The passage of AB 32, the California Global Warming Solutions Act of 2006, marked a watershed moment in California’s history. By requiring in law a sharp reduction of greenhouse gas (GHG) emissions, California set the stage for its transition to a sustainable, low-carbon future. AB 32 was the first program in the country to take a comprehensive, long-term approach to addressing climate change, and does so in a way that aims to improve the environment and natural resources while maintaining a robust economy.
AB 32 requires California to reduce its GHG emissions to 1990 levels by 2020 — a reduction of approximately 15 percent below emissions expected under a “business as usual” scenario.
Pursuant to AB 32, ARB must adopt regulations to achieve the maximum technologically feasible and cost-effective GHG emission reductions. The full implementation of AB 32 will help mitigate risks associated with climate change, while improving energy efficiency, expanding the use of renewable energy resources, cleaner transportation, and reducing waste.
According to leading climate scientists from around the world, anthropogenic climate change (that caused by humans) is a significant and growing problem that must be addressed in order to avoid the worst effects. Climate change is the result of various GHGs that are emitted into the atmosphere, such as carbon dioxide (CO2) and methane (CH4), which have a heat forcing effect on the atmosphere. Sharp rises of GHGs over the last century and a half have led to higher overall worldwide temperatures, reduced snowpack in the higher elevations, greater fluctuations of temperature and precipitation, global sea level rise and more frequent and severe extreme weather events, including hurricanes, heatwaves and droughts.
AB 32 requires ARB to develop a Scoping Plan which lays out California’s strategy for meeting the goals. The Scoping Plan must be updated every five years. In December 2008, the Board approved the initial Scoping Plan, which included a suite of measures to sharply cut GHG emissions. In May 2014, ARB approved the First Update to the Climate Change Scoping Plan (Update), which builds upon the initial Scoping Plan with new strategies and recommendations. The Update highlights California’s progress toward meeting the near-term 2020 GHG emission reduction goals, highlights the latest climate change science and provides direction on how to achieve long-term emission reduction goal described in Executive Order S-3-05.
The requirements are that ARB shall do the following:
- Prepare and approve a Scoping Plan for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources or categories of sources of GHGs by 2020, and update the Scoping Plan every five years.
- Maintain and continue reductions in emissions of GHG beyond 2020.
- Identify the statewide level of GHG emissions in 1990 to serve as the emissions limit to be achieved by 2020.
- Identify and adopt regulations for discrete early actions that could be enforceable on or before January 1, 2010.
- Adopt a regulation that establishes a system of market-based declining annual aggregate emission limits for sources or categories of sources that emit GHG emissions.
- Convene an Environmental Justice Advisory Committee to advise the Board in developing and updating the Scoping Plan and any other pertinent matter in implementing AB 32.
- Appoint an Economic and Technology Advancement Advisory Committee to provide recommendations for technologies, research and GHG emission reduction measures.
Reductions in GHG emissions will come from virtually all sectors of the economy and will be accomplished from a combination of policies, planning, direct regulations, market approaches, incentives and voluntary efforts. These efforts target GHG emission reductions from cars and trucks, electricity production, fuels, and other sources.
AB 32 authorizes the collection of a fee from sources of GHGs. In 2010, ARB adopted a regulation to collect a fee to administer the program, called the AB 32 Cost of Implementation Fee Regulation. This fee is collected annually from large sources of GHGs, including oil refineries, electricity power plants (including imported electricity), cement plants and food processors. There are approximately 250 industrial sources of GHGs from which the state collects a fee. Funds collected are used to provide staffing, contracts and equipment to ARB and other State agencies to implement AB 32.
In addition to California’s regulatory and market-based programs aimed at reducing GHG emissions, investments from various sources provide incentives for companies to reduce emissions. Combining strategic financial investments with policy support can accelerate market transitions to cleaner technologies. One important source of funding is the Greenhouse Gas Reduction Fund (GGRF), which will be used to fund a variety of projects that will provide long-term reductions in GHG emissions. Funding for the GGRF comes from auction proceeds that are part of ARB’s Cap-and-Trade program. As directed by legislation, ARB’s Investment Plan evaluates opportunities for GHG reductions and identifies priority investments in the state to help achieve emission goals and realize important co-benefits.
- By January 1, 2008 – ARB adopts the Mandatory Reporting Regulation for GHGs to require reporting, verification, monitoring and enforcement.
- By January 1, 2009 - ARB adopts a Scoping Plan indicating how emission reductions will be achieved from significant sources of GHGs via regulations, market mechanisms and other actions.
- During 2009 - ARB staff drafts rule language to implement its plan and holds a series of public workshops on each measure (including market mechanisms).
- By January 1, 2010 - Early action measures take effect.
- During 2010 - ARB conducts series of rulemakings, after workshops and public hearings, to adopt GHG regulations including rules governing market mechanisms.
- By January 1, 2011 - ARB completes major rulemakings for reducing GHGs including market mechanisms. ARB may revise the rules and adopt new ones after January 1, 2011, in furtherance of the 2020 cap.
- January 1, 2012 - GHG rules and market mechanisms adopted by ARB take effect and are legally enforceable.
- November 14, 2012 - ARB holds its first quarterly auction of GHG emissions allowances as part of the Cap-and-Trade program.
- January 1, 2013 - Cap-and-Trade program begins with a GHG emissions cap that will decline over time.
- September 17, 2013 - ARB issues first carbon offset credits as part of the Cap-and-Trade program.
- May 22, 2014 - ARB approves First Update to the Climate Change Scoping Plan.
- December 31, 2020 - Deadline for achieving 2020 GHG emissions cap.