The California Global Warming Solutions Act of 2006 (AB 32)

The effort to control greenhouse gas (“GHG”) emissions as a means of addressing climate change is poised to become the most significant regulatory development of the 21st century. The proliferation of state, federal and international legislation regulating GHG emissions is likely to be pervasive, and will have profound effects throughout the U.S. economy in almost every field, particularly energy production and consumption, agriculture, manufacturing, transportation and construction.

California, not surprisingly, is leading the way with the newly enacted California Global Warming Solutions Act of 2006 (“AB 32”), which became effective January 1, 2007. This ambitious legislative program aims to reduce GHG emissions in California to 1990 levels by 2020 and charges the California Air Resources Board (“CARB”) with monitoring and regulating all sources of emissions of GHGs—defined to include carbon dioxide, methane, nitrous oxide, hydrofluorcarbons, perfluorocarbons, and sulfur hexafluoride. Every business in California that emits GHGs is potentially affected by this far-reaching legislation.

In the coming months, CARB will establish standards and baselines for emissions reduction targets, as well as develop the framework governing industry reporting and verification of GHG emissions. Equally important, it is widely expected that CARB will institute a carbon cap and trade system that will allow companies to sell carbon emission credits where they are able to achieve reductions below pre-determined emissions baselines. AB 32 requires CARB to provide for public participation and input into the development of this new regulatory regime. Indeed, CARB has already scheduled a number of such workshops and other events for this year (along with reportedly hiring some additional 200 staff as part of this initiative). Industry should act now to protect its interests as well as benefit from the economic opportunities AB 32 presents.

Heller Ehrman is assisting clients in this rapidly evolving area through its Climate Change Practice, where interdisciplinary teams of attorneys with environmental, energy and other expertise have been brought together to address the issues companies need to anticipate. For more information about AB 32 and how it may apply to you, please contact any of the environmental contacts above or go to Summary of California AB 32 to read the full article.

The California Global Warming Solutions Act of 2006 (AB 32)