1. October 9, 2014 1

2. Objective of Presentation Update Since Last Year ARB’s Role The Challenge Successes to Date 2015 Priorities 2

3. Air Pollution Authority ARB Motor vehicles Fuels Consumer products Air toxics Climate Local air districts Stationary sources (ex. permitting/enforcement) Local rules US EPA SIP National rules 3

4. Air Pollutants of Concern Criteria pollutant precursors Oxides of nitrogen, volatile organic compounds, particulate matter Diesel PM Listed as a TAC and a component of PM2.5 Air Toxic Contaminants (TACs) Examples: Benzene, 1,3-butadiene, and others gaseous pollutants Greenhouse gases 4

5. Meeting the Challenge California faces greatest air quality challenges in the nation SIPs must address increasingly stringent standards with frequent legal challenges Greenhouse gas targets A combination of regulations, incentives, sustainable land use and transportation systems, and infrastructure investments is needed Effective implementation (e.g., stakeholder outreach, monitoring, enforcement) 5

6. Evolution of ARB Programs 1980s: Focus on Passenger Vehicles 1990s: Focus on Trucks, Cleaner Passenger Vehicles, Off-Road Engines 2000s: Focus on Legacy Fleets and Next Generation Passenger Vehicles Tail pipe standardsHeavy-duty diesel truck standards Ports and freight handling equipment Smog CheckClean diesel fuelsRetrofit/replace trucks and buses On-board diagnosticsLow-emission vehicles and clean fuels and reformulated gas Electric hybrids and plug-ins Diesel fuel specifications Small off-road equipment Marine vessels Consumer productsRetrofit/replace off- road equipment 6

7. Approach to Air Quality Planning Integrate ARB planning efforts for SIPs, AB 32 Scoping Plan, and freight planning Expand on longstanding partnerships with air pollution control districts and metropolitan planning agencies Develop innovative strategies tailored to California’s air quality problems Ongoing interaction with business, environmental, governmental, public stakeholders 7

8. Benefits of CA’s Programs: NOx 8

9. Benefits of CA’s Programs: VOC 9

10. LEV III: Reducing Criteria Emissions 10 150,000-mile New Vehicle Fleet Average Emissions 75% Reduction in fleet average emissions 2015-2025 1 mg/mi PM standard in 2025 maintains current PM emission level of well controlled PFI engines LEV III Particulate Matter Standards

11. Implementation  Truck and Bus Regulation Implementation  Advanced Clean Cars Implementation/Mid-term review  Low Carbon Fuel Standard Re-adoption/Implementation  Cap and Trade Implementation  Updated Scoping Plan Implementation Regulatory/Guideline Development  Vehicle retirement program  Alternative diesel fuel  2016 SIP  Oil and gas production, processing, and storage  Heavy duty GHG measure  Sustainable freight strategy  SB 375 California Air Resources Board 11 2015 Priorities

12. 12 SIP Planning Scoping Plan Update Freight Planning Integration of Planning Efforts

13. Ozone and PM2.5 SIP Planning Requirements Multiple SIPs required in 2016 to meet new standards: 8-hour O3 standard of 75 ppb Annual PM2.5 standard of 12 ug/m3 Extreme ozone areas have an attainment deadline of 2032 Serious PM2.5 areas have an attainment deadline of 2025 More stringent ozone standard under consideration 13

14. Approach to SIP Planning Integrate ARB planning efforts for SIPs, AB 32, and freight planning Collaborative effort involving ARB, air districts, U.S. EPA, and metropolitan planning agencies Requires long-term, comprehensive reductions through advanced technologies, fuels, and energy efficiency Combination of regulations, incentives, sustainable land use and transportation systems, and infrastructure investments will be needed 14

15. Required by AB 32 Outlines State’s strategy to achieve 2020 GHG goal Built on a balanced mix of strategies 15 Initial Scoping Plan

16. Success of Scoping Plan Comprehensive suite of strategies applied to all sectors Renewable energy currently accounts for 22 percent of state’s electricity Global leader in energy efficiency Most comprehensive Cap-and-Trade program in world 16

17. Suite of AB 32 Measures Building and appliance energy efficiency standards Transportation Tire Pressure Regulation Low Carbon Fuels Standard Heavy-Duty Trucks Mobile Air Conditioners (DIY Cans) High Speed Rail SB 375 Electricity Renewable Portfolio Standard California Solar Initiative Combined Heat and Power High Global Warming Potential Gasses High GWP Consumer Products Refrigerant Management Program SF6 Leak Reduction Stationary Sources Shore Power Semiconductor Manufacturing Landfill Methane Capture Energy Efficiency Audits for Industrial Sectors Cap-and-Trade Program California Air Resources Board 17

18. AB 32 Scoping Plan Update Key Questions How have we done over past 5 years? What is needed to continue to 2020? What steps are needed to continue emission reductions and grow our economy beyond 2020? 18

19. Climate Change Climate Change Scoping Plan Update Scoping Plan Update ● Approved in May 2014 ● Builds upon successful framework established by initial Scoping Plan ● Shows progress to steadily drive down GHG emissions to 2020 limit ● Describes actions California must undertake to move beyond 2020 ● Identifies need for establishing a statewide mid-term GHG emissions target 19

20. Short Lived Climate Pollutants (SLCP) Atmospheric lifetime of a few days to a few decades High global warming potential Include black carbon, methane, and HFCs SLCP already regulated by ARB Further control strategies being developed ARB committed to develop comprehensive SLCP strategy by 2016 20

21. Conclusions Climate change represents a serious threat to the health of Californians, our natural resources, and economy California is driving down GHG emissions to meet the 2020 goal Now is the time to begin developing long-term strategies All Californians will play a key role in meeting the long-term climate goals 21

22. 22 Sustainable Freight Strategy Systems approach: all modes/facilities Zero/near zero emission equipment Renewable fuel/energy sources Clean air and healthy communities More efficient, with reliable velocity and enhanced capacity Improved competitiveness of California’s logistics system to support jobs

23. 23 Truck & Bus Regulation Affects one million trucks and buses that operate in California PM filters and replacements for heavier trucks Replacements for lighter vehicles Adopted in 2008 Amended in 2010 due to recession Amended in 2014 to provide additional flexibility

24. Truck and Bus Regulation Implementation (Summary of 2014 Amendments) Protects emission reductions by providing lower cost compliance options to small fleets, lower mileage fleets, and fleets in areas with cleaner air. Provides new opportunities for fleet owners to access public incentive funds. Recognizes fleet owners that made early investments to comply.

25. Enhanced Fleet Modernization Program Voluntary scrap program for cars $1 per vehicle registration fee through 2023 Two elements Retirement only ~ $27M Retire and replace ~ $3M Target low-income participation Multiple options for replacement participants Cleaner replacement vehicles Transit mobility

26. Additional Support for Disadvantaged Communities Low Carbon Transportation pilots will augment EFMP by providing additional funding for cleanest replacements and other mobility options New “Plus-Up” incentives stackable with EFMP Hybrid & advanced clean car replacements Car sharing Financing assistance EFMP Income- Eligible Pilot Benefitting Disadvantage Community

27. Program Partners Retirement-only (Statewide) BAR administered High participation rate exhausts funds by May Retire and replace (Non-attainment areas) San Joaquin APCD Pre-pilot program (~70 replacements to date) Implementation in conjunction with Valley CAN South Coast AQMD 6 bids under evaluation for program kick-off

28. 28 Phase 2 GHG Program Joint program with U.S.EPA/NHTSA Major reductions possible for 2018+ Class 2b/3 pickups/vans Vocational vehicles Class 8 trucks Trailers (first ever federal standards) Standards will be met with combination of: Engine efficiency improvements Transmission efficiencies Improved aerodynamics/low-rolling resistance tires Hybrid electric vehicles Schedule Notice of Proposed Rulemaking in early 2015 Federal rule adoption in March 2016 ARB rule adoption in mid-2016

29. 29 Cap-and-Trade Implementation ● Spring - Second Board hearing to consider Rice Cultivation and Updated Forestry compliance offset protocols ● Fall - Border Carbon Adjustment Rulemaking ● Fall – End of First Compliance Period Compliance Instrument Surrender Due ● Ongoing – compliance offset issuance ● 4 quarterly joint auctions with Quebec

30. 2015 LCFS Proposed Amendments Staff sees this as an opportunity to strengthen LCFS, given four years of implementation Revised indirect land use (iLUC) values Electricity credits for mass transit and electric forklifts Low-complexity/low-energy-use refineries provision Credits for innovative crude oil production Cost containment mechanism GHG emissions reductions at refineries as additional compliance pathway Bifurcated fuel pathway application process (Tier 1/Tier 2) Miscellaneous revisions for clarity and enhancement 30

31. Progress Toward Targets. 31

32. Fuels Generating LCFS Credits 32

33. SB 375 Overview SB375 supports the state’s AB32 climate goals ARB establishes regional GHG emission reduction targets for MPOs Local governments and regional agencies work together to develop Sustainable Communities Strategies (SCSs) SCSs evaluated to date are achieving or exceeding their targets

34. SB 375 Efforts for 2015-16 Complete evaluations of San Joaquin Valley GHG determinations Update targets for future SCSs in 2015-16 Provide technical assistance to MPOs in their planning process and implementation of SCSs

35. 35 Summary Continued monitoring/implementation Development of coordinated planning documents Development of integrated strategies that better consider interactions/role of regulation/incentives and other policies