarthy Policy Vote: EQ 4-2
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BILL SUMMARY: SB 143 requires the Air Resources Board to develop
methods of determining the greenhouse gas emission reductions
from energy efficiency programs, distributed electricity
generation programs, and programs implemented by state agencies
to reduce emissions. The bill requires the Air Resources Board
to develop a program to allow regulated entities under the AB 32
cap and trade program to invest in the above programs, in order
to offset their emissions.
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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
*
* Air Pollution Control Fund.
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STAFF COMMENTS: SUSPENSE FILE.
Under AB 32 (Nunez, 2006), the Air Resources Board is required
to approve a statewide greenhouse gas emission limit, such that
statewide emissions in 2020 are equal to emissions in 1990. The
Air Resources Board is required to implement regulatory measures
to reduce emissions to meet that target. The Air Resources Board
has included a cap and trade program as part of its plan to
implement AB 32. (The environmental analysis of the cap and
trade regulation is currently under judicial review.)
Under the Air Resources Board's cap and trade plan, regulated
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entities are required to use emission credits for each ton of
carbon dioxide they emit. Regulated entities can use emission
credits they receive directly from the Air Resources Board or
emission credits they purchased from another emitter that
doesn't need the credit. In addition, the proposed regulation
allows regulated entities to use compliance offsets for up to 8
percent of their allowed emissions. Compliance offsets are
reductions in greenhouse gas emissions made by entities outside
the cap and trade program. For example, a regulated entity may
pay a forestry company to not cut down a certain number of
trees, thus reducing overall greenhouse gas emissions. In this
case, the regulated entity would use the avoided greenhouse gas
emissions from the trees that were not cut down to reduce the
number of emission credits it needs. One of requirements for
offsets under the regulations is that offsets can only come from
sectors of the economy that are not included in the cap and
trade system. The purpose of this requirement is to avoid double
counting of emission reductions.
AB 143 requires the Air Resources Board to develop methodologies
for determining the quantity of greenhouse gas emission
reductions that will occur due to voluntary energy efficiency
programs, distributed electricity generation programs, and
programs administered by the Public Utilities Commission and the
California Energy Commission. The Air Resource Board is required
to estimate the cost effectiveness of reducing emissions per ton
of these programs.
The bill authorizes regulated entities under AB 32 to invest in
programs for which the Air Resources Board has developed a
methodology under the bill. The bill requires the Air Resources
Board to develop regulations to allow such investments to be
used under the AB 32 cap and trade program, to allow regulated
entities to use such investments to meet their emission
reduction requirements. The bill specifies that offsets cannot
be generated for activities that are mandated by law or for
which another offset has already been generated.
The Air Resources Board indicates that it will need ten
additional positions over six months to develop the complex
methodologies and regulations needed to implement the bill.
Staff notes that by allowing offsets to be generated within
capped sectors of the economy, it will be difficult for the Air
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Resources Board to ensure that emission reductions are not
double counted. Also, by allowing offsets to be generated from
existing programs, the bill undermines the current regulatory
requirement that offsets only be granted for activities that
would not happen otherwise.
SB 246 (De Leon) imposes certain criteria on the use of offsets
under AB 32. That bill is on this committee's Suspense File.