BILL ANALYSIS �
AB 2050
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: AB 2050
AUTHOR: Quirk
AMENDED: June 10, 2014
FISCAL: Yes HEARING DATE: June 25, 2014
URGENCY: No CONSULTANT: Rebecca Newhouse
SUBJECT : CALIFORNIA GLOBAL WARMINGS SOLUTION ACT OF 2006:
SCOPING PLAN
SUMMARY :
Existing law , under the California Global Warming Solutions Act
of 2006 (Health and Safety Code �38500 et seq.):
1) Requires the California Air Resources Board (ARB) to
determine the 1990 statewide greenhouse gas (GHG) emissions
level and approve a statewide GHG emissions limit that is
equivalent to that level, to be achieved by 2020, and to
adopt GHG emission reduction measures by regulation, and sets
certain requirements in adopting the regulations.
2) Requires ARB to prepare and approve a scoping plan by January
1, 2009, for achieving the maximum technologically feasible and
cost-effective reductions in GHG emissions from sources or
categories of sources of GHGs by 2020. ARB must evaluate the
total potential costs and total potential economic and
noneconomic benefits of the plan for reducing GHGs to the
state's economy and public health, using the best economic
models, emission estimation techniques, and other scientific
methods. The plan must be updated at least once every five
years.
3) Requires the ARB to appoint an Economic and Technology
Advancement Advisory Committee (ETAAC) to advise on
technological research and development opportunities, and
authorizes the committee to advise the ARB on state,
regional, national, and international economic and
technological developments related to greenhouse gas emission
reductions.
AB 2050
Page 2
This bill :
1) Requires ARB, on or before January 1, 2019, as part of the
Scoping Plan Update, to include:
a) A proposal for further reducing GHG emissions by 2050,
including intermediate goals.
b) An evaluation of these proposed goals based on what
technologies can be scaled to the rest of the country and
the world that assure cost-effectiveness and maintain
local and system-wide reliability to the electrical grid.
c) Consistent metrics to accurately quantify GHG emissions
reductions and measure the cost-effectiveness of various
policies and technologies.
2) Requires ARB to submit the element above to the appropriate
committees of the Legislature on or before January 1, 2019.
3) Requires ETAAC to include at least five, but no more than 10,
members who are experts in energy technology and economics.
4) Strikes the authorization of the committee to advise the ARB
on state, regional, national, and international economic and
technological developments related to greenhouse gas emission
reductions, and specifies that ETAAC advise the ARB on
research and technology that will assist in the reduction of
greenhouse gas emissions on a global basis.
5) Requires ETAAC to conduct an economic assessment that
includes a marginal cost analysis of various strategies for
reducing GHG.
6) Makes various findings and declarations.
7) Specifies that the requirements of the bill remain effective
only until January 1, 2019.
COMMENTS :
AB 2050
Page 3
1) Purpose of Bill . According to the author, "The authority of
the Air Resources Board (ARB) to continue GHG reduction
programs (i.e. Cap and Trade, LCFS) post-2020 is ambiguous
and continues to be challenged by organization trying to halt
ARB's climate change strategies. For examples, CalChamber
recently took ARB to court over the constitutionality over
ARB's cap and trade auctions. Although the Sacramento
Superior Court ultimately decided in favor of ARB, CalChamber
filed an appeal to overturn the cap-and-trade regulation. It
is not out of the realm of possibility, then, that further
attempts to challenge the validity or ARB run programs will
undoubtedly continue. ARB is in a continuous battle and needs
support from the Legislature, if these programs are to remain
operational.
"Furthermore, ARB's 2014 Scoping Plan falls short in
developing and providing quantifiable data so that
decision-makers can better determine how revenues from
Cap-and-Trade will be spent on different projects and
programs. Developing consistent metrics to evaluate various
regulations and technologies associated with the GHG
reduction will help improve our policies and the subsequent
investments that go along with them.
"Lastly, AB 32 established the Economic and Technology
Advancement Advisory Committee (ETAAC) to "advise the state
board [ARB] on state, regional, national, and international
economic and technological developments related to greenhouse
gas emissions." Unfortunately, ETAAC was only involved in
the 2008 Scoping Plan and not involved at all in the 2014
Scoping Plan. Instead, ARB took it upon themselves to
develop their own economic assessment of their own programs,
instead of doing what AB 32 explicitly required them to do.
Maintaining the principles of AB 32 should be sustained
throughout the duration of the programs established by law,
and not modified by the administrative agency as they deem
appropriate."
2) Background . The Scoping Plan was first approved by the ARB in
2008 and outlined a suite of measures aimed at achieving
1990-level emissions of 427 million metric tons of carbon
dioxide equivalent (MMTCO2e) in 2020. The plan originally
established the reductions from California's 2020 "business
AB 2050
Page 4
as usual" GHG emissions projection to be 174 MMTCO2e, but
has since revised the estimate to 80 MMTCO2e, in part to
account for the economic downturn's impact on emission
levels.
The 2008 Scoping Plan recommended that reducing GHG emissions
from the wide variety of sources that make up the state's
emissions profile could best be accomplished through a
cap-and-trade program along with a mix of other strategies,
including the low carbon fuel standard (LCFS), light-duty
vehicle GHG standards, renewable energy requirements and
energy efficiency standards as well as other measures.
Pursuant to AB 32, the reduction measures identified in the
scoping plan had to be proposed, reviewed, and adopted as
individual regulations by January 1, 2011, to become
operative beginning on January 1, 2012. However, AB 32 does
not require the ARB to implement any or all measures in the
Scoping Plan. As a result, there are various recommended GHG
reduction measures presented in the plan, but that were not
subsequently implemented in regulations.
The basic design of the current program, as recommended by
the original Scoping Plan, and since adopted through
regulatory action, is that the combination of direct
regulatory measures and cap-and-trade is intended to achieve
the emission reduction target by 2020. The breakdown of
emission reductions by measures is that over 40 percent of
the 80 MMTCO2e emission reductions needed to meet the 2020
goal are estimated to come from the cap-and-trade and LCFS
programs, with the remainder achieved through other direct
regulatory programs.
Updated Draft Scoping Plan . The ARB released a draft of the
updated Scoping Plan October 2013, and approved by the Board
on May 22, 2014.
The update asserts that California is on track to meet the
near-term 2020 greenhouse gas limit and is well positioned
to maintain and continue reductions beyond 2020 as required
by AB 32. According to the updated plan, "This Update
identifies the next steps for California's leadership on
climate change. While California continues on its path to
AB 2050
Page 5
meet the near-term 2020 greenhouse gas limit, it must also
set a clear path toward long-term, deep GHG emission
reductions. This report highlights California's success to
date in reducing its GHG emissions and lays the foundation
for establishing a broad framework for continued emission
reductions beyond 2020, on the path to 80 percent below 1990
levels by 2050." This 2050 goal was originally set forth in
Executive Order S-3-05, issued by Governor Schwarzenegger in
2005.
The Scoping Plan Update describes policies, actions, and
strategies in the energy, transportation, fuels,
agriculture, waste, and natural lands sectors as a means to
continue emissions reductions in each of these sectors. The
draft also emphasizes the need for California to establish a
mid-term statewide emission reduction target "informed by
climate science, to frame the additional suite of policy
measures, regulations, planning efforts, and investments in
clean technologies that are needed to continue driving down
emissions."
The Update includes a variety of actions in each identified
sector to achieve emissions reductions beyond 2020, but does
not specify reduction targets or timelines for these
measures.
This bill requires ARB to include a proposal for further
reducing GHG emissions by 2050, including intermediate
goals, in the next scoping plan update scheduled for 2019.
AB 2050 is not specific on what constitutes a "proposal,"
so, arguably, the actions proposed for various sectors in
the current Update could suffice. AB 2050 would require,
however, that the next scoping plan update specify
intermediate targets along with their proposal for 2050 GHG
emission reductions.
AB 2050 would also require an evaluation in the next Scoping
Plan update focused on the cost-effective policies and
technologies in the proposal that can be scaled nationally
and internationally and maintain grid reliability.
An evaluation of this nature may be useful, but any
evaluation of a proposal to reduce GHG emission reductions
AB 2050
Page 6
by 2050 should also consider overall societal benefits,
including reductions in other air pollutants,
diversification of energy sources, and other benefits to the
economy, environment, and public health.
During the Senate Environmental Quality Committee meeting on
June 18, 2014, concerns arose regarding whether AB 2050
appropriately balances economic considerations of GHG
emission reduction strategies with an evaluation of public
health, environmental and other societal benefits of those
strategies.
The following are proposed amendments to address those
concerns, as well as concerns of stakeholders regarding the
need to accelerate the timeframe of the analysis:
Require the GHG emission reduction proposal
and intermediate targets in a report from ARB to the
Legislature by January 1, 2016.
Strike the language that focuses the
evaluation on cost-effective policies that maintain
grid reliability.
Require ARB to perform an economic
assessment, using the best available economic models
and data, of the various strategies required to
achieve the emissions reduction proposal and
intermediate goals, and specify that the economic
assessment may include a marginal cost analysis.
Require ARB to perform an analysis of the
benefits to public health, and environmental and
other benefits associated with various strategies
required to achieve the GHG emission reduction
proposal for 2050 and the intermediate targets.
Specify that consistent metrics for GHG
emission reduction quantification also be developed
to assess public health benefits.
Specify that the requirements in the bill
are intended to assist in establishing state policy
AB 2050
Page 7
and do not change statute or regulation, or
regulatory decision.
Specify that the requirements of the bill
remain effective only until January 1, 2016.
Strike all language in the bill regarding
ETAAC.
1) ETAAC . AB 32 required the ARB to appoint the ETAAC to advise
the state board on activities that will facilitate investment
in and implementation of technological research and
development opportunities including, identifying new
technologies, research, demonstration projects, funding
opportunities, developing state, national, and international
partnerships and technology transfer opportunities, and
identifying and assessing research and advanced technology
investment and incentive opportunities that will assist in
the reduction of GHG emissions. The ETAAC is composed of
stakeholders and experts representing, air quality, business,
labor, agriculture, environmental, and energy interests. The
ETAAC first met in 2007, and held their last meeting in 2009.
They produced a report recommending policies and
technologies to reduce GHG emissions in February 2008 and an
update focused on advanced technologies in December 2009.
This bill would limit the ETAAC to 10 members (with a minimum
of five members) who are experts in energy technology and
economics, and require ETAAC to perform an economic
assessment, including a marginal cost analysis, or the
various GHG emission reduction strategies.
Current law allows the ETAAC to advise ARB on state,
regional, national, and international economic and
technological developments related to GHG reductions. The
bill strikes this requirement. The bill also would amend
current law by specifying ETAAC advise the ARB on research
and technology that will assist in the reduction of
greenhouse gas emissions on a global basis.
It is unclear why this language on the breadth of issues on
which the ETAAC may advise ARB was removed. Why shouldn't the
AB 2050
Page 8
ETAAC be able to advise on state, regional, national or
international issues concerning economic and technological
developments related to GHG emission reductions? In addition,
why should the advisory body be constrained to advise the ARB
on research and technology that will assist in the reduction
of greenhouse gas emissions only on a global basis? As an
advisory body, they should be able to provide more expert
analyses and information to the regulatory body, not less.
The bill requires ETAAC to conduct an economic assessment
that includes a marginal cost analysis of various strategies
for reducing GHG emissions.
By only requiring ETAAC to include a marginal cost analysis
in their required economic assessment, the bill prioritizes
this analysis above any other type of economic assessment or
analysis ETAAC may perform to fulfill its duties in advising
ARB in implementing AB 32. Although this type of analysis
may be useful, economic experts from ETAAC should determine
whether or not it should be included in a broader economic
assessment performed for the purposes of advising ARB on
implementing the goals of AB 32.
Proposed amendments strike any reference to ETAAC from the
bill, and instead direct ARB to conduct an economic
assessment, that may, but is not required to, include a
marginal cost analysis.
2) Related Legislation .
a) SB 1078 (Jackson) of 2014, requires the California
Public Utilities and California Energy Commission to set
GHG reduction targets for the electricity sector for
consideration in their long-term energy planning. SB 1078
is currently in the Senate Rules Committee.
b) SB 1125 (Pavley) of 2014, requires the ARB to develop
quantitative GHG emission reduction and short-lived
climate pollutant reduction targets for 2030. SB 1125 was
held on the Senate Appropriations Suspense file.
c) SB 605 (Lara) of 2013, requires the ARB, when updating
the Scoping Plan, prioritize measures to achieve
AB 2050
Page 9
reductions in short-lived climate pollutants with high
global warming potentials. SB 605 is currently in the
Assembly Appropriations Committee.
SOURCE : Author
SUPPORT : California Energy Efficiency Industry Council
Large Scale Solar Association
OPPOSITION : None on file