BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 246 (De Leon)
Hearing Date: 05/16/2011 Amended: As introduced
Consultant: Brendan McCarthy Policy Vote: EQ 5-1
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BILL SUMMARY: SB 246 requires the Air Resources Board to follow
specified criteria if the Board allows greenhouse gas compliance
offsets to be used in a cap and trade program under AB 32.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Amending regulations $150 Special
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* Air Pollution Control Fund.
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STAFF COMMENTS: This bill meets the criteria for referral to the
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
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
SB 246 (De Leon)
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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.
SB 246 places certain specific conditions on the Air Resources
Board if it elects to allow compliance offsets as part of a cap
and trade program under AB 32. Specifically, the bill requires
the Air Resources Board to ensure that any compliance offset is
permanently retired and has not been claimed by another
regulated entity, that compliance offsets do not contribute to
adverse effects on human health or the environment, that the Air
Resources Board retain authority over compliance offsets, and
that the Air Resources Board has conducted an independent review
of all third-party claims before issuing an offset.
The Air Resources Board indicates that it will need to amend its
proposed regulation to comply with the requirements of the bill,
requiring the equivalent of one additional position. The Air
Resources Board also indicates that complying with the
requirements of the bill, once the regulations have been
amended, can be accommodated within existing resources dedicated
to AB 32 implementation.
SB 237 (Wolk) creates a program to use revenues generated under
the AB 32 cap and trade program for the support of agricultural
activities relating to climate change. That bill is on this
committee's suspense file.
SB 533 (Wright) makes changes to the process for adopting
regulations under AB 32. That bill has been moved to the Senate
Floor pursuant to Senate Rule 28.8.
SB 535 (De Leon) sets aside ten percent of any revenues
generated under the AB 32 cap and trade program for projects in
disadvantaged communities. That bill will be heard in this
committee.
SB 246 (De Leon)
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