On September 27, 2006, then Governor of California Arnold Schwarzenegger signed into law the Global Warming Solutions Act of 2006, or AB 32. The law seeks to fight climate change through a comprehensive program reducing GHG emissions from virtually all sources statewide. The Act requires the California Air Resources Board (CARB) to develop regulations and market mechanisms that will cut the state’s GHG emissions to 1990 levels by 2020—a 25% reduction statewide. AB 32 requires CARB to take a variety of actions aimed at reducing the state’s impact on the climate.
AB 32 authorizes CARB to use market mechanisms as part of its portfolio of carbon-cutting policies, and on December 17, 2010 CARB decided to pursue a cap-and-trade program. The Board formally adopted the proposed cap-and-trade rule on October 20, 2011. The program is scheduled to begin in 2012, though the compliance period does not begin until 2013. The program places a GHG limit that will decrease by two percent each year through 2015 and by three percent from 2015 through 2020. The cap-and-trade rules will first apply to some of the major emitters—utilities and large industrial plants. In 2015, the rules will apply to fuel distributors as well, eventually totaling 360 businesses throughout California. The market will begin with a distribution of free allowances to regulated businesses. The portion of emissions covered by these free allowances will vary by industry, but generally will account for approximately 90 percent of the business’s overall emissions and this percentage will decline over time. For any additional emissions, the business must purchase the necessary allowances at a quarterly auction or from an entity that has excess allowances. Offsets are also allowed for up to eight percent of a business’s compliance obligation. California’s cap and trade program is scheduled to link with programs in Ontario, British Columbia, Manitoba and Quebec through the Western Climate Initiative.
Main C2ES California Cap-and-Tade Page
California Cap-and-Trade Program Summary Table (pdf)
California Cap-and-Trade Home
California Cap-and-Trade Rule
Summary of California Cap-and-Trade Rule
Western Climate Initiative
C2ES Regional Initiatives Page
Association of Irritated Residents, et al. v. California Air Resources Board
In December 2010, a number of environmental justice associations, including the Association of Irritated Residents (AIR), challenged the California Air Resources Board’s (CARB) selection of a cap-and-trade program as a major element in reaching AB 32’s emission target . AIR’s lawsuit alleged that CARB violated key requirements of AB 32 and the California Environmental Quality Act (CEQA). In March 2011, a Superior Court of California judge ruled that CARB had not sufficiently considered alternatives to a cap-and-trade program and had approved and implemented its plan before completing the necessary environmental impact review (EIR) in violation of CEQA. CARB was ordered to revise its analysis of cap-and-trade alternatives, but was found not be in violation of AB 32. In June 2011, a California Court of Appeal granted CARB a stay to continue implementation of its cap-and-trade program. After the March decision CARB further analyzed alternatives to cap-and-trade, and in December 2011 this revised analysis was accepted as sufficient to fulfill the trial court’s March order. This leaves CARB in the clear to continue implementation. However, AIR has pledged to appeal the March decision that cap-and-trade does not violate AB 32, claiming it does not provide the maximum feasible and cost-effective greenhouse gas reductions.
Lawsuit News Coverage
Other AB 32 Elements
Prepare a Scoping Plan
- CARB was required to prepare a scoping plan to achieve the “maximum technologically feasible and cost-effective” reductions in greenhouse gas emissions.
- In December 2008, the Air Resources Board approved a scoping plan that will achieve emission reductions through regulations, market mechanisms, and other actions geared toward the emissions of several economic sectors.
AB 32 Scoping Plan
AB 32 Fact Sheet and Timeline
Identify 1990 Statewide Emissions Level
- AB 32 required CARB to determine 1990 greenhouse gas emissions levels to serve as the 2020 emissions reduction target.
- In December 2007, 427 million metric tons of carbon dioxide equivalent (MMTCO2e) was established as the 1990 emissions level and 2020 reduction limit.
- California emitted 474 MMTCO2e in 2008 and would be projected to emit 507 MMTCO2e in the absence of AB 32.
CARB Emissions Inventory Home Page
CARB GHG Inventory Data 2000-2008
CARB GHG Projection 2020
Mandatory Emissions Reporting
- AB 32 mandated the reporting of greenhouse gas emissions throughout the state.
- In December 2007, the California Air Resources board adopted regulations requiring the state’s largest industrial sources to report and verify their emissions.
CARB Mandatory Greenhouse Gas Reporting Home Page
Early Action Measures
- AB 32 authorized the California Air Resources Board to identify discrete early action areas that could be enforced by 2010.
- In 2007, CARB identified nine early action areas and proposed regulations for motor vehicle fuels (through the low carbon fuel standard – see below), landfill methane capture, mobile air conditioning, semiconductors, the fuel efficiency of heavy-duty tractors, tire pressure, and high global warming potential (GWP) gases in consumer products.
CARB Early Action Items Home Page
Low Carbon Fuel Standard
- With the transportation sector accounting for 40 percent of the state’s greenhouse gas emissions and with petroleum-based fuels meeting 96 percent of transportation needs, Governor Schwarzenegger issued Executive Order S-01-07 on January 18, 2007, authorizing a Low Carbon Fuel Standard (LCFS).
- The LCFS calls for at least a 10 percent reduction in the carbon intensity of California’s transportation fuels by 2020.
- The LCFS was challenged in court and was blocked on December 29, 2011. CARB appealed the decision and is allowed to enforce the LCFS while the appeal is pending.
Executive Order S-01-07
CARB LCFS Home Page
CARB LCFS Question & Answer Document
Other Requirements for CARB
- Ensure voluntary early reductions receive appropriate credit.
- Establish an Environmental Justice Advisory Committee (EJAC) to advise CARB on implementing AB 32.
- Establish an Economic and Technology Advancement Advisory Committee (ETAAC) to make scientific and technical recommendations on greenhouse gas reduction measures.
AB 32 Voluntary Actions Home Page
EJAC Home Page
ETAAC Home Page