AB 32, California's Global Warming Solutions Act


California is leading the way in efforts to limit greenhouse gas emissions in the United States. Enacted in 2006, California’s Global Warming Solutions Act commonly referred to as AB 32, requires that by 2020, the state’s greenhouse gas emissions must be reduced to 1990 levels, a roughly 25 percent reduction from current estimates. On January 1, 2012, the Air Resources Board greenhouse gas emissions rules and market mechanisms take effect and are legally enforceable.

California produces roughly 1.4 percent of the world’s, and 6.2 percent of the total U.S. greenhouse gases. As one of the world’s largest producers of greenhouse gasses, California’s efforts have spurred a strong regional initiative to limit greenhouse gasses. The Western Climate Initiative is made up of seven American states and four Canadian provinces that are collaborating on climate action policies extending the impact of AB 32 to include all of the areas making up Western North America. Veronique Bugnion, chief of analytics at Point Carbon, a research firm, noted that China, which has surpassed the U.S. as the world’s largest carbon emitter, plans to launch a trading market in six regions by 2013, with a goal of adopting a national program by 2015. California is at the forefront of the world’s view about the potential success of specific regulated limits on carbon emissions.

At the heart of AB 32 is a Cap and Trade Program that creates a cost/value to reducing green house gasses. It starts with a firm limit on emissions; covers 85 percent of California’s emissions: electricity generation, large industrial sources, transportation fuels, and residential and commercial use of natural gas, and provides regional linkage with the Western Climate Initiative which allows greater environmental and economic benefits.

Worldwide, there have been various efforts to create markets for carbon emissions. While early in their development, carbon emission trading has been steadily increasing in recent years. According to the World Bank's Carbon Finance Unit, 374 million metric tonnes of carbon dioxide equivalent (tCO2e) were exchanged through projects in 2005, a 240 percent increase relative to 2004 (110 mtCO2e)[104] which was itself a 41 percent increase relative to 2003 (78 mtCO2e).[105] In terms of dollars, the World Bank has estimated that the size of the carbon market was 11 billion USD in 2005, 30 billion USD in 2006,[104] and 64 billion in 2007.

One traditional challenge to cap and trade systems has been maintaining a minimum value for emission reductions. California has addressed this by setting an initial minimum price of 10 cents per metric ton in 2012 that goes up by 5 percent per year unless the market drives prices higher. This minimum value is designed to provide greater incentive to businesses to reduce greenhouse gasses faster.

California is initially targeting the 800 largest emission sources in California including cement, agriculture and oil/gas production. In addition they will perform an audit of the largest industrial sources to identify greenhouse gas reduction opportunities and require steps be taken to address those reduction opportunities. The audit process begins in 2012. The agriculture industry is a particular focus of the ARB, specifically focusing on more efficient agricultural equipment, fuel use and water use through transportation and energy measures; reductions from manure digesters at dairies; addressing impacts on productivity of crops and livestock.

Today, Advanced Algae is well positioned to provide a cost effective solution to companies needing to comply with AB 32. The CEC is starting a test project with a manure digester at Fiscalini Farms to validate to the dairy farming industry and the California Energy Commission the effectiveness of the APAR system. With this validation, the CEC has indicated they would certify Advanced Algae’s technology as the Best Available Control Technology providing the endorsement needed for companies seeking solutions an assurance that Advanced Algae’s APAR Technology will meet the requirements of AB 32.