California SB 32 and AB 197 set tone for next wave of clean transportation policies and funding if accepted by key stakeholders in government and business

CARB websiteCalifornia has settled a legislative battle through simultaneous passage of Senate Bill 32 and Assembly Bill 197 – or at least has gained a temporary truce. SB 32 extends the state’s greenhouse gas mandate another 10 years and reduces greenhouse gases even more. AB 197 expands oversight of the California Air Resources Board with a priority set on cutting emissions from local oil refineries and manufacturers. The two bills were “double-joined,” which is legislative jargon meaning both bills have to be signed into law by Gov. Jerry Brown to take effect. That signature is expected to be happening soon. Brown had already filed an executive order with similar goals, but the legislation once signed turns it into law.

Questions will need to be answered on what these new laws will mean for vehicle emissions, oil production, and power plants over the next 15 years. Observers will need to watch whether leadership in both political parties, and major corporations in the state, can buy into decisions made in the legislature and agencies such as CARB and California Energy Commission. Here’s a look at the regulatory issues that are expected to set the stage:

Senate Bill 32: SB 32 requires the state to reduce greenhouse gas emissions to 40% below 1990 levels by 2030. The current target is reaching 1990 levels by 2020, a goal the state is on track to meet. Sen. Fran Pavley (D-Agoura Hills) wrote the new legislation and the 2006 legislation (AB 32) that set the foundation for the new bill. The state’s cap and trade program and low carbon fuel standard came from implementation of AB 32.

“People once thought we were being alarmist when we talked about drought and year-round wildfires,” Pavley said to the LA Times. “But all these predictions have come true, and the realities of climate change seem to be accelerating and are tangibly visible sooner than I ever expected. The discussion here now is how to address it, not if.”

Media reports and analyst commentary predict how these steeper reduction targets in SB 32 may impact industries. Some possible policy changes could be increasing the number of electric cars required to be sold in the state, adding penalty fees to purchase traditional fossil fuel-powered vehicles, renewing incentives for solar and wind power, and pushing for batteries to store energy at homes and commercial buildings.

It’s also likely to be an engine for constructive job creation. Earlier this month, CALSTART released a report, “California’s Clean Transportation Technology Industry: Time to Shift into High Gear,” profiling OEMs and suppliers that are now based in California and are building zero- and near-zero emission light, medium, and heavy duty vehicles; and clean fuels, engines, and components. The report also acknowledged that state policies and funding investments are encouraging more companies to move to, or expand, in California.

“The State Assembly voted today in favor of job creation, and to make California a leader in the clean transportation technology industry going forward. We expect that passage of this measure will lead to more in-state manufacturing jobs for advanced vehicles and components,” said CALSTART President and CEO, John Boesel, in a press release last week.

Last year, the state legislature failed to pass a bill to cut petroleum use in half by 2030, after the oil industry waged an intensive campaign against it. That’s where the double-joined strategy came from, with legislators crafting and joining the two bills to address concerns from local community groups and pressure from the oil industry and manufacturers.

Assembly Bill 197: Introduced by Assemblyman Eduardo Garcia (D-Coachella), AB 197 increases legislative oversight of CARB, and requires the agency to focus more attention on cutting emissions from local refineries and manufacturers. One issue that shaped the writing of the law was the air quality impact of oil refineries, which are usually located near disadvantaged communities.

CARB has been both admired and admonished in the state and beyond, with praise given to its zero emissions vehicle mandate and adoption by other states; and criticism for adopting policies potentially raising fuel and energy costs, and for increasing the cost of doing business in California, which can motivate companies to move away to others states. Republicans and a few Democrats have accused CARB of wielding too much power in implementing climate laws; they demanded more legislative control over the agency, which became part of AB 197. It also addresses concerns from lawmakers who remain skeptical about whether policies to tackle a global problem are having a positive impact in their communities.

Garcia made comments that his bill addressed nuts-and-bolts questions about how the state would meet its goals, and how they would affect residents. “It’s great to hear about saving polar bears and hugging trees, and making sure we address global warming from a world perspective,” he said to the LA Times. “But how about people?”

Environmental groups have expressed concerns over the state’s cap-and-trade program. Though it puts an economic burden on companies until they reduce their carbon emissions, some environmental groups are frustrated because the companies can continue to release more carbon as long as they pay the price.

Cap and trade program: AB 32 required businesses that emit greenhouse gases to buy permits at cap-and-trade auctions. Oil companies, refineries, electric utilities, and manufacturers have been spending millions on credits to comply with state rules. Cap and trade auction revenue has funded programs for fleets to acquire clean vehicles, electric vehicle purchase incentives, and other clean transportation gains.

Cap and trade was not included in SB 32 or AB 197. The carbon tax, and cap-and-trade auction system, is scheduled to sunset in 2020. Gov. Brown has said that he might lead a statewide ballot measure in 2018 if lawmakers don’t come to agreement on an extension.

Recent cap-and-trade auction results have dropped, with revenue falling millions short of expectations. Funds raised since the auction started in 2012 have been substantial, and has created a new funding channel for clean transportation and clean energy stakeholders to tap into.