JTAC STAFF REPORT. MEETING DATE: August 6, 2015 AGENDA ITEM: 4

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1 JTAC STAFF REPORT SUBJECT: RTP-SCS Target Setting Update MEETING DATE: August 6, 2015 AGENDA ITEM: 4 STAFF CONTACT: Peter Imhof RECOMMENDATION: Receive a report on the update of SB 375 GHG targets for the Regional Transportation Plan- Sustainable Communities Strategy (RTP-SCS). SUMMARY: Air Resources Board (ARB) staff intends to update SB 375 GHG targets for the six smaller MPOs in advance of their second round RTP-SCSs. ARB staff has made clear that existing zero targets cannot remain. According to ARB staff, updated targets should be consistent with the reductions that were achieved by [MPOs ] first SCSs, and would be based on projected reductions in the current adopted RTP-SCSs, technical modeling information on land use and transportation scenarios, and technical consultation with SBCAG staff. Under SB 375, MPOs at their discretion may formally recommend targets to ARB. ARB does not plan to reconvene the Regional Targets Advisory Committee, which advised the target-setting process in Based on discussions with ARB staff, ARB now plans to have draft GHG targets ready by summer 2016, with adoption in late ARB staff would like to receive any target recommendations from MPOs in spring 2016, make a recommendation to ARB in June, with formal adoption to follow CEQA review. While later than the late 2015 timeframe ARB staff recommended last year, this schedule would not necessarily pose a problem. It would mean in effect that GHG target updates would occur simultaneously with update of the RTP-SCS scenarios, which could help ensure consistency. Throughout the target update process, SBCAG staff will work with JTAC to document model assumptions and the technical basis for targets. Documentation of modeling assumptions for ARB would be based on land use and transportation scenarios updated with input from JTAC, member agencies and other stakeholders. As a practical matter, most major scenario inputs (e.g., regional growth forecast and growth allocation) are not likely to change substantially, if at all, from those used in SBCAG s adopted 2040 RTP-SCS. ARB staff has recognized the need for technical adjustments to account for changes in methodology or tools and has published a methodology for making technical adjustments to account for the new EMFAC 2014 model. Preliminary modeling results show that EMFAC2014 passenger vehicle CO 2 emissions would be slightly higher than emissions calculated using EMFAC2011 based on the same 2040 RTP-SCS preferred scenario assumptions, resulting in less per capita CO 2 reductions. However, ARB s adjustment methodology would account for this difference, such that the same 2040 RTP-SCS preferred scenario assumptions should still achieve (hypothetical) updated GHG targets based on the projected emission reductions in the adopted 2040 RTP-SCS.

2 DISCUSSION: Background Government Code Section 65080(b)(2)(A) gives ARB the authority to set greenhouse gas targets for each region for the target years 2020 and 2035, and requires ARB to update those targets every eight years consistent with each metropolitan planning organization's timeframe for updating its regional transportation plan. The law additionally allows ARB to revise the targets every four years. It requires ARB to exchange technical information with the Department of Transportation, metropolitan planning organizations, local governments, and affected air districts and engage in a consultative process with public and private stakeholders prior to updating these targets. ARB originally established GHG targets for SBCAG in September 2010 based on recommendations from the Regional Targets Advisory Committee (RTAC) and SBCAG. The targets were stated as a percent reduction in per capita emissions with 2005 as base year and were set at zero growth in emissions for both target years. SBCAG adopted its 2040 Regional Transportation Plan-Sustainable Communities Strategy (RTP-SCS) in August The RTP-SCS projected GHG emissions reductions of 10.5% in 2020 and 15.4% in 2035 (greater reductions than the zero targets set by ARB), assuming the preferred land use and transportation scenario was implemented. The RTP-SCS must be updated every four years, with the next update due in summer In October 2014, ARB staff proposed an approach for updating targets to ARB. At that time, SBCAG updated TPAC/TTAC and the SBCAG Board and SBCAG sent a comment letter to ARB objecting to the proposed target update. On April 29, 2015, California Governor Jerry Brown issued Executive Order B to establish a California greenhouse gas reduction target of 40% below 1990 levels by The new target is intended as an interim target toward the 2050 target of 80% below 1990 levels established by previous Executive Order. Among other things, the new Executive Order directs CARB to update the AB 32 Scoping Plan to demonstrate how it will meet the new target. Legislation is now pending in California (SB 32) that would ensconce these executive orders in law. SB 375 Greenhouse Gas Target Updates ARB staff has signaled its intention to update SB 375 greenhouse gas (GHG) targets for both 2020 and 2035 for the six smaller MPOs in California in advance of their second round SCS updates. 1 ARB has recommended that updated targets should be consistent with the reductions that were achieved by their first SCSs, i.e., that new targets be based on the projected reductions in the adopted RTP-SCSs and supported by land use and transportation modeling assumptions. ARB staff has made clear that existing zero targets cannot remain. Throughout the target update process, SBCAG staff plans to work with JTAC to document model assumptions and the technical basis for targets. Documentation of modeling assumptions for ARB would be based on land use and transportation scenarios updated with input from JTAC, member agencies and other stakeholders. As a practical matter, most major scenario inputs (e.g., regional growth forecast and growth allocation) are not likely to change substantially, if at all, from those used in SBCAG s adopted 2040 RTP-SCS. 1 ARB would update only 2035 targets for the Big 4 MPOs (ABAG, SACOG, SANDAG, and SCAG) to apply beginning in 2019 to their third round SCSs. For the remaining San Joaquin Valley MPOs, ARB would update only 2035 targets to apply to SCSs scheduled for adoption beginning in

3 Update Process ARB staff envisions that the update of SB 375 targets would be based on consultation with MPO staff, supported by modeling analysis. In 2010, ARB staff consulted with MPOs regarding data assumptions, travel models and planning scenarios, and relied on MPO target recommendations. ARB staff considers this process to have worked well and wants to continue this approach for the target update. ARB does not, however, intend to reconvene the Regional Targets Advisory Committee (RTAC), which advised the initial target setting in In its October 2014 staff report, ARB staff specifically notes that SB 375 gives MPOs the option to make target recommendations and implicitly leaves it to the MPO to decide whether to make a formal recommendation. SB 375 gives MPOs the opportunity to recommend targets for their region. During the initial target-setting process, many of the MPOs provided ARB with recommendations for their respective targets. ARB staff supports a similar process for the target update. SBCAG may need to decide whether a formal target recommendation by the Board is desirable or necessary. Since ARB staff has already established the theoretical basis for the updated targets (namely, projected reductions in the adopted RTP-SCSs), it may be sufficient for staff to report periodically to the Board on progress of ARB staff consultations, with JTAC technical input and oversight. Target Metric and Basis ARB staff believes that the current per capita GHG metric has worked well and proposes to keep it. ARB staff also favors keeping the 2005 base year. In its October 2014 staff report, ARB staff states, Targets for the six smaller MPOs would be updated to be consistent with GHG emissions reductions achieved in their first SCSs... In conversations with them, ARB staff has clarified that the projected reductions in the adopted RTP-SCSs would be the basis or starting point for new targets, subject to supporting modeling, technical information and technical adjustments. ARB staff also emphasizes the importance of the SCS land use and transportation strategies supporting the target recommendations. Much interest has been generated around the target numbers, but the land use and transportation strategies that underpin the SCSs are equally important to assess the ambitiousness of the plans. MPOs should support their target recommendations by providing technical information on the types of SCS strategies that would be necessary to achieve those targets. This would provide the Board with an opportunity to review the potential SCS strategies before establishing updated targets for a region. Update Timeframe In its October 2014 report to its board, ARB staff proposed adoption of target updates for the six smaller MPOs by late However, this schedule has been delayed, according to ARB staff, for a number of reasons, including general pre-occupation this year with Cap & Trade and other programs, diversion of staff resources to review SCSs in the San Joaquin Valley and elsewhere, MPOs lack of readiness to begin dialogue on target updates, and the ongoing development EMFAC 2014, which is important to the setting of new targets. ARB staff now anticipates having draft updated targets for all MPOs by the middle of next year, with final targets to be adopted late in ARB staff would like to receive any target 3

4 recommendations from MPOs in spring 2016, make a recommendation to ARB in June 2016, with formal adoption to follow CEQA review sometime late in the year. Given that SBCAG s next RTP-SCS update is due in summer 2017, in effect the target setting process will occur contemporaneously with the development of the RTP-SCS update itself. While it might be preferable to know the updated targets with certainty in advance of the plan update process, the contemporaneous updating of SB 375 targets and the plan itself should not necessarily pose a problem. Since ARB staff has emphasized the importance of supporting target recommendations with technical information on the land use and transportation strategies, simultaneous development of these strategies should help ensure consistency between the updated plan and SB 375 targets. Technical Adjustments ARB staff has acknowledged the need to apply technical adjustments to account for changes in methodology or tools. In particular, ARB has published an adjustment methodology for EMFAC 2014 to be applied by MPOs which used an earlier version of EMFAC to quantify GHG emission reductions in their first RTP-SCS. The adjustment methodology is necessary, since using a different model will influence [MPOs ] estimates and their ability to achieve SB 375 targets. The adjustment is intended to neutralize the changes in fleet average emission rates between the version used for the first RTP/SCS and the version used for the second RTP/SCS presumably to allow direct comparison of the emission reductions between the plans, controlling for differences attributable solely to the EMFAC model version. Anticipating that such changes in tools and methodology could pose challenges in reaching targets, SBCAG staff had requested that ARB allow for such adjustment. SBCAG staff is pleased that ARB staff has recognized and addressed this concern. It is not yet clear how ARB will apply Governor Brown s new Executive Order creating a new 2030 GHG reduction target to SCSs. The GHG target created by the Executive Order applies statewide to emissions from all sources addressed in the ARB Scoping Plan and is not specific to vehicle emissions under SB 375. Preliminary Analysis SBCAG staff has begun preliminary modeling analysis using RTP-SCS preferred scenario assumptions to test technical variables, including use of EMFAC2014 for emissions calculations. Preliminary results indicate that per capita EMFAC2014 emissions would be higher than EMFAC2011 estimates by approximately 0.1% in 2020 and 1% in 2035, using the same 2040 RTP-SCS preferred scenario assumptions (see Attachment 2). As shown in the table below, these small differences, in combination with the recalculation of the 2005 base year emissions, result in less emission reductions from the 2005 base year using EMFAC2014 than when using EMFAC2011, based on the same scenario assumptions. Table: Comparison EMFAC2014 vs. EMFAC2011 CO2 Emissions per Capita Preferred Scenario 2035 Preferred Scenario 2040 RTP-SCS (EMFAC2011) % change from % -15.4% Same w/ EMFAC % change from % -13.3% 4

5 However, we expect that application of the ARB adjustment methodology discussed above would neutralize this difference as intended by ARB, so that the same preferred scenario assumptions would achieve hypothetical updated GHG targets based on the projected emission reductions in the adopted 2040 RTP-SCS. We further note that, as for the adopted RTP-SCS based on EMFAC2011, the ARB methodology for EMFAC2014 seeks to isolate emission reductions resulting from SB 375 land use and transportation policies and does not allow MPOs to count emissions reductions from factors that affect vehicle efficiency or fuel carbon content (e.g., the Pavley/Advanced Clean Cars or Low Carbon Fuel Standards). ATTACHMENTS: 1. EMFAC 2014 Adjustment Methodology 2. Preliminary Analysis, EMFAC2014 vs. EMFAC2011 Passenger Vehicle CO 2 Emissions \\sbcapcd.org\shares\groups-sbcag\meetings\joint TTAC & TPAC Meetings\2015\08 Aug\JTAC\Draft\Item 4 RTP-SCS Target Setting Update\Item 4 RTP-SCS Target Setting Update.doc 5

6 Methodology to Calculate CO2 Adjustment to EMFAC Output for SB 375 Target Demonstrations Background: In 2010, ARB established regional SB 375 greenhouse gas (GHG) targets in the form of a percent reduction per capita from 2005 for passenger vehicles using the ARB Emission Factor model, EMFAC EMFAC is a California-specific computer model that calculates weekday emissions of air pollutants from all on-road motor vehicles including passenger cars, trucks, and buses. ARB updates the EMFAC model periodically to reflect the latest planning assumptions (such as vehicle fleet mix) and emissions estimation data and methods. Since the time when targets were set using EMFAC2007, ARB has released two subsequent versions, EMFAC and EMFAC ARB has improved the carbon dioxide (CO2) emission rates in EMFAC2011 and EMFAC2014, based on recent emission testing data and updated energy consumption for air conditioning. In addition, vehicle fleet mix has been updated in EMFAC2011 and again in EMFAC2014 based on the latest available Department of Motor Vehicle data at the time of model development. These changes have lowered the overall CO2 emission rates in EMFAC2011 and EMFAC2014 compared to EMFAC2007. Purpose: Some metropolitan planning organizations (MPOs) used EMFAC 2007 to quantify GHG emissions reductions from their first Regional Transportation Plan/Sustainable Communities Strategy (RTP/SCS); others used EMFAC As MPOs estimate GHG emissions reductions from subsequent RTP/SCSs, they will use the latest approved version of EMFAC, but using a different model will influence their estimates and their ability to achieve SB 375 targets. The goal of this methodology is to hold each MPO to the same level of stringency in achieving their SB 375 targets regardless of the version of EMFAC used for its second RTP/SCS. ARB staff has developed this methodology to allow MPOs to adjust the calculation of percent reduction in per capita CO2 emissions used to meet the established targets when using either EMFAC2011 or EMFAC2014 for their second RTP/SCS. This method will neutralize the changes in fleet average emission rates between the version used for the first RTP/SCS and the version used for the second RTP/SCS. The methodology adjusts for the small benefit or disbenefits resulting from the use of a different version of EMFAC by accounting for changes in emission rates, and applies an 1 EMFAC2011 was approved by USEPA in March EMFAC2014 is under review for USEPA approval. 1

7 adjustment when quantifying the percent reduction in per capita CO2 emissions using EMFAC2011 or EMFAC2014. Applicability: The adjustment is applicable when the first RTP/SCS was developed using either EMFAC2007 or EMFAC2011 and the second RTP/SCS will be developed using a different version of the model (EMFAC2011 or EMFAC2014). Hold the 2005 baseline CO2 per capita estimated in the first RTP/SCS constant. Use both the human population and transportation activity data (VMT and speed distribution) from the first RTP/SCS to calculate the adjustment. Add the adjustment to the percent reduction in CO2 per capita calculated with EMFAC2011 or EMFAC2014 for the second RTP/SCS. This will allow equivalent comparison to the first RTP/SCS where emissions were established with EMFAC 2007 or EMFAC2011. Example Adjustment Calculation (hypothetical for illustration purposes): In this example, the first RTP/SCS was developed using EMFAC2007 and the second RTP/SCS using EMFAC2011 to calculate the CO2 per capita. Step1: Compile the CO2 per capita numbers from the MPO s first adopted RTP/SCS using EMFAC 2007 without any off-model adjustments for calendar years (CY) 2005, 2020, and 2035 for passenger vehicles. Calendar Year EMFAC2007 CO2 Per capita (lbs/day) Step 2: Calculate the percent reductions in CO2 per capita from the 2005 base year for CY 2020 and 2035 from Step 1. Calendar Year EMFAC2007 Percent Reductions (%) % % Step 3: Develop the input files for the EMFAC2011 model using the same activity data for CY 2020 and 2035 from the first adopted RTP/SCS (same activity data used in Step 1) and execute the model. 2

8 Step 4: Calculate the CO2 per capita for CY 2020 and 2035 using the EMFAC2011 output from Step 3; do not include Pavley I, LCFS, and ACC benefits for passenger vehicles. Calendar Year EMFAC2011 CO2 Per capita (lbs/day) Step 5: Calculate the percent reductions in CO2 per capita for CY 2020 and 2035 calculated in Step 4 from base year 2005 established in Step 1. Calendar Year EMFAC2011 Percent Reductions (%) % % Step 6: Calculate the difference in percent reductions between Step 5 and Step 2 (subtract Step 5 results from Step 2 results) for CY 2020 and 2035; this yields the adjustment for the respective CY. Calendar Year EMFAC2011 Adjustment (%) % % Step 7: Develop the input files for the EMFAC2011 model using the activity data from the new/second RTP/SCS for CY 2020 and 2035 without any off-model adjustments and execute the model. Step 8: Calculate the CO2 per capita for CY 2020 and 2035 using the EMFAC2011 output from Step 7; do not include Pavley I, LCFS, and ACC benefits for passenger vehicles. Calendar Year EMFAC2011 CO2 Per capita (lbs/day) Step 9: Calculate the percent reductions in CO2 per capita for CY 2020 and 2035 calculated in Step 8 from base year 2005 established in Step 1. Calendar Year EMFAC2011 Percent Reductions (%) % % 3

9 Step 10: Add the adjustment factors from Step 6 to the percent reductions calculated for the new/second RTP/SCS (Step 9) using EMFAC 2011 for CY 2020 and Calendar Year Adjusted Percent Reductions (%) % % Follow the same steps to adjust for use of EMFAC2007 or EMFAC2011 to EMFAC2014. Do not include any off-model adjustments during application of the EMFAC adjustment factor. 4

10 ATTACHMENT 2 PRELIMINARY ANALYSIS Note for Year 2000: VMT source - SBCAG Vision2030 Regional Transportation Plan; CO2 emissions estimates modeled in EMFAC2007.