Air Board role in greenhouse gas law.

Local industries not only have to keep their eye on the South Coast Air Quality Management District, but now they must focus on the state Air Resources Board, which has been given the task of implementing the landmark greenhouse gas reduction bill signed into law by Gov. Arnold Schwarzenegger.

The law--AB 32, by Assembly Speaker Fabian Nunez, D-Los Angeles, and Assemblywoman Fran Pavley, D-Agoura Hills--requires greenhouse gas emissions to be reduced 25 percent to 1990 levels by the year 2020. But it leaves the details of just how to do that up to the Air Resources Board.

That board consists of 11 members, all appointed by the governor. The board not only has the power to craft regulations, it can also impose fees to recover its administrative costs and can levy penalties against violators. Over the next few months, the board will be developing its strategy, starting with an Oct. 19 meeting in Sacramento. For business, the key issue is just how much and how quickly will each of the major greenhouse gas-emitting industries--oil refineries, electric power plants and cement manufacturers--have to reduce their carbon output.

The state's major business groups have warned that if the measures are too drastic or implemented too quickly, production of oil, electric power, cement and other crucial resources would have to be cut back, with drastic consequences for the economy.

Another key issue is the extent to which the board will rely on traditional "command-and-control" regulations that stipulate just how companies must comply as opposed to market-based approaches that set out general reduction targets but leave the strategies up to industry. This latter strategy is similar to what the South Coast Air Quality Management District has done with its controversial Reclaim program, which allows major industrial facilities to trade emission credits. Critics say the program allows facilities to continue to pollute their immediate surroundings.