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California Extends Cap-and-Trade and Requires Community Pollutant Reductions

By Dimitri Antoniou, AICP and Honey Walters

In July, California lawmakers approved and Governor Brown signed into law Assembly Bill (AB) 398, which extends the state’s Cap-and-Trade program through 2030, and AB 617, which seeks to reduce toxic air contaminants and criteria air emissions in pollution-burdened areas. This milestone legislation builds on California’s leadership in addressing climate change and protecting the public health, particularly in communities with “high cumulative exposure burdens for toxic air contaminants and criteria air pollutants,” a critical concern of environmental justice advocates.

Assembly Bill 398 – Cap-and-Trade Program Extension

The Cap-and-Trade program was adopted in 2011 as one of the key strategies to reduce statewide greenhouse gas (GHG) emissions to 1990 levels by 2020. The program applied to certain covered polluters in the state that emit 25,000 metric tons of carbon dioxide equivalent (CO₂e) per year or more. The program included a GHG limit (i.e., cap) that decreased approximately 3 percent annually. Companies that reduced emissions more than their limits could auction carbon allowances to other covered entities through the Cap-and-Trade market. Without enactment of SB 398, the Cap-and-Trade program would sunset in 2020.

Extending the Cap-and-Trade program is a key approach for achievement of California’s 2030 and ultimately 2050 GHG reduction targets. As outlined in the Draft 2017 Scoping Plan Update to Achieve the 2030 Target, by relying on a continually decreasing emissions cap, extension of the Cap-and-Trade program would result in a 20 percent reduction in GHGs from the refinery sector by 2030. Further, the Cap-and-Trade program can link with additional states or provinces to develop further reductions through collaborative efforts. Currently, the Cap-and-Trade program is linked with Quebec and the California Air Resources Board (CARB) has plans to link with Ontario, which has its own cap-and-trade program. Extending Cap-and-Trade means that California should remain on course to achieving its long-range climate change mitigation goals.

Environmental and Planning Practice Implications of AB 398

California’s Cap-and-Trade program affects GHG reduction planning by local governments and warrants consideration in California Environmental Quality Act (CEQA) compliance for certain plans and projects:

  • Local climate action plans (CAP) can continue to rely on emissions reductions from stationary sources covered by Cap-and-Trade, allowing local government CAPs to focus on other sectors of GHG emissions over which municipalities have more control.
  • CEQA analyses for covered GHG emission sources can use Cap-and-Trade emission limits to show consistency with state GHG reduction targets. Emission targets rely on Cap-and-Trade remaining in place, so compliance with emission limits by covered industries helps achieve overall state goals.
  • General Plans for communities that include Cap-and-Trade covered entities can account for GHG emissions reductions, as well as assess toxic and criteria pollutants, based on whether covered industries would reduce emissions on site or purchase allowances to meet limits.

Assembly Bill 617 – Community Emissions Reductions

To help protect air quality and public health in communities around Cap-and-Trade covered industries, AB 617 was also signed into law. It imposes a new state-mandated local program to address non-vehicular sources (e.g., refineries, manufacturing facilities) of criteria air pollutants and toxic air contaminants. The bill requires CARB to identify high-pollution areas and directs air districts to focus air quality improvement efforts through adoption of community emission reduction programs within these identified areas. Currently, air districts review individual sources and impose emissions limits on emitters based on best available control technology, pollutant type, and proximity to nearby existing land uses. This bill begins to address the cumulative and additive nature of air quality health effects by requiring community-wide air quality assessment and emission reduction planning.

Environmental Practice Implications of AB 617

AB 617 includes specific requirements for CARB and air districts, but the details about how implementation moves forward are yet to be defined. Nonetheless, potential practical implications may include:

  • Community-wide air quality mapping and risk reduction planning may become more prevalent as a tool for air districts and local governments. The Bay Area Air Quality Management District has developed guidance for a Community Risk Reduction Program that may be similar to future community-wide emission reduction planning described in AB 617.
  • Information regarding criteria pollutant and toxic air contaminant concentrations and related health impacts may become more readily available.
  • It will be important to watch for upcoming regulations or other technical guidance from CARB regarding the content and process for community emission reduction programs.
  • Technologies and tools for monitoring and reducing criteria air pollutant and toxic air contaminant levels from non-vehicular sources will likely continue to develop and improve.

Any Questions?

Honey Walters

Honey Walters

Principal – Climate
Dimitri Antoniou, AICP

Dimitri Antoniou, AICP

Air Quality, GHG, and Noise Practice Leader


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