1. AB 32 Implementation Nuts and Bolts IEP Annual Meeting September 22, 2008 Kevin Kennedy Office of Climate Change California Air Resources Board

2. 2 Current AB 32 Events Recently Released Documents: –Economic Analysis Supplement –Environmental/Public Health Evaluations –Joint Commissions’ Proposed Decision Still Forthcoming: –WCI Program Design Document (Sept. 23) –Proposed Scoping Plan (Oct. 3)

3. 3 Draft Scoping Plan Preliminary Recommendation Mix of strategies that combine market mechanisms, regulations, voluntary measures, and fees Key elements for electricity sector: –California cap-and-trade program linked to WCI –Energy efficiency programs –Renewables –Combined Heat and Power –Electrification of Transport

4. 4 Capped sectors: –Electricity –Industrial sources –Transportation fuels (phased in) –Commercial and residential NG (phased in) California Cap-and-Trade Linked to Regional Market California cap-and-trade program that links with other WCI partner programs to create regional market Ensure program meets all applicable AB 32 requirements

5. 5 California Cap-and-Trade Linked to Regional Market (continued) Recent Proposed Decision contains detailed discussions of many topics –Scoping Plan is much more “high level” ARB will work closely with CPUC, CEC, Cal ISO in developing the regulations –ARB will carefully consider the allocation strategy and other recommendations proposed by the two commissions Need to develop regulations by the end of 2010 for program to launch in 2012

6. 6 Energy Efficiency Plan includes aggressive energy efficiency goals Last week’s energy efficiency decision at the PUC an important step\ Meeting the goals in the Scoping Plan will require –Expanded utility-based energy efficiency programs –More stringent building and appliance standards –Innovative strategies that go beyond traditional approaches

7. 7 Renewables and Distributed Generation Achieve 33% RPS by 2020 for all utilities Million Solar Roofs Program Residential solar water heaters Encourage combined heat & power –High potential to achieve GHG reductions –Need to address concerns about policy barriers

8. 8 Next Steps This week: workshop on Friday 9/26 on the evaluation supplements released last week October 3: release of Proposed Scoping Plan November 20: Board considers the Proposed Scoping Plan for possible adoption

9. 9 Implementation of the Plan Through 2010: develop regulations to implement the Plan, including the cap-and-trade program California will work closely with WCI partners in the development of the regulations ARB will establish a formal structure to elicit public input in the regulatory process –Regulatory development will follow normal public process –Extensive stakeholder outreach and involvement Expect more details later this year, and lots of meetings starting in early 2009

10. 10 Longer term Implementation and enforcement critical ARB will monitor implementation Required to re-visit Scoping Plan in 5 years

11. 11 For Additional Information ARB Climate Change Web Site (To stay informed - sign up for list serve) www.arb.ca.gov/cc/cc.htm California Climate Change Portal www.climatechange.ca.gov Comments on the Draft Scoping Plan www.arb.ca.gov/cc/scopingplan/spcomment.htm General Climate Change Contact: Rich Varenchik rvarench@arb.ca.gov 626 575-6730