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AB-9 Greenhouse gases: market-based compliance mechanism.(2023-2024)



Current Version: 04/17/23 - Amended Assembly

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AB9:v98#DOCUMENT

Amended  IN  Assembly  April 17, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 9

Introduced by Assembly Member Muratsuchi

December 05, 2022

An act to amend Section 38566 of add Section 38562.3 to the Health and Safety Code, relating to greenhouse gas emissions.


LEGISLATIVE COUNSEL'S DIGEST


AB 9, as amended, Muratsuchi. California Global Warming Solutions Act of 2006: emissions limit. Greenhouse gases: market-based compliance mechanism.
The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. Under the act, the state board is required to approve a statewide greenhouse gas emissions limit equivalent to the statewide greenhouse gas emissions level in 1990 to be achieved by 2020 and to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by no later than December 31, 2030. Under the act, a violation of a rule, regulation, order, emission limitation, emission reduction measure, or other measure adopted by the state board under the act is a crime.

This bill instead would require the state board to ensure that statewide greenhouse gas emissions are reduced to at least 55% below the 1990 level by no later than December 31, 2030. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The act authorizes the state board to include the use of market-based compliance mechanisms in regulating greenhouse gas emissions. The act requires the state board to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions and to update the scoping plan at least once every 5 years.
This bill would require the state board to initiate a regulatory process to evaluate potential updates to the market-based compliance mechanism, and would require regulatory changes to take effect no later than January 1, 2025. The bill would require the evaluation to focus on specified items, including whether the supply of emission allowances and carbon offsets are consistent with a linear trajectory toward the statewide greenhouse gas emissions reduction goal established in the state board’s most recent scoping plan, rules for banking allowances to use for future compliance, and recommendations made by the Independent Emissions Market Advisory Committee and the state board’s environmental justice advisory committee.
The bill would require the state board, beginning January 1, 2028, and subsequently on a triennial basis, as specified, and in consultation with the Independent Emissions Market Advisory Committee and the environmental justice advisory committee, to conduct an evaluation of the market-based compliance mechanism, as provided.
The bill would require the chairperson of the state board to appear before the Joint Legislative Committee on Climate Change Policies to present the results of an evaluation and specified proposed revisions to the regulations implementing the market-based compliance mechanism. The bill would authorize, following the chairperson’s appearance before the Joint Legislative Committee on Climate Change Policies, the state board to revise the regulations implementing the market-based compliance mechanism so that the mechanism can more effectively meet the goals of the act and objectives specified in the most recent scoping plan.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YESNO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 38562.3 is added to the Health and Safety Code, to read:

38562.3.
 (a) The state board shall initiate a regulatory process, consistent with Section 38562, to evaluate potential updates to the market-based compliance mechanism, and regulatory changes shall take effect no later than January 1, 2025. The evaluation shall focus on all of the following:
(1) Whether the supply of emission allowances and carbon offsets are consistent with a linear trajectory toward the statewide greenhouse gas emissions reduction goal as established in the most recent scoping plan adopted pursuant to Section 38561.
(2) Methods to automatically adjust emission allowance supply to reflect allowance auction clearance price.
(3) The use of carbon offsets.
(4) Emissions levels of locally harmful nongreenhouse gas air pollution from facilities subject to the program and methods to address this air pollution.
(5) Rules for banking allowances to use for future compliance.
(6) The cost-effectiveness and incentive for innovation relative to other greenhouse gas emission abatement strategies.
(7) Recommendations made by the Independent Emissions Market Advisory Committee established pursuant to Section 38591.2, the environmental justice advisory committee appointed pursuant to Section 38591, and other recommendations as considered relevant by the state board.
(b) The state board shall, beginning January 1, 2028, and subsequently on a triennial basis aligned with compliance periods, and in consultation with the Independent Emissions Market Advisory Committee and the environmental justice advisory committee, conduct an evaluation of the market-based compliance mechanism. The evaluation shall focus on the items listed in paragraphs (1) to (7), inclusive, of subdivision (a). Following an evaluation, the state board may initiate a regulatory process to update the market-based compliance mechanism, consistent with Section 38562.
(c) Following an evaluation conducted pursuant to subdivision (a) or (b), both of the following shall occur:
(1) In appearing before the Joint Legislative Committee on Climate Change Policies pursuant to subdivision (c) of Section 9147.10 of the Government Code, the chairperson of the state board shall present the results of an evaluation conducted pursuant to subdivision (a) or (b) and any revisions to the regulations implementing the market-based compliance mechanism the state board proposes to make pursuant to subdivision (d).
(2) The state board shall provide the evaluation and any proposed regulatory revisions described in paragraph (1) to the appropriate policy and fiscal committees of the Legislature.
(d) Following the appearance of the chairperson of the state board before the Joint Legislative Committee on Climate Change Policies pursuant to subdivision (c), the state board may, consistent with Section 38562, revise the regulations implementing the market-based compliance mechanism so that a mechanism can more effectively meet the goals of this division and the objectives specified in the most recent scoping plan.

SECTION 1.Section 38566 of the Health and Safety Code is amended to read:
38566.

In adopting rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions authorized by this division, the state board shall ensure that statewide greenhouse gas emissions are reduced to at least 55 percent below the statewide greenhouse gas emissions limit no later than December 31, 2030.

SEC. 2.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.