California Climate Change Initiatives Create Framework for Others

Skadden's 2015 Insights - Regulatory

With climate change mandates stalled at the federal level and ongoing international political struggles complicating global climate change efforts, several U.S. states and Canadian provinces have been at the forefront of efforts to mitigate climate change.

Not surprisingly, California has been a leader in these efforts, most notably with its passage of the California Global Warming Solutions Act of 2006, known colloquially as "AB 32." The state is one of the largest domestic emitters of greenhouse gases (GHGs), including carbon dioxide, methane and other ozone-depleting gases, as well as one of the most populous states in the United States. AB 32 was the result of efforts to create a comprehensive and long-term approach to address climate change, while also ensuring a robust state economy and a generally high standard of living. AB 32 provides the framework for a strong state-mandated emissions reduction program, as well as a regional program known as the Western States Initiative, to reduce GHGs, create market mechanisms for cutting GHG emissions and reduce statewide GHG emissions to 1990 levels by 2020.

The implementation of AB 32 is under the authority of the California Air Resources Board (CARB). As required by AB 32, CARB has developed a "Scoping Plan" for the overall implementation of its GHG emissions reductions program; initiated a cap-and-trade allowance program to achieve the statutory-mandated emissions reductions; and conducted various workshops and studies to prioritize and solidify its emissions reductions goals, expand renewable energy resources, and promote energy efficiency, cleaner transportation and waste reduction. GHG emissions reductions — including those from cars and trucks, electricity production and fuels — have been targeted in the current Scoping Plan. To date, CARB has adopted and is implementing Low Carbon Fuel Standard and Advanced Clean Cars programs, which are being watched by other states looking to adopt similar measures. The Scoping Plan is mandated to be reviewed and updated every five years, and additional sectors are expected to be added in future years, based on the success (or failure) of the current programs.

In setting the stage for the next phase of GHG reductions in California, on January 5, 2015, Gov. Jerry Brown stated his explicit goals for his administration in the coming four years: increasing electricity from renewables to 50 percent from the current 33 percent under AB 32; cutting dependence on petroleum products by 50 percent, largely through electric and low-carbon vehicles; and increasing energy efficiency in all buildings. These ambitious new goals will continue to set high bars for addressing climate change, both within California and beyond.

The cap-and-trade program under AB 32 is conducted through the Western States Initiative, a consortium of several western U.S. states and some Canadian provinces (including, most recently and most visibly, Quebec). To date, this market allowance program has applied to utilities and large industrial plants — the major GHG emitters in the region — but eventually will be rolled out across a broad spectrum of industries.

Other key components of AB 32 include the establishment of an Environmental Justice Advisory Committee and an Economic and Technology Advancement Advisory Committee. Both these committee structures are designed to ensure that quality of life in California and vibrant economic considerations remain essential parts of the implementing programs by incorporating such considerations into all emissions reduction goals, even as the state strives to lower its GHG emissions.

Efforts like those in California have resulted in the implementation of intrastate and regional climate change measures. They also provide working — and potentially workable — frameworks for other jurisdictions interested in developing their own climate change programs.

This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.