BOARD MEETING DATE: April 2, 2010
AGENDA NO. 23
REPORT:
California Air Resources Board Monthly Meeting
SYNOPSIS:
The California Air Resources Board met on March 25, 2010.
The following is a summary of this meeting.
RECOMMENDED ACTION:
Receive and File.
Ronald O. Loveridge, Member
SCAQMD Governing Board
Background
The Air Resources Board’s (ARB or Board) March meeting was held in Sacramento. Key meeting items are summarized below.
Approval of Research Proposal
ARB approved funding for a study of the energy usage characteristics and behaviors of California households with very low energy usage rates to address a research need identified in ARB’s 2009-2010 Annual Research Plan.
Approval of Amendments to the Area Designations for State Ambient Air Quality Standards
The Board approved amendments to area designations for State ambient air quality standards resulting to reflect air quality monitoring data collected from 2006 through 2008. The amendments change several area designations for ozone, lead, nitrogen dioxide, and fine particulates (PM2.5.) Notable changes include the redesignation of the South Coast Air Basin to nonattainment for nitrogen dioxide, and the redesignation of the Los Angeles County portion of the South Coast Air Basin to nonattainment for lead particulate.
3. Approval of the South Coast Air Basin PM10 Redesignation Request, Maintenance Plan, and Transportation Conformity Budgets
The Board concurred with the South Coast Air Quality Management District request that South Coast Air Basin be redesignated to attainment for the National Ambient Air Quality Standard for respirable particulate matter (PM10). The South Coast attained the 24-hour PM10 Standard by the 2006 attainment deadline. The Board also approved the submittal of the PM10 maintenance plan and corresponding emissions inventory and transportation conformity budgets to the U.S. Environmental Protection Agency as a proposed revision to California’s State Implementation Plan.
4. Adoption of Updates to Proposition 1B: Goods Movement Emission Reduction Program Guidelines
The Board adopted revisions to the Proposition 1B: Goods Movement Emission Reduction Program Guidelines that lay out the eligible equipment and project funding levels for the next installment of Proposition 1B funds. Proposition 1B authorized the expenditure of up to $1 billion to reduce emissions from freight transport in the State’s four priority trade corridors. The next installment of fund provides $500 million that will be distributed as incentive funds to upgrade diesel trucks, locomotives, ship berths, cargo equipment, and harbor craft. The guideline changes increase funding eligibility and flexibility, and reallocate a portion of the funds originally set aside to be used on drayage trucks to other categories. The revised guidelines will also give local agencies earlier access to a larger portion of the funds set aside to administer the program.
5. Adoption of Near-Term Revisions to the Lower-Emission School Bus Program Guidelines and the Carl Moyer Incentive Program Guidelines
The Board adopted near-term revisions to the Lower-Emission School Bus and Carl Moyer Incentive Program Guidelines to address recent legislative directives and stakeholder feedback received during implementation of the programs. The revisions are designed to expand program participation, increase funding eligibility, simplify implementation for air districts, and allow for faster responses to stakeholder. Approved revisions to the Moyer Program Guidelines also updated the cost-effectiveness cap to reflect changes in the California Consumer Price Index.
6. Report to the Board on Economic and Allocation Advisory Report Related to Allocating Emissions Allowances Under California’s Cap-And-Trade Program
Two members of the Economic Allocation Advisory Committee (EAAC) presented the EAAC’s final report on the allocation of allowances under a greenhouse gas cap and trade program. The EAAC, which consists of 17 members appointed by the Secretary for Environmental Protection, Linda Adams, and ARB Chairman Mary Nichols, recommended that ARB distribute the allowances primarily by auctioning them to the emitting industries that would need allowances to operate in a cap and trade system. In general, the EAAC recommended the distribution of free allowances only to prevent emissions leakages (i.e., increases in emissions outside California resulting from decreases within the state), avoid disproportionate impacts to low-income households, and finance efforts to reduce potential local environmental impacts. The EAAC estimated that the allowances would be worth $7 to $22 billion in 2020. The EAAC recommended that about 75 percent of the revenues generated by such an auction be directed back to households, either directly or by being used to reduce taxes, and that the remaining funds should go toward government expenditures related to greenhouse gas reduction and climate change adaptation efforts.
Chairman Nichols noted that the EAAC recommendations are valuable and will be taken under advisement, but are not binding on the Board as it develops the cap and trade program.
7. Report to the Board on Assembly Bill 32 Economic Analysis
The Board was briefed on two different assessments of the potential economic impacts of implementing the Global Warming Solutions Act (AB 32), one prepared by ARB staff and the other by an industry-sponsored consulting firm. The staff’s analysis was developed to update the AB 32 economic analysis originally prepared in 2008 to reflect the current economic downturn, ARB’s greenhouse gas automotive emission standards, and the 20 percent renewable electricity standard. ARB staff collaborated extensively with Charles River and Associates (CRA), the consulting group that developed the industry-sponsored analysis, so the basic assumptions used in the two studies were the same. The Board also received an independent review of theses analyses that was prepared by the Economic Allocation Advisory Committee (EAAC.)
ARB staff’s analysis concluded that economic growth, job creation, and incomes will be minimally affected by implementation of the AB 32 Scoping Plan. Specifically, the analysis concluded that household incomes will increase by $4700 annually between now and 2020. Staff estimated that the implementation of AB 32 could reduce this projected increase by $105 to $738 per household per year.
The industry-sponsored CRA analysis estimated that using market mechanisms like cap and trade exclusively, without the addition of command and control measures such as the low carbon fuel standard and automotive emission standards, would lower overall program costs by up to fifty percent. The CRA analysis also projected higher costs than the ARB staff analysis when comparing the mix of cap and trade and command and control approaches currently under consideration. CRA concluded that the proposed implementation would offset the projected $4700 annual increase in household income between now and 2020 by $731 to $1,159 per year.
The EAAC reported that both analyses were well developed and together forecast the reasonable range of possible economic impacts. The EAAC suggested that ARB staff analysis shows the lower range of possible economic impacts, while the CRA analysis provides the upper extreme possibilities of economic impacts that result from implementing AB 32.
Chairman Nichols reserved time at the April 22, 2010 Board hearing for further comment and discussion of the report.
Attachment (64k, DOC)
CARB March 25, 2010 Meeting Agenda