AB 43: Greenhouse gas emissions: building materials: embodied carbon trading system.

The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. Under the act, a violation of a rule, regulation, order, emission limitation, emission reduction measure, or other measure adopted by the state board under the act is a crime.

Existing law requires the state board, by December 31, 2026, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. Existing law requires the state board to develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40% net reduction in greenhouse gas emissions of building materials, as determined from a baseline calculated using a certain 2026 report, if that report is adequate, or as specified. Existing law requires that strategy to achieve this target as soon as possible, but no later than December 31, 2035, provides for an interim target of 20% net reduction by December 31, 2030, authorizes the state board to adjust the interim target, as provided, and requires the established targets to begin no sooner than January 1, 2027. Existing law also requires the state board to form and maintain a technical advisory committee, as described.

This bill would, among other changes, eliminate the interim target of 20% net reduction. The bill would require the baseline described above to be established based on either an industry average of environmental product declarations reported for the 2026 calendar year or on the most relevant, up-to-date information available, as determined by the state board. The bill would also require the established targets to begin to apply no sooner than January 1, 2027, and 2 years after the baseline is established. The bill would delete the requirement that the state board form and maintain a technical advisory committee, and would instead require the state board to consult experts to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, as specified. The bill would also exempt violations of these requirements from criminal penalties and authorize the imposition of specified civil penalties for those violations. The bill would express the intent of the Legislature regarding the applicable civil penalties.

Existing law requires the state board, by July 1, 2023, to develop a comprehensive strategy for the states cement sector to achieve net-zero emissions of greenhouse gases associated with cement used within the state as soon as possible, but no later than December 31, 2045.

This bill would authorize the state board to establish an embodied carbon trading system, as defined and as provided. The bill would authorize the state board to integrate the embodied carbon trading system into the framework for measuring the average carbon intensity of the materials used in the construction of new buildings, as described above, on or before December 31, 2026, and to implement the system on and after January 1, 2029. The bill would authorize the state board to adopt rules and regulations for the credit allocation approach, the anticipated carbon price in the scheme, and trading periods. The bill would also require the state board to periodically review and update its emission reporting and compliance standard requirements, as necessary.