Keeping up on AB 32 implementation

By CMTA Staff

Capitol Update, June 21, 2013 Share this on FacebookTweet thisEmail this to a friend

California Air Resources Board (CARB) began firing on all cylinders in May after a quiet four months since January. We’ve had workshops on the addition of all natural gas emissions in the cap and trade program (to begin 2015), the possible exclusion of universities and combined heat and power industries caught in the first compliance period of cap and trade and the kick-off for the AB 32 updated scoping plan. Workshops are also underway to explore fixes for the low carbon fuel regulation. After a long hiatus, the Environmental Justice Advisory Committee last week held a public meeting to consider next steps. Coming up next week is a workshop to consider amendments to cap and trade cost containment mechanisms, reporting, and compliance rules. 

Much of this is heading toward an October CARB board meeting to adopt changes to transition to 2015 and beyond. The first compliance period starting in 2013 directly regulates large industrial emitters and all electric power generators. In 2015 the program greatly expands to include all transportation fuels and natural gas emissions. The California Public Utilities Commission and CARB intend to protect vulnerable companies who are ‘trade exposed and emissions intensive’ by giving free allowances or utility bill credits. Nevertheless, CMTA believes the auction component of cap and trade has made the program more expensive than necessary, and many manufacturers will incur high costs that threaten jobs and investments in the state. 

We are concerned about the cumulative impact of all AB 32 regulations when they are fully implemented in the 2015 to 2020 timeframe. Higher gasoline, electricity, and natural gas costs will be paid by local suppliers and passed up to larger manufacturers who will have their own higher costs to pay. The competitive global marketplace does not give state manufacturers pricing power – they will have to absorb the costs, reduce production, reduce employment, or suffer unprofitable operations. This is not sustainable.

Getting to 2020 will not be the end of the story. In the updated AB 32 scoping plan CARB will explore options to prepare the state for reaching a greenhouse gas emission reduction goal of 80 percent below 1990 levels by 2050. While AB 32 may grant authority to maintain 1990 emission levels past 2020, we do not agree that CARB has authority to impose regulations for lower emission reductions. For many reasons, not the least of which is the fact that California is the only state with an economy-wide cap and trade program, it is time for legislators to seriously re-engage in the debate about the path we are on since adoption of AB 32. CMTA members should make it a high priority to educate their local public officials and legislators about the impact of AB 32 on your operations, employment, investment plans, etc. Join the Climate Change Advisory Committee of CMTA to learn more about what’s happening in this issue area, and how you can help your company meet the challenges going forward.

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