California Entities Release New Reports on Climate Change and Sustainable Development

Two prominent California entities, the California Air Pollution Control Officers Association (CAPCOA) and the California Energy Commission (CEC), recently released noteworthy reports addressing climate change and sustainable development. Both reports are valuable resources for California actors and their counterparts across the country working to create legal and policy frameworks to deal with global climate change. Because California is recognized as a leader for its efforts to analyze and mitigate the effects of climate change and promote sustainable development, the reports also provide critical insight into likely future national trends in these areas.

I. The CAPCOA Report Provides a Valuable Resource for Quantifying Greenhouse Gas Mitigation Measures

In August 2010, the California Air Pollution Control Officers Association released a report titled Quantifying Greenhouse Gas Mitigation Measures (the “CAPCOA Report”).¹ The CAPCOA Report is a valuable resource that provides project proponents, government bodies and members of the public with information and reliable methods to quantify project-level mitigation of greenhouse gas (GHG) emissions.² Measures included in the CAPCOA Report can also be adapted for use outside California.

Background

The new CAPCOA Report contains calculation methodologies for nearly 100 GHG mitigation strategies associated with land use, transportation, energy use and other related measures.³ It is a follow-up to two earlier CAPCOA reports, CEQA and Climate Change (January 2008) and Model Policies for Greenhouse Gases in General Plans (June 2009). While mitigation measures in the new CAPCOA Report generally correspond to those addressed in previous CAPCOA documents, the 2010 Report is noteworthy for its extensive and detailed treatment of quantification methods.

The CAPCOA Report fills critical gaps in the current GHG quantification framework. Prior to its release, standardized quantification methods were not available for many measures commonly implemented to mitigate GHG impacts. In preparing the CAPCOA Report, CAPCOA specifically focused on these strategies, with the goal of providing accurate and reliable quantification methods for popular GHG mitigation measures. Factors used by CAPCOA to screen measures for inclusion in the CAPCOA Report include: (1) feasibility of quantifying emissions; (2) availability of robust and meaningful data on which to base quantifications; and (3) whether the measures, alone or combined with other measures, would result in appreciable GHG emission reductions.

It is important to note that the CAPCOA Report does not provide policy guidance or dictate how a local government should address issues relating to quantification of GHG emissions. Furthermore, CAPCOA does not intend to suggest that GHG mitigation measures not included in the CAPCOA Report should not be considered or are not effective or quantifiable. Ultimately, a government agency makes the final determination about whether to rely on a specific quantification method.

Opportunities for Application of the CAPCOA Report

CAPCOA’s primary focus in preparing its report was quantification of projects and mitigation under the California Environmental Quality Act (CEQA). CEQA now requires (1) a determination as to whether the GHG emissions resulting from a project may have a significant effect on the environment, and (2) consideration of feasible means of mitigating the significant effects of GHG emissions.⁴ (Additional details regarding the requirements are available in Holland & Knight’s May 7, 2010 alert, California Appeals Court Calls for Clear Analyses in First Decision on Greenhouse Gas Reviews under CEQA.) Accordingly, measures in the CAPCOA Report can be used to quantify GHG emissions to gauge the significance of impacts from GHG emissions, and to evaluate the effectiveness of GHG mitigation measures.

The CAPCOA Report may be especially useful for analyzing the significance of a proposed project’s GHG emissions. (Additional information on this topic is available in Holland & Knight’s June 15, 2010 alert, Bay Area Air Quality Management District Adopts Groundbreaking Greenhouse Gas and Toxic Air Contaminant Thresholds.) Under the CEQA Guidelines, a lead agency assessing the significance of impacts from GHG emissions has discretion to determine the threshold of significance that applies to the project.⁵ There is an emerging consensus among agencies that consistency with the emission-reduction mandates of Assembly Bill (AB) 32, the California Global Warming Solutions Act of 2006, is an appropriate benchmark for determining whether a project would result in a significant impact. AB 32 requires a reduction of statewide GHG emissions to 1990 levels by 2020, which the California Air Resources Board (CARB) determined translates into an approximate 29 percent reduction from “business as usual” projections.⁶ As applied to CEQA analysis, a proposed project’s compliance with AB 32 emission reduction standards would support a conclusion that the project does not have significant climate change impacts. Quantification methods in the CAPCOA Report offer a reliable tool for demonstrating the extent to which a proposed project’s GHG mitigation measures achieve AB 32 GHG emission reduction targets.

As noted by CAPCOA, the Report’s quantification methods may also be used in contexts other than CEQA project-level analysis. For example, certain methods in the CAPCOA Report could be applied to assess plan-level GHG emission impacts of measures included in environmental planning documents. Importantly, the CAPCOA Report was designed to be compatible with and useful in implementation of California Senate Bill (SB) 375, which requires alignment of regional land use, transportation, housing and GHG reduction planning efforts. The CAPCOA Report could also be used to quantify GHG reduction measures included in General Plans and Climate Action Plans.

Finally, quantification methods contained in the CAPCOA Report can be applied in the areas of regulatory compliance (e.g., command-and-control regulations, permitting, and cap-and-trade) and reductions for credit (e.g., off-site mitigation, mitigation funds and emissions trading).

As the climate change legal and regulatory landscape continues to evolve, additional opportunities to use the CAPCOA Report as a tool for quantifying GHG mitigation measures will inevitably emerge. Accordingly, the CAPCOA Report has the potential to be embraced by diverse actors including government bodies, environmental consultants, developers and members of the public as a reliable, accurate and standardized method for quantifying GHG mitigation measures in connection with projects and plans located both within and outside of California.

Mitigation Strategies

The CAPCOA Report includes quantification methods for a total of 96 mitigation measures that fall into nine broad categories. The following list includes examples of the type of mitigation measures contained in each category:

• Energy: Building Energy Use, Lighting, Alternative Energy Generation
• Transportation: Land Use/Location, Parking, Commute Trip Reduction Programs
• Water: Water Supply, Water Use
• Area Landscaping: Landscaping Equipment
• Solid Waste: Recycling and Composting
• Vegetation: Urban Tree Planting, New Vegetated Open Space
• Construction: Construction Equipment
• Miscellaneous: Off-Site Mitigation, Use of Local and Sustainable Building Materials
• General Plans: Fund Incentives for Energy Efficiency, Local Farmer’s Market

Several features of the CAPCOA Report enhance its accessibility and reliability as a tool for quantifying GHG emissions.

A significant portion of the CAPCOA Report is dedicated to “Fact Sheets.” The CAPCOA Report includes a Fact Sheet for each individual mitigation measure that explains the quantification methods for the measure. Fact Sheets contain the following information:

• a description of the mitigation measure
• a summary of the measure’s applicability
• calculation inputs for the specific project
• assumptions and limitations in the quantification
• a baseline methodology
• a discussion of the calculation method and a sample project calculation
• a discussion of the data and studies used to develop the quantification.

The CAPCOA Report contains a step-by-step guide to using a Fact Sheet to quantify GHG emissions, as well as information on using Fact Sheets outside of California.

The CAPCOA Report also addresses grouping and combining GHG mitigation measures. When multiple mitigation measures are implemented together, it is critical to ensure that GHG reductions are accurately measured and not double-counted. The CAPCOA Report contains rules for quantifying GHG emissions when mitigation strategies in the same category or in different categories are implemented in tandem. The CAPCOA Report also identifies certain mitigation measures that must be implemented or “grouped” with other measures to effect the desired reduction in GHG emissions.

At a time when climate change and GHG considerations play a central role in California state policy, as well as at the regional, national and international levels, the CAPCOA Report can serve as an important tool to assist in quantifying and evaluating GHG reduction measures.

II. The CEC Report Recognizes the Need to Create Sustainable Development Incentives During the Land Entitlement Process and Initiates Further Brainstorming

The California Energy Commission (CEC) released a report in September 2010 titled The Land Entitlement Process and Incentives for Sustainable Communities, which recognizes the need for sustainable development incentives during the land entitlement process and recommends creation of a task force to address related questions and issues (the “CEC Report”).⁷ The CEC Report provides a resource for local agencies and developers in California and throughout the United States looking for creative solutions to make sustainable development more attractive and feasible.

Summary

The CEC Report describes the entitlement process, identifies existing incentives as well as obstacles to sustainable development, and recommends additional incentives and strategies to encourage sustainability in development. It finds that most incentive programs reward aspects of vertical construction that are related to energy efficiency and renewable energy systems and that current incentives are typically given to the builder or homeowner. Similarly, the CEC Report concludes that few incentives exist during the process of entitling land that create rewards for investors and developers. Such incentives are particularly important since “the investor and developer communities have the ability to influence the design and construction of sustainable homes and communities on a vast scale. As a result, there may be strong strategic value in fully understanding how the land entitlement process can direct investors and developers to help the State of California reach sustainability goals.” A summary of specific incentives and obstacles to sustainable development follows.

Existing Incentives and Obstacles

Existing incentives include density/floor area ratio bonuses (additional floors of buildings or housing units per acre), grants, technical and other financial assistance, and tax policies and economic development incentives for “smart” growth. On the other hand, obstacles to sustainable development include upfront costs required for the integration of sustainable building practices and/or products, uncertainty in the net investment benefit of sustainable building on land values, and impediments at the local jurisdictional level including lack of adequate staffing and permitting backlogs.

Possible New Incentives

After conducting a survey of key stakeholders in the planning, development and home building communities, the CEC Report identified possible new incentives, including:

• expedited permitting of projects seeking entitlement
• reduced development impact fees
• incentives for solar systems including deferral of fees related to implementing solar energy in subdivisions and lower property tax assessments for solar energy systems
• reductions in the number of required parking spaces
• assistance with and/or expedited review of environmental impact reports and California Environmental Quality Act processes
• incentives for electric vehicle and energy-storage infrastructure
• predictable carbon credits
• incentives for developers to make energy improvements to existing homes in the same jurisdiction as a proposed development
• creation of a link between anticipated carbon “cap and trade” programs and land use planning

Additional Recommendations

The CEC Report concludes with a recommendation that the state – through collaboration among the Energy Commission, Air Resources Board, other agencies and other stakeholders – form a formal advisory committee or task force to address related questions and issues. The CEC Report includes a list of recommended stakeholders for the advisory group as well as a list of questions and issues for such committee to consider, including the following:

• How are current climate change, land use planning, and green building initiatives and legislation being implemented, and how are they affecting new development? (For details on land use planning and green building initiatives, see Holland & Knight’s November 25, 2008 and September 9, 2010 alerts, Governor Signs Senate Bill 375, Designed to Connect Regional Planning to Reduction of Greenhouse Gas Emissions.)
• What kinds of data – technical, financial or other – are needed by the investor and developer communities to help determine or approximate the net investment benefit of sustainable homes and communities?
• What financing strategies might help reduce the perceived risks associated with investment in sustainable homes and communities?
• What does a stable financial environment look like that would support the design and construction of sustainable homes and communities?
• What are the most opportune stages of the land entitlement process to address the design of sustainable homes and communities and why?
• At which critical stages of the land entitlement process might local communities, in conjunction with the developer community, best incentivize the design and construction of sustainable homes and communities and what does this incentive look like?
• What can be done to address any barriers currently in place?
• What kind of further policy frameworks would support these efforts?
• What are the perceived impacts of the Governor’s Office of Planning and Research (OPR)’s Technical Advisory addressing GHG emissions and climate change for plans and projects undergoing review and approval during the California Environmental Quality Act (CEQA) review process? How can these impacts be best addressed? How can this process be used to create value? (For background, see our January 23, 2010 alert, California Governor’s Office of Planning and Research Releases California Environmental Quality Act Guideline Amendments, and our June 23, 2008 alert, California Establishes Ground Rules for Assessing Climate Change Impacts for Development Projects.)
• What local jurisdictional practices would best support these efforts?
• Should California look beyond its own borders and collaborate with entities in surrounding states?

The CEC Report’s identification of obstacles and possible incentives for sustainable development provides a helpful resource for those hoping to promote such development. Further, the initiation of an advisory committee to consider relevant issues will surely help refine and implement the ideas originated in the CEC Report.

Conclusion

The CAPCOA Report and CEC Report are valuable tools that will help various public and private parties analyze and implement GHG and sustainable development policies. Holland & Knight lawyers are committed to staying at the forefront of climate change policy and law as it develops, and we provide this alert as part of a series of articles and alerts on sustainability and climate change issues. For further information on climate change issues, please see our articles mentioned above and listed here:

• California’s Air Resources Board Adopts Aggressive Regional Greenhouse Gas Emissions Reduction Targets (October 12, 2010)
• DTSC Initiates Formal Rulemaking for Green Chemistry Products Regulation - The Final Rule in California: A Likely Model for Other Jurisdictions (September 30, 2010)
• California Air District Issues Prevention of Significant Deterioration Permit With Enforceable Greenhouse Gas Limits (February 24, 2010)
• White House Issues Sweeping Draft NEPA Guidance on Greenhouse Gas Analysis, Mitigation Monitoring and Categorical Exclusions (February 24, 2010)
• The Endangered Species Act and Climate Change (December 21, 2009)
• EPA Finds That Greenhouse Gases Endanger Public Health and Welfare (December 14, 2009)
• California Continues Efforts to Link Greenhouse Gas Reductions to Land Use Decisions – But Offering Clear Advice Still a Challenge (November 6, 2009)
• California Air Resources Board, South Coast Air Quality Management District and San Diego County Release Recommendations for Setting Interim Significance Thresholds for Greenhouse Gases Under CEQA (November 19, 2008)
• California Court Rules Environmental Impact Reports Must Address Climate Change (August 22, 2008)
• Current Status of Climate Change Analysis Under CEQA (April 16, 2008)

 
¹ The CAPCOA Report was prepared with the Northeast States for Coordinated Air Use Management and the National Association of Clean Air Agencies, and with technical support from Environ and Fehr & Peers.

² The CAPCOA Report defines “greenhouse gases” as the six gases identified in the Kyoto Protocol: carbon dioxide (CO₂), nitrous oxide (N₂O), methane (CH₄), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF₆). GHGs are expressed in metric tons (MT) of CO₂e (carbon dioxide equivalents). Individual GHGs are converted to CO₂e by multiplying values by their global warming potential.

³ In some instances, GHG reduction strategies identified in the CAPCOA Report as “mitigation measures” are incorporated into a project’s design, in which case the GHG reduction strategies would be referred to as “project design features.”

⁴ CEQA Guidelines §§15064, 15064.4, 15126.4.

⁵ CEQA Guidelines § 15064.4(b)(2).

⁶ CARB Climate Change Scoping Plan (2008), pp. 12-13, available online at www.arb.ca.gov/cc/scopingplan/document/adopted_scoping_plan.pdf; CARB Greenhouse Gas Inventory - 2020 Forecast, available online at www.arb.ca.gov/cc/inventory/data/forecast.htm#summary_forescast

⁷ The CEC Report was prepared by the Architectural Energy Corporation.