BOARD MEETING DATE: May 7, 2010
AGENDA NO. 28

REPORT:

California Air Resources Board Monthly Meeting

SYNOPSIS:

The California Air Resources Board met on April 21 and 22, 2010. The following is a summary of this meeting.

RECOMMENDED ACTION:

Receive and File.
 

Ronald O. Loveridge, Member
SCAQMD Governing Board

The Air Resources Board’s (ARB or Board) April meeting was held in Sacramento. Key meeting items are summarized below.

1. Panel Discussion on the Climate Change Scoping Plan Economic Analysis

The Board heard from a panel of independent experts convened to discuss ARB staff’s updated analyses of the economic impacts of the Climate Change Scoping Plan the Board adopted in December 2008 pursuant to Assembly Bill 32 (AB 32). ARB staff updated its original analysis to incorporate new economic forecasts that reflect the current recession and major adopted rules and policies. In the update, which was released in March 2010, staff also used two different economic models to evaluate the impacts of climate change policies. The panel convened to discuss the new analysis included authors of published critiques of the original ARB economic analysis, the author of a collaborative modeling analysis funded by ARB after the release of the original analysis, and the Chair of the Board’s Economic and Allocation Advisory Committee appointed to advise the Board on AB 32 economic issues.

Staff’s economic impact analysis looked at five scenarios—different mixes of command and control regulations and a cap-and-trade approach—that could be used to attain the Scoping Plan greenhouse gas reduction goals. Most of the experts separately evaluated impacts of the five scenarios and reported results that were fairly similar. These results indicated allowing the use of offsets to substitute for up to 4 percent of annual emission allowances in a cap-and-trade program would reduce the cost of allowances by 33 percent to 80 percent. Attempting to achieve AB 32 goals through a cap-and-trade rule only, without the adoption of source-specific measures controls, would significantly increase the cost of allowances. Simultaneous implementation of a cap-and-trade rule and source-specific measures contained in the Scoping Plan will have either positive or negligible impacts on each of the sectors of California’s economy.

The following experts participated in the panel discussion:

• Dr. Paul Bernstein, Charles River Associates

• Dr. David Roland-Holst, University of California, Berkeley

• Mr. Tom Tanton, T² & Associates

• Mr. Reid Harvey, U.S. Environmental Protection Agency

• Dr. W. Michael Hanemann, University of California, Berkeley

• Dr. Lawrence Goulder, Stanford University

• Dr. Hal Nelson, Claremont Graduate University

• Dr. Chris Busch, Center for Resource Solutions

2. Update on Implementation of the Global Warming Solutions Act of 2006 (AB 32) and the Climate Change Scoping Plan

ARB staff and representatives of other State agencies provided an update to the Board on implementation of AB 32 and the Board’s Climate Change Scoping Plan. Since the last update to the Board in December 2009, the Board has adopted a refrigerant management requirement for stationary sources and a rule governing hexafluoride use in electrical distribution and particle accelerator fields: rules adopted to date provide almost half of the reductions needed to meet ARB’s 2020 greenhouse gas reduction goal. ARB staff has released its updated analysis of the economic impacts AB 32 (see prior item) and continued its analysis of the costs and benefits of the draft proposed cap-and-trade rule. Staff also provided examples of successful greenhouse gas reduction projects undertaken by local government, small businesses, and community groups, and of supporting activities that are helping to increase public awareness of AB 32 goals and greenhouse gas reduction opportunities. California Energy Commission Chair Karen Douglas summarized the Commission’s efforts to channel federal stimulus funds to green workforce training programs and to local governments for energy-saving building retrofits.

The Board heard a staff report on the process for revising two rules that require the clean-up of existing diesel sources: the In-Use Off-Road Diesel Vehicle (construction and mining equipment) Regulation adopted in July 2007, and the In-Use On-Road Diesel Vehicle (truck and bus) Regulation adopted in December 2008. After hearing a staff update on activities related to these rules including revised emission estimates, and after hearing from witnesses about vehicle owners’ ability to pay for controls or new equipment, the Board directed staff to develop proposed revisions to the regulations for consideration in September of this year.

ARB staff reported that its estimates of emissions from the equipment governed by the off-road rule has changed significantly. The new estimates of current year emissions, and of emissions in 2014, the deadline for meeting the federal air quality standard for fine particulates (PM2.5), are both substantially lower than was forecast when the rule was originally adopted. The lower emission estimates are attributed in part to the recession’s impact on construction activity and in part to a re-analysis of earlier emission inventory methodologies.

Staff reported on extended discussions with the trucking industry regarding the truck and bus rule and has conducted three public workshops and undertaken additional inventory analyses to identify possible opportunities for regulatory relief. Staff has also made two significant revisions to the emission inventory for heavy-duty trucks. Staff created a sub-category for construction industry trucking, which allowed for a better accounting of reductions attributed to reductions in that market. Staff also incorporated the results of a two-year field study and Caltrans roadway count data to develop region-specific emissions estimates. The latter analysis increased the estimate of truck miles traveled and emissions in South Coast resulting in a net increase in the truck inventory for the South Coast Air Basin.

Staff proposed to use ten guiding principles in developing proposed revisions to the on-road and off-road rules for the Board’s consideration:

1. Continue progress toward cleaner air.

2. Maintain public health benefits.

3. Meet State Implementation Plan (SIP) commitments.

4. Incentivize greenhouse gas reductions

5. Improve cost effectiveness.

6. Lower peak year costs.

7. Consider cumulative impact of both regulations.

8. Provide most relief to fleets hardest hit by the recession.

9. Ensure emission reductions as the economy recovers.

10. Support clean technologies.

After hearing the public testimony Board members gave staff general recommendations for developing proposed amendments for the September 2010 Board hearing. This direction includes collecting and analyzing more data, rewarding companies that have acted to meet the original compliance deadlines, identifying additional incentive funding to support compliance, expanding exemptions for low use vehicles, collaborating with AGC to resolve emission inventory differences, and identifying options for establishing loan guarantee programs to free up private capital needed for vehicle retrofits or replacements.

Attachment (DOC, 51k)

CARB April 21 & 22, 2010 Meeting Agenda