The much anticipated Climate Change Draft Scoping Plan for implementation of AB 32 was released June 26 by the California Air Resources Board (CARB). The goal of the plan, which is required by the Global Warming Solutions Act of 2006, is to reduce California's greenhouse gas emissions by 30 percent over the next 12 years through a variety of measures.
Highlights of the plan include:
·
New Fees
and Charges.
o
Carbon
Fees. Set between $10 and $50 per metric ton. For every $10/metric ton, the
wholesale price of coal-fired electricity would increase by $0.01 per
kilowatt-hour, of gasoline by $0.10 per gallon, and of natural gas by $0.05 per
therm. These fees are expected to generate billions per year. These fees would
increase over time and would "be high enough to drive investment and fuel
use choices toward more efficient and lower carbon options."
o
Feebates. The
plan proposes fees on the purchase of high GHG emitting vehicles that would be
rebated to purchasers of low GHG emitting vehicles.
o
Public
Goods Charge. $100 million to $500 million annually for efficiency
improvements.
o
Congestion
Pricing. Drivers would pay for travelling during peak hours on congested
routes.
o
Pay-As-You
Drive. The more you drive, the more you pay in insurance.
· Cap and Trade. A cap and trade program is proposed to cover 85 percent of the statewide emissions. A "regional carbon market" made up of seven states and portions of Canada would be created under the plan. Under the cap and trade program, the total amount of GHG emissions is capped at 365 metric tons by 2020. According to the draft plan, emissions reductions beyond what is required could be banked and traded. Currency would take the form of state-issued allowances based on the emissions cap during any specific compliance period. These allowances could be auctioned or traded. A cap and trade program design framework is expected in September 2008.
· Renewable Energy Mandates. The draft plan would require utilities to produce 33% of their energy from renewable sources by 2020 and would strengthen existing energy efficiency programs and building and appliance standards.
· Full Implementation of Clean Car Law (the Pavley Standards). CARB has applied for a waiver from the Environmental Protection Agency to implement the Pavley standards which focus on mobile source emissions reductions. They have yet to receive a waiver, but intend to draft back-up regulations if it is not granted.
· Low Carbon Fuel Standard. The proposal would require development and implementation of the Low Carbon Fuel Standard, proposed in the Governor's Executive Order (S-1-07). The preliminary recommendation is a reduction of 16.5 metric tons.
· High Global Warming Potential (GWP) Gases. The plan proposes measures to address the problem of high GWP gases, such as regulations and/or fees.
·
Full
Implementation of "Million Solar Roofs Initiative."
·
High
Speed Rail. A 700-mile long rail system capable of exceeding speeds of 200
miles per hour.
·
Water-Related
Energy Efficiency Measures. The state would establish a "public goods
charge" to fund investments in water efficiency to reduce GHG emissions. This
is estimated to generate $100 million to $500 million per year.
·
Increased
Emissions Mandates on Trucks and Ships. CARB has adopted a regulation to
require ship electrification at the ports. Also discussed in the draft plan is
a regulation requiring retrofits for medium- and heavy-duty vehicles for fuel
efficiency.
·
Local
Government Action. The draft plan encourages locally set emissions targets.
The final Proposed Plan is expected to be released in
October 2008, and according to CARB, will contain "additional staff
modeling and analysis, consideration of public comment on the Draft Plan,
recommendations from the advisory committees and other experts." The draft
plan also indicates that the Proposed Plan will contain analysis of economic,
public health and environmental impacts. Preliminarily, CARB estimates that the
benefits due to improved energy efficiency and development of alternative fuels
will exceed the costs to businesses. The economic modeling is not complete, but
is expected to be released this summer. CARB expects to hold workshops and
community meetings to obtain public comment on the Draft Plan.
Cal-Taxletter June 27, 2008
© 2008 California Taxpayers' Association. All Rights Reserved.