Legislation should improve CARB's AB 32 scoping plan update

By CMTA Staff

Capitol Update, Aug. 8, 2013 Share this on FacebookTweet thisEmail this to a friend

SB 605 (Ricardo Lara, D-Bell Gardens), as it was amended on July 3, imposes new requirements on the California Air Resources Board (CARB) for the updated AB 32 scoping plan, limits the use of offsets in the cap and trade program and would appropriate $125 million of auction revenues for projects in disadvantaged communities. CMTA is opposed to the legislation unless amendments are included to reduce costs and improve the scoping plan update.

Amendments should delete the provision in the bill that allows only in-state offsets to avoid higher costs in the cap and trade program. SB 605’s requirement for only in-state offsets would severely narrow offset options to Forest offsets and small amounts of Livestock Methane offsets. Upward pressure on allowance prices would be the result.

Also, provisions to use cap and trade revenue should be deleted. AB 32 does not authorize ARB to auction allowances in the cap and trade program, therefore we oppose the use of up to $125 million of auction revenues for certain projects. Instead, we recommend that SB 605 require CARB to make "cost containment" a priority when updating the scoping plan. 

AB 32 requires CARB to adopt a scoping plan for regulatory measures to achieve the maximum technologically feasible and cost-effective greenhouse gas (GHG) emission reductions. Without this protection, high costs for California manufacturers and other businesses that are not also imposed on competitors in other states will not result in global emission reductions, but rather simply shift those emissions to other regions.

AB 32 requires CARB to "minimize leakage" for this reason.

Other problems with the current CARB regulatory program stem from design elements that artificially increase costs rather than lower them, such as caps on total offsets and aggressive revenue-raising from regulated entities. The updated scoping plan should include a new commitment to making the cap and trade program more effective by eliminating auction costs and expanding available compliance opportunities. 

In addition, SB 605 should be amended to require legislative approval for GHG emission reduction policies beyond 2020. At this time CARB is working without clear guidance – there is no legislative authority for regulations beyond 2020. CARB intends to make recommendations in the scoping plan update, but post-2020 work is outside their AB 32 authority and is not being informed by legislatively established priorities.

CARB should also be required to perform rigorous and transparent economic analysis when developing future climate policies. This has not been the case, thus far. Instead, the CARB’s economic analysis of AB 32 measures has been an after-the-fact exercise to justify decisions already made.

SB 605 will be heard in the Assembly Natural Resources Committee on Monday, August 12th, where CMTA will urge these changes. 

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