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California Legislature to Consider Aggressive Climate Targets


Governor Newsom introduces five ambitious proposals that could alter California’s climate policy for years to come.

By JP Brisson, Nikki Buffa, Marc Campopiano, Jennifer Roy, Josh Bledsoe, Michael Dreibelbis, Aron Potash, and Alicia Robinson

On August 12, 2022, California Governor Gavin Newsom advocated for five climate proposals (the Climate Proposals) in the waning days of California’s legislative cycle. In his unprecedented transmittal, Newsom explained that “[w]e’re taking all of these major actions now in the most aggressive push on climate this state has ever seen because later is too late.”[1]

With the 2022 legislative session scheduled to close at midnight on August 31, 2022, the Legislature is poised to determine the fate of these Climate Proposals and potentially chart a new course towards increased greenhouse gas reductions. Some stakeholders have criticized the proposals as too “rushed,” out of concern that their implications have yet to be fully understood. If adopted, however, these ambitious proposals clearly would impact the trajectory of California climate policy significantly for years to come.

The five Climate Proposals address a broad range of climate change issues and overall reflect more aggressive targets for the state, as described below:

Climate Proposal 1: Codify a statewide carbon neutrality goal

This Proposal is to enact a “legally binding, and achievable goal for California to achieve statewide carbon neutrality as soon as possible, and no later than 2045.” This emission reduction target was first established as a statewide goal in 2018 by Governor Edmund Brown pursuant to Executive Order B-55-18. This Proposal would convert the goal into a legally binding target.[2]

Climate Proposal 2: Increase the state’s 2030 ambition by requiring reducing greenhouse gas (GHG) emissions to at least 55% below 1990 levels by 2030, up from 40%

California’s landmark Global Warming Solutions Act of 2006 (AB 32, subsequently extended through AB 398), which gave rise to the nation’s first economy-wide GHG cap-and-trade program, required the California Air Resources Board (CARB) to ensure that statewide GHG emissions were cut to 40% below 1990 levels by 2030. This second Proposal increases that goal to 55%, noting that “increasing ambition in the near-term supports the unprecedented rate of transformation needed in this decade to build the clean energy systems of tomorrow.”

Climate Proposal 3: Establish a setback distance and new regulatory requirements on new and existing operational oil wells within 3,200 feet of sensitive receptors

This Proposal seeks to codify 3,200 feet as the “minimum health and safety distance” between new oil and gas production wells and homes, schools, or parks. The Proposal also seeks to impose “strict pollution controls” applicable to both current and new wells to “protect the health of over 2 million Californians currently living within 3,200 feet of an active well.” Previous legislative efforts to impose oil and gas setbacks in California have failed. The Proposal would impose substantial new regulatory burdens on owners and operators of new and existing operational oil wells.

Climate Proposal 4: Establish a pathway for achieving the state’s 100% clean electricity sales goal by 2045

This Proposal identifies interim milestones to achieve the state’s existing goal of 100% clean electricity sales by 2045. The Proposal’s interim targets include clean electricity retail sales of 90% by 2035 and 95% by 2040.

Climate Proposal 5: Advance natural and engineered technologies to remove carbon pollution

Echoing CARB’s draft Scoping Plan, this final Proposal emphasizes that “there is no path to achieving carbon neutrality without removing carbon from our atmosphere.” This Proposal would establish a program managed by CARB that advances carbon capture and sequestration (CCS) technologies, including natural carbon sequestration. One feature of this new program would be a “unified permitting program” for CCS projects, similar to the California Energy Commission’s unified permitting program for certain energy projects, which was recently expanded under AB 205 to include solar, wind, and battery storage, among other energy projects.[3] The Proposal indicates that these activities must minimize impacts on communities where projects are developed and promote employment and workforce development. Notably, the Proposal would prohibit a CCS “operator from using concentrated carbon fluids for purposes of enhanced oil recovery.”

What’s Next?

Each of the Climate Proposals must be incorporated into a legislative bill in order to be codified into law. As of the date of publication of this blog post, Proposals 1–4 have been incorporated into Legislative Bills SB 1137, SB 1395, SB 2133, and SB 1020, respectively. Whether the CCS Proposal will be incorporated into legislative bills in whole or in part will likely be determined by August 30, 2022, in advance of final legislative votes, which must be cast by midnight on August 31, 2022.

A number of questions remain over whether the Proposals will pass, and if so, how the programs will be implemented. If passed by the Legislature, many of these questions would need to be resolved through subsequent rulemaking. The policy instruments identified to operationalize the Proposals will also carry important cost implications for the state, particularly in light of the degree and scope of ambition contained in the Proposals. For example, some stakeholders are raising questions about how these proposals might affect California’s housing crisis.

Impact on CARB’s Draft Scoping Plan

If enacted, the Proposals will likely also impact CARB’s ongoing Scoping Plan process, discussed in a four-part Latham blog series.[4] The Draft Scoping Plan, released in May 2022, identified CARB’s proposed path for how California can reach an interim goal of reducing GHG emissions by at least 40% below 1990 levels by 2030. It also identified how the state can reach the ultimate goal of carbon neutrality by 2045 along with accelerated options to achieve carbon neutrality by 2035. The first Climate Proposal would require CARB to model California’s path for reducing GHGs to 55% below 1990 levels. CARB would likely also have to account for the measures contained in the remaining Proposals when determining how to achieve the emission reduction targets.

Conclusion

The Climate Proposals represent Governor Newsom’s attempt to keep California as a leader on climate change policies globally. Indeed, the Climate Proposals were published on the same day that the US House of Representatives passed the landmark Inflation Reduction Act (IRA), and three days before President Biden signed the IRA into law.

Latham & Watkins will continue to monitor these legislative developments as well as any subsequent implementation of the Climate Proposals.

 

Endnotes

[1] Office of Governor Gavin Newsom, “Governor Newsom’s Ambitious Climate Proposals Presented to Legislature,” (Aug. 12, 2022), https://www.gov.ca.gov/2022/08/12/governor-newsoms-ambitious-climate-proposals-presented-to-legislature/

[2] Executive Order B-55-18 To Achieve Carbon Neutrality (September 10, 2018), https://www.ca.gov/archive/gov39/wp-content/uploads/2018/09/9.10.18-Executive-Order.pdf

[3] https://www.globalelr.com/2022/07/california-expands-state-agency-authority-to-spur-clean-energy-and-bolster-grid-reliability/

[4] Latham & Watkins, “California Air Resources Board Releases Draft Scoping Plan Update,” Environment, Land & Resources Blog, Parts 1–4, https://www.globalelr.com/2022/05/california-air-resources-board-releases-draft-scoping-plan-update/; https://www.globalelr.com/2022/05/california-air-resources-board-releases-draft-scoping-plan-update-part-2/; https://www.globalelr.com/2022/06/california-air-resources-board-releases-draft-scoping-plan-update-part-3/; https://www.globalelr.com/2022/06/california-air-resources-board-releases-draft-scoping-plan-update-part-4/



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