On June 26, 2008, the California Air Resources Board (CARB) is scheduled to release its initial draft “scoping plan” describing the programs, measures, and approaches that California will use to achieve the greenhouse gas emission reductions required under the Global Warming Solutions Act, or AB 32. The scoping plan, when completed, will serve as California’s policy blueprint for developing direct regulations, alternative compliance mechanisms, monetary and non-monetary incentives, voluntary actions, and market-based mechanisms such as a cap-and-trade system.

Since 2007, CARB and various sector subgroups have been meeting with interested parties to develop emission reduction strategies to feed into the scoping plan. For instance, the Green Buildings Subgroup has been meeting regularly to develop strategies to promote the use of green energy technologies. Meanwhile, the Energy Subgroup has held numerous meeting to develop strategies to reduce greenhouse gas emissions from the power sector through increased energy efficiency, better energy conservation, and renewable energy sources. CARB will consider these recommendations as it formulates the scoping plan.

One of the key issues that has been debated throughout the process is whether a cap-and-trade system should be adopted as part of the scoping plan. Various commentators have argued that a cap-and-trade system won’t work in California. Nevertheless, the California Public Utilities Commission and the California Energy Commission have recommended that CARB adopt a mix of direct mandatory/regulatory requirements for the electricity and natural gas sectors combined with a cap-and-trade system for the electricity sector. While CARB is not bound to adopt these recommendations, they are sure to carry a lot of weight.

Following the release of the draft scoping plan, public workshops will be held through July 2008. The final scoping plan is expected to be published in the fall of 2008 for eventual adoption by CARB by the legal deadline of January 1, 2009.

For further information about this topic, please contact Akin Gump.