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A!Health!Impact!Assessment!of!California’s!
Cap"and"Trade!Greenhouse!Gas!Mitigation!
Policy!

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Prepared!for:!!Ann!Lindsay,!MD,!Health!Officer,!Humboldt!County;!and!Linda!Rudolph,!MD,!MPH,!
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Deputy!Director,!Center!for!Chronic!Disease!Prevention!and!Health!Promotion,!
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California!Department!of!Public!Health!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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Prepared!by:!Ellen!Avis,!Caroline!Chen,!Lisa!Foster,!Jess!Lynch,!Marisa!Rimland,!!
Michelle!Ross!&!Ayrin!Zahner!
May!11,!2009
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Contributors!and!Acknowledgments!
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The!authors!of!this!report!would!like!to!acknowledge!the!following!people!and!organizations!for!
their!contribution!to!this!research:!!
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For!guidance!in!HIA!methods:!
!
Rajiv!Bhatia,!MD,!MPH!
Director,!Occupational!&!Environmental!Health,!
San!Francisco!Department!of!Public!Health!
Assistant!Clinical!Professor!of!Medicine,!UCSF!
!
Jason!Corburn,!PhD!
Assistant!Professor!
Department!of!City!&!Regional!Planning!
University!of!California,!Berkeley!
!
Edmund!Seto,!PhD!
Associate!Researcher!
Environmental!Health!Sciences!
School!of!Public!Health!
University!of!California,!Berkeley!
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For!contributions!of!data:!!
!
Zev!Ross!
President,!Zev!Ross!Spatial!Analysis!
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National!Resources!Defense!Council!
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UC!Berkeley,!PH!267D!Health!Impact!Assessment;!Rajiv!Bhatia,!MD;!Professor!
J a s o n ! C! o r b u r n ; ! P r o f e s s o r ! E d m u n d ! S e t o . !
California!Cap"and"Trade!HIA,!Page!|!2!
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Table!of!Contents!
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EXECUTIVE!SUMMARY............................................................................................................. 5!

REPORT!CONTENTS!AND!STRUCTURE .................................................................................... 10!

BACKGROUND ....................................................................................................................... 10!


Health!Impact!Assessment!Defined.............................................................................................. 10!
Screening:!!Why!conduct!this!HIA?............................................................................................... 11!
Scoping!of!Analysis!&!Major!Research!Questions ........................................................................ 12!
Current!Conditions........................................................................................................................ 16!

ASSESSMENT ......................................................................................................................... 17!


Overview!of!Process!Equity!Health!Concerns............................................................................... 17!
Overview!of!Income!Effects!from!Cap"and"Trade ........................................................................ 20!
Overview!of!Air!Pollution!Health!Concerns .................................................................................. 24!
Potential!Scenarios!under!Cap"and"Trade.................................................................................... 30!
Key!Assumptions!Regarding!Industry!Reaction ............................................................................ 30!
Air!Quality!Monitoring!around!Stationary!Sources ...................................................................... 33!

DISCUSSION!OF!ALTERNATIVE!POLICIES................................................................................. 37!

CAP"AND"TRADE!POLICY!DESIGN!RECOMMENDATIONS ........................................................ 38!


Auction/Allocation!of!Allowances................................................................................................. 38!
Offsets:!Minimized,!Incentivized,!and!Localized........................................................................... 38!
Equitable!Participatory!Processes!for!Implementation,!Enforcement!and!Monitoring............... 39!
Supplementary!Policies!for!“Green!Jobs”..................................................................................... 39!
Air!Pollution .................................................................................................................................. 40!

REFERENCES .......................................................................................................................... 41!


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California!Cap"and"Trade!HIA,!Page!|!3!
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Table!of!Maps!
Map!1:!Carbon!Emitters!in!Phase!I!of!CA!Cap"and"Trade............................................................. 13!
Map!2:!Vulnerable!Communities!and!Stationary!Sources............................................................ 27!
Map!3:!Vulnerable!Populations!in!the!L.A.!Area........................................................................... 28!
Map!4:!Children!&!Elders!in!the!L.A.!Area .................................................................................... 29!
Map!5:!Interpolation!of!NO2!Emissions!in!the!Bay!Area .............................................................. 36!
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Table!of!Figures!
Figure!1:!Policy!to!Health!Pathways!Overview ............................................................................. 14!
Figure!2:!!Pathways!Overview!–!Process!Equity ........................................................................... 17!
Figure!3:!Pathways!Overview!–!Income!Effects............................................................................ 21!
Figure!4:!Pathways!Overview!–!Criteria!Pollutants....................................................................... 24!
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Table!of!Tables!
Table!1:!The!HIA!Process............................................................................................................... 11!
Table!2:!Emissions!Reductions!below!Business!as!Usual!(BAU) ................................................... 32!
Table!3:!Avoided!Emissions!from!Top!Emitters!in!LA!in!2020,!tons!per!day ................................ 33!
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APPENDICES!
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California!Cap"and"Trade!HIA,!Page!|!4!
EXECUTIVE!SUMMARY! !
The!California!Air!Resources!Board!(ARB)!conducted!an!initial!assessment!of!the!public!health!
implications!of!Assembly!Bill!32!(AB!32),!California’s!Global!Warming!Solutions!Act,!in!the!
recently!adopted!Scoping!Plan!(June!2008).!This!analysis!explicitly!focuses!on!the!health!
benefits!of!reduced!air!pollution!that!follow!from!a!suite!of!strategies!included!in!the!Plan;!ARB!
expects!most!air!pollution!reductions!to!come!from!transportation"related!measures!and!
existing!regulations!under!the!Clean!Air!Act!(CAA).!ARB’s!health!analysis!does!not!address!the!
proposed!cap"and"trade!program,!because!of!the!difficulty!in!predicting!in!which!sectors!
reductions!might!occur.!While!ARB’s!health!analysis!gives!examples!of!air"pollution!reduction!
benefits!in!regional!and!community!scales,!it!assumes!a!rosy!scenario:!it!states!that!stationary!
industrial!sources!will!reduce!emissions!10!percent!across!the!board!(ARB,!2008a).!!!
!
This!Health!Impact!Assessment!(HIA)!attempts!to!fill!some!potential!gaps!in!ARB’s!health!
assessment!by!identifying!health!impacts!associated!with!the!first!phase!of!AB!32’s!proposed!
cap"and"trade!program,!which!concerns!stationary!source!emitters.!Our!analysis!focuses!on!
three!health!determinants:!
! Process!equity:!!How!equitable!was!the!policy"making!process!and!whose!contributions!
most!shaped!the!outcomes?!
! Economic!effects:!!How!will!the!policy!affect!costs!and!incomes!for!vulnerable!
communities?!!
! Distribution!of!air!pollution!impacts:!!Where!will!mitigation!measures!occur?!This!
analysis!will!pay!particular!attention!to!communities!that!are!already!experiencing!
heavy!impacts!from!air!pollution.!
!
Cap"and"trade!and!Procedural!Equity!!
Public!involvement!and!participation!in!decision"making!is!essential!to!a!healthy!democracy.!
The!World!Health!Organization!(WHO)!and!the!United!Nations!Human!Development!Report!
(2002)!assert!that,!“Democracy!has!proven!to!be!the!system!of!governance!most!capable!of!
mediating!and!preventing!conflict!and!of!securing!and!sustaining!well"being.”!Inclusive,!
transparent,!participatory!democratic!processes!contribute!to!building!important!health!
determinants!such!as!equality,!empowerment,!and!social!capital.!We!maintain!that!procedural!
equity!in!the!scoping!and!implementation!of!AB32!has!important!implications!for:!(1)!achieving!
efficacy!in!achieving!greenhouse!gas!(GHG)!reductions!targets!and!maximizing!overall!health!co"
benefits;!(2)!ensuring!that!vulnerable!populations!can!share!in!those!co"benefits;!and!(3)!
empowering!communities!through!participation!in!the!policy"making!process.!
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Findings:!
! Public!health!professionals!have!a!very!important!role!to!play,!in!collaboration!with!ARB!
and!other!stakeholders,!to!refine!methods!for!identifying!local!impacts!associated!with!
mitigation!policies!and!to!make!sure!those!methods!are!used!in!policy!decision"making.!
! Implementation!of!Cap"and"trade!provides!an!opportunity!for!Public!Health!to!support!
community!based!participatory!research!and!capacity"building!so!that!vulnerable!
communities!are!able!to!participate!effectively!in!decision"making!processes!that!impact!
health.!
!
Impact!of!Energy!Markets!on!Low"Income!Communities!
Household!income!and!employment!status!influences!health!(Krieger,!2003).!Low!
socioeconomic!status""defined!by!income,!education,!and!occupation""is!associated!with!many!
types!of!poor!health!outcomes,!including!low!birth!weight,!cardiovascular!disease,!
hypertension,!arthritis,!diabetes,!and!cancers!(Pamuck,!Heck,!Reuben,!&!Lochner,!1998).!
Evidence!finds!differences!in!male!mortality!by!social!class!(as!defined!by!occupation)!(Harding,!
1995).!Unemployed!people!have!a!higher!prevalence!of!poor!health!outcomes!(Bartley,!1994).!
ARB!expects!its!GHG!reductions!policies!to!stimulate!the!economy!rather!than!harm!it!(ARB,!
2008d).!However,!this!optimistic!economic!analysis!focuses!on!the!results!of!the!full!suite!of!
GHG!reduction!policies,!not!just!cap"and"trade.!Some!economic!analysts!have!perceived!this!as!
over"generalization!(EPA,!2007).!
!
Findings:!
! Cap"and"trade,!by!itself,!is!equivalent!to!a!tax!on!economic!activity,!which!may!slow!
economic!growth!(Roland"Holst,!2009).!Furthermore,!job"loss!from!decreased!economic!
activity!may!have!a!negative!health!impact!for!vulnerable!populations.!
! Industrial!emitters!and!utilities!may!pass!along!the!cost!of!allowances!and!offsets!to!
consumers,!causing!the!price!of!electricity,!cement,!and!petroleum!to!increase.!This!will!
affect!low"income!consumers!who!already!spend!a!high!proportion!of!their!incomes!on!
energy.!!
! In!the!short"term,!there!may!be!little!change.!Industry!may!choose!to!buy!allowances!
and!offsets!before!investing!in!emission"reduction!technologies.!!In!this!case,!
communities!will!not!benefit!from!new!jobs!or!local!emissions!reductions!(EPA,!2007).!

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California!Cap"and"Trade!HIA,!Page!|!6!
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Air!pollution!disproportionately!impacts!Low!income!communities!of!color!

.!!
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Reducing!GHG!emissions!by!decreasing!fossil!fuel!combustion!in!the!state!will!result!in!overall!
improved!air!quality.!!However,!because!California!policy"makers!aim!both!to!link!cap"and"trade!
to!a!regional!initiative,!and!to!allow!offsets!outside!of!the!US,!ARB’s!analysis!cannot!ensure!that!
pollution!reduction!co"benefits!will!actually!occur!within!California’s!borders.!!The!analysis!also!
omits!analyzing!how!pollution!is!geographically!distributed!within!the!state.!!At!present,!cap"
and"trade!lacks!a!mechanism!to!control!reductions!within!a!given!geographical!area.!
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California!Cap"and"Trade!HIA,!Page!|!7!
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Findings!
! The!top!17!emitters!in!the!state!contribute!over!50!percent!of!the!CO2e!emissions!from!
stationary!sources.!!!
! Eight!of!these!are!large!oil!refineries,!located!in!Richmond!and!Los!Angeles/Long!Beach!in!
high!density,!low"income!communities!of!color.!
! Current!air!quality!monitoring!devices!are!often!located!far!from!large!polluters.!This!
distance!makes!them!ineffective!at!notifying!nearby!communities!of!potential!pollution!
threats!and!enabling!those!communities!to!take!health!protective!actions.!
!
Policy!Design!Levers!
Design!details!of!cap"and"trade!(i.e.!allowance!auctioning!and!revenue!investment,!offsets!
location!guidelines,!rules!regarding!banking,!addition!of!price!ceilings/floors!for!a!single!ton!of!
CO2e,!etc.)!can!greatly!influence!the!impact!of!GHG!cap"and"trade,!determining!whether!the!
policy!will!bestow!co"benefits!or!inflict!additional!burdens!on!vulnerable!populations!(Paltsev!&!
Massachusetts!Institute!of!Technology!Center!for!Energy!and!Environmental!Policy!Research,!
2007).!A!brief!discussion!of!important!design!details!follows.!
!
Allowance!Allocation:!!Carbon!credits!are!allocated!in!two!ways:!they!can!either!be!auctioned!or!
given!away,!the!number!of!credits!based!on!current!pollution!levels!of!each!emitter.!Auctioning!
initially!allows!market!forces!set!the!price,!but!may!result!in!higher!costs!being!passed!on!to!
consumers.!Giving!away!allowances,!in!contrast,!may!result!in!a!direct!transfer!of!wealth!to!
large!polluters!as!the!market!price!of!carbon!determines!what!costs!are!translated!to!
consumers.!Auctioning!also!provides!a!source!of!revenue!that!can!be!invested!in!a!progressive!
spending!plan.!
!
!Recommendations:!
! Advocate!for!100%!auction!of!allowances!to!maximize!revenue.!Suggested!uses!include:!
o Directing!subsidies!to!stabilize!the!budgets!of!low"income!households!and!to!
assist!in!adaptation;!!
o Stimulating!job!growth!in!the!renewable!energy!and!energy!efficiency!sectors.!!
o Improving!local!air!quality!measurements!by!placing!monitors!close!to!emitters.!!

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California!Cap"and"Trade!HIA,!Page!|!8!
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Offsets:!!Current!policy!recommendations!allow!up!to!49%!of!emissions!reductions!to!be!met!
through!international!offsets.!Offsets!are!often!the!cheapest!way!for!industry!to!reduce!
emissions;!consumers!would!also!share!this!savings!by!enjoying!lower!costs,!meaning!lower!
costs!for!consumers.!These!offsets!are!controversial!because!they!can!be!difficult!to!verify,!
possibly!leading!to!unsuccessful!mitigation!efforts.!Moreover,!local!emitters!would!not!have!to!
reduce!their!emissions!and!potential!local!health!and!economic!co"benefits!would!be!lost.!!!
!
Recommendations:!
! Advocate!for!reductions!in!allowable!offsets!and!incentivize!offsets!that!create!local!
public!health!co"benefits.!!
!
Price!Controls:!!Banking,!borrowing,!price!floors!and!ceilings!are!all!ways!of!controlling!the!
carbon!market!and!reducing!price!volatility.!!!!
!
Considerations!outside!Cap"and"Trade:!
Cap"and"trade!itself!will!not!ensure!that!vulnerable!communities!are!not!adversely!impacted!by!
air!pollution!and!increasing!energy!prices.!!We!suggest!the!following!complementary!policies:!
! Define! and! institutionalize! collaborative! roles! for! other! state! agencies,! like! Public!
Health.!
! Advocate!for!the!creation!of!complementary!policies!that!encourage!renewable!energy!
use,! energy! efficiency,! and! “green”! jobs! training.! (Roland"Host,! 2009;! Apollo! Alliance,!
Green! for! All,! Center! for! American! Progress,! &! Center! on! Wisconsin! Strategy,! 2008;!
Jones,!2009)!
! Consider! direct! regulation! of! the! top! emitters! or! other! mechanisms! to! reduce! carbon!
and!pollution!in!heavily!impacted!communities.!
! Require!public!reporting!of!GHGs!emissions!and!trading!details.!

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California!Cap"and"Trade!HIA,!Page!|!9!
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REPORT!CONTENTS!AND!STRUCTURE!
This!report!begins!with!background!information!that!led!to!our!decision!to!conduct!this!Health!
Impact!Assessment.!We!then!discuss!the!scoping!process,!outlining!how!we!determined!what!
policy!and!health!determinants!to!include!in!the!analysis.!Next,!we!assess!three!health!
determinants!that!cap"and"trade!will!impact.!We!conclude!with!an!analysis!of!cap"and"trade!
policy!design!features!that!could!affect!health,!and!provide!a!series!of!recommendations!to!
ensure!the!best!public!health!outcomes.!

BACKGROUND!!
Health!Impact!Assessment!Defined 1!
Health!Impact!Assessment!(HIA)!seeks!to!identify!health!risks!and!opportunities!before!they!
actually!happen,!to!“avoid!the!transfer!of!these!hidden!costs!and!promote!multi"sectoral!
responsibility!for!health!and!well"being”!(Quigley!et!al.,!2006).!There!is!no!universal!definition!
for!HIA,!but!the!World!Health!Organization!(WHO)!definition!is!cited!in!multiple!papers!(Cole!BL,!
et!al.,!2005;!Dannenberg!et!al.,!2006;!Dannenberg!et!al.,!2008)!as!“a!combination!of!
procedures,!methods,!and!tools!by!which!a!policy,!program,!or!project!may!be!judged!as!to!its!
potential!effects!on!the!health!of!a!population,!and!the!distribution!of!those!effects!within!the!
population”!(European!Centre!for!Health!Policy,!WHO!Regional!Office!for!Europe,!1999).!
!
HIA!uses!a!broad!definition!of!health,!and!looks!for!both!positive!and!negative!health!effects!
(Cole!BL,!et!al.,!2005).!It!utilizes!a!multi"disciplinary!approach,!and!may!consider!a!wide!range!of!
factors!ranging!from!biology,!economics,!political!climate,!socio"cultural!dynamics,!the!physical!
environment,!the!availability!of!public!services,!to!the!impact!of!existing!public!policies.!HIAs!
vary!in!scope,!from!rapid!to!comprehensive!(Krieger!et!al.,!2003).!The!most!comprehensive!HIAs!
include!the!six!steps!outlined!in!Table!1.!

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1
!This!section!includes!research!from!an!unpublished!graduate!student!paper!entitled!“Bringing!Health!
Considerations!into!Planning!Decisions:!Health!Impact!Assessment!as!a!Potential!Tool”!by!Lisa!C.!Foster,!one!of!the!
authors!of!this!report.

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California!Cap"and"Trade!HIA,!Page!|!10!
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Table!1:!The!HIA!Process!

#! Step! Description!
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1! Screening! Identifying!if!an!HIA!should!occur!
2! Scoping! Identifying!what!to!do!and!how!to!do!it!
3! Assessment! Identifying!health!hazards!and!considering!evidence!of!impact!
4! Reporting! Developing!recommendations!to!reduce!hazards!and/or!improve!of!health!
!
5! Evaluation! Evaluating!the!HIA!process,!content,!and!influence!on!the!outcome!
6! Monitoring! Monitoring!the!implementation!of!the!proposal.!Sometimes!long!term!
monitoring!can!be!used!to!see!if!the!predictions!made!during!the!appraisal!
were!accurate!
Source:!World!Health!Organization:!Health!Impact!Assessment!Program!

Screening:!!Why!conduct!this!HIA?!!
!
Potential!health!and!equity!impacts!
Climate!change!poses!major!health!risks!for!humans.!Arctic!ice!melt,!sea!level!rise!(Hand,!2009),!
and!increasing!frequency!of!extreme!weather!events!have!already!impacted!vulnerable!
communities!throughout!the!world!(McMichael,!Friel,!Nyong,!&!Corvalan,!2008).!However,!the!
framework!of!climate!change!mitigation!in!California!is!also!an!opportunity!to!address!some!of!
the!worst!health!inequities!that!currently!exist.!Low"income!and!communities!of!color!in!
California!are!already!disproportionately!impacted!by!negative!health!risks!for!cancer!from!
outdoor!air!toxics!exposure!(R.!Morello"Frosch,!Pastor,!Porras,!&!Sadd,!2002).!Strong!climate!
change!mitigation!measures!could!reduce!these!disparities!by!reducing!existing!air!pollution!
hotspots,!as!an!example.!However,!Environmental!Justice!groups!have!expressed!concern!that!
the!cap"and"trade!program!proposed!under!AB!32!does!not!address!these!concerns!(EJ!Matters,!
2009).!
!
Gaps!in!the!ARB!Public!Health!Analysis!Supplement!(316!ARB!2008)!
ARB’s!health!supplement!focuses!exclusively!on!the!benefits!from!air!quality!improvements!and!
does!not!consider!the!possibility!that!cap"and"trade!may!exacerbate!existing!health!inequities!
nor!does!it!address!the!inherent!issues!involved!with!implementing!a!policy!without!yet!
understanding!local!implications.!This!oversight!is!partially!due!to!the!fact!that!the!analysis!did!
not!attempt!to!predict!the!results!of!cap"and"trade!at!all,!but!looked!at!the!entire!suite!of!
policies!under!AB!32.!!Even!the!regional!and!community"scale!assessments!focused!only!on!air!
pollution!benefits,!assuming!that!reductions!would!be!made!locally.!
!

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California!Cap"and"Trade!HIA,!Page!|!11!
Public!health!officers,!who!are!just!joining!the!AB32!policy"making!discussion!now,!have!an!
opportunity!to!influence!the!design!of!cap"and"trade!to!maximize!health!co"benefits!through!
the!Public!Health!Work!Group.!In!our!recommendation!section,!we!identify!several!key!
elements!of!the!cap"and"trade!policy!and!positions!for!which!public!health!officers!may!
advocate.!!

Scoping!of!Analysis!&!Major!Research!Questions!
Although!the!health!impacts!of!climate!change!itself!are!considerable,!this!HIA!analyzes!the!
health!impacts!of!the!proposed!carbon!cap"and"trade!program!under!California!AB!32. 2 !!We!
focus!on!the!effects!of!the!cap"and"trade!Phase!I,!which!only!applies!to!stationary!sources!of!
pollution.!!However,!we!recognize!that!Phase!II,!which!includes!all!carbon"based!fuels,!may!
have!greater!implications!for!climate!change!mitigation!and!public!health.!We!do!suggest!
conducting!an!HIA!of!Phase!II!in!the!future.!In!the!next!section,!we!focus!on!the!cap"and"trade!
policy!that!seems!most!likely!to!achieve!implementation!given!current!trends.!
!
Defining!Cap!&!Trade!in!California!!
A!cap"and"trade!program!is!a!regulatory!mechanism!that!limits!or!“caps"!the!total!amount!of!a!
pollutant,!in!this!case!GHG!emissions,!which!facilities!can!emit.!California!sets!a!cap!and!
allocates!allowances!to!polluters!by!auctioning!them!off!or!giving!them!away!based!on!a!set!of!
criteria!for!each!compliance!period!(ARB,!2008b).!Allowance!holders!can!then!buy!and!sell!
allowances!to!meet!their!emissions!needs,!as!long!as!emissions!from!the!entire!system!do!not!
exceed!the!cap.!!
!
California!is!designing!its!cap"and"trade!program!to!link!with!a!regional!carbon!market!known!as!
the!Western!Climate!Initiative!(WCI).!The!WCI!has!issued!a!set!of!cap"and"trade!design!
recommendations.!!Although!California!has!not!completed!the!design!for!its!own!program,!our!
analysis!assumes!that!most!of!the!WCI!recommendations!will!be!incorporated.!!For!Phase!I,!
these!include!the!following:!
! Beginning!in!2012,!stationary!sources!that!emit!over!25,000!metric!tons!of!carbon!
dioxide!equivalent!(CO2e)!must!hold!allowances!
! At!least!10%!of!allowances!must!be!auctioned,!increasing!to!25%!in!2020!
! Up!to!49%!of!emissions!reductions!can!be!achieved!through!offsets.!!(This!applies!to!the!
system!as!a!whole,!not!to!individual!facilities.)!
For!a!more!complete!overview!of!WCI!policy!details!see!appendix!E.!
!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2
!This!bill!requires!California!to!reduce!greenhouse!gas!(GHG)!emissions!to!1990!levels!by!2020,!and!the!cap"and"
trade!program!would!be!one!part!of!this!reduction.

!
California!Cap"and"Trade!HIA,!Page!|!12!
Map!1:!Carbon!Emitters!in!Phase!I!of!CA!Cap"and"Trade!

!
California!Cap"and"Trade!HIA,!Page!|!13!
!
Geographic!Area!of!Assessment:!State!of!California!+!Local!Case!Studies!
We!limit!our!HIA!to!the!state!of!California,!and!we!focus!on!specific!communities!in!the!Bay!
Area!and!Los!Angeles!to!examine!a!local!perspective.!Many!health!impacts!associated!with!
stationary!sources!occur!locally,!and!many!of!the!large!emitters!are!concentrated!in!these!two!
metropolitan!areas.!We!examine!the!local!geographic!distribution!of!emitters,!monitors,!and!
populations!in!order!to!understand!local!dynamics!better.!
!
Health!Determinants!Assessed:!Rationale,!Pathways,!and!Major!Research!Questions!
This!HIA!assesses!three!main!health!determinants:!equity!related!to!the!political!process!by!
which!policy"making!occurs;!income!effects!related!to!jobs!and!energy!prices;!and!air!pollution!
associated!with!GHG!emissions.!We!focus!on!these!health!determinants!rather!than!related!
health!outcomes!because!each!determinant!can!affect!health!in!a!multitude!of!ways;!it!is!
simpler!to!focus!on!three!health!determinants!rather!than!the!hundreds!of!possible!health!
outcomes.!!Also,!given!the!uncertain!nature!of!this!policy!and!the!multitude!of!possible!
outcomes,!quantifying!health!impacts!would!be!a!highly!speculative!process.!!Although!still!
based!on!a!number!of!assumptions,!predicting!the!general!trend!of!determinants!is!more!within!
the!realm!of!feasibility.!!Figure!1!below!briefly!outlines!the!general!pathways!from!the!three!
health!determinants!to!health!outcomes.!
!
Figure!1:!Policy!to!Health!Pathways!Overview!

!
!
California!Cap"and"Trade!HIA,!Page!|!14!
!
First,!we!assess!process!equity!in!AB!32!scoping!and!policy"making.!Inequitable!public!processes!
can!lead!to!disempowerment,!causing!stress!that!can!lead!to!conditions!such!as!heart!disease,!
hypertension,!and!depression.!The!pathways!from!process!equity!to!health!will!be!discussed!
further!in!the!Process!Equity!section,!and!is!summarized!in!appendix!F.!
!
Second,!we!assess!the!economic!effects!of!cap"and"trade.!!We!discuss!potential!industry!
responses!to!cap"and"trade;!because!cap"and"trade!is!a!market!mechanism,!all!health!effects!of!
the!cap"and"trade!depend!on!how!industry!responds!to!the!policy.!!We!also!analyze!income!
effects!caused!by!job!creation!or!loss,!as!well!as!changes!in!consumer!electricity!prices.!The!
health!outcomes!related!to!income!are!myriad,!and!we!discuss!them!later!in!this!report.!
Appendix!G.1!and!G.2!includes!a!diagram!outlining!the!income!and!job!effect!pathways.!
!
Third,!this!report!analyzes!how!the!proposed!cap"and"trade!policy!will!affect!air!pollution!
associated!with!GHG!emissions.!We!focus!on!six!primary!co"pollutants:!ozone!(O3),!particulate!
matter!(PM10!and!PM2.5),!carbon!monoxide!(CO),!nitrogen!oxides!(NOx),!sulfur!oxides!(SOx),!and!
lead.!!All!of!these!pollutants!are!proven!health!hazards,!and!are!routinely!monitored.!!The!
primary!health!effects!of!these!pollutants!include!respiratory!problems,!such!as!irritation,!
wheezing,!coughing,!and!difficulty!breathing;!aggravated!asthma,!particularly!in!children;!
irregular!heartbeat;!non"fatal!heart"attacks,!and!premature!death!in!people!with!heart!or!lung!
disease.!These!impacts!are!especially!severe!for!low"income!people,!the!elderly,!and!children!
(EPA,!2008b).!Populations!residing!near!stationary!sources!are!already!suffering!from!negative!
health!outcomes!(EPA,!2008b).!See!Appendix!H!for!a!chart!detailing!the!co"pollutant!health!
pathways,!including!a!list!of!health!outcomes!associated!with!each!of!the!six!major!co"
pollutants.!
!
Time!Frame!for!Assessment:!2012"2020!!
Our!assessment!of!co"pollutants!and!income!effects!will!focus!on!the!time!period!from!2012,!
the!proposed!first!year!of!the!cap"and"trade!program,!to!2020,!when!AB!32!requires!GHG!
emissions!to!reach!1990!levels.!Phase!II!is!projected!to!begin!in!2015,!but!we!do!not!believe!
that!2012"15!is!not!long!enough!to!assess!health!impacts.!Our!analysis!of!process!equity!begins!
earlier,!when!the!process!of!designing!policy!to!fulfill!the!requirements!of!AB!32!began.!!

!
California!Cap"and"Trade!HIA,!Page!|!15!
!
Current!Conditions!!
!
Federal!Regulations!!
The!Clean!Air!Act!charges!the!United!States!Environmental!Protection!Agency!(EPA)!with!setting!
minimum!air!quality!standards!to!protect!human!health.!!However,!the!mechanisms!for!
enforcing!these!regulations!are!complex!and!bureaucratically!layered.!!States!are!required!to!
produce!State!Implementation!Plans!(SIPs),!which!are!subject!to!approval!at!the!federal!level;!
however,!administration!and!enforcement!falls!to!state!and!local!jurisdictions.!In!California,!the!
Cal!EPA!oversees!35!regional!Air!Pollution!Control!Districts!(APCD)!and!Air!Quality!Management!
Districts!(AQMD),!each!with!slightly!different!standards!and!enforcement!policies!(ARB,!2009).!
!
!
In!2007,!the!Supreme!Court!ruled,!in!Massachusetts!v.!EPA,!that!greenhouse!gases!are!harmful!
pollutants!and!should!be!regulated!under!the!Clean!Air!Act.!!The!agency!recently!released!a!
“Proposed!Endangerment!Finding,”!showing!that!GHGs!do!threaten!public!health!(Part!III,!40!
CFR!Chapter!1:!202a!of!the!Clean!Air!Act,!April!24,!2009).!It!has!also!proposed!a!Mandatory!
Reporting!Rule!that!would!require!the!collection!of!comprehensive!emissions!data!to!inform!
future!policy!decisions!(United!States!Environmental!Protection!Agency,!2009).!!President!
Obama’s!administration!has!also!shown!strong!support!for!regulating!greenhouse!gases!at!the!
federal!level.!
!
California!Regulations!of!Air!Pollutants!
California!also!has!its!own!air!pollution!regulations,!although!most!of!these!relate!to!pollution!
from!transportation!sources,!including!specific!emissions!regulations!for!ports!equipment!and!
ship!auxiliary!engines;!rail!yards!and!locomotives;!construction,!mining,!and!agricultural!
equipment;!and!forthcoming!regulations!on!heavy"duty!diesel!trucks.!The!state!agency!also!
periodically!reviews!ambient!air!quality!standards!to!assess!their!adequacy!in!protecting!public!
health!(ARB,!2008c).!
!
Reductions!in!PM2.5!from!California’s!existing!programs!and!2007!SIP!measures!are!estimated!to!
result!in!3,700!avoided!premature!deaths!statewide!in!the!same!timeframe!as!AB!32!(ARB,!
2008c).!However,!ARB!has!stated!that!these!regulations!are!not!sufficient!due!to!the!new!
information!regarding!the!health!dangers!of!exposure.!They!indicate!that!there!is!a!need!to!
continue!reducing!public!exposures!to!PM2.5!(ARB,!2008e).!

!
California!Cap"and"Trade!HIA,!Page!|!16!
!

ASSESSMENT!
Overview!of!Process!Equity!Health!Concerns!
Public!involvement!and!participation!in!decision"making!is!essential!to!a!healthy!democracy.!
The!World!Health!Organization!(WHO)!and!others!emphasize!that!the!underlying!principles!of!
democracy!are!essential!to!community!health.!Inclusive,!transparent,!participatory!democratic!
processes!can!contribute!to!building!equality,!empowerment,!and!social!capital!–!all!important!
health!determinants!(Commission!on!Social!Determinants!of!Health,!2008;!Diez"Roux,!2008;!
Marmot,!2007;!Wallerstein,!2006).!In!addition,!diverse!stakeholder!involvement!can!lead!to!
more!creative!ideas!and!more!successful!policies.!On!the!other!hand,!decision"making!that!is!
not!open!to!meaningful!public!participation!can!lead!to!disempowerment!and!stress!as!
demonstrated!in!Figure!2.!!Thus,!procedural!equity!in!the!scoping!and!implementation!of!AB!32!
has!important!health!implications!in!terms!of:!(1)!efficacy!in!achieving!GHG!reductions!targets!
and!maximizing!health!co"benefits;!(2)!ensuring!that!vulnerable!populations!can!share!in!those!
co"benefits;!(3)!ensuring!that!the!public,!and!especially!vulnerable!communities,!are!
empowered!through!the!process.!
!
Figure!2:!!Pathways!Overview!–!Process!Equity!

!
Public Lack of Disempowerment Heart Disease
! Frustration Depression
Process Meaningful
! Stress Low Birth Weights
Introduced Engagement
!
!
!
Our!review!of!planning!and!policy!literature!reveals!that!there!are!various!sets!of!criteria!that!
can!be!useful!in!evaluating!inclusiveness!and!quality!of!public!participation!in!policymaking.!
Rowe!and!Frewer!(2000)!point!out!the!importance!of!“Representativeness,!Independence,!Early!
Involvement,!Influence,!Transparency,!Resource!Accessibility,!Task!definition,!and!Structured!
Decision"making”.!Connick!and!Innes!(2003)!discuss!the!following!criteria:!“The!dialogue!
includes!representatives!of!all!relevant!interests!and!(a)!is!driven!by!a!practical!purpose!and!
task!shared!in!the!group!(b)!is!self"organizing!(c)!is!engaging!to!participants!as!they!learn!and!
interact!(d)!encourages!challenges!to!assumptions!and!the!status!quo!and!fosters!creativity!(e)!
incorporates!many!kinds!of!high!quality!information!(f)!seeks!consensus!only!after!discussions!
have!fully!explored!issues!and!interests!and!significant!effort!has!been!made!to!find!creative!
responses!to!differences.”!Cunningham!and!Tiefenbacher!(2006)!emphasize:!“include!those!
most!vulnerable!to!the!hazard,!include!value"based!(non"expert)!testimony!in!the!process,!

!
California!Cap"and"Trade!HIA,!Page!|!17!
establish!legitimacy!with!the!public,!and!strive!for!government!transparency”.!!!
!
Our!analysis!of!procedural!equity!for!AB32’s!scoping!and!regulatory!process!examines!the!
following!questions:!
1) Did!the!AB!32!scoping!process,!as!overseen!by!the!California!Air!Resources!Board,!
follow!the!guidelines!set!out!in!the!AB!32!statute!and!internal!ARB!guidelines!for!
public!participation?!
2) Do!these!guidelines!facilitate!a!powerful!position!for!representatives!of!vulnerable!
communities!in!policy"making?!
3) What!are!the!health!equity!implications!of!the!process!as!it!has!been!carried!out?!
4) What!are!some!opportunities!for!public!health!professionals!to!promote!health!
equity!in!the!implementation!of!climate!change!mitigation!policy?!
!
Lessons!Learned!from!the!AB!32!Scoping!Process!

Public!Health!must!engage!actively!in!climate!change!policy!to!ensure!that!health!equity!
concerns!are!taken!into!consideration.!Public!Health!should!make!sure!its!role!on!the!
Climate!Action!Team!is!not!confined!to!adaptation,!and!the!new!AB!32!Public!Health!Work!
Group!should!move!quickly!to!engage!in!the!ongoing!policy!design!process.!

!
The!AB!32!statute!reinforces!that!the!Climate!Action!Team,!a!collaborative!of!state!agencies,!is!
responsible!for!“coordinating!overall!climate!policy”!in!California.!We!see!the!addition!of!the!
Department!of!Public!Health!to!the!Climate!Action!Team!in!2008!as!a!very!positive!
development.!Officials!from!ARB!emphasize!that!the!Climate!Action!Team!plays!an!integral!role!
in!the!implementation!of!AB!32!by!bringing!additional!analytical!expertise!to!the!decision"
making!process.!In!addition,!the!new!Public!Health!Work!Group!must!undertake!a!proactive!
agenda!to!(1)!broaden!the!scope!of!health!impacts!being!considered!and!(2)!emphasize!the!
importance!of!health!equity.!

Public!health!professionals!have!a!very!important!role!to!play!– in!collaboration!with!
atmospheric!scientists,!economists,!social!scientists!–!to!refine!methods!for!identifying!local!
impacts!associated!with!mitigation!policies!and!make!sure!those!methods!are!used!in!policy!
decision"making.!

!
AB!32!requires!that!ARB,!as!the!responsible!public!agency,!“ensure!that!activities!undertaken!to!
comply!with!the!regulations!do!not!disproportionately!impact!low"income!communities”,!and!
the!statute!also!requires!that!“to!the!extent!feasible…consider!the!potential!for!direct,!indirect,!

!
California!Cap"and"Trade!HIA,!Page!|!18!
and!cumulative!emission!impacts!from!these!mechanisms,!including!localized!impacts!in!
communities!that!are!already!adversely!impacted!by!air!pollution.”!During!the!AB!32!scoping!
process,!ARB!was!not!able!to!conduct!analyses!of!local!impacts.!As!we!have!discovered!in!
conducting!this!HIA,!there!are!many!challenges!in!conducting!local!analyses!because!most!
available!data!is!aggregated!at!the!state!level.!Greenhouse!gases,!climate!change,!and!
associated!mitigation!policies!will!affect!populations!differently,!and!existing!vulnerable!
populations!are!particularly!at!risk!(Shonkoff,!Morello"Frosch,!Pastor,!Sadd,!2009).!It!is!crucial!to!
develop!good!methods!to!understand!the!distribution!of!impacts,!identify!vulnerable!
communities!and!ensure!those!communities!are!equipped!to!build!resilience.!

In!order!to!empower!vulnerable!communities!and!to!ensure!health!equity!in!climate!change!
mitigation:!
! diverse!stakeholders!must!be!engaged!in!interactive!discourse!and!debate.!
! facilitation!and!mediation!skills!should!be!valorized!as!key!capabilities!to!ensure!that!
all!types!of!expertise!are!recognized!and!valued!in!the!process.!
! strong!efforts!must!be!made!to!ensure!decision"making!is!transparent!
!
AB!32’s!establishment!of!formal!stakeholder!committees!can!set!a!positive!precedent!for!
climate!policy.!However,!at!this!stage!it!is!important!to!identify!aspects!of!stakeholder!
engagement!that!could!be!improved!as!the!state!and!country!move!forward!with!climate!
change!mitigation.!One!key!area!for!improvement!is!the!creation!of!formal!opportunities!for!
facilitated!discourse!and!debate!between!diverse!stakeholders.!Throughout!most!of!the!scoping!
process,!the!two!advisory!committees!mandated!under!AB!32!"!!the!Economic!and!Technology!
Advancement!Advisory!committee!(ETAAC)!and!Environmental!Justice!Advisory!
Committee(EJAC)!"!!did!not!frequently!interact!and!held!their!committee!meetings!separately.!
In!the!future,!the!committees!could!work!more!closely!together 3 ,!and!we!encourage!the!new!
Public!Health!Work!Group!to!take!part.!We!interviewed!a!wide!cross"section!of!stakeholders!for!
this!report:!!officials!at!ARB,!continuing!members!of!EJAC,!members!of!a!committee!advising!on!
market"compliance!mechanisms,!as!well!as!interested!parties!who!were!outside!the!formal!
scoping!process,!but!who!are!actively!involved!with!climate!change!policy.!All!encouraged!
collaboration!between!the!committees.!One!other!conclusion!we!drew!from!our!interviews!was!
that!EJAC!could!have!been!more!effective!if!the!committee!had!included,!as!members!or!
consultants,!more!diverse!stakeholders!with!unique!expertise!and!perspectives.!In!order!for!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3
!ETAAC!and!EJAC!collaborated!to!submit!a!joint!letter!voicing!their!concerns!to!ARB!in!November!2008

!
California!Cap"and"Trade!HIA,!Page!|!19!
consensus"building!to!function!well!in!the!context!of!diverse!stakeholders,!strong!mediation!
and!access!to!information!is!crucial. 4!
!
We!also!want!to!emphasize!the!importance!of!transparency!as!implementation!of!the!AB!32!
scoping!plan!moves!forward.!In!our!review!of!the!literature!on!participatory!decision"making,!it!
was!clear!that!transparency!is!one!most!vital!aspects!of!good!democratic!process.!Moving!
towards!implementation,!transparency!will!also!be!of!critical!importance!in!design,!monitoring,!
and!enforcement!of!GHG!reductions!and!cap"and"trade!functionality.!!
!

Implementation!of!AB!32!provides!an!opportunity!for!Public!Health!to!support!community!
capacity"building!so!that!vulnerable!communities!are!able!to!effectively!participate!in!
decision"making!processes!that!impact!health.!

!
The!WHO!Commission!on!Social!Determinants!(2008)!asserts!that!“any!serious!effort!to!reduce!
health!inequities!will!involve!political!empowerment.”!Nicholas!Freudenberg!(2004)!provides!a!
useful!framework!for!thinking!about!a!Continuum!of!Community!Power.!(See!Appendix!I)!
If!representatives!of!vulnerable!communities!are!to!attain!the!necessary!power!to!effectively!
participate!in!policymaking,!they!must!have!the!“right!to!frame!issues!and!identify!options”!and!
the!“right!to!make!decisions”!(Freudenberg,!2004).!In!order!to!claim!more!control!over!
processes!that!will!affect!their!lives,!vulnerable!communities!must!contribute!substantive!and!
empirical!evidence!to!supplement!anecdotal,!value"based!statements.!By!providing!technical!
assistance!and!supporting!community"based!participatory!research,!the!public!health!
community!can!play!a!much"need!role.!This!will!help!empower!vulnerable!communities!and!
build!a!stock!of!local!data!that!is!lacking,!as!evidenced!by!ARB’s!difficulties!in!conducting!local!
analyses. 5!

Overview!of!Income!Effects!from!Cap"and"Trade!
An!effective!cap"and"trade!policy!essentially!places!a!price!on!GHG!emissions,!and!GHG"
emitting!industries!will!pass!the!costs!to!consumers!as!much!as!possible.!In!the!Phase!I!of!
California’s!proposed!cap"and"trade!program,!this!will!affect!consumers!the!most!in!their!
electricity!costs.!Since!consumers!do!not!radically!change!electricity!consumption!when!prices!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
4
!Interestingly,!the!chair!of!the!Market!Advisory!Committee!(MAC)!identified!consensus"building!and!facilitation!as!
some!of!the!most!important!capabilities!he!brought!to!the!committee.!The!MAC!was!an!expert!committee!
commissioned!by!Governor!Schwarzenegger!after!passage!of!AB!32!under!Executive!Order!S"20"06!to!design!a!Cap"
and"Trade!system!for!CA.!!The!MAC!report!Recommendations!for!Designing!a!Greenhouse!Gas!Cap"and"Trade!
System!for!California!was!released!in!June!2007,!and!many!of!their!recommendations!were!incorporated!into!ARB’s!
Scoping!Plan.
5
!J.K.!Stranlund!(1997)!posits!that!"public!technological!aid!"!is!a!method!to!allow!the!public!to!help!monitor!emissions!that!
reduces!the!amount!of!direct!enforcement!necessary!and!leads!to!savings!for!public!agencies.

!
California!Cap"and"Trade!HIA,!Page!|!20!
change!(Reiss,!White,!&!Stanford!University!Graduate!School!of!Business,!2002),!this!means!that!
most!will!simply!spend!a!greater!percentage!of!their!income!on!power,!effectively!decreasing!
their!income.!However,!many!argue!that!cap"and"trade!will!spur!innovation,!creating!new!jobs!
and!increasing!incomes.!
!
Household!income!and!employment!status!can!greatly!influence!health.!Poverty!and!low!
household!income!is!associated!with!many!types!of!poor!health!outcomes!(Subramanian!&!
Chen,!2005;!Wagstaff,!2002;!Wilkinson,!1998).!Evidence!finds!differences!in!male!mortality!by!
social!class!(as!defined!by!occupation)!(Harding,!1995).!Unemployed!people!have!a!higher!
prevalence!of!poor!health!outcomes!(Bartley,!1994).!While!there!is!some!evidence!showing!that!
ill!health!can!increase!the!risk!of!becoming!unemployed,!there!is!“unequivocal!evidence!of!
worsening!health!status!due!to!unemployment”!(Korpi,!2001).!Unemployment!can!increase!the!
likelihood!of!depression!in!men,!even!if!they!had!no!previous!psychological!issues!
(Montgomery,!1999).!
!
Figure!3:!Pathways!Overview!–!Income!Effects!

!
! Carbon Electricity Household Discretionary
! Pricing Costs Expenses Income
!
!
!
! Stress
! Business Lack of
! Expenses Job Loss
! Health Care
! ! Education
! ! Childcare
!
!
Difficulty!Projecting!Economic!Effects!
The!economic!impacts!of!a!cap"and"trade!scheme!for!greenhouse!gases!in!California!remain!
uncertain!due!to!several!factors!including:!the!current!economic!crisis!and!increasing!mistrust!
of!market!solutions,!uncertainty!in!price!per!ton!of!CO2e,!lack!of!research!on!industry!reaction,!
and!unknown!feasibility!of!current!technologies!for!GHG!emission!reduction.!The!economic!
impacts!will!also!depend!significantly!on!cap"and"trade!design!parameters,!including!
percentage!of!allowances!auctioned,!offset!parameters,!and!rules!for!banking.!Public!Health!
officers!should!play!an!instrumental!role!in!deciding!these!impending!decisions.!!!!!
!

!
California!Cap"and"Trade!HIA,!Page!|!21!
The!SO2!and!mercury!trading!schemes!serve!as!models!for!the!GHG!cap"and"trade!program,!but!
are!not!useful!for!predicting!economic!outcomes!because!the!sources!of!SO2!and!mercury!are!
few,!while!there!are!many!sources!of!GHG.!Additionally,!the!sheer!scale!of!the!carbon!market!
dwarfs!the!two!former!markets!in!comparison!(Colby,!2000).!
!
Industry!Response!
Cap"and"trade!by!itself!is!equivalent!to!a!tax!on!economic!activity,!which!economic!theory!tells!
us!will!slow!economic!growth!(Roland"Holst,!2009).!Since!reduced!economic!activity!(either!
from!the!current!recession!or!resulting!from!cap"and"trade!policies)!means!reduced!industry!
output,!GHG!emissions!and!related!criteria!air!pollutants!may!well!decrease,!but!job"loss!and!
higher!energy!prices!may!have!a!negative!health!impact!for!vulnerable!populations.!In!its!
economic!analysis!of!a!national!cap"and"trade!policy,!the!EPA!concludes!that!consumer!energy!
prices!would!rise!22%!relative!to!BAU!by!2030!due!to!“a!shift!in!fuel!mix!from!coal!to!gas!in!the!
earlier!years,!the!adoption!of!carbon!capture!and!storage!technology!in!later!years,!and!the!
increased!prices!the!consumers!of!coal!and!gas!face!due!to!the!price!of!allowances”!!(EPA,!
2007). 6!
!
ARB’s!economic!analysis!paints!a!rosier!picture:!it!expects!its!GHG!reductions!policies!to!
stimulate!the!economy!rather!than!harm!it.!ARB!makes!this!argument!by!analyzing!the!full!suite!
of!GHG!reduction!policies,!not!just!cap"and"trade.!It!concludes!that!due!to!energy!efficiency!
measures,!consumers!would!actually!face!lower!electricity!expenditures,!stimulating!“increased!
economic!activity,!resulting!in!increased!output!and!personal!income”!(ARB,!2008d).!However,!
ARB’s!analysis!de"emphasizes!the!effect!of!cap"and"trade:!ARB!states!that!“the!E3!analysis!
focuses!on!direct!programmatic!measures!and!does!not!include!the!incremental!price!impact!of!
the!cap"and"trade!program,!which!will!depend!upon!allowance!price,!allocation!strategy,!the!
capped!sector!industry!response,!and!other!program!design!decisions”!(ARB,!2008d).!!
!
From!observing!experiences!in!Europe,!some!economists!worry!that!industry!will!not!react!at!all!
within!the!first!phase!of!California’s!implementation!of!cap"and"trade!because!of!the!expected!
price!volatility!of!allowances.!Dallas!Burtraw,!a!member!of!the!AB!32!Market!Advisory!
Committee,!said!“excessive!volatility!in!prices!will!undermine!the!incentives!for!new!
investment,!slow!technological!change,!and!raise!the!long"run!cost!of!climate!policy”!(Burtraw,!
2009).!In!his!written!testimony,!Burtraw!quotes!a!representative!of!one!of!the!largest!chemical!
companies!in!Europe!as!saying:!“We!see!the!CO2!price!go!up!and!down!and!we!got!so!fed!up!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6
!Of!course,!the!National!Association!of!Manufacturers!(NAM)!projects!much!worse!economic!consequences.!In!its!
analysis!of!the!effect!of!the!Lieberman/Warner!Act!(including!a!national!version!of!cap"and"trade)!on!
manufacturing!in!California,!NAM!stated!that!cap"and"trade!could!cause!a!38%!to!49%!increase!in!electricity!prices!
and!trigger!hundreds!of!thousands!of!job!losses!(National!Association!of!Manufacturers,!2007).!

!
California!Cap"and"Trade!HIA,!Page!|!22!
with!price!variation!we!developed!an!internal!CO2!price.!We!need!an!idea!of!a!stable!price!in!
order!to!make!investment!decisions”!(Burtraw,!2009).!However,!cap"and"trade!policies!can!be!
designed!to!reduce!price!volatility,!such!as!allowing!carbon!credit!banking!(Friedman,!2009).!!!
!
Income!Effects!Related!to!Consumer!Prices!
Cap"and"trade,!on!its!own,!will!likely!raise!energy!prices;!and!low"income!households!will!face!a!
larger!burden!because!they!spend!a!larger!proportion!of!their!income!on!energy!(Lafferty!et!al.,!
2001;!Reiss!et!al.,!2002).The!rising!energy!prices!will!increase!the!percentage!of!household!
income!spent!on!energy!because!price"elasticity!of!demand!for!electricity!is!inelastic. 7 !In!fact,!
Reiss!et!al!state!that!“44!percent!of!California!households!exhibit!no!short"run!demand!
sensitivity!to!changes!in!the!marginal!price!of!electricity.!This!segment!of!the!population!is!
households!that!own!no!major!electric!appliances!other!than!a!refrigerator”!(Reiss!et!al.,!2002).!
This!subset!of!Californians!might!include!many!low!income!people!with!few!appliances,!which!
makes!it!more!difficult!to!change!energy!use!significantly.!!
!
Income!Effects!Related!to!Jobs!
Cap"and"trade!in!and!of!itself!will!not!greatly!affect!“green!jobs”!in!California.!The!only!jobs!
guaranteed!to!be!created!under!the!first!phase!of!the!California’s!proposed!cap"and"trade!
program!are!white"collar!carbon"trading!jobs,!which!would!not!be!available!to!people!without!
college!degrees.!Any!blue"collar!jobs!could!more!or!less!be!a!conversion!of!existing!construction!
jobs.!The!only!way!to!guarantee!blue"collar!jobs!would!be!to!create!supplementary!policies!
subsidizing!renewable!energy,!energy!efficiency!programs,!or!other!job"training!strategies.!This!
follows!the!recommendations!of!the!Apollo!Alliance,!Ella!Baker!Center,!Van!Jones,!and!other!
“green!job”!advocates.!Additional!policies!include!incentivizing!blue"collar"job"creating"
activities!like!small!scale!solar!installation,!energy!efficient!construction,!green!job!training,!and!
encouragement!of!new!“green”!businesses.!These!policies,!programs,!and!subsidies!would!be!
more!likely!to!result!in!the!formation!of!a!“green!economy”!which!would!serve!industries!
participating!in!the!cap"and"trade!rather!than!cap"and"trade!creating!the!“green!economy.”!As!
more!sectors!are!brought!into!the!cap"and"trade!scheme!we!could!anticipate!such!blue"collar!
jobs!as!solar!installers!and!manufacturing!growing!in!importance,!but!these!additional!policies!
are!needed!for!vulnerable!populations!to!be!positively!impacted!by!cap"and"trade!related!jobs.!
At!least!in!this!first!phase!of!cap"and"trade,!the!new!carbon!market!may!not!do!enough!to!
create!sufficient!jobs!benefiting!CA’s!lower"income!populations.!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7
Reiss, et al, estimate California’s electricity price elasticity to be -.39

!
California!Cap"and"Trade!HIA,!Page!|!23!
!
Overview!of!Air!Pollution!Health!Concerns!
Although!CO2!has!no!direct!impacts!on!human!health,!the!majority!of!GHG!emissions!come!
from!the!combustion!of!fossil!fuels!which!also!results!in!the!emission!of!other!pollutants!(co"
pollutants),!many!of!which!are!harmful!to!health.!Stationary!sources!that!fall!under!the!cap"
and"trade!program!we!are!assessing!are!also!sources!of!co"pollutants.!These!co"pollutants!are!
first!in!a!chain!of!processes,!which!ends!in!various!negative!health!outcomes!including!
respiratory!disease,!asthma,!irregular!heartbeats,!and!even!premature!death.!!
!
Figure!4:!Pathways!Overview!–!Criteria!Pollutants!

!
Combustion Breathing Problems
!
of Criteria Asthma
! Pollutants Inhalation Irregular Heartbeat
Fossil Fuels Death
!
!
!
AB!32’s!cap"and"trade!program!focuses!on!reducing!CO2e!emissions,!but!ARB!projects!that!the!
policy’s!primary!direct!public!health!effects!will!be!positive!due!to!reductions!in!smog!forming!
emissions!and!toxic!diesel!particulate!matter.!The!agency’s!analysis!indicates!that!AB!32‘s!
implementation!will!lead!to!statewide!reductions!of!approximately!61!tons!per!day!of!NOx!!and!
15!tons!per!day!!of!directly!emitted!PM2.5!by!the!year!2020!(ARB,!2008c).!This!equates!to!an!
estimated!air!quality"related!public!health!benefit!of!400!avoided!premature!deaths!statewide!
(ARB,!2008c).!
!
It!is!true!that!reducing!GHG!emissions!by!decreasing!fossil!fuel!combustion!in!the!state!will!
result!in!improved!air!quality!overall.!!However,!because!California!policy"makers!aim!to!link!
cap"and"trade!to!a!larger!regional!initiative!allowing!international!offsets!and!ARB’s!analysis!
does!not!account!for!that,!the!foundation!of!their!analysis!is!flawed.!It!is!not!certain!that!
pollution!reduction!co"benefits!will!be!captured!within!California.!!The!analysis!also!does!not!
consider!the!geographic!distribution!of!pollution!impacts!within!the!state.!!Our!geographic!
information!systems!(GIS)!analysis!shows!that!pollution!hotspots!currently!exist!within!the!state!
and!that!current!regulation!and!monitoring!are!insufficient!to!protect!the!health!of!vulnerable!
communities.!The!proposed!cap"and"trade!policy!currently!has!no!mechanism!to!prevent!the!
continuation!or!worsening!of!this!trend.!!Our!HIA!analysis!focuses!on!quantifying!the!criteria!air!
pollutants!associated!with!local!GHG!emissions!reductions!and!the!impacts!on!populations!
living!near!stationary!sources.!!We!also!use!air!quality!monitoring!data!to!look!at!ambient!levels!
of!pollutants,!particularly!PM10!and!NO2.!We!found!that!current!monitoring!is!insufficient!to!
show!the!concentrated!local!impacts!from!stationary!sources.!!!

!
California!Cap"and"Trade!HIA,!Page!|!24!
!
Heavily!Impacted!Communities!
While!all!Californians!suffer!when!air!quality!is!poor,!the!communities!that!are!most!drastically!
affected!by!co"pollutants!are!characterized!by!their!low!socio"economic!status!(SES);!stationary!
sources!are!disproportionately!located!near!these!communities!(see!Map!2).!We!found!a!
positive!correlation!between!poverty!and!susceptibility!to!climate"sensitive!health!outcomes.!
Increased!vulnerability!will!make!adapting!to!changing!weather!conditions!much!more!difficult.!
Without!proper!adaptation,!those!in!the!lowest!socio"economic!stratus!will!be!unable!to!
protect!themselves!from!these!health!outcomes!and!their!health!will!suffer!as!a!result!(Ebi,!
Mills,!Smith,!&!Grambsch,!2006).!Additionally,!there!is!evidence!that!negative!health!outcomes!
from!ambient!air!pollution!are!also!associated!with!racial!segregation.!Uneven!industrial!
development,!real!estate!speculation,!discrimination!in!government!and!private!financing,!
workplace!discrimination!and!exclusionary!zoning!have!led!to!systemic!racial!segregation!in!
diverse!urban!areas!with!important!implications!for!community!health!and!individual!well"being!
(R.!Morello"Frosch!&!Jesdale,!2006).!Asthma!prevalence,!hospitalization,!and!mortality!are!
three!times!greater!among!minorities!than!among!whites!(Burkett,!2007).!
!

Defining!Vulnerability!
We!have!used!the!following!definitions!in!our!analysis:!
! Low"income!communities!!!At!least!40%!of!residents!have!incomes!of!less!than!twice!the!
Federal!Poverty!Level!!!
! Communities!of!color!!!At!least!50!percent!people!of!color!(African"American,!Latino,!Asian"
American,!Native!American,!Hawaiian/Pacific!Islander,!or!multi"racial).!!
! Vulnerable!communities!!!Low"income!communities!of!color!as!defined!above!
! Vulnerable!age!groups!!!Children!under!the!age!of!18!and!adults!aged!65!and!over.!
!
!
Cap"and"trade!mechanisms!can!also!concentrate!pollution!in!communities!where!stationary!
sources!purchase!emissions!reduction!allowances!rather!than!reduce!actual!emissions.!These!
localized!health!risks!from!pollution!sources!are!often!overlooked!due!to!a!focus!on!regional!air!
quality!concerns,!resulting!in!a!disproportionate!burden!on!communities!surrounding!major!
emitters!many!of!which!are!low"income!communities!and!neighborhoods!populated!by!people!
of!color!(Drury,!Belliveau,!Kuhn,!&!Bansal,!1999).!
!

!
California!Cap"and"Trade!HIA,!Page!|!25!
!
Baseline!Conditions!
Our!assessment!of!baseline!conditions!includes!maps!showing!many!of!the!stationary!emitters!
of!GHGs!that!will!be!included!under!Phase!I!of!California’s!proposed!cap"and"trade!program!
(see!Map!1).!Approximately!800!stationary!sources!of!GHG!emissions!in!California!emit!over!
25,000!tons!of!carbon!dioxide!and!will!be!capped!within!the!policy’s!first!compliance!period.!
These!include!electricity!generating!facilities,!electricity!retail!providers!and!power!marketers,!
oil!refineries,!hydrogen!plants,!cement!plants,!cogeneration!facilities,!and!other!industrial!
sources.!We!have!mapped!only!the!large"scale!sources!that!emit!2!million!metric!tons!of!CO2e!
or!more!each!year.!!There!are!17!such!facilities!in!California,!which!together!account!for!more!
than!50%!of!the!total!GHG!emissions!from!stationary!sources.!!Eight!of!the!largest!emitters!are!
refineries,!six!are!power!plants,!and!two!are!cement!producers.!
!
It!is!particularly!important!to!note!the!distribution!of!these!large!emitters.!!Map!1!shows!large!
emitters!clustered!in!populated!areas!of!the!state.!Eleven!of!the!top!polluters,!including!all!the!
large!oil!refineries!in!the!state,!are!clustered!in!the!San!Francisco!Bay!Area!and!the!Los!Angeles!
region.!!Six!of!the!largest!facilities!are!in!Contra!Costa!County,!(eastern!Bay!Area),!while!
southern!Los!Angeles!County!hosts!five.!The!clustering!of!large!emitters!along!with!a!large!
number!of!smaller!facilities!results!in!the!surrounding!neighborhoods!bearing!the!cumulative!
impacts!of!pollution!from!all!those!sources.!!!!
!
Our!GIS!analysis!shows!that!the!neighborhoods!most!impacted!by!clusters!of!large!polluters!are!
predominantly!low"income!communities!of!color.!Map!2!shows!the!distribution!of!polluting!
facilities!in!relation!to!what!we!have!defined!as!“vulnerable!communities,”!or!low"income!
communities!of!color.!(See!Appendix!K.1"4!for!separate!maps!of!low"income!and!minority!
communities).!From!these!maps,!we!see!that,!because!of!residential!segregation,!vulnerable!
communities!are!disproportionately!located!near!stationary!sources!of!pollution.!!!

!
California!Cap"and"Trade!HIA,!Page!|!26!
Map!2:!Vulnerable!Communities!and!Stationary!Sources!

!
California!Cap"and"Trade!HIA,!Page!|!27!
!
!
Maps!3"4!magnify!the!areas!surrounding!large!emitters!in!Los!Angeles!showing!large!and!small!
GHG!emitters!as!well!as!vulnerable!populations.!Appendix!K!includes!similar!maps!of!the!Bay!
Area.!The!most!striking!trend!is!the!clustering!of!stationary!sources!in!densely!populated!areas.!
The!largest!cluster!of!polluters!is!in!Long!Beach!and!Carson!in!Los!Angeles!County,!where!
concentrations!of!poverty,!communities!of!color,!and!large!numbers!of!children!reside.!In!the!
Bay!Area,!neighborhoods!in!Richmond,!West!Oakland!and!Eastern!San!Francisco!stand!out!as!
having!especially!vulnerable!populations!living!in!close!proximity!to!polluters.!Four!of!the!top!10!
emitters!in!the!state!are!in!Eastern!Contra!Costa!County.!!!The!demographic!data!displayed!on!
these!maps!is!from!the!2000!Decennial!Census,!and!may!not!fully!represent!the!current!
population.!
!
Map!3:!Vulnerable!Populations!in!the!L.A.!Area!

!
!

!
California!Cap"and"Trade!HIA,!Page!|!28!
Map!4:!Children!&!Elders!in!the!L.A.!Area!

!
!
!
The!Environmental!Justice!community!has!drawn!the!attention!of!policy"makers!to!the!
disparate!pollution!burdens!born!by!low"income!communities!of!color!and!the!California!Air!
Resources!Board!has!an!explicit!policy!to!“integrate!environmental!justice!into!all!of![its]!
programs,!policies,!and!regulations”(California!Air!Resources!Board,!2001).!However,!conditions!
of!unequal!health!impacts!persist.!Our!spatial!analysis!shows!that!the!claims!of!the!
Environmental!Justice!community!are!founded!and!could!have!considerable!implications!for!
health.!!We!illustrate!the!point!here!to!show!that!the!framework!of!climate!change!policy!has!
the!potential!improve!health!outcomes!for!people!in!these!disproportionately!impacted!
communities.!!!

!
California!Cap"and"Trade!HIA,!Page!|!29!
!
Potential!Scenarios!under!Cap"and"Trade!
To!begin!understanding!the!complexity!of!a!carbon!cap"and"trade!scheme’s!effects!on!health!
and!make!predictions,!we!first!explore!how!the!stationary!emitters!will!react!to!the!scheme.!
Our!economic!analysis!of!cap"and"trade!shows!that,!in!the!absence!of!any!other!controls,!
emitters!will!achieve!mandated!reductions!as!cheaply!as!possible.!!As!mentioned,!the!program!
under!consideration!in!California!will!likely!allow!up!to!49%!of!mandated!GHG!emissions!
reductions!to!come!from!offsets!purchased!outside!of!California.!According!to!our!discussion!of!
economic!effects!below!and!from!the!European!experience,!offsetting!emissions!is!often!the!
cheapest!way!to!meet!reductions!targets,!purchasing!allowances!is!somewhere!in!the!middle!of!
the!expense!spectrum,!and!adopting!technologies!or!investing!in!energy!efficiency!are!more!
expensive.!Unfortunately,!emissions!reductions!achieved!by!offsets!do!not!capture!local!co"
benefits!associated!with!GHG!reductions.!

Key!Assumptions!Regarding!Industry!Reaction!!
! Industry!will!take!49%!of!offsets!abroad!unless!policy!prevents!them,!leaving!a!
maximum!of!51%!GHG!reductions!in!the!State!of!California.!
! Except!for!electric!utilities,!which!are!required!to!reach!a!33%!renewable!portfolio!
standard!(RPS)!by!2020,!most!stationary!sources!will!prefer!to!buy!allowances!from!
early!implementers!rather!than!invest!in!technology!to!reduce!GHG!emissions.!
! The!current!global!economic!crisis!will!slow!economic!growth!in!California,!so!it!may!
be!difficult!to!determine!how!much!job!growth!and!industry!reaction!occurs!in!
response!to!the!overall!economic!situation!versus!cap"and"trade.!
!
In the short-term, most industries under the cap-and-trade system, except utilities, will buy
allowances and offsets before investing in emissions reductions technologies. If many out-of-
state offsets are allowed, this would result in few or no air-quality co-benefits of local emissions
reductions (EPA, 2007). Power generators, on the other hand, are likely to respond to cap-and-
trade by increasing their renewable portfolio. Since public utilities in California have a state
mandated goal of 33% renewable energy by 2020, it is a logical way to reduce allowances
needed. This state mandate may help the utilities become overall allowance sellers rather than
buyers. Electricity prices, however, are projected to increase, but the renewable portfolio
standard will have some positive impacts on air pollution where public utilities have natural gas,
coal, or other fossil fuel generation plants. 8 On the other hand, particularly profitable forms of
pollution, like oil refineries are the least likely to reduce their emissions. It will be more cost
effective for these facilities to buy allowances and offsets.!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
8
http://www.cpuc.ca.gov/PUC/energy/Renewables

!
California!Cap"and"Trade!HIA,!Page!|!30!
!
With!this!understanding,!we!developed!three!possible!industry!responses!to!this!first!phase!of!a!
cap"and"trade!scheme!in!California!to!help!illustrate!possible!affects!on!health!determinants.!!!
1. First,!we!envision!an!optimistic!scenario,!in!which!stationary!sources!find!it!relatively!
easy!to!invest!in!the!technology!to!reduce!emissions!and!do!not!purchase!the!maximum!
offsets!allowed!or!buy!large!amounts!of!allowances.!This!would!result!in!a!local!CO2!
reduction!close!to!what!is!mandated!by!the!cap.!!Because!we!think!it!is!unlikely!that!no!
firms!will!buy!offsets,!for!this!scenario!we!are!assuming!that!emitters!will!achieve!78%!of!
the!mandated!reductions!locally.!See!Figure!1!in!appendix!L.!
2. Second,!we!assume!that!because!offsets!are!the!cheapest!form!of!reduction,!capped!
stationary!sources!will!purchase!the!maximum!allowed!offsets!abroad!and!then!make!
changes!in!operations!to!achieve!the!remaining!51%!of!mandated!reductions.!This!
scenario!could!also!occur!if!emitters!purchase!a!combination!of!offsets!and!allowances.!
See!Figure!2!in!appendix!L.!!!!
3. Lastly,!we!imagine!a!scenario!in!which!stationary!sources,!again,!purchase!the!maximum!
offsets!allowed!abroad!and!then!are!able!to!purchase!sufficient!allowances!to!cover!
current!levels!of!emissions.!This!is!what!we!would!consider!a!worst"case!scenario,!in!
which!no!reductions!would!occur!locally.!See!Figure!3!in!appendix!L.!!
!
In!each!scenario,!co"benefits!from!improved!air!quality!are!associated!with!the!actual!local!
reductions.!Because!stationary!sources!are!investing!in!efficiency!or!emissions!reducing!
technology,!co"benefits!in!terms!of!local!jobs!may!also!be!associated!with!local!reductions.!
However,!households!are!likely!to!experience!higher!costs!due!industries!passing!on!their!new!
costs.!In!the!third!scenario,!although!net!global!reductions!of!CO2e!would!occur,!none!would!
occur!at!facilities!within!the!locality!and!therefore!none!of!the!air!quality!co"benefits!would!be!
captured!there.!Consumer!prices!would!still!increase,!due!to!industries!passing!along!costs!of!
allowances!and!offsets!to!customers.!Few!local!jobs!would!be!created!to!offset!increasing!costs.!!!
!
The!three!scenarios!outlined!above!apply!over!time.!!However,!the!total!amount!of!emissions!
reductions!required!will!increase!during!each!compliance!period!as!the!cap!is!incrementally!
lowered.!Table!2!shows!the!resulting!emissions!reductions!that!would!be!achieved!locally!under!
each!scenario.!These!numbers!are!expressed!as!the!percent!that!would!be!reduced!below!the!
business"as"usual!scenario.!!
!
!
!

!
California!Cap"and"Trade!HIA,!Page!|!31!
Table!2:!Emissions!Reductions!below!Business!as!Usual!(BAU)!

Compliance! Total!
Scenario!1! Scenario!2! Scenario!3!
Period!! Reductions!!!
1!(2012!–!2014)! 2.3%! 1.2%! 1.8%! !BAU!
2!(2015!–!2017)! 9.6%! 4.9%! 7.5%! !BAU!
3!(2018!–!2020)! 17.5%! 8.9%! 13.7%! !BAU!
!
We!recognize!that!this!is!a!simplification!of!an!extremely!complex!market.!!In!all!likelihood,!
each!individual!facility!will!react!differently,!buying!and!selling!allowances!and!purchasing!
various!amounts!of!offsets!to!achieve!the!reductions!targets!as!cheaply!as!possible.!!It!is!
important!to!remember,!however,!that!the!more!real!reductions!that!are!made!within!the!
state,!the!more!local!co"benefits!are!likely!to!occur.!Reductions!made!within!the!state!are!also!
easier!to!monitor!and!enforce!than!offsets!purchased!abroad,!ensuring!that!the!emissions!
targets!are!actually!met.!However,!even!statewide!reductions!do!not!guarantee!an!equitable!
geographic!distribution!of!co"benefits.!!For!our!purposes,!it!is!useful!to!think!on!a!more!local!
scale,!rather!than!considering!the!entire!state!in!order!to!make!the!connection!between!GHG!
emissions!reductions!and!local!health!impacts.!For!this!reason!we!have!chosen!to!only!quantify!
the!reductions!in!GHG!emissions!and!co"pollutants!for!the!top!17!emitters!under!the!three!
scenarios!described!above.!!!
!
In!2007!the!top!17!polluters!were!responsible!for!approximately!51%!of!the!state’s!total!carbon!
emissions!from!stationary!sources!in!2007.!According!to!data!provided!by!the!National!
Resources!Defense!Council!(NRDC),!this!amounted!to!approximately!58!million!tons!of!CO2e!in!
2007.!!Assuming!a!business"as"usual!increase!of!2.5%!per!year,!by!2020,!CO2e!emissions!from!
these!sources!will!increase!to!nearly!80!million!tons.!These!emissions!are!associated!with!over!
289!million!pounds!of!NOx,!and!21!million!pounds!of!PM10.!Table!3!shows!the!potential!daily!
pollution!reduction!for!top!polluters!in!the!Bay!Area!under!these!three!scenarios,!projected!to!
the!year!2020.!(See!Appendix!O!for!quantifications!of!emissions!for!the!remaining!top!emitters.)!
We!used!co"pollutant!factors!provided!by!the!Clean!Air!and!Climate!Protection!(CACP)!software!
developed!by!ICLEI"!Local!Governments!for!Sustainability!(see!appendix!M)!to!calculate!the!
reductions!in!emissions!and!harmful!pollutants!for!each!scenario!described!above.!These!tables!
can!be!found!in!appendix!N.!Table!3!shows!the!amount!that!harmful!pollutants!could!be!
reduced!under!these!three!scenarios!in!the!area!around!heavily!impacted!communities!in!Los!
Angeles.!The!most!significant!potential!reductions!are!in!Nox!and!Sox.!!!!! ! !
!
!
!
! ! ! !

!
California!Cap"and"Trade!HIA,!Page!|!32!
Table!3:!Avoided!Emissions!from!Top!Emitters!in!LA!in!2020,!tons!per!day!

!! CO2e!! Nox!! Sox!! CO!! VOC!! PM10!!


Scenario!1! 7,438! 13! 79! 5! 1! 1!
Scenario!2! 4,832! 9! 52! 3! 1! 1!
!BAU! 54,295! 96! 579! 38! 7! 7!
!
Cap"and"trade!under!AB!32!establishes!a!cap!on!GHG!emissions,!but!does!not!require!that!any!
particular!facility!reduce!emissions!in!any!given!compliance!period.!The!rationale!behind!the!
policy!is!that!companies!will!make!the!most!efficient!and!cost!effective!reductions!and!purchase!
allowances!from!more!efficient!firms!to!make!up!the!difference.!Unfortunately!this!will!not!
guarantee!that!heavily!impacted!communities!will!see!a!reduction!in!pollution.!!!
In!fact,!it!is!possible!that!emissions!trading!could!increase!health!disparities!if!large"scale!
emitters!find!it!cheaper!to!purchase!allowances!than!to!reduce!emissions.!!Unless!strong!
regulatory!mechanisms!are!in!place,!these!facilities!could!even!increase!their!emissions!if!they!
found!it!profitable!to!do!so.!!!!

Air!Quality!Monitoring!around!Stationary!Sources!
As!mentioned!previously,!ARB!believes!that!cap"and"trade!will!produce!a!public!health!benefit!
from!the!reduction!of!smog!forming!emissions!and!toxic!diesel!particulate!matter!that!will!
coincide!with!CO2e!emission!reductions!(ARB,!2008c).!Amongst!these!unhealthy!pollutants!are!
mono"nitrogen!oxides!(NOx)!and!particulate!matter!(PM2.5!&!PM10),!two!of!the!six!criteria!
pollutants!that!are!federally!regulated!by!the!U.S.!EPA.!NOx!contributes!to!the!formation!of!
ozone!(O3)!and!PM2.5!(for!a!more!explanation!of!this!process!see!appendix!P).!Of!the!six!criteria!
pollutants,!particle!pollution,!and!ground!level!ozone!are!the!most!widespread!health!threats!
(EPA,!2008b).!!
!
To!understand!localized!health!threats!that!are!created!by!stationary!source!emitters!we!
conducted!a!GIS"based!analysis!of!one!highly!polluted!region!of!California,!the!Bay!Area.!As!the!
maps!of!vulnerable!populations!demonstrate!(Map!2),!the!East!Bay!houses!6!of!the!17!top!
emitters!of!CO2e!in!the!entire!state,!all!of!which!are!located!in!Contra!Costa!County!(See!
appendix!O!"!Top!Emitters!in!the!State).!From!what!we!know,!these!levels!of!CO2e!are!closely!
linked!to!quantities!of!criteria!pollutants!(See!Appendix!M!"!the!ICLEI!model).!!
!
!
!
!
!
!
!

!
California!Cap"and"Trade!HIA,!Page!|!33!
Figure!5:!Nitrogen!Oxides!Emissions!by!Source!Sector,!In!Contra!Costa!County,!%!of!the!California!Emissions!Total,!2002,!(US!
EPA,!2008)!

!
!
Contra!Costa!alone!emits!30%!of!all!nitrogen!oxides!from!industrial!processes!in!the!state!as!
well!at!19%!of!all!nitrogen!oxides!from!electricity!generation!in!the!state!(EPA,!2008a).!From!
this!we!extrapolate!that!there!are!high!levels!of!NO2!dispersed!as!air!pollution,!especially!
around!communities!housing!industrial!and!electrical!facilities.!!Potentially!affected!cities!
include!Benicia,!Martinez,!Pittsburg!and!Richmond.!!
!
With!data!from!the!Air!Quality!Data!Branch!of!ARB,!we!created!interpolations!of!NO2!based!
upon!the!data!from!monitoring!sites!throughout!the!state.!An!interpolation!is!a!GIS!model!that!
estimates!“the!value!of!a!variable!of!interest!at!an!un"sampled!location!based!on!the!values!
measured!at!sampled!locations”!(Radke,!2009).!In!this!circumstance,!the!monitoring!sites!
functioned!as!our!sampled!locations!that!predicted!expected!levels!of!NO2!in!un"sampled!
regions!of!the!Bay!Area.!This!interpolation!is!strictly!to!show!baseline!levels!of!NO2!from!2007.!
Some!limitations!of!the!interpolation!are!that!we!did!not!integrate!environmental!variables!
such!as!wind!direction,!and!topography,!which!influence!the!dispersion!of!the!air!pollutants.!
!
From!the!interpolation!of!NO2!emissions!(Map!5)!parts!of!Contra!Costa!and!Alameda!County!
look!as!though!they!have!very!low!levels!of!NO2!despite!there!being!large!stationary!sources!in!
the!vicinity.!We!conclude!that!our!interpolations!based!on!air!quality!monitoring!data!are!not!
representing!the!high!NO2!emissions!and!are!instead!collecting!an!average!at!best!of!this!
particular!criteria!air!pollutant.!Similar!trends!are!seen!in!interpolations!of!PM10.!Air!quality!

!
California!Cap"and"Trade!HIA,!Page!|!34!
monitoring!data!is!not!accurately!showing!extreme!values!of!criteria!air!pollutants!that!are!
emitted!within!close!proximity!to!vulnerable!communities.!!
!
Without!an!accurate!understanding!of!the!conditions!at!baseline!it!will!be!difficult!to!gauge!if!
cap"and"trade!has!an!impact!on!air!quality.!Prior!to!implementation!of!cap"and"trade!we!
recommend!that!public!health!officials!lobby!to!ensure!that!air!quality!monitoring!sites!collect!
data!on!both!the!extremes!and!average!levels!of!air!pollution.!This!may!entail!placing!state!
monitoring!sites!at!or!near!top!emitters.!We!also!encourage!the!public!health!community!to!
advocate!that!a!portion!of!auction!revenues!be!allocated!to!improving!air!quality!monitoring!in!
the!future.!!
!

!
California!Cap"and"Trade!HIA,!Page!|!35!
Map!5:!Interpolation!of!NO2!Emissions!in!the!Bay!Area!

!
California!Cap"and"Trade!HIA,!Page!|!36!
DISCUSSION!OF!ALTERNATIVE!POLICIES!!
While!cap"and"trade!is!the!current!policy!strategy!on!the!table!for!California,!there!are!
alternative!policies!that!were!not!thoroughly!vetted!as!climate!change!mitigation!solutions!for!
the!State.!Two!alternative!scenarios!are!a!carbon!tax 9 !(or!fee 10 ),!which!ARB!mentions!briefly!in!
the!Scoping!plan,!and!command!and!control!regulation.!While!assessing!the!health!impacts!of!
these!alternatives!in"depth!is!outside!of!the!scope!of!this!HIA!the!following!section!briefly!
summarizes!these!policy!options.!!
!
Carbon!Tax/!Fee:!In!general,!a!carbon!tax!is!a!market"based!instrument!that!levies!a!tax!that!is!
proportional!to!the!cost!of!externalities!associated!with!carbon!emissions!released!from!
burning!various!fuels!(Dornbusch!&!Poterba,!1991).!If!set!at!the!appropriate!price!(which!is!
difficult!to!calculate),!a!carbon!tax!would!create!a!situation!where!market!prices!for!fuels!would!
reflect!the!true!societal!costs!of!climate!change!and!incentivize!purchasers!to!make!the!
economically!and!environmentally!responsible!choice.!!That!is,!consumers!would!be!more!likely!
to!purchase!low"carbon!goods!and!services!and!producers!would!invest!in!environmentally!
sound!alternatives!because!they!would!be!the!less!expensive!option!(Schneider!&!Goulder,!
1997).!One!difficulty!with!using!a!carbon!tax!to!mitigate!GHG!emissions!is!that!the!price!
elasticity!associated!with!energy,!transportation!fuels,!and!other!carbon"intensive!goods!are!
relatively!low,!so!the!tax!must!be!set!relatively!high!in!order!to!change!purchasing!behavior.!!
This!would!impose!a!large!cost!burden!on!low"income!households.!
!
Command!&!Control!Regulation:!Alternatively,!command!and!control!regulation!is!a!policy!
mechanism,!in!which!a!government!(federal,!state!or!local)!develops!standards!and!mandates!
that!all!industries!falling!under!the!legislative!measure!adhere!to!these!standards.,!In!the!case!
of!climate!change!this!would!mean!developing!industry!based!performance!standard!(e.g.,!
emissions!limit!per!ton!cement)!and!all!feasible!mitigation!practices!(e.g.,!best!available!
technology!would!be!subject!to!a!cost"effectiveness!test).!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
9
!Refer!to!the!“Carbon!Tax!Health!Impact!Assessment”!for!an!in"depth!analysis!of!how!different!types!of!carbon!
taxes!can!impact!population!health.!
10
!Rather!than!using!the!term!‘tax’!California!would!likely!identify!this!policy!alternative!as!a!carbon!fee!because!of!
the!legal!definitions!of!what!constitutes!a!tax!verses!a!fee.!

!
California!Cap"and"Trade!HIA,!Page!|!37!
!

CAP"AND"TRADE!POLICY!DESIGN!RECOMMENDATIONS!!
Public!health!officers!in!California!have!an!opportunity!to!address!some!design!elements!of!the!
cap"and"trade!policy!that!we!identify!as!triggers!to!potentially!affect!health!determinants!
discussed!in!this!report.!Below!are!the!design!elements!that!will!affect!health!outcomes!and!our!
recommendations!to!California!public!health!officers.!!

Auction/Allocation!of!Allowances!
We!recommend!that!California!transition!to!a!full!auction!of!carbon!allowances.!Full!auction!
would!drive!up!the!price!of!an!allowance!and!create!more!motivation!to!begin!actual!GHG!
emissions!reductions;!giving!away!allowances!does!not!incentivize!industry!to!make!real!
emissions!reductions!decreasing!the!need!for!allowances.!!Second,!the!revenue!stream!could!be!
used!to!support!other!climate!change!mitigation!and!adaptation!efforts!or!to!alleviate!some!of!
the!burden!(economic!or!pollution)!on!vulnerable!populations!and!related!health!impacts!
discussed!above,!e.g.!subsidizing!investment!in!energy!efficient!appliances!for!low"income!
households!to!help!offset!any!increasing!electricity!prices.!If!ARB’s!intent!as!stated!in!AB!32!is!to!
consider!societal!benefits!of!GHG!reductions,!of!improving!air!quality!and!including!public!
health,!at!least!some!revenues!resulting!from!allowance!sales!should!be!used!towards!public!
health"related!projects!that!are!also!related!to!climate!change!mitigation!or!adaptation!
(Rimland,!2008). 11!

Offsets:!Minimized,!Incentivized,!and!Localized!
We!recommend!that!California!minimize!the!use!of!offsets!to!maximize!GHG!emissions!
reductions!in!the!capped!sector!and!within!the!state.!By!minimizing!offset!use,!the!air!quality!
co"benefits!associated!with!GHG!reductions!can!be!kept!within!the!State.!It!is!likely!that!offsets!
will!be!included!in!the!CA!cap"and"trade!program,!however.!Therefore,!we!have!made!
recommendations!regarding!how!offsets!can!be!designed!to!benefit!California!and!public!health!
within!the!State.!California!should!incentivize!offsets!that!reduce!GHGs!and!improve!local!air!
quality,!increase!energy!efficiency!and!renewable!energy!or!improve!health!for!Californians!in!
general!and!vulnerable!populations!in!particular!(Rimland,!2008).!By!keeping!offsets!in!
California!the!state!can!reap!the!benefits!both!economically!and!through!localized!co"benefits!
resulting!from!GHG!emissions!reductions.!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
11
!California!Assembly!Bill!No.!32:!8!

!
California!Cap"and"Trade!HIA,!Page!|!38!
!
Equitable!Participatory!Processes!for!Implementation,!Enforcement!and!Monitoring!
In!order!to!ensure!health!equity!in!climate!change!mitigation,!we!recommend:!(1)!diverse!
stakeholders!must!be!engaged!in!interactive!discourse!and!debate;!(2)!facilitation!and!
mediation!skills!should!be!valorized!as!key!capabilities!to!ensure!that!all!types!of!expertise!are!
recognized!and!valued!in!the!process;!and!(3)!strong!efforts!must!be!made!to!ensure!decision"
making!is!transparent.!Public!Health!officers!can!help!achieve!these!goals!by!working!
collaboratively!with!ARB!and!other!stakeholders!to!refine!methods!for!identifying!local!impacts!
associated!with!mitigation!policies!and!make!sure!those!methods!are!used!in!policy!decision"
making.!Additionally,!they!should!support!community!based!participatory!research!and!
capacity"building!so!that!vulnerable!communities!are!able!to!effectively!participate!in!decision"
making!processes!that!impact!health!as!well.!
!
Allowance!Price!Regulation!!
In!order!to!decrease!price!volatility!that!discourages!industry!from!investing!in!real,!local!
reductions!ensuring!that!cap"and"trade!decreases!air!pollutants,!the!policy!should!allow!carbon!
allowance!banking!and!include!price!floors.!The!Pew!Center!on!Global!climate!Change!listed!
these!two!policy!elements!as!major!“lessons"learned”!from!the!European!Trading!Scheme!(Pew!
Center!on!Global!Climate!Change,!2009).!In!“allowance!banking,”!firms!are!able!to!hold!onto!
carbon!allowances!from!one!compliance!period!to!the!next.!!This!helps!reduce!price!volatility!
because!it!allows!firms!to!make!long"term!plans!(Friedman,!2009;!Pew!Center!on!Global!Climate!
Change,!2009).!Setting!a!price!floor!for!carbon!allowances!would!help!ensure!that!they!do!not!
fall!below!the!price!that!would!spur!technological!change!or!inspire!consumer!behavior!change!
(Roland"Holst,!2009). 12!

Supplementary!Policies!for!“Green!Jobs”!
In!order!for!cap"and"trade!to!create!positive!income!effects!for!vulnerable!populations,!
complementary!policies!encouraging!“green”!jobs!will!need!to!be!implemented!(Apollo!Alliance!
et!al.,!2008;!Jones,!2009).!As!simple!as!market!economics!makes!economic!transition!sound,!
new!industries,!innovators,!and!creators!of!“green”!jobs!will!still!need!a!boost!to!achieve!exit!
velocity!from!the!inertia!of!the!economic!status!quo.!Supplementary!policies!and!programs!can!
also!help!ensure!that!low"income!people!are!prepared!to!enter!this!market.!Examples!of!such!
programs!include!training!workers!to!install!solar!panels,!providing!payroll!tax!exemptions!for!
green!employers!providing!quality!blue"collar!jobs,!or!creating!entrepreneurial!incentives,!or!
engaging!the!community!in!co"generating!participatory!research.!Creating!new!jobs!can!
increase!incomes!for!employees,!increasing!access!to!resources,!health!care,!child!care,!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
12
!For!an!opposing!viewpoint,!see!Grubb,!Michael!and!Neuhoff!(2006)!

!
California!Cap"and"Trade!HIA,!Page!|!39!
education,!and!other!important!health!promoting!factors.!!It!can!also!reduce!stress,!which!
affects!health.!!!

Air!Pollution!
Public!Health!officers!should!consider!advocating!for!direct!regulation!of!the!top!emitters!or!
other!mechanisms!to!ensure!carbon!and!pollution!reductions!occur!within!heavily!impacted!
communities.!The!Scoping!Plan!does!include!a!measure!requiring!facilities!emitting!more!than!
0.5!million!metric!tons!of!CO2e!annually!to!conduct!an!energy!efficiency!audit!of!individual!
combustion!and!other!direct!sources!of!GHGs!and!identify!potential!reduction!opportunities!for!
co"pollutants!and!toxic!air!contaminants,!in!addition!to!GHGs!(ARB,!2009).!However,!we!have!
determined!that!these!criteria!would!only!result!in!the!top!three!emitters!having!to!undergo!
these!audits.!We!believe!that!Public!Health!would!benefit!from!all!of!the!top!emitters!falling!
under!this!requirement!and!recommend!that!Public!Health!officers!support!the!amendment!of!
this!measure!to!include!them!all.!
!
!

!
California!Cap"and"Trade!HIA,!Page!|!40!
!

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ARB.!(2008b).!Climate!change!scoping!plan!appendices!volume!I:!Supporting!documents!and!
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3
Assembly Bill No. 32

CHAPTER 488

An act to add Division 25.5 (commencing with Section 38500) to the


Health and Safety Code, relating to air pollution.

[Approved by Governor September 27, 2006. Filed with


Secretary of State September 27, 2006.]

legislative counsel’s digest


AB 32, Nunez. Air pollution: greenhouse gases: California Global
Warming Solutions Act of 2006.
Under existing law, the State Air Resources Board (state board), the
State Energy Resources Conservation and Development Commission
(Energy Commission), and the California Climate Action Registry all have
responsibilities with respect to the control of emissions of greenhouse
gases, as defined, and the Secretary for Environmental Protection is
required to coordinate emission reductions of greenhouse gases and
climate change activity in state government.
This bill would require the state board to adopt regulations to require the
reporting and verification of statewide greenhouse gas emissions and to
monitor and enforce compliance with this program, as specified. The bill
would require the state board to adopt a statewide greenhouse gas
emissions limit equivalent to the statewide greenhouse gas emissions
levels in 1990 to be achieved by 2020, as specified. The bill would require
the state board to adopt rules and regulations in an open public process to
achieve the maximum technologically feasible and cost-effective
greenhouse gas emission reductions, as specified. The bill would authorize
the state board to adopt market-based compliance mechanisms, as defined,
meeting specified requirements. The bill would require the state board to
monitor compliance with and enforce any rule, regulation, order, emission
limitation, emissions reduction measure, or market-based compliance
mechanism adopted by the state board, pursuant to specified provisions of
existing law. The bill would authorize the state board to adopt a schedule
of fees to be paid by regulated sources of greenhouse gas emissions, as
specified.
Because the bill would require the state board to establish emissions
limits and other requirements, the violation of which would be a crime,
this bill would create a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the state.
Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for
a specified reason.

89

4
Ch. 488 —2—

The people of the State of California do enact as follows:

SECTION 1. Division 25.5 (commencing with Section 38500) is added


to the Health and Safety Code, to read:

DIVISION 25.5. CALIFORNIA GLOBAL WARMING SOLUTIONS


ACT OF 2006

PART 1. GENERAL PROVISIONS

Chapter 1. Title of Division

38500. This division shall be known, and may be cited, as the


California Global Warming Solutions Act of 2006.

Chapter 2. Findings and Declarations

38501. The Legislature finds and declares all of the following:


(a) Global warming poses a serious threat to the economic well-being,
public health, natural resources, and the environment of California. The
potential adverse impacts of global warming include the exacerbation of
air quality problems, a reduction in the quality and supply of water to the
state from the Sierra snowpack, a rise in sea levels resulting in the
displacement of thousands of coastal businesses and residences, damage to
marine ecosystems and the natural environment, and an increase in the
incidences of infectious diseases, asthma, and other human health-related
problems.
(b) Global warming will have detrimental effects on some of
California’s largest industries, including agriculture, wine, tourism, skiing,
recreational and commercial fishing, and forestry. It will also increase the
strain on electricity supplies necessary to meet the demand for summer
air-conditioning in the hottest parts of the state.
(c) California has long been a national and international leader on
energy conservation and environmental stewardship efforts, including the
areas of air quality protections, energy efficiency requirements, renewable
energy standards, natural resource conservation, and greenhouse gas
emission standards for passenger vehicles. The program established by this
division will continue this tradition of environmental leadership by placing
California at the forefront of national and international efforts to reduce
emissions of greenhouse gases.
(d) National and international actions are necessary to fully address the
issue of global warming. However, action taken by California to reduce
emissions of greenhouse gases will have far-reaching effects by
encouraging other states, the federal government, and other countries to
act.

89

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(e) By exercising a global leadership role, California will also position


its economy, technology centers, financial institutions, and businesses to
benefit from national and international efforts to reduce emissions of
greenhouse gases. More importantly, investing in the development of
innovative and pioneering technologies will assist California in achieving
the 2020 statewide limit on emissions of greenhouse gases established by
this division and will provide an opportunity for the state to take a global
economic and technological leadership role in reducing emissions of
greenhouse gases.
(f) It is the intent of the Legislature that the State Air Resources Board
coordinate with state agencies, as well as consult with the environmental
justice community, industry sectors, business groups, academic
institutions, environmental organizations, and other stakeholders in
implementing this division.
(g) It is the intent of the Legislature that the State Air Resources Board
consult with the Public Utilities Commission in the development of
emissions reduction measures, including limits on emissions of greenhouse
gases applied to electricity and natural gas providers regulated by the
Public Utilities Commission in order to ensure that electricity and natural
gas providers are not required to meet duplicative or inconsistent
regulatory requirements.
(h) It is the intent of the Legislature that the State Air Resources Board
design emissions reduction measures to meet the statewide emissions
limits for greenhouse gases established pursuant to this division in a
manner that minimizes costs and maximizes benefits for California’s
economy, improves and modernizes California’s energy infrastructure and
maintains electric system reliability, maximizes additional environmental
and economic co-benefits for California, and complements the state’s
efforts to improve air quality.
(i) It is the intent of the Legislature that the Climate Action Team
established by the Governor to coordinate the efforts set forth under
Executive Order S-3-05 continue its role in coordinating overall climate
policy.

Chapter 3. Definitions

38505. For the purposes of this division, the following terms have the
following meanings:
(a) “Allowance” means an authorization to emit, during a specified
year, up to one ton of carbon dioxide equivalent.
(b) “Alternative compliance mechanism” means an action undertaken
by a greenhouse gas emission source that achieves the equivalent
reduction of greenhouse gas emissions over the same time period as a
direct emission reduction, and that is approved by the state board.
“Alternative compliance mechanism” includes, but is not limited to, a

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flexible compliance schedule, alternative control technology, a process


change, or a product substitution.
(c) “Carbon dioxide equivalent” means the amount of carbon dioxide
by weight that would produce the same global warming impact as a given
weight of another greenhouse gas, based on the best available science,
including from the Intergovernmental Panel on Climate Change.
(d) “Cost-effective” or “cost-effectiveness” means the cost per unit of
reduced emissions of greenhouse gases adjusted for its global warming
potential.
(e) “Direct emission reduction” means a greenhouse gas emission
reduction action made by a greenhouse gas emission source at that source.
(f) “Emissions reduction measure” means programs, measures,
standards, and alternative compliance mechanisms authorized pursuant to
this division, applicable to sources or categories of sources, that are
designed to reduce emissions of greenhouse gases.
(g) “Greenhouse gas” or “greenhouse gases” includes all of the
following gases: carbon dioxide, methane, nitrous oxide,
hydrofluorocarbons, perfluorocarbons, and sulfur hexaflouride.
(h) “Greenhouse gas emissions limit” means an authorization, during a
specified year, to emit up to a level of greenhouse gases specified by the
state board, expressed in tons of carbon dioxide equivalents.
(i) “Greenhouse gas emission source” or “source” means any source, or
category of sources, of greenhouse gas emissions whose emissions are at a
level of significance, as determined by the state board, that its participation
in the program established under this division will enable the state board to
effectively reduce greenhouse gas emissions and monitor compliance with
the statewide greenhouse gas emissions limit.
(j) “Leakage” means a reduction in emissions of greenhouse gases
within the state that is offset by an increase in emissions of greenhouse
gases outside the state.
(k) “Market-based compliance mechanism” means either of the
following:
(1) A system of market-based declining annual aggregate emissions
limitations for sources or categories of sources that emit greenhouse gases.
(2) Greenhouse gas emissions exchanges, banking, credits, and other
transactions, governed by rules and protocols established by the state
board, that result in the same greenhouse gas emission reduction, over the
same time period, as direct compliance with a greenhouse gas emission
limit or emission reduction measure adopted by the state board pursuant to
this division.
(l) “State board” means the State Air Resources Board.
(m) “Statewide greenhouse gas emissions” means the total annual
emissions of greenhouse gases in the state, including all emissions of
greenhouse gases from the generation of electricity delivered to and
consumed in California, accounting for transmission and distribution line
losses, whether the electricity is generated in state or imported. Statewide
emissions shall be expressed in tons of carbon dioxide equivalents.

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(n) “Statewide greenhouse gas emissions limit” or “statewide emissions


limit” means the maximum allowable level of statewide greenhouse gas
emissions in 2020, as determined by the state board pursuant to Part 3
(commencing with Section 38850).

Chapter 4. Role of State Board

38510. The State Air Resources Board is the state agency charged with
monitoring and regulating sources of emissions of greenhouse gases that
cause global warming in order to reduce emissions of greenhouse gases.

PART 2. MANDATORY GREENHOUSE GAS EMISSIONS


REPORTING

38530. (a) On or before January 1, 2008, the state board shall adopt
regulations to require the reporting and verification of statewide
greenhouse gas emissions and to monitor and enforce compliance with this
program.
(b) The regulations shall do all of the following:
(1) Require the monitoring and annual reporting of greenhouse gas
emissions from greenhouse gas emission sources beginning with the
sources or categories of sources that contribute the most to statewide
emissions.
(2) Account for greenhouse gas 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.
This requirement applies to all retail sellers of electricity, including
load-serving entities as defined in subdivision (j) of Section 380 of the
Public Utilities Code and local publicly owned electric utilities as defined
in Section 9604 of the Public Utilities Code.
(3) Where appropriate and to the maximum extent feasible, incorporate
the standards and protocols developed by the California Climate Action
Registry, established pursuant to Chapter 6 (commencing with Section
42800) of Part 4 of Division 26. Entities that voluntarily participated in the
California Climate Action Registry prior to December 31, 2006, and have
developed a greenhouse gas emission reporting program, shall not be
required to significantly alter their reporting or verification program except
as necessary to ensure that reporting is complete and verifiable for the
purposes of compliance with this division as determined by the state
board.
(4) Ensure rigorous and consistent accounting of emissions, and
provide reporting tools and formats to ensure collection of necessary data.
(5) Ensure that greenhouse gas emission sources maintain
comprehensive records of all reported greenhouse gas emissions.
(c) The state board shall do both of the following:

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(1) Periodically review and update its emission reporting requirements,


as necessary.
(2) Review existing and proposed international, federal, and state
greenhouse gas emission reporting programs and make reasonable efforts
to promote consistency among the programs established pursuant to this
part and other programs, and to streamline reporting requirements on
greenhouse gas emission sources.

PART 3. STATEWIDE GREENHOUSE GAS EMISSIONS LIMIT

38550. By January 1, 2008, the state board shall, after one or more
public workshops, with public notice, and an opportunity for all interested
parties to comment, determine what the statewide greenhouse gas
emissions level was in 1990, and approve in a public hearing, a statewide
greenhouse gas emissions limit that is equivalent to that level, to be
achieved by 2020. In order to ensure the most accurate determination
feasible, the state board shall evaluate the best available scientific,
technological, and economic information on greenhouse gas emissions to
determine the 1990 level of greenhouse gas emissions.
38551. (a) The statewide greenhouse gas emissions limit shall remain
in effect unless otherwise amended or repealed.
(b) It is the intent of the Legislature that the statewide greenhouse gas
emissions limit continue in existence and be used to maintain and continue
reductions in emissions of greenhouse gases beyond 2020.
(c) The state board shall make recommendations to the Governor and
the Legislature on how to continue reductions of greenhouse gas emissions
beyond 2020.

PART 4. GREENHOUSE GAS EMISSIONS REDUCTIONS

38560. The state board shall adopt rules and regulations in an open
public process to achieve the maximum technologically feasible and
cost-effective greenhouse gas emission reductions from sources or
categories of sources, subject to the criteria and schedules set forth in this
part.
38560.5. (a) On or before June 30, 2007, the state board shall publish
and make available to the public a list of discrete early action greenhouse
gas emission reduction measures that can be implemented prior to the
measures and limits adopted pursuant to Section 38562.
(b) On or before January 1, 2010, the state board shall adopt regulations
to implement the measures identified on the list published pursuant to
subdivision (a).
(c) The regulations adopted by the state board pursuant to this section
shall achieve the maximum technologically feasible and cost-effective
reductions in greenhouse gas emissions from those sources or categories of

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sources, in furtherance of achieving the statewide greenhouse gas


emissions limit.
(d) The regulations adopted pursuant to this section shall be enforceable
no later than January 1, 2010.
38561. (a) On or before January 1, 2009, the state board shall prepare
and approve a scoping plan, as that term is understood by the state board,
for achieving the maximum technologically feasible and cost-effective
reductions in greenhouse gas emissions from sources or categories of
sources of greenhouse gases by 2020 under this division. The state board
shall consult with all state agencies with jurisdiction over sources of
greenhouse gases, including the Public Utilities Commission and the State
Energy Resources Conservation and Development Commission, on all
elements of its plan that pertain to energy related matters including, but not
limited to, electrical generation, load based-standards or requirements, the
provision of reliable and affordable electrical service, petroleum refining,
and statewide fuel supplies to ensure the greenhouse gas emissions
reduction activities to be adopted and implemented by the state board are
complementary, nonduplicative, and can be implemented in an efficient
and cost-effective manner.
(b) The plan shall identify and make recommendations on direct
emission reduction measures, alternative compliance mechanisms,
market-based compliance mechanisms, and potential monetary and
nonmonetary incentives for sources and categories of sources that the state
board finds are necessary or desirable to facilitate the achievement of the
maximum feasible and cost-effective reductions of greenhouse gas
emissions by 2020.
(c) In making the determinations required by subdivision (b), the state
board shall consider all relevant information pertaining to greenhouse gas
emissions reduction programs in other states, localities, and nations,
including the northeastern states of the United States, Canada, and the
European Union.
(d) The state board shall evaluate the total potential costs and total
potential economic and noneconomic benefits of the plan for reducing
greenhouse gases to California’s economy, environment, and public
health, using the best available economic models, emission estimation
techniques, and other scientific methods.
(e) In developing its plan, the state board shall take into account the
relative contribution of each source or source category to statewide
greenhouse gas emissions, and the potential for adverse effects on small
businesses, and shall recommend a de minimis threshold of greenhouse
gas emissions below which emission reduction requirements will not
apply.
(f) In developing its plan, the state board shall identify opportunities for
emission reductions measures from all verifiable and enforceable
voluntary actions, including, but not limited to, carbon sequestration
projects and best management practices.

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(g) The state board shall conduct a series of public workshops to give
interested parties an opportunity to comment on the plan. The state board
shall conduct a portion of these workshops in regions of the state that have
the most significant exposure to air pollutants, including, but not limited
to, communities with minority populations, communities with low-income
populations, or both.
(h) The state board shall update its plan for achieving the maximum
technologically feasible and cost-effective reductions of greenhouse gas
emissions at least once every five years.
38562. (a) On or before January 1, 2011, the state board shall adopt
greenhouse gas emission limits and emission reduction measures by
regulation to achieve the maximum technologically feasible and
cost-effective reductions in greenhouse gas emissions in furtherance of
achieving the statewide greenhouse gas emissions limit, to become
operative beginning on January 1, 2012.
(b) In adopting regulations pursuant to this section and Part 5
(commencing with Section 38570), to the extent feasible and in
furtherance of achieving the statewide greenhouse gas emissions limit, the
state board shall do all of the following:
(1) Design the regulations, including distribution of emissions
allowances where appropriate, in a manner that is equitable, seeks to
minimize costs and maximize the total benefits to California, and
encourages early action to reduce greenhouse gas emissions.
(2) Ensure that activities undertaken to comply with the regulations do
not disproportionately impact low-income communities.
(3) Ensure that entities that have voluntarily reduced their greenhouse
gas emissions prior to the implementation of this section receive
appropriate credit for early voluntary reductions.
(4) Ensure that activities undertaken pursuant to the regulations
complement, and do not interfere with, efforts to achieve and maintain
federal and state ambient air quality standards and to reduce toxic air
contaminant emissions.
(5) Consider cost-effectiveness of these regulations.
(6) Consider overall societal benefits, including reductions in other air
pollutants, diversification of energy sources, and other benefits to the
economy, environment, and public health.
(7) Minimize the administrative burden of implementing and
complying with these regulations.
(8) Minimize leakage.
(9) Consider the significance of the contribution of each source or
category of sources to statewide emissions of greenhouse gases.
(c) In furtherance of achieving the statewide greenhouse gas emissions
limit, by January 1, 2011, the state board may adopt a regulation that
establishes a system of market-based declining annual aggregate emission
limits for sources or categories of sources that emit greenhouse gas
emissions, applicable from January 1, 2012, to December 31, 2020,
inclusive, that the state board determines will achieve the maximum

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technologically feasible and cost-effective reductions in greenhouse gas


emissions, in the aggregate, from those sources or categories of sources.
(d) Any regulation adopted by the state board pursuant to this part or
Part 5 (commencing with Section 38570) shall ensure all of the following:
(1) The greenhouse gas emission reductions achieved are real,
permanent, quantifiable, verifiable, and enforceable by the state board.
(2) For regulations pursuant to Part 5 (commencing with Section
38570), the reduction is in addition to any greenhouse gas emission
reduction otherwise required by law or regulation, and any other
greenhouse gas emission reduction that otherwise would occur.
(3) If applicable, the greenhouse gas emission reduction occurs over the
same time period and is equivalent in amount to any direct emission
reduction required pursuant to this division.
(e) The state board shall rely upon the best available economic and
scientific information and its assessment of existing and projected
technological capabilities when adopting the regulations required by this
section.
(f) The state board shall consult with the Public Utilities Commission in
the development of the regulations as they affect electricity and natural gas
providers in order to minimize duplicative or inconsistent regulatory
requirements.
(g) After January 1, 2011, the state board may revise regulations
adopted pursuant to this section and adopt additional regulations to further
the provisions of this division.
38563. Nothing in this division restricts the state board from adopting
greenhouse gas emission limits or emission reduction measures prior to
January 1, 2011, imposing those limits or measures prior to January 1,
2012, or providing early reduction credit where appropriate.
38564. The state board shall consult with other states, and the federal
government, and other nations to identify the most effective strategies and
methods to reduce greenhouse gases, manage greenhouse gas control
programs, and to facilitate the development of integrated and
cost-effective regional, national, and international greenhouse gas
reduction programs.
38565. The state board shall ensure that the greenhouse gas emission
reduction rules, regulations, programs, mechanisms, and incentives under
its jurisdiction, where applicable and to the extent feasible, direct public
and private investment toward the most disadvantaged communities in
California and provide an opportunity for small businesses, schools,
affordable housing associations, and other community institutions to
participate in and benefit from statewide efforts to reduce greenhouse gas
emissions.

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PART 5. MARKET-BASED COMPLIANCE MECHANISMS

38570. (a) The state board may include in the regulations adopted
pursuant to Section 38562 the use of market-based compliance
mechanisms to comply with the regulations.
(b) Prior to the inclusion of any market-based compliance mechanism
in the regulations, to the extent feasible and in furtherance of achieving the
statewide greenhouse gas emissions limit, the state board shall do all of the
following:
(1) Consider the potential for direct, indirect, and cumulative emission
impacts from these mechanisms, including localized impacts in
communities that are already adversely impacted by air pollution.
(2) Design any market-based compliance mechanism to prevent any
increase in the emissions of toxic air contaminants or criteria air
pollutants.
(3) Maximize additional environmental and economic benefits for
California, as appropriate.
(c) The state board shall adopt regulations governing how market-based
compliance mechanisms may be used by regulated entities subject to
greenhouse gas emission limits and mandatory emission reporting
requirements to achieve compliance with their greenhouse gas emissions
limits.
38571. The state board shall adopt methodologies for the quantification
of voluntary greenhouse gas emission reductions. The state board shall
adopt regulations to verify and enforce any voluntary greenhouse gas
emission reductions that are authorized by the state board for use to
comply with greenhouse gas emission limits established by the state board.
The adoption of methodologies is exempt from the rulemaking provisions
of the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
38574. Nothing in this part or Part 4 (commencing with Section 38560)
confers any authority on the state board to alter any programs administered
by other state agencies for the reduction of greenhouse gas emissions.

PART 6. ENFORCEMENT

38580. (a) The state board shall monitor compliance with and enforce
any rule, regulation, order, emission limitation, emissions reduction
measure, or market-based compliance mechanism adopted by the state
board pursuant to this division.
(b) (1) Any violation of any rule, regulation, order, emission limitation,
emissions reduction measure, or other measure adopted by the state board
pursuant to this division may be enjoined pursuant to Section 41513, and
the violation is subject to those penalties set forth in Article 3
(commencing with Section 42400) of Chapter 4 of Part 4 of, and Chapter
1.5 (commencing with Section 43025) of Part 5 of, Division 26.

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(2) Any violation of any rule, regulation, order, emission limitation,


emissions reduction measure, or other measure adopted by the state board
pursuant to this division shall be deemed to result in an emission of an air
contaminant for the purposes of the penalty provisions of Article 3
(commencing with Section 42400) of Chapter 4 of Part 4 of, and Chapter
1.5 (commencing with Section 43025) of Part 5 of, Division 26.
(3) The state board may develop a method to convert a violation of any
rule, regulation, order, emission limitation, or other emissions reduction
measure adopted by the state board pursuant to this division into the
number of days in violation, where appropriate, for the purposes of the
penalty provisions of Article 3 (commencing with Section 42400) of
Chapter 4 of Part 4 of, and Chapter 1.5 (commencing with Section 43025)
of Part 5 of, Division 26.
(c) Section 42407 and subdivision (i) of Section 42410 shall not apply
to this part.

PART 7. MISCELLANEOUS PROVISIONS

38590. If the regulations adopted pursuant to Section 43018.5 do not


remain in effect, the state board shall implement alternative regulations to
control mobile sources of greenhouse gas emissions to achieve equivalent
or greater reductions.
38591. (a) The state board, by July 1, 2007, shall convene an
environmental justice advisory committee, of at least three members, to
advise it in developing the scoping plan pursuant to Section 38561 and any
other pertinent matter in implementing this division. The advisory
committee shall be comprised of representatives from communities in the
state with the most significant exposure to air pollution, including, but not
limited to, communities with minority populations or low-income
populations, or both.
(b) The state board shall appoint the advisory committee members from
nominations received from environmental justice organizations and
community groups.
(c) The state board shall provide reasonable per diem for attendance at
advisory committee meetings by advisory committee members from
nonprofit organizations.
(d) The state board shall appoint an Economic and Technology
Advancement Advisory Committee to advise the state board on activities
that will facilitate investment in and implementation of technological
research and development opportunities, including, but not limited to,
identifying new technologies, research, demonstration projects, funding
opportunities, developing state, national, and international partnerships
and technology transfer opportunities, and identifying and assessing
research and advanced technology investment and incentive opportunities
that will assist in the reduction of greenhouse gas emissions. The
committee may also advise the state board on state, regional, national, and

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international economic and technological developments related to


greenhouse gas emission reductions.
38592. (a) All state agencies shall consider and implement strategies
to reduce their greenhouse gas emissions.
(b) Nothing in this division shall relieve any person, entity, or public
agency of compliance with other applicable federal, state, or local laws or
regulations, including state air and water quality requirements, and other
requirements for protecting public health or the environment.
38593. (a) Nothing in this division affects the authority of the Public
Utilities Commission.
(b) Nothing in this division affects the obligation of an electrical
corporation to provide customers with safe and reliable electric service.
38594. Nothing in this division shall limit or expand the existing
authority of any district, as defined in Section 39025.
38595. Nothing in this division shall preclude, prohibit, or restrict the
construction of any new facility or the expansion of an existing facility
subject to regulation under this division, if all applicable requirements are
met and the facility is in compliance with regulations adopted pursuant to
this division.
38596. The provisions of this division are severable. If any provision
of this division or its application is held invalid, that invalidity shall not
affect other provisions or applications that can be given effect without the
invalid provision or application.
38597. The state board may adopt by regulation, after a public
workshop, a schedule of fees to be paid by the sources of greenhouse gas
emissions regulated pursuant to this division, consistent with Section
57001. The revenues collected pursuant to this section, shall be deposited
into the Air Pollution Control Fund and are available upon appropriation,
by the Legislature, for purposes of carrying out this division.
38598. (a) Nothing in this division shall limit the existing authority of
a state entity to adopt and implement greenhouse gas emissions reduction
measures.
(b) Nothing in this division shall relieve any state entity of its legal
obligations to comply with existing law or regulation.
38599. (a) In the event of extraordinary circumstances, catastrophic
events, or threat of significant economic harm, the Governor may adjust
the applicable deadlines for individual regulations, or for the state in the
aggregate, to the earliest feasible date after that deadline.
(b) The adjustment period may not exceed one year unless the
Governor makes an additional adjustment pursuant to subdivision (a).
(c) Nothing in this section affects the powers and duties established in
the California Emergency Services Act (Chapter 7 (commencing with
Section 8550) of Division 1 of Title 2 of the Government Code).
(d) The Governor shall, within 10 days of invoking subdivision (a),
provide written notification to the Legislature of the action undertaken.
SEC. 2 No reimbursement is required by this act pursuant to Section 6
of Article XIII B of the California Constitution because the only costs that

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may be incurred by a local agency or school district will be incurred


because this act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within the
meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII B of
the California Constitution.

89

16
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17
Office of the Governor of the State of California http://gov.ca.gov/index.php?/print-version/executive-order/4484/

EXECUTIVE ORDER S-20-06

10/18/2006

WHEREAS California has taken a leadership role in reducing greenhouse gas emissions through its motor vehicle
emission standards, the Renewable Portfolio Standard that requires 20 percent electricity to be supplied by
renewable power by 2010, world leading energy efficiency standards and programs, solid waste diversion and reuse
programs, expanding the use of alternative fuels and investing in the Hydrogen Highway; and

WHEREAS California collaborated with the United Kingdom and signed an historic agreement to partner and work
collaboratively to address climate change and promote energy diversity; and

WHEREAS California, through the Western Governors’ Association, has urged the President, Congress, the U.S.
Department of State, and other federal agencies to include the interests and expertise of the states as part of any
national debate on the impacts of and efforts to reduce greenhouse gas emissions to ensure fully coordinated
policies; and

WHEREAS on June 1, 2005, Governor Schwarzenegger signed Executive Order


S-3-05 which established the following climate change emission reduction targets for California: By 2010, reduce
emissions to 2000 levels; By 2020, reduce emissions to 1990 levels; and By 2050, reduce emissions to 80 percent
below 1990 levels; and

WHEREAS the Secretary for Environmental Protection, in order to achieve the climate change emission reduction
targets created the Climate Action Team in June 2005. The Climate Action Team is composed of the Secretary of
the Business, Transportation and Housing Agency, Secretary of the Department of Food and Agriculture, Secretary
of the Resources Agency, Chairperson of the Air Resources Board, Chairperson of the State Energy Resources and
Conservation Development Commission and President of the Public Utilities Commission. The Climate Action
Team issued a report to the Governor and the Legislature in March 2006; and

WHEREAS on August 27, 2006, Governor Schwarzenegger signed Assembly Bill 32, Núñez and Pavley, Health and
Safety Code, Division 25.5,, and which requires a cap on greenhouse gas emissions by 2020, mandatory emissions
reporting, and the development of a market-based compliance program to achieve the emissions cap in the most cost
effective and technologically feasible manner with the least impact on California consumers and business; and

WHEREAS numerous studies, including studies conducted by the University of California, Berkeley, Stanford
University, and the Pew Center on Global Climate Change, have determined that market-based mechanisms,
including emissions trading, provide an important means for California to reduce greenhouse gas emissions in the
most efficient and effective manner possible; and the University of California, Berkeley released a report on the
economic benefits of climate action in California and specifically found that regulatory and market-based strategies
are complementary; and

WHEREAS existing law directs the Secretary for Environmental Protection to coordinate greenhouse gas emission
reduction activities in the State, and the requirements contained in Assembly Bill 32, Health and Safety Code,
Division 25.5 will require maximum coordination and input to ensure successful and timely implementation; and

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Office of the Governor of the State of California http://gov.ca.gov/index.php?/print-version/executive-order/4484/

WHEREAS the California Climate Action Registry has developed greenhouse gas emission reporting and/or
reduction protocols that ensure accurate reporting of emissions, and the members of the California Climate Action
Registry have demonstrated their commitment to reducing greenhouse gas emissions.

NOW, THEREFORE, I, ARNOLD SCHWARZENEGGER, Governor of the State of California, by virtue of the
power vested in me by the Constitution and statutes of the State of California, do hereby order effective
immediately:

1. The Secretary for Environmental Protection shall continue to be the statewide leader for California’s greenhouse
gas emission reduction programs, shall work with the Climate Action Team, and shall coordinate with the State Air
Resources Board in the development of all ongoing efforts related to the implementation of greenhouse gas emission
reduction policies and Assembly Bill 32, Health and Safety Code, Division 25.5; and

2. The Secretary for Environmental Protection shall coordinate with the State Air Resources Board, State Energy
Resources and Conservation Development Commission, Public Utilities Commission, Integrated Waste Management
Board, Resources Agency, Department of Forestry and Fire Protection, Department of Water Resources, Department
of Food and Agriculture, Business, Transportation and Housing Agency, and State and Consumer Services Agency
to further implement the recommendations in the March 2006 Climate Action Team report; and

3. The Secretary for Environmental Protection shall create a Market Advisory Committee of national and
international experts to make recommendations to the State Air Resources Board on or before June 30, 2007, on the
design of a market-based compliance program; and

4. The State Air Resources Board shall work with the Secretary for Environmental Protection and the Climate
Action Team to bring both regulatory measures and market-based mechanisms forward on a concurrent and
expeditious schedule; and

5. The State Air Resources Board shall collaborate with the Secretary for Environmental Protection and the Climate
Action Team to develop a comprehensive market-based compliance program with the goal of creating a program that
permits trading with the European Union, the Regional Greenhouse Gas Initiative and other jurisdictions. The State
Air Resources Board shall consider the recommendations of the Market Advisory Committee in the development of
the market-based compliance program; and

6. The Secretary for Environmental Protection will oversee the transition of the greenhouse gas emission inventory
development responsibilities and the California Climate Action Registry responsibilities from the State Energy
Resources and Conservation Development Commission to the State Air Resources Board; and

7. The State Air Resources Board in coordination with the Secretary for Environmental Protection shall work with
the California Climate Action Registry to develop reporting and reduction protocols, including reporting and
reduction protocols for local governments and agriculture, and shall support the California Climate Action Registry
efforts to develop a multi-state registry; and

8. The State Air Resources Board shall consult with the California Public Utilities Commission and the State Energy
Resources and Conservation Development Commission as they develop regulations that will affect electricity and
natural gas providers in order to avoid duplicative or inconsistent regulatory requirements. The Secretary for
Environmental Protection will facilitate and coordinate these efforts; and
9. The Secretary for Environmental Protection and the Climate Action Team shall coordinate with the State Air
Resources Board to develop an economic analysis of efforts to reduce greenhouse gas emissions, including a
cost-effectiveness analysis; and

10. The Secretary for Environmental Protection shall coordinate with the Climate Action Team to develop a plan by
June 1, 2008, which is based on input from the Economic and Technology Advancement Advisory Committee, that
will incentivize investment and compliance, enhance research, and develop and demonstrate greenhouse gas

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Office of the Governor of the State of California http://gov.ca.gov/index.php?/print-version/executive-order/4484/

emission reduction technologies through a variety of options including, but not limited to: research tax credits,
monetary and non-monetary incentives, public/private partnerships, investment tax credits, and accelerated
depreciation.

This Order is not intended to create, and does not create, any right or benefit, whether substantive or procedural,
enforceable at law or in equity against the State of California, its agencies, departments, entities, officers, employees,
agents, or any other person.

I FURTHER DIRECT that as soon as hereafter possible, this Order be filed in the Office of the Secretary of State
and that widespread publicity and notice be given to this Order.

IN WITNESS WHEREOF I have hereunto set my hand and caused the Great Seal of the
State of California to be affixed this 17th day of October 2006.

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21
Climate Change
Draft Scoping Plan

Public Health Analysis


Supplement
Pursuant to AB 32
The California Global Warming Solutions Act of 2006

Prepared by
the California Air Resources Board
for the State of California

Arnold Schwarzenegger
Governor

Linda S. Adams
Secretary, California Environmental Protection Agency
Mary D. Nichols
Chairman, Air Resources Board
James N. Goldstene
Executive Officer, Air Resources Board

22
Table of Contents

Executive Summary

Attachment A: Public Health and Environmental Benefits of Draft Scoping Plan Measures

Attachment B: Regional Assessment of Public Health Benefits of Draft Scoping Plan: South
Coast Air Basin

Attachment C: Community Level Assessment of Public Health Benefits of Draft Scoping Plan:
Wilmington Example

Attachment D: Method Used to Quantify Health benefits of Draft Scoping Plan Co-Pollutant
Emission Reductions: Quantification of the Health Impacts and Economic
Valuation of Air Pollution from “Ports and Goods Movement in California from
Proposed Emission Reduction Plan for Ports and Goods Movement In California”
(March 2006)

Attachment E: Overview of Regulatory Programs for Criteria and Toxic Air Pollutants in
California

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Executive Summary

Overview

AB 32 requires the California Air Resources Board (ARB) to evaluate the environmental and public
health impacts of the Scoping Plan. This analysis is focused primarily on the quantification of
public health benefits from air quality improvements that would result from implementation of the
Draft Scoping Plan. Unlike traditional pollutants, and toxic emissions, global warming pollutants
do not typically have localized impacts. At ambient levels, carbon dioxide (which makes up over
80 percent of global warming pollutants in California) has no direct environmental or public health
consequences. Greenhouse gas pollutants emitted in another state or country have the same
potential to damage our public health and the environment as do climate change pollutants emitted
within California. Many of the measures aimed at reducing global warming pollutants also provide
co-benefits to public health and California’s natural resources.

Analyses of the environmental and cumulative impacts of the Plan will be undertaken in the
California Environmental Quality Act (CEQA) document for the Proposed Scoping Plan. As the
Scoping Plan is implemented, and specific measures are developed, ARB will conduct further
CEQA analyses, including cumulative and multi-media impacts. ARB recognizes that the adoption
of the Scoping Plan will launch a variety of regulatory proceedings in many different venues. ARB
will work closely with other agencies including the Office of Planning and Research, the California
Environmental Protection Agency, Resources Agency, the California Integrated Waste Management
Board, the Department of Public Health, the Office of Environmental Health Hazard Assessment,
the State Water Resources Control Board, the Department of Toxic Substances Control, the
Department of Water Resources, the Board of Forestry, the Department of Fish and Game, and
California Energy Commission and others, to identify and address potential multi-media
environmental impacts early in the regulatory development process.

California’s actions to reduce greenhouse gas emissions will help transition the State to new
technologies, improved efficiencies, and land use patterns also necessary to meet air quality
standards and other public health goals. California’s challenging public health issues associated
with air pollution are already the focus of comprehensive regulatory and incentive programs. These
programs are reducing smog forming pollutants and toxic diesel particulate matter at a rapid pace.
However, to meet increasingly stringent air quality standards and air toxics reduction goals,
transformative changes are needed in the 2020 timeframe and beyond. Implementation of AB 32,
the Global Warming Solutions Act of 2006, will provide additional support to existing state efforts
devoted to protecting and improving public health.

Key Public Health Benefits of the Preliminary Recommendation of the Draft Scoping Plan

• Approximately 320 premature deaths statewide would be avoided in 2020 under the preliminary
recommendation in the Draft Scoping Plan. This is in addition to an estimated 3,700 avoided
premature deaths in 2020 due to existing and planned California air quality programs.
• Almost 9,000 incidences of asthma and lower respiratory symptoms, and 53,000 work loss days
would be avoided with the implementation of the preliminary recommendation in the Draft
Scoping Plan.

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The primary direct public health benefits of the Draft Scoping Plan are reductions in smog forming
emissions and toxic diesel particulate matter. The most significant reductions are of oxides of
nitrogen (NOx), which forms both ozone and particulate pollution (PM2.5), and directly emitted
PM2.5, which includes diesel particulate matter. This supplemental analysis focuses on PM2.5
impacts, and quantifies 2020 public health benefits of the Draft Scoping Plan in terms of avoided
premature deaths, hospitalizations, respiratory effects, and lost work days. Additional benefits
associated with the reductions in ozone forming emissions were not quantified since statewide 2020
photochemical modeling is not available.

The estimated public health benefits of the Draft Scoping Plan are above and beyond the much
greater benefits of California’s existing programs, which are reducing air pollutant emissions every
year. This continuing progress is the result of California’s plans for meeting air quality standards
(“State Implementation Plans” or SIPs), reducing emissions from goods movement activities, and
addressing health risk from diesel particulate matter. These programs address both existing and
new sources of air pollution, taking into account population and economic growth. The additional
benefits of the Draft Scoping Plan in 2020 are significant, and in the longer term, can be expected to
increase with further reductions in fossil fuel combustion, the primary basis for the estimated public
health benefits.

The recommended measures in the Draft Scoping Plan that reduce smog forming (“criteria”)
pollutants are shown in Table 1 along with the estimated reductions.1 Statewide, these measures
would reduce approximately 56 tons per day of NOx and 12 tons per day of PM2.5 in 2020. As
shown in Table 2, this equates to an estimated public health benefit of 320 avoided premature
deaths statewide. In comparison, reductions in PM2.5 from California’s existing programs and
2007 SIP measures are estimated to result in 3,700 avoided premature deaths statewide in the same
timeframe.

1
Table 1 does not include the criteria pollutant co-benefits of additional GHG reductions that would be achieved from
the proposed cap-and-trade regulation because we cannot predict in which sectors they would be achieved.

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Table 1: Statewide Criteria Pollutant Emission Reductions in 2020 from
Draft Scoping Plan Preliminary Recommendation 2
(tons per day)

Measure NOx PM2.5


Light-Duty Vehicle
• Pavley 1 and Pavley 2 GHG Standards 1.6 1.5
• Vehicle Efficiency Measures
Goods Movement Efficiency Measures 16.6 0.6
Medium and Heavy-Duty Vehicle GHG Emission
Reduction
• Aerodynamic Efficiency 5.6 0.2
• Hybridization
• Engine Efficiency
Local Government Actions and Regional Targets 3.5 0.6
Energy Efficiency and Conservation (Electricity) 7.0 4.0
Energy Efficiency and Conservation (Natural Gas) 10.4 0.8
Solar Water Heating 0.3 0.03
Million Solar Roofs 1.0 0.6
Renewables Portfolio Standard 9.8 3.7
Total 56 12

Table 2: Estimates of Statewide Health Benefits in 2020

Health Benefits of Health Benefits of Preliminary


Existing Measures Recommendation in the Draft
and 2007 SIP Scoping Plan (Transportation and
Health Endpoint Electricity and Natural Gas
Sectors)
mean mean
Avoided Premature Death 3,700 320
Avoided Hospital Admissions for
770 67
Respiratory Causes
Avoided Hospital Admissions for
1,400 120
Cardiovascular Causes
Avoided Asthma and Lower
110,000 8,800
Respiratory Symptoms
Avoided Acute Bronchitis 8,700 730
Avoided Work Loss Days 620,000 53,000
Avoided Minor Restricted Activity 3,600,000 310,000
Days

2
Table 1 does not include the criteria pollutant co-benefits of additional GHG reductions that would be achieved from
the proposed cap-and-trade regulation because we cannot predict in which sectors they would be achieved.

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In addition to the quantified health benefits, our analysis indicates that implementation of the Draft
Scoping Plan can deliver other public health benefits as well. These include potential health
benefits associated with local and regional transportation-related greenhouse gas targets that can
facilitate greater use of alternative modes of transportation such as walking and bicycling. These
types of moderate physical activities reduce many serious health risks including coronary heart
disease, diabetes, hypertension and obesity.3 Finally, it is important to note that the steps California
is taking to address global warming, along with actions by other regions, states, and nations, will
help mitigate the public health effects of heat waves, more widespread incidence of illness and
disease, and other potentially severe impacts.

The measures in the Draft Scoping Plan are designed primarily to help spur the transition to a lower
carbon economy. However, in addition to improving air quality, these measures can also improve
California’s environmental resources including land, water, and native species. Land resources will
be affected by regional transportation-related targets leading to improved land use planning, and
forest carbon sequestration targets which can result in better stewardship of California lands and
reduce wildfire risk. A number of conservation measures will aid in effective management of the
State’s precious water resources. Demand for waste disposal and hazardous materials should
decrease as measures to encourage recycling and reuse transform our wastes into fuel, energy, and
other useful products are implemented. Additional analysis of the way that implementation of the
Scoping Plan will impact these environmental resources will be conducted as we proceed.

Approach

AB 32 requires ARB to “evaluate the total potential costs and total potential economic and
noneconomic benefits of the [Scoping Plan] to California’s economy, environment and public
health, using the best available economic models, emission estimation techniques and other
scientific methods” (Health and Safety Code (HSC) §38562(c)). This supplemental analysis
focuses primarily on the quantifiable air quality-related public health benefits of the Draft Scoping
Plan. As noted, further analyses of the environmental impacts of the plan will be undertaken as part
of our requirement to comply with the California Environmental Quality Act and we will also be
analyzing the environmental impacts of specific measures in the plan they are further developed in
the regulatory process.

We quantified the potential reductions of NOx and PM2.5 from implementation of the preliminary
recommendations, and the public health benefits associated with the resulting potential air quality
improvement. The methodology used to evaluate the public health benefits of the emission
reductions is similar to the methodology used in ARB’s 2006 Goods Movement Emission
Reduction Plan (GMERP) and is included in Attachment D as a reference. This methodology is
based on a peer-reviewed methodology developed by the U.S. Environmental Protection Agency
(EPA). ARB augmented EPA’s methodology by incorporating the result of new epidemiological
studies relevant to California’s population, including regionally specific studies, as they became
available.

AB 32 directs ARB to conduct several levels of analysis as we proceed through the development
and implementation of a comprehensive greenhouse gas reduction strategy. As part of the Scoping

3
Attachment A contains a reference list of studies documenting the public health benefits of alternative transportation.

5
27
Plan development, we are required to assess both the economic and non-economic impacts of the
plan as noted above. Additionally, AB 32 requires ARB to undertake additional analysis at the time
of adoption of regulations, including market-based compliance mechanisms.

Although we are not yet at the stage of regulatory development and adoption, in this analysis we
have conducted a preliminary evaluation of the potential air quality-related public health impacts
associated with market-based regulations in the Draft Scoping Plan based on an example
community level emissions analysis. As regulations that rely on market-based compliance
mechanisms are further developed for consideration by the Board, more detail about the specific
regulatory proposals will be developed, allowing ARB to more closely evaluate the potential for
direct, indirect and cumulative impacts.

Existing Programs for Air Quality Improvement in California

This analysis presents public health benefits of the Draft Scoping Plan that are in addition to the
benefits of California’s comprehensive air quality programs to meet health-based standards and
reduce health risk from air toxics. It is also important to note that under both a “business-as-usual”
scenario and under the implementation of the Draft Scoping Plan, the population and economy of
California are projected to continue to grow.4 New businesses and industries will continue to site in
California, bringing both economic opportunity and potential environmental impacts. Federal, state,
and local laws and regulations have established requirements to ensure that new and modified
sources of pollution are carefully evaluated and that significant impacts are mitigated. Emissions
from existing businesses are also tightly controlled by local air pollution control districts. Statewide
programs are in place to reduce emissions from cars, trucks, and off-road equipment, along with
smog check, cleaner gasoline and diesel fuels, and regulations to reduce evaporative emissions from
consumer products, paints, and refueling. Additional information about the existing regulatory
framework for sources of air pollution is provided in Attachment E.

It is important to evaluate the air quality and public health benefits of the Draft Scoping Plan in the
context of the State’s on-going air quality improvement efforts. California’s long-standing air
pollution control programs have substantially improved air quality in the state, and will continue to
do so in the future. By 2020, these programs will deliver reductions in statewide NOx emissions of
441 tons per day and direct fine particle emission reductions of 34 tons per day. Through 2020
three key ARB efforts will deliver deep cuts in air pollutant emissions despite continuing growth:

• Diesel Risk Reduction Plan


• Goods Movement Emission Reduction Plan
• 2007 State Implementation Plan

Measures in these plans will result in the accelerated phase-in of cleaner technology for virtually all
of California’s diesel engine fleets including trucks, buses, construction equipment, and cargo
handling equipment at ports. Adoption and implementation of these and other measures are critical
to achieving clean air and public health goals statewide.

4
Economic Analysis Supplement to the Draft Scoping Plan, September 2008.

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The U.S. Environmental Protection Agency has set a new, more stringent, national ambient air
quality standard for ozone that will have compliance deadlines well past 2020 for the most severely
impacted areas like southern California.5 The unmitigated impacts of climate change will make it
harder to meet this standard and to provide healthful air to Californians.

Summary and Results

The Draft Scoping Plan includes an emissions and public health analysis based on anticipated
reductions in fuel use associated with the recommended sector-specific measures. The analyses in
this evaluation update and replace the Draft Scoping Plan analysis, providing a more detailed
statewide evaluation of each recommended measure, as well as examples of potential regional and
community level impacts, primarily in terms of air quality impacts.

1. Statewide Analysis

ARB’s statewide environmental evaluation of the benefits of the preliminary recommendation in the
Draft Scoping Plan is provided in Attachment A. For this evaluation, ARB examined each
recommended measure in the transportation, energy, and industrial sector to determine the potential
for impacts on air, land, water, native species and biological resources, and waste and hazardous
materials. As noted, the main focus of this analysis is on air quality. To the extent feasible, ARB
quantified estimated emissions reductions in criteria pollutants associated with each recommended
measure except cap and trade. Reductions in NOx and PM2.5 were used to estimate public health
benefits. The estimated statewide reductions are 56 tons per day of NOx and 12 tons per day of
PM2.5 from recommended measures in the transportation, energy, and industrial sectors. Further
analysis of the potential criteria pollutant benefits of a cap-and-trade program would be done as part
of regulatory development.

2. Regional Assessment: South Coast Air Basin Example

In order to assess potential benefits of the Draft Scoping Plan on a regional level, ARB evaluated
associated criteria pollutant reductions in the South Coast Air Basin as an example case. The
analysis is described in more detail in Attachment B. Existing programs will reduce current NOx
emissions by almost 50 percent in 2020. With the new 2007 SIP measures, NOx emissions will be
reduced almost 60 percent. Because of the large population and high pollutant concentrations in
this region, greater benefits occur from each ton of pollution reduced. The estimated public health
benefits of the Draft Scoping Plan for the South Coast region are shown in Table 3. The significant
public health benefits in this region are largely attributed to the additional reductions in PM2.5.

5
http://www.epa.gov/air/ozonepollution/actions.html.

7
29
Table 3: Estimated Health Benefits of Existing Program, 2007 SIP, and Draft Scoping Plan
In the South Coast Air Basin, 2020

Additional
Benefits from Additional
Co-Benefits
Health Impacts / Scenario Existing Benefits from
from Draft
Program 2007 SIP
Scoping Plan
Premature Deaths Avoided 1,600 920 160
Hospitalizations Avoided – Respiratory 330 200 33
Hospitalizations Avoided – Cardiovascular 610 360 62
Asthma & Lower Respiratory Symptoms
46,000 28,000 4,700
Avoided
Acute Bronchitis Avoided 3,800 2,300 390
Work Loss Days Avoided 270,000 160,000 28,000
Minor Restricted Activity Days Avoided 1,600,000 940,000 160,000

3. Community Level Assessment: Wilmington Example

We also conducted a preliminary evaluation of the potential air quality impacts of the Draft Scoping
Plan in the community of Wilmington as an illustration of the potential for localized impacts. This
analysis is provided in Attachment C. Wilmington is in southern Los Angeles County and includes
a diverse range of stationary and mobile sources including the ports of Los Angeles and
Long Beach, railyards, major transportation corridors, refineries, power plants, and other industrial
and commercial operations. Like the regional analysis, additional emission reductions from the
2007 SIP were estimated and show significant reductions in Wilmington by 2020 – approximately a
45 percent reduction in NOx and a 40 percent reduction in directly-emitted PM2.5. Mobile source
emissions are projected to continue to be proportionately greater than stationary source emissions in
2020 even as mobile source emissions decline.

For this assessment, ARB evaluated criteria pollutant emission reductions in the Wilmington study
area assuming that the source-specific quantified measures are implemented. It was further
assumed that the non-source specific program elements such as the proposed cap-and-trade program
result in a 10 percent reduction in fuel combustion by affected sources within the study area. For
example, it is estimated that industrial sources would achieve greenhouse gas emission reductions
through efficiency measures that reduce on site fuel use by 10 percent either in response to a cap
and trade program, or due to the results of the facility energy efficiency audits. While it is likely
that the actual onsite reductions will differ across individual facilities from the assumed uniform ten
percent reduction6, the analysis identifies how reductions at these facilities affect the overall level of
co-benefits.

6
The reductions at any one facility could be much greater or lesser than 10 percent For example very small or no
reductions might occur because available cost-effective industrial emission reductions have already been implemented
at a particular site.

8
30
The estimated NOx co-benefit of about 1.7 tons per day is small relative to the projected reductions
of 24 tons per day that will occur as a result of the SIP and other measures. For example, an 8 ton
per day NOx reduction is expected from cleaner port trucks. In comparison, the potential NOx
benefit from a 10 percent efficiency improvement in major goods movement categories is estimated
at about 1.5 tons per day. The estimated PM2.5 co-benefits, on the order of 0.12 tons per day, are
also small relative to the projected reductions of 2.3 tons per day that will occur as a result of the
SIP and other measures. Approximately 30 percent (0.04 ton per day) of the PM 2.5 co-benefit
reduction is associated with assumed energy efficiency measures at the four large refineries in the
study area, while another 30 percent would occur due to a 10 percent efficiency improvement by
goods movement sources.

The co-benefit emission reductions in the study area would produce health benefits for the
population in the study area (approximately 300,000 area residents) as well as regional benefits
among a much larger population. Health benefits due to reductions in NOx are mostly at the
regional levels, since NOx emissions have usually travelled some distance before they are
transformed into PM via atmospheric reactions. Point source combustion PM emissions persist in
the atmosphere and increase exposures both in the area where they are emitted and broadly
throughout the region. Based on previous modeling studies of the impact of port and rail yard PM
emissions in the South Coast Air Basin conducted by the ARB, PM exposures will be reduced far
beyond the study area, and a majority of the health benefits are expected to occur in areas outside of
the Wilmington community.

Using the previously described methodology that correlates emission reductions in the air basin
with expected health benefits7 there would be approximately 11 avoided premature deaths. As the
application of the general methodology for estimating health impacts in small populations and small
geographic areas is still under development, the results in this section are presented for comparative
purposes only.

Conclusion

The Draft Scoping Plan presents a Preliminary Recommendation for reducing California’s
greenhouse gas emissions to 1990 levels by the year 2020. This analysis provides an initial
assessment of the statewide public health benefits, with a focus on air quality, associated with
implementation of the preliminary recommendation. The analysis indicates that implementation of
AB 32 will deliver significant additional public health benefits beyond those that will be achieved
by California’s comprehensive air quality programs. The analysis also indicates that additional
environmental impacts associated with implementation of the plan can be positive.

As noted, we will work with partner agencies and departments to conduct additional analyses of the
measures recommended in the Scoping Plan as we move forward. These analyses will incorporate
any new information that we discover as we proceed to ensure that a full assessment of the impacts
of all of the measures in the Scoping Plan is conducted before they are implemented.

We are requesting comments on this Supplement as soon as possible, recognizing that comments on
this document will not be able to be reflected in the October 3rd release of the Proposed Scoping

7
See Attachment D

9
31
Plan. The October 3rd Proposed Scoping Plan will contain a public health assessment of the final
staff recommendation and it will be available for additional public comment.

Comments received on this document will be considered along with all other comments about the
measures and the public health analysis in the Proposed Scoping Plan that will be considered by the
Board at its November hearing.

Staff will provide an update at the November Board meeting as needed to respond to comments
received on the analysis that is included with October 3rd Proposed Scoping Plan. The public health
and environmental impact of the proposal will be one of a number of factors that the Board will
weigh when it considers adoption of the Proposed Plan at its November hearing.

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The greenhouse gases that can be quantified into CO2e using the CACP software are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), PFCs, HFCs
and SF6. The co-pollutants included in the analysis are 5 of the EPA regulated criteria air pollutants: carbon monoxide (CO), nitrogen dioxide (NOx), sulfur dioxide
(SOx), volatile organic compounds (VOC), and particulate matter (PM 10).{{260 ICLEI--Local Governments for Sustainability 2008}} These are by no means the
only criteria air pollutants associated with GHG emissions, nor are they the only ones considered to impact human health. Increasingly, the EPA and local air
districts are monitoring PM 2.5 and ozone (O3) which are not included in the ICLEI quantification method.

The CACP software quantification is based on many coefficients to convert fuel used to co2e and criteria air pollutants. These data were collected and analyzed by
STAAPA/ALAPCO consultants, the EPA, and ICLEI staff in the year 2000. There are assumptions embedded within each coefficient set about the fuel efficiency
of the apparatus using the fuel, and for electricity producers which mix of fuels they use. For California, the appropriate grid coefficient set is Western States 13,
which is an average of the large utilities’ fuel portfolios within the state (PG&E, SD&E, Southern California Edison, Western Area Power Authority, et al). It is
possible to create utility specific coefficient sets, but for this state-wide analysis we will use the average grid coefficient set included. For a more detailed
description of the methodologies please see the CACP Users’ Manual and ICLEI Draft Protocol.

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