BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1288


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          Date of Hearing:  May 27, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          1288 (Atkins) - As Introduced February 27, 2015


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:     
          No


          SUMMARY:


          This bill allows AB 32 market-based regulations adopted by the  
          Air Resources Board (ARB) to remain operable beyond December 31,  
          2020.  








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          FISCAL EFFECT:


          Minor, absorbable costs for ARB to continue its cap-and trade  
          program beyond 2020.


          COMMENTS:


          1)Rationale.  According to the author, through the AB 32  
            cap-and-trade program, an overall limit is placed on carbon  
            emissions (the cap) and, in turn, regulated entities can  
            acquire allowances through a variety of mechanisms including  
            participating in carbon auctions to purchase allowances.  
            Entities can use allowances to help meet their GHG reduction  
            requirements or trade allowances to others if they are able to  
            cost-effectively lower their own emissions (the trade). 
            The cap is reduced each year and only a specific amount of  
            allowances are available for purchase. Funding generated from  
            the sale of allowances is invested into programs that reduce  
            GHG emissions.


            Currently, the cap and trade program developed by ARB only  
            includes emissions reduction requirements through 2020.


            This bill recognizes and clarifies the importance of  
            continuing ambitious GHG emissions reductions beyond 2020 and  
            the important on-going role of market-based mechanisms in that  
            effort.


          2)Background.  The California Global Warming Solutions Act of  
            2006 (AB 32) requires ARB to adopt a statewide GHG emissions  
            limit equivalent to 1990 levels by 2020 and adopt regulations,  








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            including market-based compliance mechanisms, to achieve  
            maximum technologically feasible and cost-effective GHG  
            emission reductions.  

            As part of the implementation of AB 32 market-based compliance  
            measures, ARB adopted a cap-and-trade program that caps the  
            allowable statewide emissions and provides for the auctioning  
            of emission credits, the proceeds of which are quarterly  
            deposited into the GGRF available for appropriation by the  
            Legislature.  



          3)Cap-and-Trade Revenues.  The 2014-15 Budget Act allocates  
            cap-and-trade revenues for the 2014-15 fiscal year and  
            establishes a long-term plan for the allocation of  
            cap-and-trade revenues beginning in fiscal year 2015-16.  
            The Budget continuously appropriates 35% of cap-and-trade  
            funds for investments in transit, affordable housing, and  
            sustainable communities.  Twenty-five percent of the revenues  
            are continuously appropriated to continue the construction of  
            high-speed rail.  The remaining 40% will be appropriated  
            annually by the Legislature for investments in programs that  
            include low-carbon transportation, energy efficiency and  
            renewable energy, and natural resources and waste diversion.  



            The Governor's 2015-16 budget assumes the receipt of $650  
            million in state revenue from cap-and-trade auctions in  
            2014-15 and $1 billion in 2015-16. 







          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  








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          319-2081