On September 8th this year, California Governor Jerry Brown signed into law Senate Bill 32 (SB 32) and Assembly Bill 197 (AB 197), together an update of the California Global Warming Solutions Act of 2006 (AB 32). With the bills’ passage, California has once again taken a leading role in the fight against climate change and set a new standard in efforts to reduce greenhouse gas emissions (GHG) worldwide.
The original 2006 act authorized a state agency, the Air Resources Board (ARB), to monitor and regulate a wide range of sources of GHG emissions. The act required California to reduce its GHG emissions to 1990 levels by 2020, enforced through regulatory actions coupled with targeted incentives. The 2016 update of SB 32 extends this mandate through 2030, with a target of a 40% reduction below 1990 levels.
After passage of the 2006 bill, the ARB compiled an inventory of the state’s 1990 GHG emissions. It found that an equivalent of 427 million metric tons (MMT) of CO2 had been released into the atmosphere across the state in 1990. To put this in context, the Environmental Protection Agency estimates that one metric ton of CO2e is akin to burning 103 gallons of gasoline, or 40 typical barbecue grill propane tanks.
With the State on track to meet the 2006 mandates early (the most recent figures available are from 2014, and show annual emission levels of 441.5 MMT CO2e), the 2016 law stipulates further cuts across the board. Both supporters and opponents of the measure agree that far more aggressive tactics will be needed to meet the 2030 mandate, due to both the diminishing returns from low-hanging fruit (energy efficiency, renewable energy sources) and the projected growth of California’s population and economy over the next 15 years.
The law empowers the ARB to produce a Scoping Plan that begins with an inventory of GHG and then outlines methods for meeting targeted reduction. The latest update to the Scoping Plan calls for:
According to the plan, “achieving these emission reduction goals will require that a number of important administrative, financial and technological changes are undertaken to guide energy investments and planning toward the most appropriate combination of conservation, efficiency and clean-energy technologies to decarbonize the State’s energy systems at the lowest cost.”
At the time AB 32 was first passed in 2006, there was some concern it would lead to higher consumer energy costs, and job losses across the state. Opponents of the measure placed Proposition 23, the California Jobs Initiative, on the California ballot which sought to halt implementation of the SB 32 until a time when California’s official unemployment rate was below 5.5% for four consecutive quarters (in 2010, with the state still recovering from recession, the official unemployment rate was near 12%, higher than the national average). In the end the measure was defeated at the polls 60/40.
Since then, there has been very little pushback against the law at the state level. We believe the overall effect on the economy has been largely positive. Since 2006 the state has seen GDP grow by over 12%, even accounting for a significant downtick in 2009/2010 owing to the world-wide recession. At the same time the state’s economy has grown from the world’s eighth to sixth largest (if California was treated as an independent entity), all while reducing emissions considerably faster than the rest of the nation. In fact, California with a population of 38.8 million, representing over 12% of the US population, accounts for only 6% of all US GHG emissions (441 MMT CO2e in 2014 against 6,870 MMT C02e for the country as a whole). This performance is proof positive that economic growth can be coupled with declining emissions, reversing a trend that held from early in the industrial revolution through the end of the 20th century.
This latest legislation is a continuation of California’s efforts to mitigate the impact of climate change. Between the 2006 AB 32 and this year’s SB 32, California led the way in creating the Western Climate Initiative, launched in 2007, one of the largest market-based cap-and-trade programs for GHG in the world. Looking forward, the state seems poised to continue providing evidence that environmental conservation, technology innovation, climate change mitigation and robust economic growth can go hand-in-hand, a path the rest of the country could be wise to adopt.
If your business is affected by SB 32, and you would like to discuss how GI Energy could help, please contact us on (312) 894-4646, or email Dave Yanni. We look forward to talking to you.
 Since each GHG’s warming effect varies and lingers in the atmosphere for a different amount of time, the metric ton of CO2 equivalent, or CO2e is used to provide a standard criterion across all GHGs.
 Slightly different to net-zero energy buildings, which generate enough renewable energy on-site to cover their own needs, net zero carbon buildings achieve net zero carbon emissions by balancing the amount of carbon released with an equivalent amount offset. This can be supported by buying carbon credits to make up the difference.