August 28, 2007 Subcommittee on Alternative Energy Background

Subcommittee on Alternative Energy

 

Oversight Hearing: AB 32 Implementation:
Electricity Sector Greenhouse Gas Reduction Compliance

 

AB 32 (Nunez/Pavely) established the California Global Warming Solutions Act of 2006. The goal of the Act is to reduce greenhouse gas emission (GHG) by 2020 to 1990 emissions levels. In order to achieve this goal, this landmark legislation establishes a regulatory process to:

  • Establish early action items for immediate greenhouse gas reductions.
  • Create a reporting process for greenhouse gas emissions.
  • Define 1990 greenhouse gas emissions so it becomes the baseline and 2020 cap.
  • Adopt plan indicting how emissions reductions will be achieved from specific greenhouse gas emitting sources.

AB 32 provides a specific timeline to meet its goals. The adoption of early action items was the first goal to be reached. One June 21st, 2007, the Air Resources Board (ARB) adopted three early action items that are required to be fully implemented by 2010. These early action items are:

  • the Governor’s Low Carbon Fuel Standard,
  • reduction of refrigerant losses from motor vehicle air conditioning maintenance, and
  • increased methane capture from landfills

AB 32 next requires that by January 1, 2008, that ARB adopt regulations for mandatory GHG emissions reporting and to define 1990 GHG emissions (baseline emissions) and set them as the 2020 statewide cap.

In order to meet this deadline, ARB is coordinating with the appropriate agencies with electricity sector expertise. Though not specifically required under AB 32, the California Energy Commission (CEC) and Public Utilities Commission (PUC) have created a joint staff report, Electricity Retail Provider GHG Reporting Protocol as the basis for public discussion and a final recommendation to the ARB on which GHG regulatory process to undertake.

Around the same time as the CEC/PUC report was made available, the final Market Advisory Committee (MAC) report, Recommendations for Designing a Greenhouse Gas Cap-and-Trade System, was also issued.

What is the MAC? The Market Advisory Committee was not established under AB 32 but instead created by Secretary of Cal-EPA, Linda Adams pursuant to Executive Order S-20-06. The specific role of the MAC was to examine a cap-and-trade system that will work best for California and submit its recommendation to the ARB after which the MAC would be dissolved. The final report was issued June 30, 2007.

These reports address important issues on how a cap-and-trade program could potentially work in California and potentially be integrated into a multi-state GHG reduction standard.

In addition to these recent efforts there are existing programs that need to be integrated into AB 32’s GHG reduction planning.

Energy efficiency remains the most cost effective solution in reducing electricity consumption. Over the past 30 years California has enacted numerous laws that have helped the state maintain a lower per capita consumption of electricity the rest of the United States.

Additionally, in 2002, California embarked on a renewable portfolio standard (RPS) originally requiring that 20% of California’s power be met by renewables by 2017. In 2006, legislation was enacted to require that goal be met by the end of 2010 (SB 107 Simitian, Statutes of 2006). Though the publicly owned municipal utilities (POU’s) were originally excluded from meeting these requirements they were subsequently required to produce an annual report to the CEC regarding their mix of renewable power and success at meeting their own RPS.

In 2005 the Governor adopted a goal of reducing greenhouse gas emissions and this included increasing the RPS to 33% by 2020. This goal was reflected in the 2005 Energy Action Plan. Now pending before the legislature is SB 411 (Simitian) that would lift the 20% cap to 33% by 2020.

As AB 32 implementation continues to move forward ensuring that energy efficiency and the RPS are integrated into quantifiable greenhouse gas reductions understanding these programs limitations will be of equal interest to the Legislature.

Committee Address

Staff