A First Look at a New California Bill That Would Impact GHG Emissions Disclosures

A new bill that would impact California greenhouse gas emissions disclosures was introduced last month by Josh Becker, a California State Senator from a district just to the south of San Francisco. Senate Bill 285 would require that offsets counted for purposes of greenhouse gas emissions reporting under the Climate Corporate Data Accountability Act meet specified requirements. The bill is among other things intended to help California achieve its 2045 carbon reduction goals, by enabling it to better measure progress against its targets. SB 285 is discussed in further detail in this post.

First, to recap, the Climate Corporate Data Accountability Act (SB 253) requires annual public disclosure of scope 1, 2 and 3 greenhouse gas emissions by U.S.-organized entities doing business in California with total annual revenues exceeding $1 billion. Under that Act, the first disclosures are required in 2026 for fiscal 2025. The Climate Corporate Data Accountability Act is discussed in recent Ropes & Gray posts here and here, among others.

Under SB 285, for purposes of reporting offsets against greenhouse gas emissions to be reported under the Climate Corporate Data Accountability Act, only qualified carbon dioxide removal could be included. “Qualified carbon dioxide removal” is defined in the bill as carbon dioxide removal that meets the following requirements:

• If the carbon dioxide removal process requires terrestrial biomass as a feedstock, it only uses biomass from agricultural residues, forestry residues or municipal organic waste.
• The carbon dioxide removal process is not used for enhanced oil recovery, including the facilitation of enhanced oil recovery from another well.
• The carbon dioxide removal process is consistent with community protection principles established as part of California AB 905. These include a requirement to minimize, to the maximum extent technologically feasible:
  • Copollutant emissions from facilities where carbon capture use and storage or carbon dioxide removal technology is deployed to ensure that the use of these technologies does not have an adverse impact on local air quality and public health, particularly in low-income and disadvantaged communities; and
  • Local water pollution or air pollution from construction- and transportation-related impacts from the projects in communities adjacent to the projects.

Carbon dioxide removal, agricultural residues, forestry residues and municipal organic waste are all defined terms in the bill. For brevity, we have omitted those definitions.

In addition, the qualified carbon dioxide removal used to counterbalance each type of greenhouse gas emissions would be required to use a form of carbon sequestration (also defined) with substantially equivalent duration to the longevity of the form of storage from which the greenhouse gas was released when emitted or the longevity of the greenhouse gas in the atmosphere once emitted, subject to the following:

• Emissions of carbon dioxide from fossil fuels or from carbon that was previously held in a stable, long-term mineral form, such as a carbonate rock, could only be counterbalanced by durable carbon dioxide removal (also defined).
• Emissions of carbon dioxide from relatively short-term forms of storage in the natural carbon cycle, such as from soils and biological forms, could be counterbalanced by negative net emissions from natural and working lands (also defined), or by other qualified carbon dioxide removal with carbon sequestration of at least equivalent storage duration.
• Emissions of short-lived climate pollutants (also defined) could be counterbalanced by an equal quantity, on a carbon dioxide-equivalent basis, of negative net emissions from natural and working lands or of other qualified carbon dioxide removal with carbon sequestration that is at least equivalent in duration to the short-lived climate pollutant’s average lifetime in the atmosphere.

The plain language example of this “like-for-like principle” cited in the fact sheet released by Senator Becker’s office indicates this means that emissions from relatively short-term forms of storage, such as trees, can be matched with storage of similar durability, like reforestation. In contrast, emissions from fossil fuels that were stored underground for millions of years would be required to be matched to removals with similarly permanent forms of storage.

When reporting information under the Climate Corporate Data Accountability Act, the reporting entity would be required to provide the amount of greenhouse gas emissions and the amount of qualified carbon dioxide removal used to counterbalance those emissions as separate numbers and to provide sufficient detail about the types of greenhouse gas emissions and types of qualified carbon dioxide removals used to counterbalance those greenhouse gas emissions.

Bill Status

The bill is still at its very early stages. The first Senate committee hearing is scheduled for April 2. Therefore, it is too early to predict whether the bill will move forward and what it will ultimately look like if it does so. However, like all things related to California climate disclosure, it probably bears watching.