Amended IN Senate June 20, 2023 Amended IN Assembly March 30, 2023 Amended IN Assembly March 02, 2023 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 43Introduced by Assembly Member HoldenDecember 05, 2022An act to amend Section 38561.3 of, and to add Section 38561.6 to to, the Health and Safety Code, relating to greenhouse gas emissions. LEGISLATIVE COUNSEL'S DIGESTAB 43, as amended, Holden. Greenhouse gas emissions: building materials: embodied carbon trading system. The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. Under the act, a violation of a rule, regulation, order, emission limitation, emission reduction measure, or other measure adopted by the state board under the act is a crime. Existing law requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. Existing law requires the framework to include a comprehensive strategy for the states building sector to achieve a 40% net reduction in greenhouse gas emissions of building materials, as determined from a baseline calculated using a certain 2026 report, if that report is adequate, or as specified. Existing law requires that strategy to achieve this target as soon as possible, but no later than December 31, 2035, provides for an interim target of 20% net reduction by December 31, 2030, authorizes the state board to adjust the interim target, as provided, and requires the established targets to begin no sooner than January 1, 2027. Existing law also requires the state board to form and maintain a technical advisory committee, as described. This bill would, among other changes, extend the date for the development of the framework to December 31, 2026, and would require the state board to develop a comprehensive strategy, by December 31, 2028, rather than by December 31, 2035, to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The bill would eliminate the interim target of 20% net reduction. The bill would authorize the baseline described above to be established based on either an industry average of environmental product declarations reported for the 2026 calendar year or on the most relevant, up-to-date information available, as determined by the state board. The bill would also require the established targets to begin to apply no sooner than January 1, 2027, and 2 years after the baseline is established. The bill would delete the requirement that the state board form and maintain a technical advisory committee, and would instead require the state board to consult experts to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, as specified. Existing law requires the state board, by July 1, 2023, to develop a comprehensive strategy for the states cement sector to achieve net-zero emissions of greenhouse gases associated with cement used within the state as soon as possible, but no later than December 31, 2045. Existing law, effective January 1, 2023, requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. This bill would require authorize the state board to establish an embodied carbon trading system, as defined, and would make it applicable to building materials providers, developers, architectural and engineering firms, and construction companies. defined and as provided. The bill would require authorize the state board to integrate the embodied carbon trading system into the framework for measuring the average carbon intensity of the materials used in the construction of new buildings, as described above, on or before December 31, 2026, and to implement the system on and after January 1, 2029. The bill would require authorize the state board to adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods, and would make a violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to these and other requirements of the bill an emission of an air contaminant for the purposes of the penalty provisions of the act. The bill would also require the state board to periodically review and update its emission reporting and compliance standard requirements, as necessary. By expanding the scope of crimes, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES Bill TextThe people of the State of California do enact as follows: SECTION 1. Section 38561.3 of the Health and Safety Code is amended to read: 38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses. (2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035. (b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board. (b) (c) The framework developed pursuant to subdivision (a) shall include both of the following: (1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings. (2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues. (c) (d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision. (d) (e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i). (e) (f) As used in this section the following terms have the following meanings: (1) Feasibility, in regard to the use of a material, means all of the following: (A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. (B) The material does not harm the health or safety of those who install the materials or occupy the building. (C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials. (D) The material is commercially available to the region of the project. (E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation. (F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material. (2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material. (B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable. (f) (g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board. (g) (h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit. (h) (i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If (2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target. (2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target. (3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility. (C) (4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project. (i)The provisions of this section do (j) This section does not apply to appliances. (j) (k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section. (k) (l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following: (1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state. (2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures: (A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services. (B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies. (m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act. (n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section. SECTION 1. SEC. 2. Section 38561.6 is added to the Health and Safety Code, to read: 38561.6. (a) For purposes of this section, the following definitions apply: (1)Building materials providers includes, but is not limited to, building materials manufacturers.(2) (1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material. (3) (2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division. (4) (3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3). (5)Low carbon (4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified. (b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements: (1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies. (1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers. (2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2). (c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system: (1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods. (B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material. (2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases. (3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources. (4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029. (5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements. (d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate. (e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices. (f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.(i)The state board shall periodically review and update its emission reporting requirements, as necessary. (f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3. (2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible. (3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3. (g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section. (h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3. (1) The penalties set forth in subdivision (b) of Section 38580 apply to this section. (2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3. (i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary. (j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system. (k) This section provides guidance only. This section does not limit or expand the authority of the state board. (j) ( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section. SEC. 2. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
Amended IN Senate June 20, 2023 Amended IN Assembly March 30, 2023 Amended IN Assembly March 02, 2023 CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION Assembly Bill No. 43Introduced by Assembly Member HoldenDecember 05, 2022An act to amend Section 38561.3 of, and to add Section 38561.6 to to, the Health and Safety Code, relating to greenhouse gas emissions. LEGISLATIVE COUNSEL'S DIGESTAB 43, as amended, Holden. Greenhouse gas emissions: building materials: embodied carbon trading system. The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. Under the act, a violation of a rule, regulation, order, emission limitation, emission reduction measure, or other measure adopted by the state board under the act is a crime. Existing law requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. Existing law requires the framework to include a comprehensive strategy for the states building sector to achieve a 40% net reduction in greenhouse gas emissions of building materials, as determined from a baseline calculated using a certain 2026 report, if that report is adequate, or as specified. Existing law requires that strategy to achieve this target as soon as possible, but no later than December 31, 2035, provides for an interim target of 20% net reduction by December 31, 2030, authorizes the state board to adjust the interim target, as provided, and requires the established targets to begin no sooner than January 1, 2027. Existing law also requires the state board to form and maintain a technical advisory committee, as described. This bill would, among other changes, extend the date for the development of the framework to December 31, 2026, and would require the state board to develop a comprehensive strategy, by December 31, 2028, rather than by December 31, 2035, to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The bill would eliminate the interim target of 20% net reduction. The bill would authorize the baseline described above to be established based on either an industry average of environmental product declarations reported for the 2026 calendar year or on the most relevant, up-to-date information available, as determined by the state board. The bill would also require the established targets to begin to apply no sooner than January 1, 2027, and 2 years after the baseline is established. The bill would delete the requirement that the state board form and maintain a technical advisory committee, and would instead require the state board to consult experts to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, as specified. Existing law requires the state board, by July 1, 2023, to develop a comprehensive strategy for the states cement sector to achieve net-zero emissions of greenhouse gases associated with cement used within the state as soon as possible, but no later than December 31, 2045. Existing law, effective January 1, 2023, requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. This bill would require authorize the state board to establish an embodied carbon trading system, as defined, and would make it applicable to building materials providers, developers, architectural and engineering firms, and construction companies. defined and as provided. The bill would require authorize the state board to integrate the embodied carbon trading system into the framework for measuring the average carbon intensity of the materials used in the construction of new buildings, as described above, on or before December 31, 2026, and to implement the system on and after January 1, 2029. The bill would require authorize the state board to adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods, and would make a violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to these and other requirements of the bill an emission of an air contaminant for the purposes of the penalty provisions of the act. The bill would also require the state board to periodically review and update its emission reporting and compliance standard requirements, as necessary. By expanding the scope of crimes, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES
Amended IN Senate June 20, 2023 Amended IN Assembly March 30, 2023 Amended IN Assembly March 02, 2023
Amended IN Senate June 20, 2023
Amended IN Assembly March 30, 2023
Amended IN Assembly March 02, 2023
CALIFORNIA LEGISLATURE 20232024 REGULAR SESSION
Assembly Bill
No. 43
Introduced by Assembly Member HoldenDecember 05, 2022
Introduced by Assembly Member Holden
December 05, 2022
An act to amend Section 38561.3 of, and to add Section 38561.6 to to, the Health and Safety Code, relating to greenhouse gas emissions.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 43, as amended, Holden. Greenhouse gas emissions: building materials: embodied carbon trading system.
The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. Under the act, a violation of a rule, regulation, order, emission limitation, emission reduction measure, or other measure adopted by the state board under the act is a crime. Existing law requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. Existing law requires the framework to include a comprehensive strategy for the states building sector to achieve a 40% net reduction in greenhouse gas emissions of building materials, as determined from a baseline calculated using a certain 2026 report, if that report is adequate, or as specified. Existing law requires that strategy to achieve this target as soon as possible, but no later than December 31, 2035, provides for an interim target of 20% net reduction by December 31, 2030, authorizes the state board to adjust the interim target, as provided, and requires the established targets to begin no sooner than January 1, 2027. Existing law also requires the state board to form and maintain a technical advisory committee, as described. This bill would, among other changes, extend the date for the development of the framework to December 31, 2026, and would require the state board to develop a comprehensive strategy, by December 31, 2028, rather than by December 31, 2035, to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The bill would eliminate the interim target of 20% net reduction. The bill would authorize the baseline described above to be established based on either an industry average of environmental product declarations reported for the 2026 calendar year or on the most relevant, up-to-date information available, as determined by the state board. The bill would also require the established targets to begin to apply no sooner than January 1, 2027, and 2 years after the baseline is established. The bill would delete the requirement that the state board form and maintain a technical advisory committee, and would instead require the state board to consult experts to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, as specified. Existing law requires the state board, by July 1, 2023, to develop a comprehensive strategy for the states cement sector to achieve net-zero emissions of greenhouse gases associated with cement used within the state as soon as possible, but no later than December 31, 2045. Existing law, effective January 1, 2023, requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. This bill would require authorize the state board to establish an embodied carbon trading system, as defined, and would make it applicable to building materials providers, developers, architectural and engineering firms, and construction companies. defined and as provided. The bill would require authorize the state board to integrate the embodied carbon trading system into the framework for measuring the average carbon intensity of the materials used in the construction of new buildings, as described above, on or before December 31, 2026, and to implement the system on and after January 1, 2029. The bill would require authorize the state board to adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods, and would make a violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to these and other requirements of the bill an emission of an air contaminant for the purposes of the penalty provisions of the act. The bill would also require the state board to periodically review and update its emission reporting and compliance standard requirements, as necessary. By expanding the scope of crimes, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.
The California Global Warming Solutions Act of 2006 requires the State Air Resources Board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. Under the act, a violation of a rule, regulation, order, emission limitation, emission reduction measure, or other measure adopted by the state board under the act is a crime.
Existing law requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses. Existing law requires the framework to include a comprehensive strategy for the states building sector to achieve a 40% net reduction in greenhouse gas emissions of building materials, as determined from a baseline calculated using a certain 2026 report, if that report is adequate, or as specified. Existing law requires that strategy to achieve this target as soon as possible, but no later than December 31, 2035, provides for an interim target of 20% net reduction by December 31, 2030, authorizes the state board to adjust the interim target, as provided, and requires the established targets to begin no sooner than January 1, 2027. Existing law also requires the state board to form and maintain a technical advisory committee, as described.
This bill would, among other changes, extend the date for the development of the framework to December 31, 2026, and would require the state board to develop a comprehensive strategy, by December 31, 2028, rather than by December 31, 2035, to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The bill would eliminate the interim target of 20% net reduction. The bill would authorize the baseline described above to be established based on either an industry average of environmental product declarations reported for the 2026 calendar year or on the most relevant, up-to-date information available, as determined by the state board. The bill would also require the established targets to begin to apply no sooner than January 1, 2027, and 2 years after the baseline is established. The bill would delete the requirement that the state board form and maintain a technical advisory committee, and would instead require the state board to consult experts to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, as specified.
Existing law requires the state board, by July 1, 2023, to develop a comprehensive strategy for the states cement sector to achieve net-zero emissions of greenhouse gases associated with cement used within the state as soon as possible, but no later than December 31, 2045. Existing law, effective January 1, 2023, requires the state board, by July 1, 2025, to develop, in consultation with specified stakeholders, a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses.
This bill would require authorize the state board to establish an embodied carbon trading system, as defined, and would make it applicable to building materials providers, developers, architectural and engineering firms, and construction companies. defined and as provided. The bill would require authorize the state board to integrate the embodied carbon trading system into the framework for measuring the average carbon intensity of the materials used in the construction of new buildings, as described above, on or before December 31, 2026, and to implement the system on and after January 1, 2029. The bill would require authorize the state board to adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods, and would make a violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to these and other requirements of the bill an emission of an air contaminant for the purposes of the penalty provisions of the act. The bill would also require the state board to periodically review and update its emission reporting and compliance standard requirements, as necessary. By expanding the scope of crimes, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
## Digest Key
## Bill Text
The people of the State of California do enact as follows: SECTION 1. Section 38561.3 of the Health and Safety Code is amended to read: 38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses. (2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035. (b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board. (b) (c) The framework developed pursuant to subdivision (a) shall include both of the following: (1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings. (2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues. (c) (d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision. (d) (e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i). (e) (f) As used in this section the following terms have the following meanings: (1) Feasibility, in regard to the use of a material, means all of the following: (A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. (B) The material does not harm the health or safety of those who install the materials or occupy the building. (C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials. (D) The material is commercially available to the region of the project. (E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation. (F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material. (2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material. (B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable. (f) (g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board. (g) (h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit. (h) (i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If (2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target. (2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target. (3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility. (C) (4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project. (i)The provisions of this section do (j) This section does not apply to appliances. (j) (k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section. (k) (l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following: (1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state. (2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures: (A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services. (B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies. (m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act. (n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section. SECTION 1. SEC. 2. Section 38561.6 is added to the Health and Safety Code, to read: 38561.6. (a) For purposes of this section, the following definitions apply: (1)Building materials providers includes, but is not limited to, building materials manufacturers.(2) (1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material. (3) (2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division. (4) (3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3). (5)Low carbon (4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified. (b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements: (1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies. (1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers. (2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2). (c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system: (1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods. (B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material. (2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases. (3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources. (4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029. (5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements. (d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate. (e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices. (f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.(i)The state board shall periodically review and update its emission reporting requirements, as necessary. (f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3. (2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible. (3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3. (g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section. (h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3. (1) The penalties set forth in subdivision (b) of Section 38580 apply to this section. (2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3. (i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary. (j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system. (k) This section provides guidance only. This section does not limit or expand the authority of the state board. (j) ( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section. SEC. 2. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 38561.3 of the Health and Safety Code is amended to read: 38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses. (2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035. (b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board. (b) (c) The framework developed pursuant to subdivision (a) shall include both of the following: (1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings. (2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues. (c) (d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision. (d) (e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i). (e) (f) As used in this section the following terms have the following meanings: (1) Feasibility, in regard to the use of a material, means all of the following: (A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. (B) The material does not harm the health or safety of those who install the materials or occupy the building. (C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials. (D) The material is commercially available to the region of the project. (E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation. (F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material. (2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material. (B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable. (f) (g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board. (g) (h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit. (h) (i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If (2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target. (2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target. (3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility. (C) (4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project. (i)The provisions of this section do (j) This section does not apply to appliances. (j) (k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section. (k) (l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following: (1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state. (2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures: (A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services. (B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies. (m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act. (n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section.
SECTION 1. Section 38561.3 of the Health and Safety Code is amended to read:
### SECTION 1.
38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses. (2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035. (b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board. (b) (c) The framework developed pursuant to subdivision (a) shall include both of the following: (1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings. (2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues. (c) (d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision. (d) (e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i). (e) (f) As used in this section the following terms have the following meanings: (1) Feasibility, in regard to the use of a material, means all of the following: (A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. (B) The material does not harm the health or safety of those who install the materials or occupy the building. (C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials. (D) The material is commercially available to the region of the project. (E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation. (F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material. (2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material. (B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable. (f) (g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board. (g) (h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit. (h) (i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If (2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target. (2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target. (3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility. (C) (4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project. (i)The provisions of this section do (j) This section does not apply to appliances. (j) (k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section. (k) (l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following: (1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state. (2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures: (A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services. (B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies. (m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act. (n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section.
38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses. (2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035. (b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board. (b) (c) The framework developed pursuant to subdivision (a) shall include both of the following: (1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings. (2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues. (c) (d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision. (d) (e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i). (e) (f) As used in this section the following terms have the following meanings: (1) Feasibility, in regard to the use of a material, means all of the following: (A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. (B) The material does not harm the health or safety of those who install the materials or occupy the building. (C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials. (D) The material is commercially available to the region of the project. (E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation. (F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material. (2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material. (B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable. (f) (g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board. (g) (h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit. (h) (i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If (2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target. (2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target. (3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility. (C) (4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project. (i)The provisions of this section do (j) This section does not apply to appliances. (j) (k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section. (k) (l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following: (1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state. (2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures: (A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services. (B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies. (m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act. (n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section.
38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses. (2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035. (b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board. (b) (c) The framework developed pursuant to subdivision (a) shall include both of the following: (1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings. (2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues. (c) (d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision. (d) (e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i). (e) (f) As used in this section the following terms have the following meanings: (1) Feasibility, in regard to the use of a material, means all of the following: (A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors. (B) The material does not harm the health or safety of those who install the materials or occupy the building. (C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials. (D) The material is commercially available to the region of the project. (E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation. (F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material. (2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material. (B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable. (f) (g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board. (g) (h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit. (h) (i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If (2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target. (2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target. (3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility. (C) (4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project. (i)The provisions of this section do (j) This section does not apply to appliances. (j) (k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section. (k) (l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following: (1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state. (2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures: (A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services. (B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies. (m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act. (n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section.
38561.3. (a) (1)By July 1, 2025, By December 31, 2026, the state board, in consultation with relevant stakeholders, including, but not limited to, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission, shall develop a framework for measuring and then reducing the average carbon intensity of the materials used in the construction of new buildings, including those for residential uses, compared to the baseline. The framework shall include a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported during the 2026 calendar year. The state board shall determine the industry average by consulting recognized databases of environmental product declarations and data submitted to the state board by material manufacturers during the 2026 reporting year. If the state board determines that the environmental product declarations available do not adequately represent the industry as a whole, the state board may use industrywide environmental product declarations based on domestic production data for its calculation of the industry average. uses.
(2)To ensure adequate progress is made toward achieving the goal established in paragraph (1), the state board shall utilize an interim target of 20-percent net reduction by December 31, 2030.
(3)(A)By July 1, 2029, the state board shall evaluate the feasibility and cost impact of achieving the interim target established under paragraph (2). The state board may adjust the interim target upward or downward to reflect technological advancements and progress in addressing barriers to the deployment of greenhouse gas emissions reduction technologies and processes in the manufacturing of building materials.
(B)If the state board reduces the interim target of 20-percent net reduction established under paragraph (2), the state board shall document the feasibility and cost impact constraints the state board has identified and recommend measures and actions, including proposed statutory changes, necessary to overcome those constraints to enable the building sector to achieve a 40-percent net reduction in emissions of greenhouse gases of building materials as soon as possible, but no later than December 31, 2035.
(b) The state board shall also develop, by December 31, 2028, a comprehensive strategy for the states building sector to achieve a 40-percent net reduction in greenhouse gas emissions of building materials as soon as possible, but no later than December 31, 2035. The baseline for the 40-percent net reduction shall be established based on an industry average of environmental product declarations reported for the 2026 calendar year, or the most relevant, up-to-date data that is available, as determined by the state board.
(b)
(c) The framework developed pursuant to subdivision (a) shall include both of the following:
(1) A requirement for the submission by an entity undertaking the construction of a project with a minimum size of five new residential units or 10,000 square feet of nonresidential building space of a life-cycle assessment, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3), to determine the carbon intensity of the materials used in new residential and nonresidential buildings.
(2) A requirement for the submission by the manufacturer of a building material of an Environmental Product Declaration, Type III, as defined by the International Organization for Standardization (ISO) Standard 14025, or similarly robust life-cycle assessment methods that have uniform standards in data collection consistent with ISO Standard 14025, industry acceptance, and integrity for construction materials used for the building. The state board shall determine how to proceed in the event that insufficient life-cycle assessments or Environmental Product Declarations exist, or in the event of significant supply chain issues.
(c)
(d) The framework developed pursuant to subdivision (a) may include a tracking and reporting mechanism that would facilitate the achievement of the goals set forth in this section. in order to facilitate the reporting of data to the state board on the carbon intensity of buildings, and that would also allow tracking of progress toward the carbon intensity reduction targets set forth in this section. Except for a fee to reimburse the state board for any administrative costs incurred in administering the reporting mechanism, the state board shall not impose any other charges on the participants in the reporting mechanism authorized under this subdivision.
(d)
(e) Based on the information submitted by an entity undertaking the construction of a covered project pursuant to paragraph (1) (2) of subdivision (h), (i), as well as other relevant information as determined by the state board, the state board shall evaluate the cost impact and feasibility of implementation, and establish a system for addressing known cost impact and feasibility issues in strategy implementation. implementation of the strategy developed pursuant to subdivision (b), for the purpose of developing recommendations for addressing known cost impact and feasibility issues in strategy implementation. This subdivision shall not affect the projects status as deemed to comply with the applicable target based on the finding made solely by the entity undertaking the construction of a project pursuant to paragraphs (1) and (2) of subdivision (i).
(e)
(f) As used in this section the following terms have the following meanings:
(1) Feasibility, in regard to the use of a material, means all of the following:
(A) The material is capable of being installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, social, and technological factors.
(B) The material does not harm the health or safety of those who install the materials or occupy the building.
(C) The building using the material can be designed to provide an equivalent function and at a minimum, the same useful life, performance, and durability as the building made with baseline materials.
(D) The material is commercially available to the region of the project.
(E) The material has not been involved in a claim for a construction or design defect, breach of express or implied warranty, fraud, or misrepresentation.
(F) The material provides an equivalent function and at least the same useful life, performance, and durability as the baseline material.
(2) (A) Cost impact means a significant overall material or operational cost increase or schedule delay resulting from incorporating the lower carbon material.
(B) As used in subparagraph (A), significant means an increase of 5 percent or more in the operational or overall material cost at the location of the project or time schedule delay that is attributable to incorporating a lower carbon material compared to the baseline material for which it is a substitute in the project. For purposes of this paragraph, the baseline material shall be the material that would have been used by the entity undertaking the construction of the project if this section did not apply to the project at the time the application for the building permit is submitted for a model home or project pursuant to subdivision (h). project, as applicable.
(f)
(g) The state board shall allow the entity undertaking the construction of a project to use the same persons as those responsible for the Certificate of Installation pursuant to paragraph (3) of subdivision (a) of Section 10-103 of Title 25 of the California Code of Regulations in submitting, reporting, notifying, tracking, or otherwise conveying information to the state board.
(g)
(h) The targets established by this section shall begin to apply no sooner than January 1, 2027. 2027, and two years after the baseline is established. The applicable target for each residential unit built within a project shall be the target that applied at the time the application was submitted for a building permit of the first model home in the project. For projects that do not use model homes, the applicable target shall be the target in effect at the time of submission of the application for the building permit.
(h)
(i) (1) The For buildings covered by this section, the incorporation of lower carbon materials shall be limited or excluded to the extent that it has a cost impact or is unfeasible. If
(2) If the entity undertaking the construction of a project finds that it is unable to achieve the applicable target due to unfeasibility or cost impact and there are no alternative materials or methods that are feasible and without cost impact that would allow the project to achieve the target, then the project shall be deemed to comply with the applicable target. In such a case, the entity undertaking the construction of a project shall provide the state board with information that explains the steps they took to meet the target and why they were unable to meet the target.
(2)(A)The state board shall form and maintain a technical advisory committee composed of representatives of building product manufacturers, builders, and design professionals. The technical advisory committee shall review information submitted pursuant to paragraph (1).
(B)After the entity completes the project, the technical advisory committee shall make recommendations to the entity on what steps it could take for future similar projects that would increase the entitys ability to meet the target.
(3) The state board shall consult experts, including, but not limited to, building product manufacturers, builders, and design professionals, to advise the state board on methods to reduce the carbon intensity of building materials and covered projects, while maintaining the avoidance of cost impact and their feasibility.
(C)
(4) The state board and the technical advisory committee shall not have the authority to approve, deny, or delay the planning, use, development, design, or construction of a project.
(i)The provisions of this section do
(j) This section does not apply to appliances.
(j)
(k) For purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code), no adverse environmental impact associated with the manufacture of building materials may be attributed, directly or indirectly, to the project incorporating the building material. This subdivision does not relieve the entity undertaking the construction of a covered project from complying with any other provision within this section.
(k)
(l) In developing the strategy pursuant to subdivision (b), the state board shall do all of the following:
(1) Research and prioritize actions and provisions that leverage state and federal incentives, where applicable, to reduce costs of implementing greenhouse gas emissions reduction technologies, processes, and materials used in construction-related projects for the construction industry, homeowners, and developers, and to increase economic value for the state.
(2) Evaluate measures to support market demand and financial incentives to encourage the production and use of materials used in construction-related projects with low greenhouse gas intensity, including, but not limited to, consideration of both of the following measures:
(A) Measures to expedite the adoption for use in projects undertaken by state agencies, including the Department of Transportation and the Department of General Services.
(B) Measures to provide financial support and incentives for research, development, and demonstration of technologies to mitigate emissions of greenhouse gases from the manufacture of materials used in construction-related projects, with the objective of accelerating commercial availability of those technologies.
(m) The Administrative Procedure Act (Chapter 3.5, commencing with Section 11340 of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to reporting regulations and reporting standards promulgated pursuant to this section. Prior to adopting those reporting standards and regulations pursuant to this section, the proposed rulemaking shall be made available to the public and stakeholders for comment and workshopping. The state board, the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission shall exchange technical information with each other as part of this process prior to the adoption of any reporting standard or regulation pursuant to this section. All other regulations adopted pursuant to this section are subject to the Administrative Procedure Act.
(n) Division 13 (commencing with Section 21000) of the Public Resources Code does not apply to the state boards development and approval of the framework and comprehensive strategy developed pursuant to this section.
SECTION 1. SEC. 2. Section 38561.6 is added to the Health and Safety Code, to read: 38561.6. (a) For purposes of this section, the following definitions apply: (1)Building materials providers includes, but is not limited to, building materials manufacturers.(2) (1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material. (3) (2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division. (4) (3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3). (5)Low carbon (4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified. (b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements: (1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies. (1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers. (2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2). (c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system: (1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods. (B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material. (2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases. (3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources. (4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029. (5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements. (d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate. (e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices. (f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.(i)The state board shall periodically review and update its emission reporting requirements, as necessary. (f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3. (2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible. (3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3. (g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section. (h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3. (1) The penalties set forth in subdivision (b) of Section 38580 apply to this section. (2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3. (i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary. (j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system. (k) This section provides guidance only. This section does not limit or expand the authority of the state board. (j) ( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section.
SECTION 1. SEC. 2. Section 38561.6 is added to the Health and Safety Code, to read:
### SECTION 1. SEC. 2.
38561.6. (a) For purposes of this section, the following definitions apply: (1)Building materials providers includes, but is not limited to, building materials manufacturers.(2) (1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material. (3) (2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division. (4) (3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3). (5)Low carbon (4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified. (b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements: (1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies. (1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers. (2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2). (c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system: (1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods. (B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material. (2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases. (3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources. (4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029. (5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements. (d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate. (e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices. (f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.(i)The state board shall periodically review and update its emission reporting requirements, as necessary. (f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3. (2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible. (3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3. (g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section. (h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3. (1) The penalties set forth in subdivision (b) of Section 38580 apply to this section. (2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3. (i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary. (j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system. (k) This section provides guidance only. This section does not limit or expand the authority of the state board. (j) ( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section.
38561.6. (a) For purposes of this section, the following definitions apply: (1)Building materials providers includes, but is not limited to, building materials manufacturers.(2) (1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material. (3) (2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division. (4) (3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3). (5)Low carbon (4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified. (b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements: (1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies. (1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers. (2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2). (c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system: (1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods. (B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material. (2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases. (3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources. (4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029. (5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements. (d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate. (e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices. (f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.(i)The state board shall periodically review and update its emission reporting requirements, as necessary. (f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3. (2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible. (3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3. (g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section. (h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3. (1) The penalties set forth in subdivision (b) of Section 38580 apply to this section. (2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3. (i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary. (j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system. (k) This section provides guidance only. This section does not limit or expand the authority of the state board. (j) ( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section.
38561.6. (a) For purposes of this section, the following definitions apply: (1)Building materials providers includes, but is not limited to, building materials manufacturers.(2) (1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material. (3) (2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division. (4) (3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3). (5)Low carbon (4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified. (b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements: (1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies. (1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers. (2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2). (c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system: (1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods. (B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material. (2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases. (3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources. (4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029. (5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements. (d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate. (e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices. (f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.(i)The state board shall periodically review and update its emission reporting requirements, as necessary. (f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3. (2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible. (3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3. (g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section. (h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3. (1) The penalties set forth in subdivision (b) of Section 38580 apply to this section. (2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3. (i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary. (j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system. (k) This section provides guidance only. This section does not limit or expand the authority of the state board. (j) ( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section.
38561.6. (a) For purposes of this section, the following definitions apply:
(1)Building materials providers includes, but is not limited to, building materials manufacturers.
(2)
(1) Carbon intensity means the quantity of life-cycle greenhouse gas emissions per unit of building material, and specifically the ratio between the net upstream carbon dioxide impact (emissions minus storage) of a material and the weight of the material.
(3)
(2) Embodied carbon trading system means a market-based credit trading platform of greenhouse gas emissions exchanges, banking, credits, and other transactions, governed by rules and protocols established by the state board, that result in the same greenhouse gas emission reduction, over the same time period, as direct compliance with a greenhouse gas emission limit or emission reduction measure adopted by the state board pursuant to this division.
(4)
(3) Full material life-cycle means the aggregate of greenhouse gas emissions of a building material, including direct emissions and significant indirect emissions, such as significant indirect emissions associated with material production, including those that arise from extracting, producing, transporting, manufacturing, as well as the operational and end-of-life emissions associated with those materials. associated with material production, as defined in the International Organization for Standardization (ISO) 14040 series of standards with a focus on the Product Stage phases (A1-A3).
(5)Low carbon
(4) Low -carbon product standard means a framework created pursuant to Section 38561.3 to reduce by 40 percent the carbon intensity of the materials used in newly constructed buildings identified in paragraph (1) of subdivision (c) of Section 38561.3 and within the embodied carbon trading system, to facilitate a credit trading platform for building materials along with other requirements as specified.
(b) The state board shall may establish an embodied carbon trading system in compliance with the requirements set forth in Section 38561.3 and this section that meets both of the following requirements:
(1)The system shall apply to building materials providers, developers, architectural and engineering firms, and construction companies.
(1) If the state board opts to establish an embodied carbon trading system, the system shall be designed to be used by entities undertaking a construction project and building material manufacturers.
(2) The embodied carbon trading system unit of measurement shall be Global Warming Potential (GWP) per gross square foot (kg CO2 e/sq. ft.2). (kg CO2e/sq. ft.2).
(c) The state board shall have the flexibility to design the embodied carbon trading system and shall may do all of the following: following with respect to the embodied carbon trading system:
(1) (A) Adopt rules and regulations for the credit allocation method, the anticipated carbon price in the scheme, and trading periods.
(B) In developing the rules and regulations for the credit allocation method, including those governing any tradeable compliance instrument, make efforts to avoid an overabundance of compliance credits in the market, and, to this end, may consider setting an upper limit on amount of credits that can be generated per unit of material.
(2) Consider using the credits generated through the use of the embodied carbon trading system to help promote innovation and investment in building construction materials that reduce emissions of greenhouse gases.
(3) Consider all relevant information pertaining to low-carbon building materials reduction programs in other states, localities, and nations, including other states, Canada, and the European Union, and, in doing so, review existing and proposed international, federal, and state greenhouse gas emission reporting programs, make reasonable efforts to promote consistency among the programs established pursuant to this division and other programs, and streamline reporting requirements on greenhouse gas emission sources.
(4) Integrate the embodied carbon trading system with the framework described in Section 38561.3 on or before December 31, 2026, and shall implement that system on and after January 1, 2029.
(5) Consult with the California Building Standards Commission, the Department of Housing and Community Development, and the State Energy Resources Conservation and Development Commission in the development of building regulations, in order to minimize duplicate or inconsistent regulatory requirements.
(d) The state board shall have the discretion to adopt further greenhouse gas emission reduction targets within the scope of Section 38561.3 prior to December 31, 2035, to alter the interim 2030 target as appropriate, or provide early reduction credit considering market adoption, if appropriate.
(e) In developing its plan, the state board shall identify opportunities for emission reduction measures from all verifiable and enforceable voluntary actions, and best management practices.
(f)(1)The state board shall adopt rules and regulations to monitor, verify, and enforce voluntary greenhouse gas emission reductions from building materials that are authorized by the state board for use to comply with limits established by the state board pursuant to Section 38561.3.
(2)The state board shall adopt rules and regulations in an open public process to achieve the maximum technologically feasible and cost-effective greenhouse gas emission reductions from construction building materials.
(3)The rules and regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from construction building materials, in furtherance of achieving the statewide greenhouse gas emissions limit.
(4)The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.
(5)The state board shall consider the cost-effectiveness of these rules and regulations, but shall not limit consideration to monetary costs and benefits. The state board shall also consider overall societal benefits, including reductions in other air pollutants, diversification of energy sources, and other benefits to the economy, environment, and public health.
(g)The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.
(h)A violation of a rule, regulation, order, emission limitation, emissions reduction measure, or other measure adopted by the state board pursuant to this section shall be deemed to result in an emission of an air contaminant for the purposes of the penalty provisions of this division.
(i)The state board shall periodically review and update its emission reporting requirements, as necessary.
(f) (1) The state board may adopt rules and regulations to monitor, verify, and enforce reductions in embodied carbon in building materials pursuant to this section and Section 38561.3.
(2) The state board shall minimize the administrative burden of implementing and complying with these regulations when possible.
(3) The state board shall design any rules and regulations to encourage manufacturers of building materials to produce low-carbon materials for sale in California to ensure that entities that undertake construction of projects identified in paragraph (1) of subdivision (c) of Section 38561.3 have an adequate supply of low-carbon materials to meet the greenhouse gas reduction targets established in Section 38561.3.
(g) The state board may consider the use of third parties, such as verifiers, for purposes of implementing the requirements of this section.
(h) Compliance mechanisms, reporting requirements, and penalties for noncompliance with any compliance standards or an embodied carbon trading system established pursuant to this section or Section 38561.3 will be determined by the administrative process. The carbon trading system established pursuant to this section alone or in combination with Section 38561.3 shall not cause a project to have a cost impact or be infeasible as those terms are defined in subdivision (f) of Section 38561.3.
(1) The penalties set forth in subdivision (b) of Section 38580 apply to this section.
(2) The deemed to comply provisions in paragraphs (1) or (2) of subdivision (i) of Section 38561.3 apply when the state board adopts any compliance standards or establishes an embodied carbon trading system. Penalties do not apply to a project that is validly deemed to comply pursuant to Section 38561.3.
(i) The state board shall periodically review and update its emission reporting and compliance standard requirements, as necessary.
(j) This section does not limit the state boards ability to establish alternative incentives or compliance programs aside from or in addition to an embodied carbon trading system.
(k) This section provides guidance only. This section does not limit or expand the authority of the state board.
(j)
( l ) This section does not authorize the creation of a revenue-generating program or any other program that would result in moneys being paid to the state, other than penalties imposed for a violation of this section.
SEC. 2. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 2. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SEC. 2. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
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