The California Air Resources Board (CARB) announced today its draft “scoping plan” to reduce greenhouse gas emissions in California to 1990 levels by the year 2020.  Pursuant to the Global Warming Solutions Act, or AB 32, CARB is required to prepare and approve a scoping plan by January 1, 2009.  The draft scoping plan proposes a comprehensive set of actions that would affect virtually every sector of the California economy, including utilities, oil refineries, carmakers, farmers, manufacturers, and forest managers.  Beyond the sweeping impact on California’s $1.7 trillion economy, the plan will likely be seen as a model for other states and the nation as a whole.

Key features of the scoping plan include expansion of California’s energy efficiency programs and building standards, enforcement of vehicle greenhouse gas emissions standards (if not through current regulations and EPA waiver procedures, then through alternative strategies), and implementation of water efficiency and sustainable forest programs.  The plan also calls for boosting to 33 percent the amount of renewable energy that must be generated by electric utilities.  In addition, the plan outlines a cap-and-trade emissions program for California that will link with programs in the Western Climate Initiative.  The capped sectors will include electricity, transportation fuels, natural gas, and large industrial sources. 

According to CARB, by setting a limit on the quantity of greenhouse gases emitted, the cap-and-trade program will complement regulatory measures and achieve emission reductions that would not have occurred otherwise.  Although CARB has not yet devised the method for distributing allowances, it expects that it will quickly transition from a system in which the State provides some free allowances, to a system in which the majority of allowances are auctioned in the trading market.

While many commentators have questioned the price tag of California’s climate initiative, CARB estimates that the overall savings from improved efficiency and developing alternatives to petroleum will, on the whole, outweigh the costs.  Moreover, CARB asserts that California’s leadership in environmental and energy efficiency policy has attracted a growing share of the nation’s venture capital investment in green technologies.  One source estimates that between 1990 and 2006 green technology business in California grew by 84 percent.  CARB hopes that implementation of AB 32 will accelerate this green tech business boom.

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