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Regulatory Round-up: 2017 Scoping Plan is approved

December 19, 2017 by Abhilasha Fullonton

(CaliforniaCarbon.Info, 19 December 2017): The California Air Resources Board (CARB) recently released their 2017 Scoping Plan highlighting California’s approach to reducing GHG emissions. This is the second update to the Scoping Plan which was approved on Thursday the 14th of Dec. The 2017 Scoping Plan adapted the current multifaceted approach to achieving California’s climate change goals in the most cost-effective way. The 2017 Scoping Plan has been in the works for the last 25 months. It is a product of collaboration between 20 state agencies, 15 state sponsored workshops and input from 500 public comments. The stated aim of this plan is:

• “Lower GHG emissions on a trajectory to avoid the worst impacts of climate change;
• Support a clean energy economy which provides more opportunities for all Californians;
• Provide a more equitable future with good jobs and less pollution for all communities;
• Improve the health of all Californians by reducing air and water pollution and making it easier to bike and walk; and
• Make California an even better place to live, work, and play by improving our natural and working lands.”

The update includes more analyses but has stuck to the original framework which has proven to be effective since the original plan came out in 2008. A big part of the scoping plan mentioned during the CARB board meeting was identifying limitations in methodologies for alternative scenarios and adding new policy measures based on developments in the last 25 months specifically the adoption of AB 398. Authors of the scoping plan approached the task through two thought processes- first was assessing “state-specific circumstances to development measures” and the other was assessing measures that concern other jurisdictions to increase linkage options.

Key legislation which preceded AB 398 played a big role in the continuing long-term efforts by California to achieve GHG reductions. Since the beginning of his tenure Democratic Governor Jerry Brown had a clear guideline for California’s climate change trajectory. It started off with his Administration issuing Executive Order B-30-15 in April 2015, which mandated state-wide GHG reduction targets at 40% below 1990 by 2030. Below is a table outlining the legislative agenda that has framed California’s climate legacy and future policy:

Climate Legislation Descriptor
Senate Bill 350 Mandates GHG reduction targets set through Integrated Resource Planning in the electricity sector and increased RPS to 50% by 2030 while requiring a doubling of energy efficiency.
Senate Bill 32 Codified E.O. B-30-15. It integrates a more science based approach and aligns itself with international climate agreement (COP 15) to keep global temperature increase below 2 degree Celsius.
Assembly Bill 197 Complements SB 32 by requiring CARB to post statewide GHG data, protecting State’s most disadvantaged communities, rules and regulations that make direct emissions reductions by large stationary sources, mobile sources and others. Directs CARB in developing the scoping plan with regards to range of projected GHG emissions, air pollution reductions and cost-effectiveness
Senate Bill 1383 Requires development, adoption and implementation of Short- Lived Climate Pollutant Strategy.
Assembly Bill 1504 Requires the Board of Forestry and Fire Protection to a) adopt district forest practice rules and regulations b) consider capacity of forest resources for targeted carbon sequestration
Senate Bill 1386 Outlines protection and management of natural and working lands
Assembly Bill 398 Extends the State’s Cap-and-Trade program through 2030, establishes the Compliance Offsets Protocol Task Force and Emissions Market Advisory Committee (EMAC), identifies legislative priorities for allocating auction revenue proceeds.
Assembly Bill 617 Bill was passed in tandem with AB 398 to strengthen air quality monitoring and reduce air pollution at a community level.

Under AB 32 – The California Global Warming Solutions Act 2006, CARB is mandated to update the Scoping Plan every five years. The idea behind the 5-year update stems from ARB’s intention to identify and assess new issues and which lowers the margin of error on both qualitative and quantitative analysis. Factors such as funding, new and available technology, number of entities, population, economic growth have to be updated in order to map out accurate trajectories for GHG emissions reductions. It also helps renew the metrics by which the effectiveness of scoping plan is measured.

As it stands, California is well on its way to meet its 2020 GHG targets. Market mechanisms like the cap and trade program, LCFS, and RPS out performed market expectations even from CARB’s perspective. Since January, adjustments to the scoping plan had to be made based because CARB had initially made “conservative guesses”, as Board Chair Mary Nichols pointed out during the recent CARB board meeting. For example – RPS now includes more shares of solar and wind energy because falling prices have made these alternatives economically feasible. CARB staff ensured that scoping plan development was a multidisciplinary process– the process involved working closely with EJAC, academia, members from the industry and the public.

Transparency:  Having listened to previous board meetings CARB followed through its promise of being transparent in the scoping plan development process. Through public meetings voices of civil society organizations, activists, oil and gas industry members and the general public were heard. Updating the scoping plan also means including policy based issues that might have been birthed in the last few years. Specifically, issues surrounding marginalized communities, impacts of regulations on industry which allows ARB to self-assess steps they are taking. Chair Nichols pointed out that even though the scoping plan has not satisfied all stakeholders, their concerns are reflected in the plan. And transparency played a big role in that.

Qualitative and Quantitative analysis: The scoping plan includes 4 scenarios that were narrowed down using public comments which are presented below in brief:

– Alternative 1: No Cap and Trade
– Alternative 2: Carbon Tax
– Alternative 3: All Cap-and-Trade (Scoping plan scenario)
– Alternative 4: Cap-and-Tax

The scoping plan scenario was determined to be more holistic approach that aligned with California’s targets. There are compromises in this scenario, however it addressed all the pillars of sustainability. Much of the scoping plan focuses on how this trajectory takes into consideration the environment, social and economic factors while complying with regulatory standards. This time around, the focus has shifted to put equal weight on strategy and modeling. The plan has also singled out certain policies or changes in those policies that ought to have their own public hearing process – specifically re-designing parts of LCFS through public comments, California’s Natural and Working lands implementation document which is to be drafted by early 2018.

Because there are so many policies working in tandem, the document also provides a detailed policy analysis on the on-going programs and their continued relevancy within the cap and trade program. These were echoed in the CARB board meeting because these policies and targets “are not set in isolation”. In order to achieve continued reductions ARB acknowledges the importance of refining the implementation of these policies because scoping scenario can be very different to implementation. For the first time the scoping plan has included a list of economic sectors that have additional opportunities to grow (beyond 2030). ARB staff is also in the process of identifying cost and technology barriers because deep reduction goals are something California is keen on pursuing.

Offsets: While there was not much conversation surrounding offsets at the ARB board meeting, CARB is reinforcing the importance of offsetting primarily by incorporating management of natural and working lands into the 2017 Scoping Plan. A significant portion of offsets are linked to tribal climate related efforts that are set to gain traction over the coming years. CARB plans to implement few changes post-2020 in accordance with AB 398 part of which is changes to the offset usage limit even though there is no specific mention of the kind of changes that might take place. While EJAC recommended to scrap offset program post-2020, a large part of the industry supports offsets due to its environmental and economic benefits it continues to generate. Recently, the industry support for offsets was evident in a letter (download here) which was submitted to Richard Corey, Executive Officer at CARB. It was signed by 40 different stakeholders covering large range of sectors specifically calling for expansion on the current offset program.

Criticisms and Complements: Predictably the Scoping Plan drew criticisms most notably by EJAC. Their concerns were presented in this order – 1) Biomass being combusted not composted 2) data on how emissions will be reduced within transportation sector 3) emissions reductions amongst industrial sector and 4) better evaluation on how cap and trade impacts EJ communities. EJAC also criticized the lack of localized data in the Scoping Plan. Discussions were charged largely due to the California fires and climate change’s role in causing that.

However, majority of the stakeholders agreed that the Scoping plan has struck a balance between the economic growth and social benefit. If scoping plan is implemented successfully there will be a $1.9 billion worth of avoided social damages with only a 3-month lag on GDP growth. In the Scoping Plan document as well as the board meeting there was repeated mention of minimizing leakage. It is important that California implements a plan that does not force industry to move to a different state which will inevitably result in job loss and slow down economic activity. They have to keep enough incentives in place for entities to comply with the cap-and-trade program. A lot of stakeholders came forward to applaud the CARB staff for conducting an inclusive development process, including EJAC who commended them for attending EJAC meetings and creating an atmosphere of inclusivity.

California continues to be a global advocate for climate change adaption. Meeting their GHG targets well before 2020 catalyzes development process for reductions way beyond that. The Scoping Plan also aims for resiliency so it does not make a dent in California’s zero emissions pathway. The plan also accounts for uncertainty, however as for now Chair Nichols is “confident that it [2017 Scoping Plan] will keep California in track”.

 

Analyst Contact

Abhilasha Fullonton: abhilasha.fullonton@californiacarbon.info

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