AB-32
THE GLOBAL WARMING
SOLUTIONS ACT OF CALIFORNIA
John A. McKinsey
Stoel Rives LLP
770 L Street, Suite 800
Sacramento, CA 95814
916.319.4746
jamckinsey@stoel.com
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
Hydrofluorocarbons
Nitrous
Oxide 6% 2%
Methane 8%
Carbon
Dioxide 84%
Sources
• Carbon Dioxide (CO2)
Fossil fuel combustion
• Methane
Fossil fuels
Landfills, agriculture
• Nitrous Oxide
Agriculture, cars
• Hydrofluorocarbons
Refrigerants, solvents
Source: Draft Greenhouse Gas Inventory Update, California Energy Commission, 2001
In CO2 equivalents
Transportation
Is California’sBy
Largest
Source of CO2
CO2 Emissions
Source
Commercial
4%
Electricity
Generation
16%
Industrial
13%
Residential
9%
Transportation
California Fossil Fuel CO2
Source: Draft Greenhouse Gas Invent ory Update, Cali forni a Energy Commi ssi on, 2001 Emission Sources, 1999
58%
15
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
CO2
The Task: Reduce the emission
rate by about 170 MMT in 16
years (includes reductions to
counter further increases)
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?
What AB-32 requires CARB to do:
• 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.
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
170 MMT
- 2.8 MMT
167.8 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
Transportation
Increase Removals
But How?....
Natural Systems
Electricity
Mandates
or
Buildings
and
Development
Encouragements
Artificial
Systems
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.
Electricity Generation
Comparative Emission Rates
Units of 1000’s pounds per MW-HR
2,100
Applies to Long term procurements (5 years)
1,900
Applies to baseload (>60% CF)
1400
1100
1000?
Nuclear/
Hydro/
Wind***
CC CGT
Standard
SS CGT
Oil
Coal
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.