Existing law requires the State Air Resources Board to inventory sources of air pollution within the air basins of the state and determine the kinds and quantity of air pollutants. Existing law requires the state board to make available, and update at least annually, on its Internet Web site the emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants for each facility that reports to the state board and air pollution control and air quality management districts as well as the emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants throughout the state broken down to a local and subcounty level for stationary sources and to at least a county level for mobile sources, as specified.

This bill, beginning January 1, 2020, would additionally require the state board to quantify and publish annually the amount of greenhouse gas emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas imported into the state from out-of-state sources.

Existing law requires the State Air Resources Board to inventory sources of air pollution within the air basins of the state and determine the kinds and quantity of air pollutants. Existing law requires the state board to make available, and update at least annually, on its Internet Web site the emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants for each facility that reports to the state board and air pollution control and air quality management districts as well as the emissions of greenhouse gases, criteria air pollutants, and toxic air contaminants throughout the state broken down to a local and subcounty level for stationary sources and to at least a county level for mobile sources, as specified.

This bill, beginning January 1, 2020, would additionally require the state board to quantify and publish annually the amount of greenhouse gas emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas imported into the state from out-of-state sources.

This bill, beginning January 1, 2020, would additionally require the state board to quantify, report, and continually update in that inventory of greenhouse gas emissions quantify and publish annually the amount of greenhouse gas emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas imported into the state from out-of-state sources.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. Existing law requires the state board to prepare, adopt, and update an inventory of greenhouse gas emissions that, prior to January 1, 2007, was required to be adopted and updated by the State Energy Resources Conservation and Development Commission.

This bill bill, beginning January 1, 2020, would additionally require the state board to quantify, report, and continually update in that inventory of greenhouse gas emissions the amount of greenhouse gas emissions resulting from the loss or release of uncombusted natural gas leakage and venting during to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas imported into the state from out-of-state sources.

Existing law requires the Natural Resources Agency, by July 1, 2017, and every 3 years thereafter, to update the states climate adaptation strategy, as provided. Existing law requires the agency, by January 1, 2017, and every 3 years thereafter, to release a draft climate adaptation strategy, as provided. Existing law states the intent of the Legislature to prioritize the states response to the impacts resulting from climate change by ensuring all state departments and agencies prepare for and are ready to respond to the impacts of climate change, as specified.

This bill would make a technical, nonsubstantive change to that provision.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2195

Author:(Chau)

As Amended Ver:June 25, 2018

Majority vote

Original Committee Reference: NAT. RES.

SUMMARY: Requires the Air Resources Board (ARB), by January 1, 2020, to use the best available science to quantify and annually report on its website the amount of greenhouse gas (GHG) emissions, expressed in tons of carbon dioxide equivalents, resulting from the loss or release of natural gas during all processes associated with the production, processing, and transport of natural gas imported into the state from out-of-state sources.

SENATE AMENDMENTS: Amendments accepted in the Senate Environmental Quality Committee move language from Health and Safety Code Section 39607.4 to Section 39607 and remove references to requirements related to the State Energy Resources Conservation and Development Commission.

EXISTING LAW:

1. Establishes ARB as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile sources and coordinate with local air districts to control emissions from stationary sources in order to implement the Clean Air Act.
2. Requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost- effective GHG emission reductions.
3. Requires ARB, in adopting rules and regulations to achieve the maximum technologically feasible and cost-effective GHG emissions reductions, to ensure that statewide GHG emissions are reduced to at least 40% below the 2020 statewide limit no later than December 31, 2030.
4. Requires ARB to adopt regulations to require the reporting and verification of statewide GHG emissions, including monitoring and annual reporting of GHG emissions sources.
5. Requires ARB to account for GHG emissions from all electricity consumed in the state, including transmission and distribution line losses from electricity generated within the state or imported from outside the state.
6. Requires the California Energy Commission (CEC) to minimize in-state natural gas system leakage and related emissions.
7. Requires ARB to approve and begin implementing the comprehensive short-lived climate pollutant strategy, which includes a requirement to achieve 40% reduction in statewide emissions of methane from 2013 levels by 2030.
8. Requires ARB to work with air districts that monitor methane to undertake monitoring and measurements of high-emissions methane hotspots in the state and gather or acquire the necessary information for the purpose of carrying out a life-cycle analysis of GHG emissions from natural gas produced and imported into the state.

FISCAL EFFECT: According to the Senate Appropriations Committee: Ongoing annual costs of $25,000 (Cost of Implementation Account) for California Air Resources Board (CARB) to contract for inventory modeling and the expansion of the Oil Production Greenhouse Gas Emission Estimator (OPGEE), the existing in-state methane and natural gas monitoring program; and, minor and absorbable costs for CARB to publish OPGEE estimates annually

COMMENTS: Natural gas is an alternative to other fossil fuels that emit less carbon dioxide and other pollutants compared to coal and oil, and it is used in vehicle fuel, heating homes and buildings, and electricity generation. However, methane, the primary component of natural gas, is 84 times more potent as a GHG than carbon dioxide over the course of its first 20 years in the atmosphere. The transport and storage of natural gas and associated leaks associated with these processes can allow significant amounts of GHGs to enter the atmosphere. California imports approximately 90% of its natural gas from out of state.

The Union of Concerned Scientists estimates that between 1% and 9% of all natural gas produced in the United States (US) escapes into the atmosphere before it is used, and methane leaks release a substantial amount of potent GHG emissions across the country. A 2016 collaborative study between the Environmental Defense Fund (EDF), Stanford University, and the University of Arkansas that used aerial surveys to assess natural gas leaks across 8,000 production facilities identified hundreds of "super-emitter" sites and revealed that incidental emissions associated with production were much higher than current industry estimates account for. In a 2016 study, the US Environmental Protection Agency (US EPA) estimated that industry methane emissions from production facilities are 34% higher than previous estimates and grew 11% between 2010 and 2014. A 2015 collaborative study led by EDF revealed that, in the Barnett Shale oil production region in Texas, measured methane losses were 90% higher than the US EPA GHG inventory accounted for. Due to the potency of methane as a GHG, these leaks are likely to impact the state's GHG reduction targets.

In March 2018, US EPA amended two sections of the Fugitive Emissions Requirements in the 2016 New Source Performance Standards for the Oil and Gas Industry. The amendments
remove the requirement for owners and operators of oil and gas facilities to repair leaks during unscheduled or emergency shutdowns and decrease the frequency of monitoring requirements on the Alaskan North Slope from semi-annual to annual. The Trump Administration has also proposed repealing most of the provisions of 2016 Obama Administration rules requiring drillers operating on federal Bureau of Land Management to develop plans to minimize and detect leaks and update equipment.

In March of 2017, ARB adopted regulations that require quarterly monitoring of in-state methane emissions from oil and gas wells, natural gas processing facilities, compressor stations and other equipment used in the processing and delivery of oil and natural gas using the best available science. These regulations will help track the full extent of methane emissions in the state and identify problem areas, but they do not account for emissions generated by production outside the state. This bill would give ARB the ability to determine the details of how out-of-state emissions from natural gas are tracked, and in-state efforts provide a template for how this could be done. Similar to the goals of this bill, ARB is required to track GHG emissions from all electricity consumed in the state under AB 32 (Núñez), Chapter 488, Statutes of 2006, including transmission and distribution line losses from electricity generated within the state or imported from outside the state. This bill would help account for GHG emissions from out-of-state natural gas production and transport that are not currently included in the state's emissions tracking.

Analysis Prepared by: Dylan Chapple / NAT. RES. / (916) 319-2092 FN: 0003938

 THIRD READING  

Bill No: AB 2195

Author:

:

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 6/20/18

AYES: Wieckowski, Hill, Lara, Skinner, Stern

NOES: Stone, Gaines

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/6/18

AYES: Portantino, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 52-23, 5/29/18 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill requires, starting January 1, 2020, the Air Resources Board (ARB) to quantify and publish annually the amount of greenhouse gas (GHG) emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas that is imported into the state from out-of-state sources, as specified.

ANALYSIS:

Existing law:

1. Establishes the ARB as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile sources and coordinate, encourage, and review the efforts of all levels of government as they affect air quality. (Health and Safety Code (HSC) §39500 et seq.)
   
2. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), ARB to (1) determine the 1990 statewide GHG emissions level and approve a statewide GHG emissions limit that is equivalent to that level to be achieved by 2020; (2) ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030 (i.e., SB 32); and (3) adopt regulations, until December 31, 2030, that utilize market-based compliance mechanisms to reduce GHG emissions (i.e., the cap-and-trade program). (HSC §38500 et seq.)
   
3. Requires ARB to adopt regulations—known as the Mandatory Reporting Rule (MRR)—that require the reporting and verification of statewide GHG emissions, as specified. (HSC §38530)
   

This bill:

1. Requires, starting January 1, 2020, ARB to quantify and publish annually the amount of GHG emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas that is imported into the state from out-of-state sources, as specified.
   
2. Clarifies that the new reporting requirement does not expand, contract, or otherwise alter other requirements for GHG emissions reporting by sources or categories of sources or for the statewide GHG emissions limit.

Background

1. Implementing AB 32: The California Global Warming Solutions Act of 2006. In 2006, AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) was signed into law, which requires ARB to determine the 1990 statewide GHG emission level and achieve a reduction in GHG emissions to that level by 2020. In addition to calling on ARB to inventory GHGs in California (including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) and approve the aforementioned statewide GHG emissions limit.
   
   AB 32 also requires ARB to (1) implement regulations that achieve the maximum technologically feasible and cost-effective reduction of GHG emissions, (2) identify and adopt regulations for discrete early-action measures, and (3) prepare and approve a scoping plan, to be updated at least once every five years, to achieve the maximum technologically feasible and cost-effective reduction of GHG emissions. Due to a variety of factors, most importantly being the great recession that started in 2008, California will achieve the goals of AB 32 in advance of the 2020 deadline.
   
   In 2016, the Legislature approved, and the Governor signed, SB 32 (Pavley, Chapter 249, Statutes of 2016), which requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030. This new goal is known as the SB 32 target.
   
   The following year, AB 398 (E. Garcia, Chapter 135, Statutes of 2017) was enacted to extend the authority of ARB to implement a cap-and-trade program to reduce GHG emissions throughout the state. AB 398 specified a variety of requirements on the post-2020 cap-and-trade program, most notable are (1) requiring the banking of allowances from the current cap-and-trade program into the post-2020 program, (2) specifying industry assistance factors for the post-2020 program, and (3) requiring that all GHG rules and regulations adopted by ARB must be consistent with the updated scoping plan.
   
2. Mandatory Reporting Rule (MRR). Reporting of GHG emissions by major sources is required by the California Global Warming Solutions Act of 2006 (AB 32). The Regulation for the Mandatory Reporting of Greenhouse Gas Emissions is known as the MRR and is applicable to electricity generators, industrial facilities, fuel suppliers, and electricity importers. A summary of reported GHG emissions data reported under MRR are made public each year, and the data used by the Cap-and-Trade Program and included in California GHG inventory.
   
   ARB implements and oversees a third-party verification program to support mandatory GHG reporting. All GHG reports subject to the Cap-and-Trade Program must be independently verified by ARB-accredited verification bodies and verifiers. Of note, not all entities that are required to report their emissions of GHGs under the MRR are also subject the cap-and-trade program.
   
3. State GHG inventory. AB 1803 (Committee on Budget, Chapter 77, Statutes of 2006) made ARB responsible to prepare, adopt, and update California’s GHG inventory, which had previously been under the control of the California Energy Commission. The ARB GHG Emission Inventory program provides information on the annual GHG emission inventory of state wide GHG emissions from transportation, electricity, commercial/residential, industrial, agricultural, and waste management sectors including high-global-warming-potential gases. The program also includes information relating to the 1990 GHG emission level and 2020 limit, the Short-Live Climate Pollutant inventories, and other climate information.
   
4. Methane. Methane is the principal component of natural gas and is also produced biologically under anaerobic conditions in ruminant animals, landfills and waste handling. Methane is termed a Short-Lived Climate Pollutant (SLCP) because it has a much shorter lifetime in the atmosphere than carbon dioxide, but has a much higher global warming potential. According to the US Environmental Protection Agency (US EPA), methane is 20-30 times more effective than carbon dioxide in trapping heat in the atmosphere over a 100-year period. SLCPs, including methane, are responsible for 30-40% of global warming to date.
   
   Atmospheric methane concentrations have been increasing as a result of human activities related to agriculture, fossil fuel extraction and distribution, and waste generation and processing. According to the ARB’s updated scoping plan, the state’s largest anthropogenic methane-producing sources are enteric fermentation (eructation, or belching by animals), manure management, landfills, natural gas transmission, and wastewater treatment. Methane emissions also come from non-anthropogenic sources such as wetlands, oceans, and forests.
   
   Methane gas from oil and gas production and distribution is a growing source of emissions in many countries, including the United States, due to increased exploration and use of natural gas for energy.

Comments

1. Purpose of Bill. According to the author, “AB 2195 would require ARB to include, in the annual greenhouse gas inventory for the state, an estimate of the total greenhouse gas emissions associated with the leakage of gas to the atmosphere during the production, processing, and transport of natural gas imported into the state from out-of-state sources.
   
   “Specifically, this bill would require ARB, based on the best available science and information, to quantify and report in the state greenhouse gas inventory the amount of greenhouse gas emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transport of natural gas imported into the state from out-of-state sources. Calculation of these emissions would be done in a manner determined by ARB, though in practice would be similar to the method utilized for in-state leakage (e.g., the amount of gas at issue multiplied by an emission factor determined by the agency).”
   
2. Is this necessary? Under AB 1496 (Thurmond, Chapter 604, Statutes of 2015), ARB is already required to consult with specified entities to gather information for purposes of carrying out life-cycle GHG emissions analyses of natural gas imports. ARB is on track to meet these goals, but it must be noted that because ARB does not have enforcement authority outside the state of California, most of that data is speculative and model-based. Given the current state of scientific research, some models are better than others so the quality and certainty of the lifecycle analyses are variable.
   
   Furthermore, it remains unclear how including this information in the state’s inventory helps California achieve the state’s climate goals. It is already clear that California is a national leader on reducing GHG emissions, but how does putting a soft number on undesirable practices that occur outside of California help the state achieve its goals? Especially since the natural gas actually imported into and burned in the state is currently accounted for in ARB’s GHG inventory?
   
   That being said, if there is a solution inside of California to problems that occur outside of California, the only way the state can implement that solution is to have as much information as possible.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Ongoing annual costs of $25,000 (Cost of Implementation Account) for CARB to contract for inventory modeling and the expansion of the Oil Production Greenhouse Gas Emission Estimator (OPGEE), the existing in-state methane and natural gas monitoring program.
• Minor and absorbable costs for CARB to publish OPGEE estimates annually.

SUPPORT: (Verified 8/7/18)

American Lung Association in California

Asian Pacific Environmental Network

Center for Biological Diversity

Center on Race, Poverty & the Environment

Central California Asthma Collaborative

Clean Water Action

Coalition for Clean Air

Environmental Defense Fund

Moms Clean Air Force

Natural Resources Defense Council

Sierra Club California

Silicon Valley Leadership Group

Union of Concerned Scientists

OPPOSITION: (Verified 8/7/18)

None received

ASSEMBLY FLOOR: 52-23, 5/29/18

AYES: Aguiar-Curry, Arambula, Baker, Berman, Bloom, Bonta, Caballero, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Cooley, Daly, Eggman, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Bigelow, Brough, Chávez, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Harper, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Burke, Cooper, Frazier

Prepared by:

8/8/18 9:54:49

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2017 - 2018 Regular Session

AB 2195 (Chau) - Natural gas: out-of-state sources: greenhouse gases

This bill does not meet the criteria for referral to the Suspense File.

Bill Summary:

This bill would require the California Air Resources Board (CARB) to quantify and report emissions associated with natural gas imported from out of state as part of the state’s greenhouse gas (GHG) inventory by January 1, 2020.

Fiscal Impact:

• Ongoing annual costs of $25,000 (Cost of Implementation Account) for CARB to contract for inventory modeling and the expansion of the Oil Production Greenhouse Gas Emission Estimator (OPGEE), the existing in-state methane and natural gas monitoring program.
• Minor and absorbable costs for CARB to publish OPGEE estimates annually.

Background: AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) requires CARB to determine the 1990 statewide GHG emission level and achieve a reduction in GHG emissions to that level by 2020. AB 32 also requires CARB to (1) implement regulations that achieve the maximum technologically feasible and cost-effective reduction of GHG emissions, (2) identify and adopt regulations for discrete early-action measures, and (3) prepare and approve a scoping plan, to be updated at least once every five years, to achieve the maximum technologically feasible and cost-effective reduction of GHG emissions.

SB 32 (Pavley, Chapter 249, Statutes of 2016) requires CARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030. This new goal is known as the SB 32 target.

AB 398 (E. Garcia, Chapter 135, Statutes of 2017) extends the authority of CARB to implement a cap-and-trade program to reduce GHG emissions throughout the state. AB 398 specified a variety of requirements on the post-2020 cap-and-trade program, most notable are (1) requiring the banking of allowances from the current cap-and-trade program into the post-2020 program, (2) specifying industry assistance factors for the post-2020 program, and (3) requiring that all GHG rules and regulations adopted by ARB must be consistent with the updated scoping plan.

Proposed Law: This bill would require CARB, based on the best available information, to quantify and publish annually beginning in 2020 the amount of greenhouse gas emissions that are emitted from leaks and flaring during all processes associated with the production, processing, and transportation of natural gas that is imported into the state from out-of-state sources. It would also specify that nothing in this act shall be interpreted as altering the requirements for greenhouse gas emissions reporting by sources or categories of sources for the statewide greenhouse gas emissions limit.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: AB 2195

SUBJECT: Natural gas: out-of-state sources: greenhouse gases

ANALYSIS:

Existing law:

1. Establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile sources and coordinate, encourage, and review the efforts of all levels of government as they affect air quality. (Health and Safety Code (HSC) §39500 et seq.)
   
2. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), ARB to (1) determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level to be achieved by 2020; (2) ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030 (i.e., SB 32); and (3) adopt regulations, until December 31, 2030, that utilize market-based compliance mechanisms to reduce GHG emissions (i.e., the cap-and-trade program). (HSC §38500 et seq.)
   
3. Requires ARB to adopt regulations—known as the Mandatory Reporting Rule (MRR)—that require the reporting and verification of statewide GHG emissions, as specified. (HSC §38530)
   

This bill:

1. Requires, starting January 1, 2020, ARB to quantify and report the amount of GHG emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transporting of natural gas that is imported into the state from out-of-state sources, as specified.
   
2. Clarifies that the new reporting requirement does not expand, contract, or otherwise alter other requirements for GHG emissions reporting by sources or categories of sources or for the statewide GHG emissions limit.
   

Background

1. Implementing AB 32: The California Global Warming Solutions Act of 2006. In 2006, AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) was signed into law, which requires ARB to determine the 1990 statewide GHG emission level and achieve a reduction in GHG emissions to that level by 2020. In addition to calling on ARB to inventory GHGs in California (including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride) and approve the aforementioned statewide GHG emissions limit.
   
   AB 32 also requires ARB to (1) implement regulations that achieve the maximum technologically feasible and cost-effective reduction of GHG emissions, (2) identify and adopt regulations for discrete early-action measures, and (3) prepare and approve a scoping plan, to be updated at least once every five years, to achieve the maximum technologically feasible and cost-effective reduction of GHG emissions. Due to a variety of factors, most importantly being the great recession that started in 2008, California will achieve the goals of AB 32 in advance of the 2020 deadline.
   
   In 2016, the Legislature approved, and the Governor signed, SB 32 (Pavley, Chapter 249, Statutes of 2016), which requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030. This new goal is known as the SB 32 target.
   
   The following year, AB 398 (E. Garcia, Chapter 135, Statutes of 2017) was enacted to extend the authority of ARB to implement a cap-and-trade program to reduce GHG emissions throughout the state. AB 398 specified a variety of requirements on the post-2020 cap-and-trade program, most notable are (1) requiring the banking of allowances from the current cap-and-trade program into the post-2020 program, (2) specifying industry assistance factors for the post-2020 program, and (3) requiring that all GHG rules and regulations adopted by ARB must be consistent with the updated scoping plan.
   
2. Mandatory Reporting Rule (MRR). Reporting of GHG emissions by major sources is required by the California Global Warming Solutions Act of 2006 (AB 32). The Regulation for the Mandatory Reporting of Greenhouse Gas Emissions is known as the MRR and is applicable to electricity generators, industrial facilities, fuel suppliers, and electricity importers. A summary of reported GHG emissions data reported under MRR are made public each year, and the data used by the Cap-and-Trade Program and included in California GHG inventory.
   
   ARB implements and oversees a third-party verification program to support mandatory GHG reporting. All GHG reports subject to the Cap-and-Trade Program must be independently verified by ARB-accredited verification bodies and verifiers. Of note, not all entities that are required to report their emissions of GHGs under the MRR are also subject the cap-and-trade program.
   
3. State GHG inventory. AB 1803 (Committee on Budget, Chapter 77, Statutes of 2006) made ARB responsible to prepare, adopt, and update California’s GHG inventory, which had previously been under the control of the California Energy Commission. The ARB GHG Emission Inventory program provides information on the annual GHG emission inventory of state wide GHG emissions from transportation, electricity, commercial/residential, industrial, agricultural, and waste management sectors including high-global-warming-potential gases. The program also includes information relating to the 1990 GHG emission level and 2020 limit, the Short-Live Climate Pollutant inventories, and other climate information.
   
4. Methane. Methane is the principal component of natural gas and is also produced biologically under anaerobic conditions in ruminant animals, landfills and waste handling. Methane is termed a Short-Lived Climate Pollutant (SLCP) because it has a much shorter lifetime in the atmosphere than carbon dioxide, but has a much higher global warming potential. According to the US Environmental Protection Agency (US EPA), methane is 20-30 times more effective than carbon dioxide in trapping heat in the atmosphere over a 100-year period. SLCPs, including methane, are responsible for 30-40% of global warming to date.
   
   Atmospheric methane concentrations have been increasing as a result of human activities related to agriculture, fossil fuel extraction and distribution, and waste generation and processing. According to the ARB’s updated scoping plan, the state’s largest anthropogenic methane-producing sources are enteric fermentation (eructation, or belching by animals), manure management, landfills, natural gas transmission, and wastewater treatment. Methane emissions also come from non-anthropogenic sources such as wetlands, oceans, and forests.
   
   Methane gas from oil and gas production and distribution is a growing source of emissions in many countries, including the United States, due to increased exploration and use of natural gas for energy.
   

Comments

1. Purpose of Bill. According to the author, “AB 2195 would require ARB to include, in the annual greenhouse gas inventory for the state, an estimate of the total greenhouse gas emissions associated with the leakage of gas to the atmosphere during the production, processing, and transport of natural gas imported into the state from out-of-state sources.
   
   “Specifically, this bill would require ARB, based on the best available science and information, to quantify and report in the state greenhouse gas inventory the amount of greenhouse gas emissions resulting from the loss or release of uncombusted natural gas to the atmosphere and emissions from natural gas flares during all processes associated with the production, processing, and transport of natural gas imported into the state from out-of-state sources. Calculation of these emissions would be done in a manner determined by ARB, though in practice would be similar to the method utilized for in-state leakage (e.g., the amount of gas at issue multiplied by an emission factor determined by the agency).”
   
2. Is this necessary? Under AB 1496 (Thurmond, Chapter 604, Statutes of 2015), ARB is already required to consult with specified entities to gather information for purposes of carrying out life-cycle GHG emissions analyses of natural gas imports. ARB is on track to meet these goals, but it must be noted that because ARB does not have enforcement authority outside the state of California, most of that data is speculative and model-based. Given the current state of scientific research, some models are better than others so the quality and certainty of the lifecycle analyses are variable.
   
   Furthermore, it remains unclear how including this information in the state’s inventory helps California achieve the state’s climate goals. It is already clear that California is a national leader on reducing GHG emissions, but how does putting a soft number on undesirable practices that occur outside of California help the state achieve its goals? Especially since the natural gas actually imported into and burned in the state is currently accounted for in ARB’s GHG inventory?
   
   That being said, if there is a solution inside of California to problems that occur outside of California, the only way the state can implement that solution is to have as much information as possible.
   
3. A question of placement. The section of code that AB 2195 is amending was a one-time statute transferring the responsibility for the state GHG inventory from the California Energy Commission to ARB. It would be more appropriate to have this direction under HSC §39607, which pertains to other inventory activities ARB has been directed to perform.
   
   The Committee may wish to amend the bill moving the language in AB 2195 to HSC §39607.
   

Related/Prior Legislation

AB 1496 (Thurmond, Chapter 604, Statutes of 2015) requires ARB to 1) monitor high-emission methane hot-spots in the state, 2) consult with specified entities to gather information for purposes of carrying out life-cycle GHG emissions analyses of natural gas imports, 3) update relevant policies and programs based on those updated life-cycle analyses, and 4) review scientific information on atmospheric reactivity of methane as a precursor to the formation of photochemical oxidants.

SB 1371 (Leno, Chapter 525, Statutes of 2014) requires the Public Utilities Commission (PUC), in consultation with the ARB, to open a proceeding to adopt rules and procedures that minimize natural gas leaks from PUC-regulated gas pipeline facilities, and requires the rules and procedures that provide for the development of metrics to quantify the volume of emissions from leaking gas pipeline facilities, and for evaluating and tracking leaks geographically and over time that may be incorporated into the ARB’s mandatory GHG emission reporting.

SOURCE:

Environmental Defense Fund

SUPPORT:

American Lung Association in California

Asian Pacific Environmental Network

Center on Race, Poverty & the Environment

Central California Asthma Collaborative

Clean Water Action

Coalition for Clean Air

Moms Clean Air Force

Natural Resources Defense Council

Sierra Club California

Union of Concerned Scientists

OPPOSITION:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2195

Author:(Chau)

As Amended Ver:April 16, 2018

Majority vote

SUMMARY: Requires the Air Resources Board (ARB), by January 1, 2020, to use the best available science to quantify and report the amount of greenhouse gas (GHG) emissions, expressed in tons of carbon dioxide equivalents, resulting from the loss or release of natural gas during all processes associated with the production, processing, and transport of natural gas imported into the state from out-of-state sources.

EXISTING LAW:

1. Establishes ARB as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile source s and coordinate with local air districts to control emissions from stationary sources in order to implement the Clean Air Act.
2. Requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
3. Requires ARB, in adopting rules and regulations to achieve the maximum technologically feasible and cost-effective GHG emissions reductions, to ensure that statewide GHG emissions are reduced to at least 40% below the 2020 statewide limit no later than December 31, 2030.
4. Requires ARB to adopt regulations to require the reporting and verification of statewide GHG emissions, including monitoring and annual reporting of GHG emissions sources.
5. Requires ARB to account for GHG emissions from all electricity consumed in the state, including transmission and distribution line losses from electricity generated within the state or imported from outside the state.
6. Requires the California Energy Commission (CEC) to minimize in-state natural gas system leakage and related emissions.
7. Requires ARB to approve and begin implementing the comprehensive short-lived climate pollutant strategy, which includes a requirement to achieve 40% reduction in statewide emissions of methane from 2013 levels by 2030.
8. Requires ARB to work with air districts that monitor methane to undertake monitoring and measurements of high-emissions methane hotspots in the state and gather or acquire the necessary information for the purpose of carrying out a life-cycle analysis of GHG emissions from natural gas produced and imported into the state.

FISCAL EFFECT: According to the Assembly Appropriations Committee: Increased ongoing annual ARB costs of $75,000 (Cost of Implementation Account) to contract for inventory modeling and expansion of the Oil Production Greenhouse Gas Emission Estimator, the existing in-state methane and natural gas monitoring program.

COMMENTS: Natural gas is an alternative to other fossil fuels that emit less carbon dioxide and other pollutants compared to coal and oil, and it is used in vehicle fuel, heating homes and buildings, and electricity generation. However, methane, the primary component of natural gas, is 84 times more potent as a GHG than carbon dioxide over the course of its first 20 years in the atmosphere. The transport and storage of natural gas and associated leaks associated with these processes can allow significant amounts of GHGs to enter the atmosphere. California imports approximately 90% of its natural gas from out of state.

The Union of Concerned Scientists estimates that between 1% and 9% of all natural gas produced in the US escapes into the atmosphere before it is used, and methane leaks release a substantial amount of potent GHG emissions across the country. A 2016 collaborative study between the Environmental Defense Fund (EDF), Stanford University, and the University of Arkansas that used aerial surveys to assess natural gas leaks across 8,000 production facilities identified hundreds of "super-emitter" sites and revealed that incidental emissions associated with production were much higher than current industry estimates account for. In a 2016 study, the US Environmental Protection Agency (US EPA) estimated that industry methane emissions from production facilities are 34% higher than previous estimates and grew 11% between 2010 and 2014. A 2015 collaborative study led by EDF revealed that, in the Barnett Shale oil production region in Texas, measured methane losses were 90% higher than the US EPA GHG inventory accounted for. Due to the potency of methane as a GHG, these leaks are likely to impact the state's GHG reduction targets.

In March 2018, US EPA amended two sections of the Fugitive Emissions Requirements in the 2016 New Source Performance Standards for the Oil and Gas Industry. The amendments remove the requirement for owners and operators of oil and gas facilities to repair leaks during unscheduled or emergency shutdowns and decrease the frequency of monitoring requirements on the Alaskan North Slope from semi-annual to annual. The Trump Administration has also proposed repealing most of the provisions of 2016 Obama Administration rules requiring drillers operating on federal Bureau of Land Management to develop plans to minimize and detect leaks and update equipment.

In March of 2017, ARB adopted regulations that require quarterly monitoring of in-state methane emissions from oil and gas wells, natural gas processing facilities, compressor stations and other equipment used in the processing and delivery of oil and natural gas using the best available science. These regulations will help track the full extent of methane emissions in the state and identify problem areas, but they do not account for emissions generated by production outside the state. This bill would give ARB the ability to determine the details of how out-of-state emissions from natural gas are tracked, and in-state efforts provide a template for how this could be done. Similar to the goals of this bill, ARB is required to track GHG emissions from all electricity consumed in the state under AB 32 (Nunez, Chapter 488, Statutes of 2016), including transmission and distribution line losses from electricity generated within the state or imported from outside the state. This bill would help account for GHG emissions from out-of-state natural gas production and transport that are not currently included in the state's emissions tracking.

Analysis Prepared by: Dylan Chapple / NAT. RES. / (916) 319-2092 FN: 0003172

Date of Hearing: May 2, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 2195

Author:(Chau) – As Amended Ver:April 16, 2018

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the California Air Resources Board (ARB) to use the best available science, as specified, to quantify and report emissions associated with natural gas imported from out of state as part of the state’s greenhouse gas (GHG) inventory by January 1, 2020.

This bill provides it shall not be interpreted to expand, contract, or otherwise alter existing requirements for GHG reporting by emissions sources or categories of sources, or the statewide GHG emissions limit.

FISCAL EFFECT:

Increased ongoing annual ARB costs of $75,000 (Cost of Implementation Account) to contract for inventory modeling and the expansion of the Oil Production Greenhouse Gas Emission Estimator, the existing in-state methane and natural gas monitoring program.

COMMENTS:

Background and Purpose. Natural gas is an alternative to other fossil fuels that emit more CO2 and other pollutants compared to coal and oil. It is used in vehicle fuel, heating homes and buildings, and electricity generation. However, methane, the primary component of natural gas, is 84 times more potent as a GHG than CO2 over the course of its first 20 years in the atmosphere. The transport and storage of natural gas and associated leaks associated with these processes can allow significant amounts of GHGs to enter the atmosphere. California imports approximately 90% of its natural gas from out of state.

The Union of Concerned Scientists estimates that between 1% and 9% of all natural gas produced in the United States escapes into the atmosphere before it is used, and methane leaks release a substantial amount of potent GHG emissions across the country.

In March of 2017, ARB adopted regulations that require quarterly monitoring of in-state methane emissions from oil and gas wells, natural gas processing facilities, compressor stations and other equipment used in the processing and delivery of oil and natural gas. These regulations will help track the full extent of methane emissions in the state and identify problem areas.

This bill expands this effort to account for the GHG emissions from out-of-state natural gas production and transport that are not currently included in the state’s emissions tracking.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 23, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

ABPCA Bill Id:AB 2195 (

Author:Chau) – As Amended Ver:April 16, 2018

SUBJECT: Natural gas: out-of-state sources: greenhouse gases

SUMMARY: Requires the Air Resources Board (ARB) to report emissions associated with natural gas imported from out of state as part of the state’s greenhouse gas (GHG) inventory.

EXISTING LAW:

1. Establishes ARB as the air pollution control agency in California and requires ARB, among other things, to control emissions from a wide array of mobile source s and coordinate with local air districts to control emissions from stationary sources in order to implement the Clean Air Act.
2. Requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
3. Requires ARB, in adopting rules and regulations to achieve the maximum technologically feasible and cost-effective GHG emissions reductions, to ensure that statewide GHG emissions are reduced to at least 40% below the 2020 statewide limit no later than December 31, 2030.
4. Requires ARB to adopt regulations to require the reporting and verification of statewide GHG emissions, including monitoring and annual reporting of GHG emissions sources.
5. Requires ARB to account for GHG emissions from all electricity consumed in the state, including transmission and distribution line losses from electricity generated within the state or imported from outside the state.
6. Requires the California Energy Commission (CEC) to minimize in-state natural gas system leakage and related emissions.
7. Requires ARB to approve and begin implementing the comprehensive short-lived climate pollutant strategy, which includes a requirement to achieve 40% reduction in statewide emissions of methane from 2013 levels by 2030.
8. Requires ARB to work with air districts that monitor methane to undertake monitoring and measurements of high-emissions methane hotspots in the state and gather or acquire the necessary information for the purpose of carrying out a life-cycle analysis of GHG emissions from natural gas produced and imported into the state.

THIS BILL:

1. Requires ARB, by January 1, 2020, to use the best available science to quantify and report the amount of GHG emissions, expressed in tons of carbon dioxide equivalents, resulting from the loss or release of natural gas during all processes associated with the production, processing, and transport of natural gas imported into the state from out-of-state sources.
2. Specifies that these provisions shall not be interpreted to expand, contract, or otherwise alter existing requirements for GHG reporting by emissions sources or categories of sources, or the statewide GHG emissions limit.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s Statement:

AB 2195 would require ARB to include, in the annual greenhouse gas inventory for the state, an estimate of the total greenhouse gas emissions associated with the leakage of gas to the atmosphere during the production, processing, and transport of natural gas used in California.

Specifically, this bill would require ARB, based on the best available science and information, to quantify and report in the state greenhouse gas inventory the amount of greenhouse gas emissions from natural gas leakage and venting during the production, processing and transport of natural gas imported into California from sources outside the state. Calculation of these emissions would be done in a manner determined by ARB, though in practice would be similar to the method utilized for in-state leakage (e.g., the amount of gas at issue multiplied by an emission factor determined by the agency).

1. Emissions leakage. Natural gas is an alternative to other fossil fuels that emit less carbon dioxide and other pollutants compared to coal and oil, and it is used in vehicle fuel, heating homes and buildings, and electricity generation. However, methane, the primary component of natural gas, is 84 times more potent as a GHG than carbon dioxide over the course of its first 20 years in the atmosphere. The transport and storage of natural gas and associated leaks associated with these processes can allow significant amounts of GHGs to enter the atmosphere. California imports approximately 90% of its natural gas from out of state.

The Union of Concerned Scientists estimates that between 1% and 9% of all natural gas produced in the US escapes into the atmosphere before it is used, and methane leaks release a substantial amount of potent GHG emissions across the country. A 2016 collaborative study between the Environmental Defense Fund (EDF), Stanford University, and the University of Arkansas that used aerial surveys to assess natural gas leaks across 8,000 production facilities identified hundreds of “super-emitter” sites and revealed that incidental emissions associated with production were much higher than current industry estimates account for. In a 2016 study, the US Environmental Protection Agency (US EPA) estimated that industry methane emissions from production facilities are 34% higher than previous estimates and grew 11% between 2010 and 2014. A 2015 collaborative study led by EDF revealed that, in the Barnett Shale oil production region in Texas, measured methane losses were 90% higher than the US EPA GHG inventory accounted for. Due to the potency of methane as a GHG, these leaks are likely to impact the state’s GHG reduction targets.

In March 2018, US EPA amended two sections of the Fugitive Emissions Requirements in the 2016 New Source Performance Standards for the Oil and Gas Industry. The amendments remove the requirement for owners and operators of oil and gas facilities to repair leaks during unscheduled or emergency shutdowns and decrease the frequency of monitoring requirements on the Alaskan North Slope from semi-annual to annual. The Trump Administration has also proposed repealing most of the provisions of 2016 Obama Administration rules requiring drillers operating on federal Bureau of Land Management to develop plans to minimize and detect leaks and update equipment.

In March of 2017, ARB adopted regulations that require quarterly monitoring of in-state methane emissions from oil and gas wells, natural gas processing facilities, compressor stations and other equipment used in the processing and delivery of oil and natural gas using the best available science. These regulations will help track the full extent of methane emissions in the state and identify problem areas, but they do not account for emissions generated by production outside the state. This bill would give ARB the ability to determine the details of how out-of-state emissions from natural gas are tracked, and in-state efforts provide a template for how this could be done. Similar to the goals of this bill, ARB is required to track GHG emissions from all electricity consumed in the state under AB 32, including transmission and distribution line losses from electricity generated within the state or imported from outside the state. This bill would help account for GHG emissions from out-of-state natural gas production and transport that are not currently included in the state’s emissions tracking.

1. Related Legislation:

AB 2726 (Levine, 2018) would require ARB to establish and maintain a GHG inventory based on a consumption-based accounting basis. This bill will be heard in the Assembly Natural Resources Committee on April 23, 2018.

REGISTERED SUPPORT / OPPOSITION:

Support

American Lung Association in California

Asian Pacific Environmental Network

Clean Water Action

Coalition for Clean Air

Environmental Defense Fund (sponsor)

Natural Resources Defense Council

Sierra Club California

Union of Concerned Scientists

Opposition

None on file

Analysis Prepared by: Dylan Chapple / NAT. RES. /