In 2006, California’s legislature adopted Assembly Bill 32 (AB 32), the Global Warming Solutions Act, which directed the California Air Resources Board (CARB) to develop a plan to reduce California’s greenhouse gas (GHG) emissions to 1990 levels by 2020. AB 32 also requires CARB to approve a scoping plan “for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions” by January 2009. On June 26, 2008, CARB released its long-awaited Climate Change Draft Scoping Plan to implement the directives of AB 32. CARB will continue to revise this Draft Scoping Plan based on further analysis and public input to develop the Proposed Scoping Plan, which it will present for further consideration in November 2008.
CARB has approached the goals of AB 32 with a comprehensive set of recommended actions, including, but not limited to, (1) expansion and strengthening of existing energy efficiency programs; (2) expansion of the Renewable Portfolio Standard (RPS) to 33 percent; (3) development of a Californian GHG cap-and-trade program; (4) implementation of existing state laws and policies; (5) targeted fees to fund California’s long-term commitment to AB 32; and (6) achievement of 3,000 MW of new solar distributed generation under California’s Million Solar Roofs Program. With these varied recommendations, CARB has sought to combine market mechanisms, existing and new regulations, voluntary measures, fees and other policies that complement each other to form the most effective overall method of reducing GHG emissions.
The central element of the Draft Scoping Plan is the GHG cap-and-trade program, under which 85 percent of California’s GHG emissions will be subject to a declining emissions cap. CARB proposes to work closely with the Western Climate Initiative (WCI) to design and develop California’s cap-and-trade program so that it will link with the overall regional GHG emissions reduction program developed under the WCI. Currently California, Arizona, Montana, New Mexico, Oregon, Utah, Washington and the Canadian provinces of British Columbia, Manitoba and Quebec have actively joined the WCI, while several other U.S. and Mexican states and Canadian provinces are observing. CARB hopes that by participating in a regional GHG emissions reduction program, the potential for “leakage” will be reduced and that substantially greater reductions can be achieved in the most efficient manner. In addition, CARB anticipates that a GHG cap-and-trade program will be a significant element in any future federal regulation of GHG emissions, and hopes that California’s program can serve as a model for the development of such a federal program.
The specific elements of California’s cap-and-trade program, such as setting the cap and deciding how to allocate and distribute allowances, will need to be developed through the public rulemaking process over the following two years. To meet AB 32’s directives, regulations to implement the cap-and-trade system will need to be developed by January 1, 2011, with the program beginning in 2012.
Increasing energy efficiency is another lynchpin in the CARB’s Draft Scoping Plan. California has a long history of encouraging and improving energy efficiency: in 2004, Governor Schwarzenegger passed his Green Building Initiative to encourage energy efficiency in new and existing buildings, and in 2005 and 2006, the California legislature directed electric utilities to meet their resource needs first through all available energy efficiency and demand response resources. The Draft Scoping Plan builds upon these initial steps and envisions that programs like these can be expanded and enhanced to reduce California’s overall energy needs and thus the amount of GHG emitted in such energy’s production.
Another major facet of the CARB’s Draft Scoping Plan is to tackle GHG emissions from the transportation sector. CARB has proposed several strategies for addressing various aspects of the transportation industry. First, CARB recommends the implementation of the Light-Duty Vehicle GHG Standard that was adopted by the California legislature in 2002. To date, CARB has adopted regulations for this program, but cannot implement such regulations without a waiver from the U.S. Environmental Protection Agency, which initial had been denied. If these regulations cannot be implemented, CARB has several suggested alternative regulations to serve as a backstop for achieving GHG emissions reductions in the transportation sector. Second, CARB recommends the development and implementation of a Low Carbon Fuel Standard that incorporates a market-based compliance mechanism to provide flexibility to fuel providers while meeting emissions goals. Third, the CARB suggests implementation of various vehicle efficiency measures for different categories of vehicles. Further, CARB indicates that it will support the implementation of a high speed light rail system. This system will provide travelers with a public means of transportation between Northern and Southern California, thus reducing the number of cars on the highway. Other measures addressing the transportation sector remain under consideration and may be included in the final Proposed Scoping Plan based on further analysis and public comment.
Balancing California’s Environmental Goals with the Economic Realities
The Draft Scoping Plan is designed to maximize the total benefits to California in the most efficient and effective manner. CARB has conducted and continues to conduct extensive economic modeling, including measuring the impacts of AB 32 on low-income households. Preliminary estimates of the overall costs and savings of the actions considered in the Draft Scoping Plan indicate that on the whole, the savings will outweigh the costs. Most significantly, studies have shown that the costs of doing nothing far outweigh any potential costs of implementing the actions recommended in the Draft Scoping Plan. High energy prices and California’s particular sensitivity to the effects of global warming, such as the melting ice pack in the Sierra, rising sea levels and more frequent heat waves, contribute to the burgeoning costs of ignoring the issue of global warming.
On the other hand, the potential benefits to Californians of reducing GHG emissions under the Draft Scoping Plan include individual cost savings, increased investment in California, more available jobs in green industries, environmental benefits and the improvement of public health. For instance, increased energy efficiency will provide significant savings to both individuals and companies by reducing utility bills. In addition, the implementation of actions under the Draft Scoping Plan will drive the growth of California’s green industries, which in turn will encourage investment in California in general.
California’s actions to address climate change once again place it in a global leadership role in the environmental sector. The state as a whole is committed to developing a comprehensive plan to reduce GHG emissions. CARB plans to hold several public workshops across California on the Draft Scoping Plan and will be accepting public comments while it continues to perform research, analysis and modeling efforts to determine what modifications to make in the final Proposed Scoping Plan.
Other Recent State Actions
California, while a groundbreaker in environmental regulation, is not the only state addressing climate change. For instance, a state court in Georgia recently invalidated a permit for the development of a proposed coal-burning power plant and instructed the state Environmental Protection Division to include carbon dioxide emissions limitations in any future permit for that plant. The court, applying the Supreme Court of the United States’ decision in Massachusetts v. EPA (2007), for the first time linked carbon dioxide to an air pollution permit under the Clean Air Act. See McDermott On the Subject “Two U.S. Supreme Court Rulings Pave the Way, Maybe,” published April 5, 2007. In Massachusetts v. EPA, the Supreme Court found that carbon dioxide was a pollutant that could be regulated under the federal Clean Air Act. Although the federal government has not issued any regulations in response to this decision, the Georgia court stated that federal air pollution control laws required pollution permits to cover all pollutants that could potentially be regulated under the Clean Air Act. If upheld on appeal or adopted by other states, this decision could have a far-reaching impact on the regulation and limitation of carbon dioxide emissions from emission sources, such as power plants, in the United States.