AB-32
THE GLOBAL WARMING SOLUTIONS ACT OF CALIFORNIA
John A. McKinseyStoel Rives LLP
770 L Street, Suite 800Sacramento, CA 95814
AB-32
• In 2006, California passed Assembly Bill-32 which requires the California Air Resources Board (CARB) to reduce greenhouse gas emissions to 1990 levels by 2020.
• It is often referred to as requiring a 25% reduction.
1999 California Greenhouse Gas Emissions
Carbon Dioxide 84%
Hydrofluorocarbons 2%
NitrousOxide 6%
Methane 8%Sources• Carbon Dioxide (CO2)
Fossil fuel combustion
• Methane Fossil fuelsLandfills, agriculture
• Nitrous OxideAgriculture, cars
• HydrofluorocarbonsRefrigerants, solvents
Source: Draft Greenhouse Gas Inventory Update, California Energy Commission, 2001 In COCO22 equivalents equivalents
15Source: Draft Greenhouse Gas Inventory Update, Cali forni a Energy Commission, 2001
Transportation Is California’s Largest Source of COCO22
Residential
9%
Industrial
13%
Transportation
58%
Electricity Generation
16%
Commercial
4%
California Fossil Fuel CO2
Emission Sources, 1999
CO2 Emissions By Source
Major Questions
• “How” will CARB reduce emissions? Indirectly, directly, or a combination of both?
• “How much” will CARB reduce emissions?
• “What” will CARB reduce?
How Much
1990: 440 Million Metric Tons (MMT)
2004: 500 MMT
2020 Projected: 610
The Task: Reduce the emission rate by about 170 MMT in 16 years (includes reductions to counter further increases)
CO2
The Burning Question
• How will CARB reduce CO2 emissions? – Will trading of CO2 credits be allowed?– How will CARB find the reductions when
transportation is mostly off-limits and electricity is already fairly lean?
• Adopt a list of early action measures by July 1, 2007 that can be implemented before January 1, 2010 and adopt such measures by then.
• Establish by January 1, 2008, a statewide GHG emissions cap for 2020, based on 1990 emissions.
• Adopt mandatory reporting rules by January 1, 2008 for significant sources of greenhouse gases.
• Adopt a scoping plan by January 1, 2009 that indicates how emission reductions will be achieved from significant GHG sources via regulations, market mechanisms and other actions.
• Adopt regulations by January 1, 2011 to achieve the maximum technologically feasible and cost-effective reductions in GHGs, including provisions for using both market mechanisms and alternative compliance mechanisms.
What AB-32 requires CARB to do:
AB-32: Early Action Measures
• CARB “Adopted” three measures- Low carbon fuel standard- Auto A/C improvements- Landfill methane capture
• CARB has announced six more measures:– Trucking (aerodynamic retrofitting)– Ports (plug in docked ships so they can turn off)– Tire pressure assurances– Semiconductor industry (standards)– Consumer products (standards)– Reduce use of sulfur hexafluoride
AB-32: Early Action Measures cont….
• CARB has also announced five more measures to come:– Cement plant efficiency– Cement blending requirements– Ban on truck idling at rest stops– Recover refrigerants– Possible fertilizer standards
167.8 MMT
170 MMT- 2.8 MMT
AB-32: Next Steps
• Reporting requirements (by end of 2007)
• Scoping plan (by end of 2008)
• Regulations to implement scoping plan (by end of 2010)
• Implementing regulations take effect (2011)
Reduction Measures and Limits (AB-32)- Thoughts
• CARB has broad task and vehicle emissions, though a major source, are not really an option for reductions right now.
• This endeavor is new. Expect delays, missteps, lawsuits, and lots of uncertainty.
• Lurking quietly in the background is the federal government. With one quick action, the California scheme could be gutted, eliminated, or significantly changed.
• California electricity generation is already very lean on CO2 and getting leaner. It may be very hard to squeeze many reductions out of that sector either.
Implementing AB-32: Lowering CO2 to 1990 Levels
Reduce Emissions Increase Removals
Transportation
Electricity
Buildings and
Development
Natural Systems
Artificial Systems
But How?....
Mandates
Encouragements
or
The Big Picture
• Need 170 MMT reduction
• Have 2.8 MMT from early measures
• Will get some from SB-1368
• Will get some from RPS • Total is maybe 36 MMT at this point so 135 left to go.
• Where will the other 135 or so MMTs come from?
• Answer: The biggest fruit:– Electricity Sector– Transportation (where allowed)– Buildings and development
The Electricity Sector
• SB-1368 imposes CO2 emissions standard on long term baseload electricity procurement. (translated: no more coal)
• The CPUC is taking the initiative to continue its GHG rulemaking. In Phase II it plans to adopt, as recommended to CARB, a load-based, cap and trade scheme for the electricity sector.
• CARB is not obligated to follow the recommendation.
• The battle over the electricity sector under AB-32 will come down to:– Load or source-based?
– Trading, direct, or both?
– How much?
• It is clearly significantly too early to predict the outcome.
Nuclear/ Hydro/ Wind***
CC CGT Standard SS CGT Oil Coal
1100
1400
1,900
2,100
1000?
Electricity GenerationComparative Emission Rates
Units of 1000’s pounds per MW-HR
Applies to Long term procurements (5 years)
Applies to baseload (>60% CF)
Transportation
• Two methods: reduce emissions per VMT or reduce VMT
• Reducing emissions per VMT is blocked by federal law (so far)– Mostly: tire pressure, incentives to buy high mileage
cars, etc. – But no tailpipe emission regulation for now.
• Reducing VMT– Nothing new here, carpooling, work from home,
neighborhood/ community design– But is their political will to do this????
Buildings and Development
• Building Efficiency– The zero emission building– Insulation, natural light and heating and on site or
linked renewable energy production– $$$$$$$$$$$$$$$$
• Development Efficiency– How to force local jurisdictions to play along?
• One answer so far: environmental law• Incentives?• New state law
– Building Standards
The Battlefront: CEQA
• The California Environmental Quality Act (CEQA) is, and will become more, involved– Ex: AG Brown forces SF Bay Refiner to pay $7M for
mitigation of new CO2 emissions resulting from refinery expansion.
– Ex: Environmental intervenor insists that peaker project EIR inadequately addresses potential impacts from CO2 emissions.
• Clearly, CEQA “projects” now have to include an analysis of the potential for significant impacts to the environment through greenhouse gas emissions.
Next Events
• More CEQA comments, challenges
• CARB rulemaking and AB-32 implementation.
• CPUC Phase II GHG rulemaking
• Outcome of vehicle emissions cases
• Outcome of EPA decision on whether to regulate GHGs (driven by Supreme Court Decision)
Forums to track
• CARB: www.arb.ca.gov
• CPUC: GHG Phase II Rulemaking 06-04-009 www.cpuc.ca.gov/proceedings/R0604009.htm
• CEC: 06-OIR-1
www.energy.ca.gov/ghgstandards
• Federal EPA: GHG decision
epa.gov/climatechange/index.html
Final Thought
• How do you prove that a CO2 reduction or removal is real, permanent and accurate?– Answer: Indirectly by inference from science– Answer translated: “On paper”– Compare to air pollutants which we can
measure concentration reductions over time– For CO2 it is a global concentration of which
meager California reductions under SB-32 will be completely insignificant and unnoticeable.