California's AB 32, the "Global Warming Solutions Act of 2006"
|California Assembly Bill 32 (2006)|
|Legislature:||California State Legislature|
|Sponsor(s):||Fabian Nunez, Fran Pavley|
|Introduced:||December 6, 2004|
|State house:||Approved August 31, 2006|
|Vote (lower house):||47 yes, 32 no|
|State senate:||Approved August 30, 2006|
|Vote (upper house):||23 yes, 14 no|
|Signed:||September 27, 2006|
|Code:||Health and Safety Code|
AB 32 says that by the year 2020, the level of emissions of greenhouse gases in the state must be reduced to the level that such emissions had in 1990. It is estimated that reducing the state's greenhouse gas emissions to 1990 levels would require an approximate 25% reduction over the level of emissions in 2006, the year the bill was signed.
The California Environmental Protection Agency is charged with implementing the provisions of AB 32.
AB 32 defines "greenhouse gases" as:
- Carbon dioxide (CO2)
- Methane (CH4)
- Nitrous oxide (N2O)
- Hydrofluorocarbons (HFCs)
- Perfluorocarbons (PFCs)
- Sulfur hexafluoride (SF6).
Cost of electricity
According to the San Francisco Chronicle, electricity rates are likely to rise by about 15% in the first few years of the implementation of AB 32, because the generation of electricity using renewable resources costs more than the generation of electricity from non-renewable resources.
Effort to suspend
|Proposition 23 (article about) |
|Full text of Prop 23 |
|AB 32 (article about) |
|Full text of AB 32|
In 2010, the Proposition 23, the "California Jobs Initiative" was proposed, but failed at the ballot box. It would have frozen the provisions of AB 32 from going into effect until the unemployment rate in California dropped to 5.5% or less for four quarters in a row. When AB 32 was enacted in 2006, the state's unemployment rate was 4.8%. In the early part of 2010, the unemployment rate crept over 12%.
- In 2008, the California Air Resources Board (ARB) adopted a plan to implement the provisions of AB 32.
- A variety of environmental groups filed a lawsuit against ARB, arguing that its 2008 plan was adopted before the agency completed a required environmental review, and that it did not adequately consider alternatives to cap and trade as its primary method of implementing AB 32.
- On February 4, San Francisco Superior Court judge Ernest Goldsmith agreed with the plaintiffs and ordered the ARB not to go forward with its 2008 plan to implement AB 32 until it has come into compliance with the California Environmental Quality Act. Goldsmith's ruling said that ARB "seeks to create a fait accompli by premature establishment of a cap-and-trade program before alternatives can be exposed to public comment and properly evaluated by the ARB itself", that the analysis it did provide includes "no evidence to support its chosen approach" and that ARB's decision to approve the larger plan without a complete review "undermines (the state environmental quality act's) goal of informed decision-making."
Low carbon rules
On December 30, 2011, federal judge Lawrence J. O'Neill of the U.S. District Court for the Eastern District of California issued a preliminary injunction against a provision in AB 32 about fuel imports into the state infringes on Congress's constitutional authority over interstate commerce.
The injunction says that AB 32 unconstitutionally discriminates against crude oil and ethanol imported into the state.
Charles Drevna, president of the National Petrochemical and Refiners Association, applauded the court ruling and said that if that provision of AB 32 was upheld, "...the standards would have hurt consumers by discriminating against their use of renewable fuels from the Midwest and crude oil from our neighbor and ally Canada. Different states could have followed California's example and created a patchwork quilt of varying fuel standards that would have raised the costs of manufacturing gasoline and diesel fuel across the United States."
Trip Van Noppen, president of Earthjustice, an environmental law firm, responded to the injunction by saying, "It is not surprising that the oil industry is attacking these programs, but like previous attacks in the courts and at the ballot box, we expect this one ultimately to fail."
Carbon offset auctions
Beginning in the fall of 2012, under the terms of AB 32, the state will be able to conduct auctions of "pollution credits" to businesses in the state that product carbon, such as oil refineries and power plants. These companies can bid in an auction to pay money to the state in exchange for the ability to continue to produce atmospheric pollutants at a higher-than-would-otherwise-be-allowed level.
The California Legislative Analyst's Office estimates that these auctions will yield anywhere from $1 billion to $3 billion a year for the state, possibly rising as high as $14 billion a year in 2015. This is significant, considering that in 2012, the state's budget deficit is approximately $9 billion.
Several businesses have filed lawsuits against this part of the AB 32 legislation. In addition, it is likely that the state would only be able to spend any money it does raise in these auctions -- if they are allowed to proceed -- on programs that are narrowly targeted to reduce greenhouse gas emissions.
- Full text of AB 32
- AB 32 Fact Sheet
- California Environmental Protection Agency's FAQ page about AB 32
- Office of the Governor, "Gov. Schwarzenegger Signs Landmark Legislation to Reduce Greenhouse Gas Emissions", January 27, 2006
- Environmental Defense Fund, "CA Legislature Moves On Global Warming"
- City Journal, "On Further Review...", January 13, 2012
- San Diego Union Tribune, "Critics: State can’t handle greenhouse gas mandates", February 12, 2010
- San Francisco Chronicle, "Calif. cap-trade plan dealt blow by S.F. judge", February 4, 2011
- Wall Street Journal, "California Low-Carbon Rules Halted", December 30, 2011
- Inside Bay Area, "Windfall of cash could hit state treasury from global warming program", April 8, 2012