ARB Adopts Early Action Measures To Reduce Greenhouse Gases Under AB 32 - The California Global Warming Solutions Act of 2006

On June 21, 2007, the California Air Resources Board (ARB) adopted three discrete "early action measures" to reduce emissions contributing to global warming. The measures are:

• compliance with the Governor's Low Carbon Fuel Standard;
• reduction of refrigerant losses from motor vehicle air conditioning maintenance; and
• increased methane capture from landfills.

Based on these measures, regulations will be proposed and submitted for public comment in the next 12 to 18 months, and ARB will adopt legally enforceable regulations by January 1, 2010.

These discrete early action measures are mandated by Assembly Bill (AB) 32, the California Global Warming Solutions Act, signed into law by Governor Schwarzenegger on September 27, 2006. AB 32 requires that California reduce its greenhouse gas (GHG) emissions to 1990 levels by 2020.

Significance

While these three control measures are relatively narrow in their application, they signal the beginning of a new state regulatory regime that is expected to grow quickly. It will ultimately result in new, enforceable rules governing the emission of GHGs from a wide variety of sources. It also promises to play a significant role in guiding the preparation of environmental review documents prepared pursuant to the California Environmental Quality Act (CEQA), and the legal challenges that will inevitably follow.

The Three Discrete Early Action Measures

The Governor's Low Carbon Fuel Standard requires that transportation fuels sold in California meet an increasingly stringent "carbon content" standard for GHG emissions. By limiting carbon content, this measure aims to reduce vehicle fuels' "carbon intensity" (GHG emissions per unit of energy) by at least 10 percent by 2020. Responsibility for meeting this standard will fall to fuel providers, including producers, importers, refiners, and blenders. Fuel providers will have to produce lower carbon intensity fuels, such as biofuels, hydrogen, electricity, compressed natural gas, liquefied petroleum, and biogas, to reduce the average carbon content of the fuels they sell.

The second early action measure limits the use of refrigerants with high global warming potential (GWP) in motor vehicle air conditioning systems. Almost all motor vehicle air conditioning systems use hydrofluorocarbons (HFCs), especially HFC-134a. These compounds are the particular focus of the measure. Because HFCs are powerful GHGs, the measure calls for restrictions on the use of these refrigerants when leaky motor vehicle air conditioning systems are recharged.

The third early action measure calls for a statewide standard for installation and performance of active gas collection systems at municipal solid waste (MSW) landfills, requiring MSW landfills to install emission control systems to manage the methane released through the decomposition of organic matter. This measure is directed at the forty-one MSW landfills in California that currently lack gas collection systems.

Requirements For Early Action Measures: Cost-Effectiveness, Technological Feasibility, Relationship with Conventional Pollution Controls, and Socio-Economic Impacts

The early action measures are not final at this point. Implementing regulations adopted by ARB must be cost-effective and technologically feasible. Also, the regulations must not interfere with conventional air pollution controls, and must not have disproportionate socio-economic impacts. If a measure fails to meet any of these requirements, then it either will not be put into effect or will be changed to meet the requirement(s). The standards for acceptability of regulations under these criteria have not been formally established.

Future ARB Actions To Reduce Greenhouse Gas Emissions In California

In addition to the mandate to adopt early action measures, AB 32 requires ARB to create an overall plan by 2009 to meet the 2020 GHG emissions target. Implementation of individual measures must begin no later than January 1, 2012. To ensure compliance with its plan and regulations, ARB is authorized to use both "carrots," i.e., market-based compliance mechanisms such as "cap-and-trade" programs, and "sticks," in the form of penalties for non-compliance.

ARB has announced that it will be considering twenty-two other GHG emission reduction measures and ten conventional air pollution control measures that have GHG emission reduction effects. The GHG emission reduction measures will apply to a variety of industries and may mandate changes in a number of practices. Many of the activities covered by the second phase of AB 32 implementation are associated with the early action measures, while others range from manure management and commercial refrigeration to port electrification and tire inflation.

Voluntary Reductions In Emissions

AB 32 authorizes credits for making voluntary reductions in GHG emissions before the reduction measures go into effect. At this time, the manner in which such credits will be calculated and documented has not been determined. ARB has announced its intention shortly to begin development of a procedure for calculating and crediting voluntary reductions, and to acknowledge efforts that entities will already have taken to reduce GHG emissions by the time the crediting system is implemented.

* * *

Allen Matkins will continue to keep its clients and friends informed of developments in the law and regulations regarding GHG emissions in California.