Senate Standing Committee on Environmental Quality

The Joint Legislative Climate Change Committee, Environmental Quality Committee and Assembly Natural Resources Committee will come to order in 60 seconds.

Welcome members and members of the public. The Joint Legislative Committee on Climate Change Policies, the Senate Environmental Quality Committee and the Assembly Natural Resources are now coming to order jointly here. Good morning. As the legislature continues to welcome the public, in-person and participation via the teleconference line, we're going to provide a participant number for today's hearing as well. It's 877-692-8957. The access code is 18501100. The detailed instructions on how the teleconference system works are on the senate, and our committee, website. And we're holding our hearings here in the O Street Building. I'm asking as many members as can get down here to be present, but we should -- we're close to a quorum. But we can still begin the hearing.

For today's hearing, we'll be hearing a panel of witnesses prior to taking public comment. And then once we've heard all the witnesses, we're going to have a public comment period at the end and try to give a good amount of time for that. For those who are brave enough to stick around and weigh in, we do want to give you a chance to testify, so stay tuned for that. Please note that in order for us to hear you clearly and avoid acoustic feedback, you have to mute your device you're watching the hearing on, if you're going to give testimony over the phone. It's important that we hear from you and thank you for your patience.

I and the other chairs will maintain decorum during the hearing as is customary, and any individual who is disruptive may be removed from the remote meeting service or have their connections muted. So I just want to start out -- first hearing for my chairmanship of this Joint Legislative Committee -- honored to have been appointed recently. Want to thank the real collective effort here with my vice chair, Senator Connolly, who's coming up, Senator Allen, chair of the Environmental Quality Committee, as well as Chair Rivas, and their staff for putting together today's hearing. We know it's all relatively short notice and there's a lot of oversight going on in the Capitol right now, on a number of fronts.

So for those who are not able to attend today, the real work begins after this. We did some background and want to walk members through it and really give us a chance to dig into Scoping Plan and sort of the core of California's climate policies. But we know that work can't just get done in a few days, and it's going to be a central focus, hopefully, for us, here, in the legislature. We can pass big bills, but the implementation is everything. So want to dig into all that today. I'll reserve, sort of, deeper comments for the panels, but I would just say that this Scoping Plan, for those who are newer to California climate policy, is supposed to be sort of the central roadmap for how we get to our goals. And we accelerated those goals last year with some important and landmark legislation.

There was an Assembly Bill that set us on a 2045 path to carbon neutrality and a direct emissions reduction pathway as well. And the Air Board has now proposed a Scoping Plan that gets us, or at least charts somewhat of the way, to 2045. But we also have a near term deadline in 2030. And one of the big concerns is that we don't have enough of a roadmap for how to get from here to the near term.

That there's vision for that long term, that there are a lot of tough decisions, planning, implementation, regulation, investment that are all going to have to happen on a very truncated pathway for us to hit a 2030 target, and for us to maintain our leadership role in climate, not just here in California, but globally.

So hoping to dig into those details and spend some time on that with you all today. Let's see. So order wise, we're going to turn to a first panel before we have Chair Randolph here. But first, I want to give a chance to my vice chair and co-chair, here, to make any opening remarks, and then we'll get started. Mr. Vice Chair, co-chair. I'll go to my right and I'll come to my left. Yeah.

Well, thank you. Thank you, Henry. Thank you, Senator. Want to echo the thanks to all the staff, especially the EQ staff that stepped up, Environmental Quality staff, that worked so hard to get this hearing together. This was a very difficult hearing to schedule. We've got three different committees. And I also know that Chair Rivas sends her regrets. She's not going to be able to be here today, I don't believe. But but it was a lot of -- a lot of work. And I really do want to thank the staff and all our friends from CARB and the panelists, as well, who helped to make this, to pull this together. Quite frankly, all that hard work is largely why I'm here.

Many of you know I lost my father on Saturday and I just wanted to come up here for this hearing, partly because of all the work, but also quite frankly, so much of my interest in environmental policy really came from him. He's someone who was very committed to -- very interested in this work, followed our hearings very closely from his laptop in Santa Monica, and was very proud of California's environmental leadership and certainly anxious that we continue this work. So I wanted to be here for this hearing today. As was mentioned, we're focusing on the, on the, on the Scoping Plan.

We all know, of course, 17 years ago, that our predecessor, Fran Pavley, and the legislature passed AB 32. It set in motion, this real effort to decarbonize our state's economy. And that then, as we all know, that set the goals of achieving 1990 levels by 2020, which of course was then built upon ten years later, when we passed SB 32 together, which set this goal of a further 40 percent reduction by 2030. And then most recently, I saw Al Muratsuchi walk in, we passed AB 1279, which set the target of carbon neutrality by 2045, with an 85 percent reduction in emissions to get there. We know this is incredibly hard work. We also know that we've put a lot of trust in CARB to do the bulk of that hard work.

The chair and I happened to fly up this morning together and we talked all about this. So there are lots of people at CARB who work really hard every day to try to help us achieve these goals. But we also -- they're working every day -- but once every five years, we get this unique chance to zoom out and see the big picture with the Scoping Plan update. So that's part of what we're doing today. Now, of course, the legislature has tasked some independent experts with aiding us to keep tabs on the work that CARB is doing toward achieving our climate goals. And we're hearing from some of them today, some of the most important voices in that conversation.

The main impetus for this hearing is, really, an important and difficult report, quite frankly, that was put out by the LAO, the Legislative Analyst Office, this January, which raised some really serious flags about shortcomings that they saw in the 2022 Scoping Plan update. And we're going to hear more from Dr. Ross Brown on that report shortly. We're also joined by two members from the Independent Emissions Market Advisory Committee, IEMAC, Danny Cullenward and Katelyn Sutter. I was able to speak with both of you yesterday. Thank you for that time. They bring unique and valuable perspectives to the work that they do in advising the legislature, in CARB and the design of the state Cap-and-Trade program.

And then, of course, last but not least, we're honored to have the chair of CARB herself, Leanne Randolph, with us today. So this is an opportunity for us to really get into the Scoping Plan update. What it does, what it doesn't do, what are the shortcomings, what the legislature can do with this information, starting right now. And I think what we're looking for, is for our panelists to deliver brief, scene-setting remarks, but then openly, kind of ultimately, have a real frank and open dialogue with each other. This framework was set out by the legislature with a lot of deference given to CARB. And we know that this is just the first of many hearings. I mean, I've spoken extensively with Henry, with Senator Stern, about this and the build up to this.

And I know this joint committee with Assembly Member Connolly -- we'll be working really hard on many more hearings moving forward because this is so immensely important. So let me also just recognize my colleague, our brand new senator who's just hit the ground running, Caroline Menjivar, who's now -- her very first EQ-related activity here today. So welcome to you, Senator. And with that, I'd love to pass the mic to the vice chair.

Thank you, Senator. And thank you, Chair. Good morning everyone. Pleased to be a part of the joint committee as well. Climate change and its impacts are truly the biggest threat we face today. The consequences of climate change are numerous, severe and affect the well being of all people, animals and ecosystems on the planet, and certainly right here in the Golden State. The urgency of addressing climate change cannot be overstated. Without action, the consequences will continue to worsen, causing even greater harm to people, wildlife and the environment. That's why it's essential that we take meaningful steps toward reducing greenhouse gas emissions, and transition to a more sustainable, low-carbon economy. California can take justifiable pride in setting ambitious goals. And as we know, 2030 is only a few years away.

Two independent reports have highlighted concerns with the recent Scoping Plan update, as was just noted. It's imperative that we resolve any ambiguity in our plan to meet the 2030 reduction goal. Time is of the essence. I understand that CARB is currently considering the role engineered carbon solutions, such as CCS, will play in achieving our climate goals. I do not believe CCS should be deployed in a way that would prolong California's reliance on fossil fuels or allow industries to keep doing business as usual.

I urge CARB to take a closer look at the implications of CCS on some of our climate policies, such as local air quality concerns, and to look at whether other alternatives exist. Unfortunately, I'll note finally, my attendance is also required at Assembly Budget Committee, Subcommittee number three, which is happening, right now, across the street. But I will be monitoring this hearing from afar, as will my staff. And again, I look forward to the discussion today. Thank you.

Thank you, Mr. Vice Chair. Unless members have other opening remarks that they want to make, I think we'll dive right into our first panel. Seeing none. Let's get started. I know Ross Brown is here with the LAO. Welcome. And for members following along, you should have in your packet, a report entitled "Assessing California's Climate Policies." It's a March 1 document there for you.

Okay, hopefully everybody can hear me. Thank you, chairs, Vice Chair, and members. Ross Brown with the Legislative Analyst Office. As you both mentioned, our office released a report earlier this year, entitled, "Assessing California's Climate Policy," with a focus on the 2022 Scoping Plan update. There's also a handout that hopefully you have in front of you, which is really just meant to summarize some of the key findings from that report. So I'm going to spend a few minutes, hopefully, to walk through that.

I do want to just emphasize before I begin my remarks, just a kind of little background on the report. We do have a statutory requirement to report annually on the state's climate policies. And so this is in fulfillment of that requirement. Our focus of this was really on the 2030 goals. As the Chair mentioned, clearly, the state has other longer-term goals around 2045. We focused on the 2030 goals, because one, that's kind of what our statutory requirement indicated what we should focus on, as well as, we do think that's a state goal, an important state goal, and the most -- next, kind of, most important target that the state has on a statewide basis.

So with that, I'm going to just walk through the handout very quickly. Page one of the handout, really just some background on, as I'm sure many of you are well aware, what our statutory goals are, that have been set. So you can see sort of the line with actual emissions where they've been since 2006. Then the goals that were set in 2020 and then 2030 goal of 40 percent below 1990 levels and then the 2045 emission reduction goal. Page two of the handout just has a little bit of background on the Scoping Plan. CARB must update that plan every five years. And it really is sort of the state's plan, or roadmap, for achieving its statewide goals that we saw on the previous chart.

And the plan must identify and make recommendations on measures to achieve the maximum, technologically feasible and cost-effective GHG reductions. And for each measure that's part of that plan, identify emission reductions, cost-effectiveness, local error, pollution reductions, for each of those measures that are in the plan. I'm sure you'll hear more from the Chair about, kind of, the details of what CARB included in the plan. I think some of the main pieces of the plan we just want to highlight that were in the '22 update, are that the plan highlights several different modeling scenarios to kind of reach some of the goals that we mentioned.

It does have a significant focus on 2045, less so on the 2030 goals, in our view, and it identifies a more aggressive 2030 goal of a 48 percent reduction below 1990 levels, instead of just a 40 percent reduction. So if you turn to page three of the handout, that just kind of adds to the previous chart, had what the goals were. This is sort of what CARB's Scoping Plan shows and the top, dotted line there is what they refer to as a reference scenario, which is really meant to be kind of business as usual, or under current policies, where they see emissions going, relative to what our targets are. The bottom line, what they refer to as a Scoping Plan scenario.

So what their vision is for where emissions will be along the way, on the path to the targets that we've laid out. And you can see in 2030, that those emissions are below the kind of statutory target. So that reflects that more ambitious 2030 goal that they've set. Page four of the handout really gets at one of the two main, I think, takeaways and findings from our analysis of the Scoping Plan. And the first is really that, in our view, the plan lacks a clear strategy for meeting those 2030 goals. There's no clear description of what policy approaches will be used to reduce emissions.

It's unclear about how much the state will rely on, for example, financial incentives versus regulations versus Cap-and-Trade, and kind of what the mix of those policies will be, and what those specific policies will be. Instead, the estimated reductions that you saw on the previous chart are really driven, in many cases, largely by assumptions that are developed around which technologies might be in place at that point, what behavioral changes we might see. So, for example, 25 percent -- an assumed sort of 25 percent reduction in vehicle miles traveled by 2030, or 70 percent of refinery operations will have carbon capture and storage by 2030. And those are scenarios built on assumptions around that, but not specific policies around how that will be achieved.

In our view, that lack of policy detail and clear policy approach has several downsides. One, to the extent we have to, kind of, then, as a next step, takes time to develop that policy approach and figure out what those policies will be -- that creates a delay and increases the risk that the state won't meet its 2030 targets, of course, to the extent the state has to sort of rush to meet those targets because there is their delay -- then it could be more costly, as we try to sort of ramp up efforts to meet that goal. Critically, we think the lack of detail about specific policy approaches limits the information available to you, the legislature, as you're trying to make decisions about what needs to be done to hit the targets that you have set.

What the different options are, what the state's plan is going to be, and even as you're considering policy approaches that come before you, either regulations or budget activities and spending, how those fit into the state's overall plan and how one option compares to another, and how you balance the trade-offs of some of the different policy approaches that you might see in front of you. And then finally, I think it's important to keep in mind, sort of the state's role in the global climate scene. And we do think the lack of a credible plan could potentially adversely affect California's ability to demonstrate global leadership.

So if you turn to page five, this is really sort of our second main category of findings from our report, which is really that Cap-and-Trade program, specifically. So sort of zeroing in on that specific policy, is not currently positioned to close any emissions gap or any additional emission reductions that are needed to hit some of our 2030 targets. Just by way of background, the 2017 Scoping Plan update identified Cap-and-Trade as a policy that would serve that purpose of closing any emissions reductions that are that gap that's needed to meet our 2030 target.

So all the other policies that we have will achieve some of the reductions, and then Cap-and-Trade would play that role, as closing that gap to make up the difference. The 2022 Scoping Plan update isn't as explicit in what the role of Cap-and-Trade will be now. So I think that is kind of an open question and one perhaps you might want to explore in today's hearing of how CARB use the role of cap and trade. But it's less explicit, here, in the 2022 plan. We did want to take a look at, if you continue to want to have that role for the program, whether it's up to the challenge, whether it's kind of structured in a way to actually accomplish that.

And we essentially found that as currently structured, it's not really sort of up to that task. I do want to be clear that as a policy, our office does think Cap-and-Trade can be the most cost-effective way, or carbon pricing in general, can be the most cost-effective way to achieve greenhouse gas goals. So we are supportive of that particular policy approach, but it has to be designed in a way that is consistent with the goals that the legislature has set in the ambitious goals. And so we don't think it's currently well-positioned to ensure that the state's going to meet its 2030 target.

We looked at a range of potential emission scenarios going forward and found under a wide variety of those scenarios: essentially the state would reach 2030, where emissions are above where the statutory target is, and there's still plenty of allowances available, that are unused. And so it's essentially just not stringent enough to be consistent with those 2030 goals. That does assume just, sort of the current structure of the program and we can talk about -- if there are potential changes, and that could certainly change matters. So if you turn to page six of the handout, that just gives a sort of graphical representation of kind of why we have this concern.

The basic issue is, in the earlier years of the program, emissions have been well below what the program caps have been. And that's a good thing from an environmental perspective. But what that results in is a large bank of allowances that can then be used later on to comply with the program. And so you reach this when you get out to 2030 or the later years of the program, emissions can still be above where our targets are, and covered entities can continue to use some of the allowances that are available. And so we're not actually at the emissions targets that we've set. So, apologies, I'll try to wrap up, here, real quick.

Page seven of the handout really gets to just our two main recommendations. One, we recommend the legislature require CARB to clarify its plan for meeting the 2030 goals. Report to the legislature by our suggested date was July of this year, with more detail on the plan, including the specific emission reduction measures that it envisions and the costs and GHG reductions and air pollution implications of those different measures to help you with your policy making going forward. And then two, consider changes to the Cap-and-Trade program to make it more consistent with the legislative goals and targets. I won't get into all of the details around some of the options related to that.

Some of them include, you know, adjusting the supply of future allowances, limiting offsets, even an extension of the program beyond 2030 could have implications for how stringent the program is before 2030. And so that's important to keep in mind. And we might get into that conversation here. We didn't get that into that in -- into our report. It was a little bit outside of the scope. So I'm going to end my comments here. I know we have other panelists here, so I'm happy to answer questions now or whenever that time comes. So, thank you.

Okay, thank you, Mr. Brown. Do members have any initial questions for the LAO? I think we're going to do sort of briefer opening remarks for the next panel, but we want to spend a second here with Mr. Brown while we've got him here. Happy to defer. I've got some questions of my own, but -- open. Maybe you could just spend a brief moment honing in on the bigger picture point you made, which is that this Scoping Plan is not like the others. And you called it assumptions that are sort of driving our pathways.

I know that in, for instance, the 2010 Scoping Plan, CARB actually adopted the low-carbon fuel standard, which was a new regulatory framework -- that we didn't tell them exactly what that ought to be, but they worked through a rule-making process and actually put regulations into the Scoping Plan that they were going to sort of drive it.

My observations, at least now, is that this doesn't have those sort of teeth in it. It's more of, sort of, almost a description of how we could get there, as opposed to the driving regulatory framework, or the document that's going to do that. Do you think it's a fair characterization? And can you kind of just help us understand, I guess, the parts that aren't in here, like just drilling down on that a little more and giving us a little better sense of: what's the unfinished business here, either from the administration, or on our part.

Yeah, I think you summarize kind of our main view of it pretty well and that's sort of the key, I think, concern that we have around the sort of specifics. And I think your reference to, for example, the low-carbon fuel standard which has been sort of -- was sort of a new policy that was included, as sort of a way to achieve some of the state's targets in previous scoping plans. And that's a policy that still exists, of course, but there's less specificity around how many reductions are going to be achieved, associated with that policy going forward -- the specific changes that might be made to that policy going forward, any sort of new policies.

I mean, in previous Scoping Plans, there was reference to renewable portfolio standards. "We'll be achieving this level of emission reductions, low-carbon fuel standard. We'll be achieving this level of emission reductions." For all the other emission reductions that are policies, our current policies, are the ones that we're proposing that are not being achieved. Cap-and-Trade is going to make up the gap, which is this amount. So really sort of a clear articulation of what the plan is, in terms of specific policies. In this case, in the case of this plan, I think there is a large reliance on assumptions and a view of what technologies we will have in place.

How many electric water heaters, how many electric heat pumps and behavioral changes, in terms of how many vehicle miles traveled, we'll reduce going forward. But less sort of the specific policies that will get us to those assumptions. And I think from a legislative perspective, you deal with policy making and it's the policies that really, I think, are sort of important to understand. And of course, the legislature doesn't always have to agree with whatever policies the administration or CARB is proposing. And that's part of an ongoing discussion, of course, but at least having sort of a starting point for having that discussion of: what policy actions need to be taken in order to kind of make this vision become a reality.

What are the trade offs? And then you can make your decisions around, well, maybe we view things a little bit differently and we emphasize or prioritize a different policy a little bit more. We can push a little bit further. But at least having that starting baseline we think is very important.

And fair to say, not just policies that need to get us there, but investments as well. I mean, you'd sort of mentioned policies, sort of compliance regulations, broad policies, and then the investment side. I know the vice chair is going off to Budget Sub Three right now, and our Budget Sub Two, which is the corollary, and the senate is having a hearing tomorrow. Fair to say that the investment roadmap, if you will, is also not really clear. Like, we don't quite understand what cutting $8 billion out of the climate budget is going to do to achieving the 2030 goals, for example.

Yeah, I mean, I was using sort of policy as kind of a catch-all, certainly to include budget actions and spending, as well as regulations and market-based mechanisms like Cap-and-Trade. I mean, I think to try to be fair to CARB, I think past Scoping Plans, they didn't always include a lot of specifics around the specific amount of money that would be going to a particular program. But I do think there was a little bit more of a vision of how we get there. But the specific funding amounts, I think is, of course -- that's also a legislative decision around how it prioritizes its budget. But I would very much include budget actions as part of the overall suite of policies that the state and the legislature wants to ideally have a vision for how it moves forward for achieving some of these goals.

Just to put a finer point on that, my understanding is the model that CARB used to look at our sort of pathway didn't, for instance, factor in the Inflation Reduction Act. It didn't take into account, for instance, large amounts of federal funding that might come in that may accelerate a particular pathway, or-

-That's my understanding as well. And that complicates, I think, your job of trying to figure out, with the state's limited resources, how much does the state sort of push and where is federal money going to be pushing things, and where can the state prioritize its resources, given some of the federal money that's coming in?

Thanks. I don't want to belabor that anymore. We'll get deeper, but I know some members -- Burr and Wood had a question. I'll go down here and back up.

Thank you for being here today. Rick Chavez Zbur, I represent Assembly District 51. And thank you for the report. I thought it was really instructive and helpful.

One of the things I noted, though, is the report focuses a lot on the reductions that are required to meet our climate goals for both 2030 and 2045. What I didn't see and was wondering if you looked at was a lot of the Scoping plan assumes that we're going to be moving to electrification, we've got assumptions about when offshore wind would be coming on board and other wind resources, as well as additional solar resources to the extent that we're moving towards electrification and other cleaner, cleaner emission sources.

Did you look at all about and analyze at all about whether or not we're sort of on track on the energy supply side? One of the things I've been really nervous about is that we have these assumptions about when we're going to get to five gigawatts of offshore wind at another 25 gigawatts.

And it seems to me that there are huge challenges to get there, building ports, entitling ports. We have issues with procurement. And I'm wondering if to the extent you looked at sort of some of these things that are required to provide the electricity that we need for the various scenarios, alternative scenarios that you sort of laid out.

It's a good question. It's not something we spent a lot of time looking at. I mean, I will say I believe there is some discussion in the Scoping plan around a lot of those issues.

And I ting there's a clear recognition that to achieve some of these goals and achieve this vision, there's going to be a lot of work that needs to be done on kind of the electricity supply side of things and making sure that we have adequate electricity supply. Certainly budget actions that have been taken in recent years to try to shore that up. And so I think it's an important kind of ongoing issue to continue to look at.

And I think the Administration and the Legislature have been spending a lot of time and resources trying to shore that up and look at it. But it's given a lot of the kind of assumptions around electrification for vehicles, like you said, and for home heating and things like that, then it's going to be a major challenge.

And I think on the electricity supply side of things, I know the chair and...might kind of talk a little bit about just kind of on the infrastructure development side of things, I think there's things that's kind of a big challenge. There's a lot of build out that's going to be required for kind of producing all this clean electricity and that's an important area to focus on over the next years and decades.

Thank you.

Senator Wood.

Thank you. And thank you very much for your presentation. I'll go back to your page four there. I've got three comments. There no clear description of what policy approaches will be used to reduce emissions. The reduction of per capita driving, that's tough for people in rural districts like myself, Mr. Dahle, got to travel long distances, pretty hard for us to do that.

Carbon capture and storage is emerging technology, very expensive at scale. And then the heating, electricity, the challenges there we saw last summer call for us to reduce our power consumption when it was really hot in September. It isn't just the challenge of producing energy, it's a huge challenge with transmission and interconnection. A lot of these all electric households are laudable goals and important goals for us. But we're finding that utilities are having delayed time in hooking these up, turning them on.

As you look at Scoping plans here, I just wonder, are we at times looking doing some of the most cost effective ways of doing this? Obviously a huge emphasis on reducing emissions and I think that's critically important.

But what about protecting those reductions? And what I don't see any reference to here is the impact of wildfires and how that in many just getting the numbers on how much greenhouse gases were liberated from wildfires was challenging and there was resistance to that.

If we're going to spend all this money to reduce emissions and we're not going to protect those reductions by other low tech, low cost methods, how are we ever going to get ahead of this? And so can you talk about references to wildfires? The challenge I think about that is we often hear from communities during wildfires like San Francisco and other urban areas they don't like the wildfire smoke there.

It often comes at the worst time of the year, in the summertime and in the fall when other stationary sources of emissions are at their peak. And so we complicate that by adding wildfire smoke to there. And I just don't see anything in here that really addresses some really basic things that could protect those emission reductions.

There is some additional modeling that was included in this Scoping plan related to natural and working lands, again, the focus was and that includes wildfires and forests of course are a huge piece of that and the large focus was on kind of those 2045 goals and sort of long term, what are we doing with our kind of carbon storage and our forests and how do we expect that to change Hoover time? And if we were to be more aggressive in some of our kind of forest management strategies to reduce those emissions, what kind of an impact can we have? And so there's some of that information in there and some of that long term planning.

And I think for a lot of the forest management stuff, it is important to look at kind of the carbon emissions over a long term scale. But I think to your point, there are a lot of reasons to kind of focus on wildfires and forest management, especially on kind of the local air pollution side of things. I think that was probably referenced in the plan here, but was not sort of a key emphasis as kind of a kind of short term climate change strategy.

And so I think when thinking about kind of wildfire and forest management stuff, it's really sort of keeping in mind the carbon emissions, but also, of course, the local air pollution and just public safety issues that are really kind of very important, sort of near term issues that deserve focus. And in some cases, there might be a balance or trade off that's needed to strike and kind of protecting one or emphasizing one over another.

Thank you for that. I just think when we have these massive fires, we also have huge expenditures as a state to suppress fires, protect property. Meanwhile, massive amounts of greenhouse gases are liberated into the environment. And then after the fact, which I see when they talk about reductions in methane, unharvested trees that have died in fires become sources of methane as well. I don't see that reference here. Maybe it's not a huge number, I don't know. But I know that when trees degrade in the forest, they liberate methane as well.

I guess I I hope that when we start looking at these things that we're not being you know, that we're that we're looking at the best return on our investments and not which, rather than the shiny object which is really cool, and it's an emerging technology, but there's some basic things that could be done, possibly that might make a huge difference for us. And I don't want to see that left out, but I don't see a lot of reference to that.

Yeah. And I think maybe just to emphasize and I think sort of agree with the point. I think part of the idea here is to try to look at the options that we have available and find the ones that we can kind of achieve our goals at the least possible cost, which I think is sort of a baseline.

That's really what we're looking for. And I think that kind of gets to the core of what we feel like is in many cases, kind of missing from this, at least in terms of meeting our 2030 goals, is having kind of a suite of, a plan or at the very least, sort of a suite of policy options available and understanding what the costs are of those different options and what the trade offs might be.

Thank you, Senator Muratsuchi.

Thank you very much, Mr. Chair. I want to thank the LAO for this. What I think is going to be a reference point for our Scoping plan debate going forward, for the nonpartisan Legislative Analyst Office to put out this clear and concise Scoping plan analysis that concludes that we are not on track to meet our 2030 goals, much less the 48% greenhouse gas reduction goals.

That the new greenhouse gas target of 48% below the 1990 level. Is that a fair assessment of the primary message of your Scoping plan analysis?

Yeah, I think it's both that it doesn't appear that we're on track, but also it doesn't appear that we have kind of a clear plan for how we will get on track and sort of and get to those goals. And it's not easy. Those are difficult policy decisions, and those are ambitious goals that are going to require significant reductions. But there's also a limited amount of time. And so trying to have a real conversation around what specific policy approaches we think is an important step that needs to be taken.

Okay. And one of your main points that you're raising is that the Scoping plan lacks in details, in terms of specific policy recommendations on how, or at least options for the Legislature to consider, and how to reach our 2030 goals. Instead, it relies primarily, as you describe it, on assumptions. And one of the assumptions that you identify in your analysis is that the plan assumes a 25% reduction in per capita vehicle miles traveled by 2030. Is that correct?

Yes.

For all Californians to reduce our vehicle miles traveled by a fourth in seven years. That seems like an incredibly ambitious assumption without any details as to how to get there.

Yes, I think that's a fair characterization.

Okay. And so, for example, I'm looking at the two transportation chairs on the other side of the dais, an issue that Senator Allen and I had been working on to extend the Los Angeles metro for 3 miles from North Redonda Beach to Torrance.

And originally it was proposed to be part of the 28 by 28 to have that up and running so that all the folks in our districts in the Los Angeles County, South Bay can get out of their cars and take the Metro to get to the LA airport. That is something that we have specifically been focusing on as a concrete plan to get people out of their cars, as Chair Friedman has been championing and to get them onto public transportation. And yet now we're hearing, what? 2030, 2032 for that three mile extension.

I just want to raise that as one example of how we have been working on these specific policy actions that are necessary to get people out of their cars, and yet we just can't seem to accomplish them. And so that just raises my overall concern. I'm as guilty as anyone on this dais of introducing bills and passing bills to set ambitious goals, but it seems to me like this Scoping plan doesn't appear to be grounded in the realities that we're facing in terms of how we can get to our ambitious climate goals.

One of your main points was that the cap and trade well, first of all, does the Scoping plan identify, like in the 2017 Scoping plan, it identified that cap and trade was to account for 50% of emission reductions. Does the 2022 Scoping plan identify a percentage of the emissions that cap and trade is to account for?

No, it doesn't have that same type of analysis where we can see at least the expectation for around how many emission reductions and what percent of emission reductions will come from cap and trade. Of course that can change over time and things change and the percentage and the role that cap and trade will be playing can change, but even as kind of part of a planning exercise, that analysis wasn't part of this plan.

Okay. One of your main points is that given the overabundance of allowances or pollution credits that are out there that there are so many pollution credits banked that it's not going to send the the necessary price signal for us to have the necessary emission reductions. Is that correct?

Yeah, I think that's that's the kind of bottom line that we've come to, at least as the program is currently structured. I think you've identified really the main issue at least through 2030, assuming the program isn't extended and there aren't any modifications.

Okay, so last year I had a Bill, Assembly Bill 2793 that was a simple transparency measure to require the ARB to conduct an annual review of cap and try to evaluate the supply of allowances and carbon offsets and to adopt public banking metrics to track the number of unused compliance instruments like allowances and offsets. Currently, do we have that kind of transparency coming out of the ARB?

ARB does have kind of a regular process for tracking compliance instruments by year. In terms of kind of trying to summarize that in terms of the size of the bank, I don't think there's a regular process. CARB has in the past issued reports in part, I think, in response to legislative requests or requests from the Independent Emission Market Advisory Committee to kind of quantify what the size of that bank is.

And so there have been reports issued in the past. I believe they have committed to issuing a report at the end of this year, but there's not that I'm aware of kind of a sort of set in stone requirement around doing that every single year.

So to address the main point of making sure that we don't have too many pollution credits out there to not bring down the total emission reductions necessary for us to meet our climate goals. Will it advance our cause of meeting our our climate goals if we had that kind of requirement every year that the ARB was to assess the number of allowances and offsets and whether that is in line with our meeting our greenhouse gas reduction goals?

I think greater transparent given the magnitude of the issues here and the issues and problems we've identified min this report, more transparency around kind of where we are and more frequent kind of check ins on where we are can be important. I think it's also important just to keep in mind having that information, of course, doesn't solve the problem and it doesn't necessarily even tell you where you're going to be going forward.

But at least having more information on kind of where we are right now, or at least in recent history, can be very helpful for kind of informing some of these discussions.

To help drive home the point that there are already too many allowances banked for us to realistically be on track to meet our 2030 GHC goals.

Yeah, this is maybe sort of more of a nuanced point, I think sort of the size of that number that you might receive from some of those reports, it doesn't get you all the way to sort of saying what that implies for where you are going to be in 2030 or in 2045. But it is, in our view, I think, an important input to that conversation and can certainly inform a lot of those discussions.

All right, thank you very much, Mr. Chair.

Thank you. And let's go to Seminar Mathis.

Thank you, Mr. Chair. One word: hydrogen. We're talking about reducing emissions. We're talking about doing all these other things. We're not talking about hydrogen. And that's a problem because it's the one ting out here that for my colleagues in other areas, they might want to be getting people out of cars.

But in areas like mine, you're kind of dependent on your car. In the agricultural sector, you're dependent on heavier equipment. Hydrogen fits the Bill. It's the one thing that's applicable and it's the one thing we're not talking about enough. So as we move forward, we need to make sure that hydrogen is part of the discussion.

We know this reduces emissions. We know this is a solution. All the other countries around the world are headed out ahead of us. It needs to be part of what's being discussed and part of the options, so I would really appreciate, and I'm sure a lot of my colleagues and those that aren't here would love to see how the hydrogen solution could be written into a lot of this, because I'm reading this and you got 80% of new heating, ventilation and air conditioners.

Water heaters for cell will be electric, but you can also use hydrogen gas to heat and to do these things and to move forward. That is an option that's not being discussed enough. When it comes to fuel liquid hydrogen, hydrogen fuel cell is an option, especially for heavy equipment, for the transportation sector, for freight and goods movement. Yet we're not talking about it.

So as we move forward, as we look at our options and frankly, we're about to miss a huge window on being able to buy into some of these programs. And we need to stop picking favorites and start having the hard discussions on making these viable options and bringing them to the table so we can actually get to our carbon goals. Thank you.

Thank you. Any other questions from the Members at this point? I think we're going to do, because I don't want to keep Chair Randolph waiting too long, is have our second panel come up, deliver some brief remarks, and then move straight to the chair. And then maybe you can stick around if we have follow up questions for afterwards. Is that all right? You can just take a seat in the front row or wherever you like.

Let's bring Mr. Cullen Ward and Mr. Rodner Sutter up. So Members these are our appointees to the Independent Emissions Market Advisory Committee. Ms. Roedner Sutter is the Assembly's appointee, Mr. Cullenward is the Senate's appointee, and this is an advisory committee for the Air Resources Board that looks particularly at the cap and trade carbon market piece of the broader Scoping plan. But without further ado, appreciate your service on behalf of both houses, and please take it away.

Thank you. Mr. Chairman and Members of the various committees.

We'll be brief. We recognize that we're standing between you and the CARB chair, a few remarks from my perspective just to endorse. I think the Legislative Analyst Office Report has done a very thorough job identifying some of the big picture concerns and issues, especially the lack of balance between the cap and trade program which was in previous plans, identified as the biggest source of our emission reduction plans, versus other regulatory measures, versus the public investments that budget committees will need to be thinking about.

That lack of information is important to talk about, and hopefully we can get some clarity on that going forward. You've heard some critical things, well I'll add a few more about the situation we're in. But before I do that, I just want to call out we're talking about some of the challenges in regulating especially stationary sources, where I think the state, and CARB in particular, can do more to tell us a clearer view about how to manage these issues.

The same time, CARB has been doing extraordinarily important work in cleaning up our mobile sources, our cars and trucks, and the standards set there. So I just wanted to call out that's an area, I think, where things have a lot more clarity and arguably quite a bit more success than some of the challenges mentioned here.

The Independent Emissions Market Advisory Committee just put out its fifth annual report, where a statutory body created as part of the 2017 cap and trade Extension Bill to provide annual reporting. Over the course of five years of annual reports, we've identified some of the same issues you heard Dr. Brown speak about.

We've also developed various ideas for how to address some of the technical challenges that come up if policymakers were wanting to make the cap and trade program more stringent and more effective, which is one of the tools we have at our disposal to get back on track and to help close the gap you've heard and identified.

This year's report also talks about the post 2030 legal authority for the program. The explicit legal authority currently runs through 2030, and we've recommended that policymakers clarify the future of that program as well, which is one of the things that might address some of the concerns you've heard with respect to that program.

But extending the program isn't a simple fix. It doesn't resolve a lot of the issues. Let me call up briefly three of the issues that are likely to be relevant. One is we've talked about the issue of having lots of allowances, extra allowances relative to our goals. So there needs to be predictable resolution to that issue. The IEMAC has also identified the large role of carbon offsets in that program. There have been significant questions raised about the environmental integrity of those credits.

And the third issue I wanted to call out is we've also heard concerns from environmental justice communities about pollution disparities and thinking about addressing those disparities in the design of the program we thing is an important area to focus on.

The last thing I'll say is it's not just about Cap and Trade. We've heard about vehicle miles traveled. We've heard about the difference between rural and urban communities and their ability to contribute to reductions in vehicle miles traveled. I think if we're talking seriously about the scale of what's required here, we're going to need to build a lot of clean energy, a lot of infrastructure.

We have to talk about transit funding, we have to talk about housing policy. So it's not just cap and trade. But I think given the significant role previous plans have called for with Cap and Trade, the ambiguity in the current plan around Cap and Trade and the possibility to do a better job with that program, we hope that that will be one of the options that CARB and policymakers in the Legislature will consider. Let me turn over now to my colleague Katelyn.

Thanks, Danny. Good morning, chairs, Members of the committee again.

I'm Katelyn Roedner Sutter, and I know some of you in my capacity as California Director at Environmental Defense Fund. But I am here before you today as the Assembly appointee to IEMAC.

I want to just start by thanking CARB staff and leadership and the LAO staff and staff of this committee and all of you for all of the work that went into the Scoping plan, the report, the preparation materials for today. I mean, we really have some world class staff and leadership in the state on these issues. I want to echo many of the...