• California Issues Roadmap for Implementation of State's Groundbreaking Climate Change Legislation
  • July 21, 2008 | Authors: Kevin Poloncarz; Edward L. Strohbehn; Rick R. Rothman; Michael S. McDonough; Robert S. Taylor
  • Law Firms: Bingham McCutchen LLP - San Francisco Office; Bingham McCutchen LLP - Los Angeles Office; Bingham McCutchen LLP - Washington Office; Bingham McCutchen LLP - Boston Office
  • On June 26th, ahead of schedule, the California Air Resources Board (CARB) issued its Draft Scoping Plan (Draft Plan), as required by the California Global Warming Solutions Act of 2006 (known as Assembly Bill (AB) 32, Núñez) (Cal. Health and Safety Code §§ 38500 et seq.). Captioned “A Framework for Change,” the Draft Plan is intended to provide the roadmap for California to achieve the ambitious goals set forth by AB 32. But, as Chair Mary Nichols has emphasized, the Draft Plan provides a broad range of alternatives and is not intended as a blueprint for the specific actions that will need to be undertaken to reduce greenhouse gas emissions to 1990 levels by 2020.

    The Draft Plan casts a spotlight on initiatives and paths that CARB is likely to take, even if the specific elements are still to be developed. CARB Staff intends to present the proposed Plan to the Board for its consideration in October. The Board is then expected to make its final decision on the Plan at its November meeting. Individual measures will then be implemented through separate rulemaking efforts. In some cases, additional legislation may be necessary.

    CARB highlights five “preliminary recommendations” among the 26 “Greenhouse Gas Reduction Measures” listed in the Draft Plan:

    • Develop a California Cap-and-Trade program linked to the Western Climate Initiative Partner programs to create a regional market system.
    • Expand the Renewables Portfolio Standard to 33 percent.
    • Implement targeted fees to fund administration of AB 32.
    • Expand and strengthen existing energy efficiency programs and building and appliance standards.
    • Implement existing state laws and policies, including the California clean car standards, goods movement measures, and the Low Carbon Fuel Standard.

    Overall, the mix of regulatory measures proposed by the Scoping Plan would generate reductions in California’s greenhouse gas emissions of 169 million tons of carbon dioxide (CO2) equivalent, in comparison to the emissions projected in 2020 if growth were assumed to continue growing under “business as usual.” This would represent about a 30 percent reduction from business as usual. 

    CARB leaves no doubt about its focus on promoting the development of an effective cap-and-trade program that, by 2020, would include 85 percent of statewide emissions within a declining cap. Nevertheless, CARB also underscores that “sources within the cap-and-trade program will need to meet other regulatory requirements.” For sectors within the cap, these other measures would, by themselves, achieve over 75 percent of the reductions required from such sectors. For example, transportation fuels, which are already slated for coverage by the Low Carbon Fuel Standard, are also proposed by CARB for inclusion within the cap. Of the total of 147 million tons of reductions to come from the capped sectors, 112 million tons (about 76 percent) will be achieved through other regulatory measures, with the remaining 35 million tons of reductions demanded from such sectors (about 24 percent) to come from additional efforts taken to meet the cap.

    The expected sequence is:

    • Beginning as early as 2010, initial reductions will be achieved by new and existing regulations and other measures.
    • By 2012, the cap-and-trade program will begin delivering reductions.
    • By 2020, the cap-and-trade program “will achieve a significant portion of the required reductions.”
    • Beyond 2020, all the mechanisms, including cap-and-trade and innovations in technology, will be needed to meet California’s long-term greenhouse gas reduction goals.

    Importantly, CARB proposes to develop the cap-and-trade program along with six western states and three Canadian provinces as part of the Western Climate Initiative (WCI). Two of the key benefits cited by CARB of pursuing a cooperative program with other WCI members are:

    • Reduces the potential for “leakage,” i.e., that reductions in emitting activities in California would merely relocate to outside California; and
    • Helps WCI partners gain an advantage in preparing for future action at the federal level, which is also likely to include a cap-and-trade program as a key element.

    The Draft Scoping Plan does not attempt to resolve some of the most critical questions regarding a cap-and-trade program, such as the percentage of allowances that should be allocated freely vs. auctioned or whether and to what extent sources may meet their mandatory reduction obligation through acquisition of “offsets” obtained from other sources.

    CARB underscores that a significant portion of the reductions will need to come from its automotive emission standards (known as the Pavley standards), which are currently barred from enforcement because U.S. EPA has denied California’s request for waiver of federal preemption.

    According to CARB, implementation of the measures proposed in the Draft Plan will:

    (i) Provide savings for households and businesses, estimated to be $200 per year for the average homeowner;

    (ii) Drive increased investment and job growth in California in green technology businesses, with each $100 million in venture capital funding creating 2,700 jobs, $500 million in annual revenues for two decades, and many indirect jobs; and

    (iii) Improve public health through reductions in smog-forming and toxic “co-pollutants,” with the total value of public health benefits estimated at $2 billion in 2020 with, for example, 330,000 fewer restricted activity days and 57,000 fewer work days lost. 

    CARB expects to provide further details about its analysis of these benefits later this summer.

    The Draft Scoping Plan is truly revolutionary in its scope and breadth, calling upon changes in individual behavior to support many of the recommended measures. In its conclusion, CARB says, “The basic outline is here. It’s up to you who read it to help fill in the blanks” — to which one might add, “The devil is in the details.” For a plan that is long on vision and short on details, effective implementation will require focused participation from members of the public and affected sectors, both in finalizing the plan and in developing the regulatory measures called for by it.

    The Draft Scoping Plan may be reviewed and comments electronically submitted at: http://www.arb.ca.gov/cc/scopingplan/document/draftscopingplan.htm.