California plans for its 2050 climate future

Californie : une trajectoire climatique pour 2050
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A pioneer in electricity efficiency
California: A pioneer in reducing greenhouse gas…
California in the international climate race
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California is a pioneer state in terms of environmental protection and also for specific action on climate and the promotion of the green economy. Its choices have been a lever for changing national and regional policies in this area. The Brown administration that is currently in power is working to define and implement a climate trajectory for 2050, the influence of which should go beyond state borders.

California has been a leader on environmental policy since the 1960s, when it adopted the first-ever regulations to control automotive emissions in an effort to combat the state's air pollution problems. In the 1970s, California led the nation in efforts to increase energy efficiency. Since that time, California has continued to lead in these efforts, and to build on them to combat global climate change. While the state has taken its position as a forerunner, the state's economy has continued to grow and the state has reaped economic and environmental benefits.

The state has taken a comprehensive approach to addressing climate change, leading efforts to reduce greenhouse gas (GHG) emissions, to prepare for unavoidable climate impacts, and to support research into climate change, options to reduce emissions, and to safeguard the state from unavoidable climate impacts, which are already being experienced across California. The state's leadership has also led to the development of several interstate and international agreements for cooperation on climate change policy. California is working, on a global scale, to demonstrate the important and meaningful impact that subnational entities are having in addressing global climate change. This chapter outlines the evolution of California's climate change programme, progress to date, and next steps for the state as it looks to achieve deep emission reduction by the middle of this century.

A brief history - California's environmental leadership

California has been an environmental leader for many years. Two key areas of leadership include improving air quality and increasing energy efficiency. Work in these areas has been underway for several decades and has resulted in significant benefits for the state, while serving as the foundation for the state's actions on climate change.

Tackling air pollution

In 1960, California established a board to test and certify emission control devices for motor vehicles as a response to the state's unhealthy and severe air pollution problems in the Los Angeles area. Following that, the state established a series of vehicle technology requirements and tailpipe emission regulations. These regulations preceded any action on the federal level by several years. This leadership was ultimately reflected in the first federal Clean Air Act, which granted California the ability to establish its own, more stringent standards for passenger vehicle emissions control. The Clean Air Act also allows other states to opt to follow California's standards instead of federal standards, a choice that many, particularly northeastern, states have made. California's special status was granted because of the state's 'unique' air quality challenges and 'pioneering efforts' (Clean Air Act of 1967 as cited in Hanemann, 2008). Each time California establishes new vehicle emission standards, the US Environmental Protection Agency grants the state a waiver that allows the state to implement the rules.

With this authority, California has designed increasingly stringent requirements for reductions of smog-forming emissions through emissions control technology and advanced vehicle technology, including strict tailpipe standards and requirements to limit evaporative emissions from vehicles. As part of its low emission vehicle programme, the state also developed a zero-emission vehicle (ZEV) programme. Most recently, the state has combined its programmes into an Advanced Clean Cars programme, which focuses on reducing smog-forming and GHG emissions from the passenger vehicle fleet and to promote broader dissemination and adoption of advanced vehicle technologies.

Improving energy efficiency

During the Energy Crisis of the 1970s, California led the way in establishing energy efficiency standards for buildings and appliances. California has remained out in front on energy efficiency, setting standards that are models for other states, the federal government, and other countries. As a result of these standards, California's per capita electricity consumption has remained nearly constant since 1975 and well below the national average since 1990. One study has estimated that the energy savings that have resulted from California's energy efficiency policies have added approximately $40 billion to the economy from 1972 to 2007 (Roland-Holst, 2008).

California's continued efforts to improve energy efficiency are reflected in its loading order, or the order in which the state dispatches resources to meet electricity demand. The state's loading order places energy efficiency in the first priority, meaning that energy efficiency measures including efficiency standards and demand side management will be the first methods deployed to meet increasing demand. Following energy efficiency, the state prioritizes renewable electricity sources, followed by clean, efficient natural gas. The loading order has been in place for several decades and was reaffirmed in the 2003 Energy Action Plan (State of California, 2003).

To facilitate its efforts to increase energy efficiency, the state's electricity rate structure also benefits from decoupling, which is a structure designed to alleviate the disincentive that utilities have to promote energy efficiency. Under this structure, a utility's profits are not tied to the amount of electricity sold, but rather rates are adjusted to meet specific revenue targets. These revenue targets are set to allow utilities to recover their fixed costs and are periodically reviewed to ensure cost recovery (for more information on decoupling, see NARUC, 2007). California has the longest experience of any state with decoupling, since it adopted the approach in the early 1980s.

Taking on climate change

Climate change has been a part of California's policy landscape since the late 1980s, when the State Legislature requested the first assessment of climate change impacts on the state and assessment of options for reducing GHG emissions (Franco et al., 2008). Following that legislation, two reports were issued that outlined climate impacts and options for reducing GHG emissions in 1989 and 1991 (Franco et al., 2008). However, it was several years until the state took formal steps to address climate change.

From these initial steps, California's climate change programme has evolved into sector-specific emission reduction programmes and then into the comprehensive climate policy that is in place today. The state began its climate activities building on its leadership in transportation and energy (Hanemann, 2008). From here, the state's policy has further evolved and developed, leading to stronger regulations to reduce emissions and greater investments in research to support climate policies. Building on these focused successes, the state then adopted a comprehensive, economy-wide GHG emission reduction target.

Assembly Bill 1493: Controlling Vehicle Emissions

In 2002, California adopted Assembly Bill (AB) 1493, a law directing the California Air Resources Board to set tailpipe emission standards to limit GHG emissions from passenger vehicles (California State Assembly, 2002). These regulations were developed and adopted using California's special status under the Clean Air Act, which had enabled decades of strong standards to control passenger vehicle emissions of so-called 'criteria air pollutants', which are a set of pollutants for which the US Environmental Protection Agency (EPA) sets national limits.

These regulations were the first of their kind in the world. The regulations set fleet average standards for passenger cars and light trucks, starting with the 2009 model year. The standards are designed to be phased in and become increasingly stringent, to achieve a 30% reduction in GHG emissions from new cars by 2016. Despite a lawsuit by the automobile industry and initial delays from the US EPA in granting California the waiver needed to implement the standards, the regulations have been adopted by a number of other states.

California's motor vehicle emissions standards demonstrate the far-reaching effect of the state's environmental leadership. While the Clean Air Act only gives special authority to California, other states are able to choose to follow California's vehicle standards instead of the federal ones. Shortly after their adoption, enough states had opted for the Californian regulations (including the GHG standards) to account for about one third of the US vehicle market. Ultimately, the US government established fuel economy standards for new vehicles that harmonized with California's rules and now all new vehicles sold in the US achieve the GHG emission targets that were set in California.

Building a market for renewable energy

In addition to pushing for increased energy efficiency, California also established a programme to encourage the production of clean, renewable sources of electricity. In 2002, California adopted its first Renewable Portfolio Standard (RPS). The RPS required all investor-owned utilities, electric service providers, and community choice aggregators

Community choice aggregators (CCAs) are cities or counties that buy power on behalf of an aggregated group of customers. Residents can opt out of participation. CCAs enable communities to purchase contracts for alternative energy supplies.

to procure 20% of their electricity from renewable sources by 2020. The 2003 State Energy Action Plan accelerated this timeline, calling for 20% renewables by 2010 (State of California, 2003). This more aggressive target was codified into law in 2006 (California State Senate, 2006a). More recently, the state has adopted stronger goals, which are discussed below.

Alongside its goals for renewable energy, California also established an emissions performance standard for long-term contracts for baseload power (California State Senate, 2006b). Under these rules, utilities cannot enter into contracts with entities that exceed the state's performance standard. The guidelines are set at a level that will eventually result in the phase-out of electricity from coal (California Energy Commission, 2014).

California has also taken a comprehensive, multi-stakeholder approach to siting large renewable energy projects in the state's desert region. The Desert Renewable Energy Conservation Plan (DRECP) includes state, federal, and local governments as well as conservation groups. The plan has identified areas for renewable energy development and priority areas for species and habitat conservation. The goal of the plan is to enhance and restore natural ecosystems, while also providing renewable energy developers with more predictable and certain permit timing and costs (DRECP, 2014).

Bringing it together: adopting a GHG emission target

California's vehicle and energy policies laid strong groundwork for the adoption of a comprehensive climate mitigation programme. In 2005, then-Governor Arnold Schwarzenegger announced that California would take steps to reduce GHG emissions economy-wide. Through Executive Order (EO) S-03-05, Governor Schwarzenegger established emission reduction targets for the state. This included a directive to reduce statewide GHG emissions to 1990 levels by 2020 and to reduce emissions to 80% below 1990 levels by 2050 (EO S-03-05).

Text of the Executive Order is available here: http://gov.ca.gov/news.php?id=1861

These deep emission reductions by the middle of the century are on the order of those believed to be necessary to achieve climate stabilization and limit the impacts of global warming.

Assembly Bill 32: The Global Warming Solutions Act of 2006

In 2006, California took steps to codify the 2020 emission reduction target into law. AB 32, The Global Warming Solutions Act of 2006, established the 2020 emission target to reduce GHG emissions to 1990 levels. The bill placed the responsibility and authority for implementing AB 32 with the California Air Resources Board (CARB), the agency that has led California in its efforts to address air pollution. The bill also included a 'safety valve', which allowed for a delay in meeting the target under specific circumstances. The safety valve was included as part of the negotiation of the legislative language (Hanemann, 2008). AB 32 also included language that allowed for the use of market mechanisms (e.g., cap and trade or a carbon tax) as part of the state's effort to reduce emissions. The law directed CARB to develop a Scoping Plan, outlining how the state would achieve the 2020 emission reduction target (California State Assembly, 2006)

CARB adopted the first Scoping Plan in 2008, outlining the programmes that would be implemented to meet the 2020 target. The foundation for the state's emission reductions lay in its well-established programmes, including the state's vehicle emissions standards, the renewable portfolio standard, and energy efficiency measures. The Scoping Plan also included a number of new programmes, including a low carbon fuel standard for transportation fuels, programmes to reduce GHG emissions from medium- and heavy-duty vehicles, and programmes to reduce high global warming potential gases. The Scoping Plan also called for the development and implementation of a cap and trade programme to be implemented to reduce a portion of the state's GHG emissions (California Air Resources Board, 2008).

Following the passage of AB 32, CARB adopted a series of regulations to limit GHG emissions. In addition several new laws were enacted to reduce GHG emissions from several sources.

Land use and transportation

In 2008, California adopted a law to require the reduction of per capita GHG emissions through the integration of land use and transportation planning at a regional scale. Senate Bill (SB) 375 directed CARB to develop regional GHG emission reduction targets (California State Senate, 2008). Regions demonstrate compliance with these targets through the preparation of sustainable communities strategies. These strategies include efforts to reduce vehicle miles travelled through a combination of efficient land use and investments in transit and other alternatives to driving such as biking and walking.

Renewable energy

When Governor Brown took office in 2010, he reaffirmed the state's commitment to reduce GHG emissions and adopted several additional laws and goals to achieve this objective. This includes a bill that increases the state's renewable portfolio standard to 33% by 2020 (California State Senate, 2011). Governor Brown also set a goal to encourage the deployment of zero emission vehicles (ZEVs), setting a goal of reaching 1.5 million ZEVs on the road by 2025 (EO B-16-2012, for more details see Governor's Office, 2013). He also set goals for distributed generation (i.e., rooftop photovoltaics and small renewable systems) and combined heat and power. The state also aims to increase building energy efficiency in new buildings to reach a zero-net-energy standard by 2020 in residential buildings and by 2030 in commercial buildings (California Energy Commission, 2007), which has been reaffirmed in recent energy planning exercises.

As the state increases its reliance on intermittent renewable sources of electricity, it is developing a programme to procure and install energy storage technology. The California Public Utilities Commission (CPUC) was instructed to set a target for energy storage (California State Assembly, 2010). In 2013, the CPUC adopted an energy storage procurement target of 1,325 megawatts by 2020 for the state's three investor-owned utilities. The storage is to be installed by 2024 (CPUC, 2013). California's plan for energy storage is the first of its kind in the US.

Cap and trade

AB 32 gave CARB the authority to use market mechanisms to reduce GHG emissions. As a result, California has developed a cap and trade programme. The cap covers about 85% of the state's emissions and is responsible for about 15% of the emissions reductions necessary to meet the AB 32 target. The emissions cap was set in 2013 and declines annually from that initial point. The programme began with the free allocation of emissions allowances, but subsequent allowances have had to be purchased by auction. The state held its first cap and trade auction in 2012. In its first two years, the programme covered electric utilities and large industrial customers. In 2015, transportation fuels will be included under the cap (California Air Resources Board, 2011).

Revenues from the cap and trade auctions are used to support programmes to reduce GHG emissions. To identify potential areas where this income can be invested, the state has developed a cap and trade investment plan. Auction proceeds must be invested in projects that will lead to demonstrable GHG emission reductions. In addition, state law requires that 25% of auction proceeds be invested in projects that benefit disadvantaged communities and that 10% be invested in projects located in disadvantaged communities (California State Senate, 2012).

Interstate and international engagement

California has long partnered with other states and countries to share information, coordinate programmes, and advance environmental goals; and climate change has been no exception. These agreements span broad geographic scales and include a range of elements. One of the most recent and complex agreements is between California and the Canadian province of Quebec. In January 2014, California and Quebec linked their cap and trade systems, enabling allowances from both jurisdictions to be used in either programme. The two governments held their first joint auction in 2014.

In addition, California has agreements with several other US states and Canadian provinces through the Pacific Coast Collaborative. Through this agreement, the states of Washington, Oregon, and California, along with the Canadian province of British Columbia have committed to accounting for the cost of carbon pollution and adopting and maintaining low carbon fuel standards. Where feasible and appropriate, the signatories will link programmes.

California also has agreements with a number of Chinese government entities. These include agreements with the Chinese Ministry of Commerce, the National Ministry of Environmental Protection, the provinces of Jiangsu and Guangdong, and the Beijing Ministry of Environmental Protection. The Memorandums of Understanding include cooperation on addressing air pollution, low-carbon development, clean transportation, and investment in clean energy technologies.

California has also developed agreements with the government of Mexico that address energy, climate change, air pollution, and carbon pricing. These agreements were signed in July 2014. California has additional agreements with numerous other states and regions throughout the world, including several countries in South America, India, Japan, and Israel.

A full list of California's current Memorandums of Understanding can be found here: http://climatechange.ca.gov/climate_action_team/intergovernmental.html

Opposition to AB 32

When the law was passed in 2006, California had a strong economy with low unemployment (below 5%) and a steady, but slowing real estate market (California Department of Finance, 2006). AB 32 was supported by all major environmental groups in California, as well as many local governments, industrial leaders, several labour organizations, and members of California's congressional delegation, including the US Senators Boxer and Feinstein. It also received the editorial support of the state's major newspapers and the New York Times. On the other side, the largest opponents were generally those with the most to lose - oil companies.

A list of supporting and opposing parties can be seen here: http://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml

However, some companies that were also greatly affected by the bill, including Pacific Gas and Electric, one of the state's largest investor-owned utilities, supported the passage of AB 32.

Opposition to AB 32 has manifested in several ways. The most public being a 2010 ballot measure that would have delayed the implementation of AB 32 until California's unemployment level remained at or below 5.5% for four consecutive quarters. Most viewed this to be an indefinite suspension of the law and the proposition, which was supported by two large oil companies and several individuals, was soundly defeated by California voters, with nearly 62% of voters opposing the proposition.

Many oil companies, led by the Western States Petroleum Association (WSPA), continue to wage an ongoing campaign against AB 32 and many elements of its implementation. For example, the oil companies have supported an economic analysis, prepared by the Boston Consulting Group (BCG), of the fuel provisions under AB 32. The BCG study, which has become the focus of the debate for opponents, argues that AB 32 will result in increasing fuel prices, refinery closures and the loss of jobs, and a large wealth transfer (Boston Consulting Group, 2012). In 2013, the University of California, Davis was engaged by WSPA, the Rockefeller Brothers Fund, and the Alliance of Automobile Manufacturers to review the BCG study. The peer review group, led by academic experts in economics, climate policy, and refineries found that the report was based on a set of unlikely assumptions and scenarios, but that policymakers should remain on alert for signals that the costs of compliance are too high (UC Davis Policy Institute for Energy, Environment, and the Economy, 2013).

Without doubt, this debate will continue alongside California's implementation of AB 32 and the steps the state takes to achieve GHG emission reductions beyond 2020. In fact, these arguments have been in full force as the state is expanding its cap and trade programme to include transportation fuels under the cap beginning in January 2015. Furthermore, it is not likely that this debate will be confined to California's policies, but will take place on a global scale. Achieving deep emission reductions will require fundamental shifts in global energy supplies away from high-carbon energy sources. Businesses who choose not to engage in that transition stand to lose.

Nonetheless, even as this debate continues, California has proceeded with the implementation of AB 32 and is seeing progress in many arenas, including in the development of clean energy businesses and jobs.

Progress: implementing California's Global Warming Solutions Act: AB 32

Since California's adoption of AB 32, the state has updated its policies and made significant progress. An updated Scoping Plan was adopted in 2014, showing that the state is on track to meet its 2020 target (CARB, 2014). The state's emissions have declined and the economy has rebounded from the recession, while much success has been achieved in areas such as renewable energy and investment in clean energy.

GHG emissions in California

AB 32 sets a target for emissions to reach 1990 levels by 2020. Considerable progress has been made on this front with California's GHG emissions currently falling below the 2000 level and moving closer to the 1990 figure (Figure 2). The transportation sector remains the largest source of emission reductions in the state, accounting for 37% of emissions in 2012.

Per capita GHG emissions have also declined over the same time period and are well below the national average. However, California's per capita emissions remain higher than countries with a similar standard of living (Figure 3).

Renewable energy, clean transportation, and energy efficiency

In 2013, California's three largest investor-owned utilities procured nearly 23% of their electricity from renewable sources (California Public Utilities Commission, 2014) and these sources are accounting for an increasingly large share of the state's power mix. The generating capacity from renewable energy sources in California has increased dramatically over the past ten years and almost doubled in 2013. By the end of 2013, over 8,000 MW of generating capacity was commercially available from renewable sources.

Generation Capacity from Renewable Sources from the California Public Utilities Commission: http://www.cpuc.ca.gov/NR/rdonlyres/384E3432-6EAB-4492-BF88-992874A7B978/0/2013_Q1RPSReportFINAL.pdf

Utilities report that they are on track to meet the 33% RPS target in 2020 and the state is actively exploring options to set goals beyond 2020.

There has also been significant progress in the deployment of distributed renewable energy systems. The California Solar Initiative began in 2007 with the goal of encouraging widespread installation of rooftop solar systems. The programme provided financial incentives through utilities for installation. Since then, the programme has seen a tremendous success in the number of systems installed, in an increase in the generating capacity, and a decrease in the operating costs of the systems. California leads the nation with over 240,000 solar systems installed, which accounts for almost 2,300 MW of installed capacity. Since 2007, the operating cost for these systems has declined by half, from close to $11/Watt down to just over $5/Watt (all data from CA Solar Statistics, 2014).

Economic impacts: innovation and investment

Due at least in part to its environmental leadership, California continues to lead the US and the world in attracting private investment in clean energy technologies, with more than double the number of clean energy patents than the next most-innovative state (Next10, 2014). The state's core clean economy, which includes private-sector jobs in clean energy fields, has grown faster than the economy as a whole, with a 20% increase in the number of jobs between January 2002 and January 2012 (Next10, 2014). While definitions and methodologies vary, all analyses show that California has the largest number of clean economy jobs in the country (Next10, 2014; Brookings, 2010; and Pew Charitable Trusts, 2009).

Continuing the journey: achieving deep emission reductions

California is on track to meet its 2020 GHG emission goal, but that is only one stop on the way to achieving deep emission reductions by the middle of this century. Scientists estimate that emission reductions of around 80% to 90% below 1990 levels are needed to stabilize the climate and minimize the disruptions caused by the emissions in the atmosphere. Reductions of this magnitude are needed on a global scale in the developed world but even with these reductions, many impacts of climate change are already underway and are unavoidable and irreversible.

Achieving deep emission reductions in California

California already has many programmes in place that will be needed to achieve its 2050 goal of 80% below 1990 levels by 2050, but it will need to ramp up the rate of implementation and the pace of emission reductions. The state will need to continue to reduce emissions from transportation and electricity generation and increase energy efficiency. In addition, the state will need to manage natural systems in a manner to maximize carbon storage potential in forests, wetlands, and other natural areas.

To further reduce GHG emissions the state needs to decarbonize its electricity supply. This means increasing the amount of clean and renewable sources of energy and drastically reducing the use of carbon-emitting fossil fuels. At the same time, the state must reduce the energy demand through efficiency measures and by shifting as many direct fuel uses from fossil fuels to electricity as soon as possible. This requires a transition to electric vehicles and hydrogen fuel cells powered by low-carbon sources. To meet its long-term GHG target the state will need to generate nearly three-quarters of its electricity from non-GHG producing sources - meaning renewable sources or, potentially, nuclear power or fossil fuel combined with carbon capture and sequestration (Williams et al., 2012).

Massive and sustained energy efficiency measures - amounting to 1.3% per year - will also be critical for transforming the state's energy and transportation systems to enable the long-term target to be reached (Williams et al., 2012). These energy efficiency improvements will be particularly needed in the state's existing building stock and also in relation to water usage, since nearly 20% of California's electricity consumption is devoted to water-related energy use.

http://www.energy.ca.gov/research/iaw/water.html

These reductions will also go a long way to boosting the state's resilience in the face of climate change.

Efficiencies in transportation infrastructure and land use planning will also be important for reducing emissions. Investments in public transit and communities are needed to provide viable alternatives to driving. Diversifying land use, designing neighbourhoods that are easier to walk in, and creating closer proximity between housing and jobs all have a significant effect on travel behaviour and can reduce the distances people drive (Ewing and Cervero, 2001). In addition to building communities that make it easier for people to use alternatives to single-occupant vehicles, major investments are needed in how we move between the state's regions. Investment in the state's high-speed rail system combined with advancements in vehicle technology and efficiency will reduce the environmental impact of the state's transportation system. The state's high-speed rail will connect the state's regions, providing alternatives to highway travel and interregional air trips. Tying these investments to robust local transportation networks will be key for realizing their maximum environmental benefits. However, this is contingent upon efforts to ensure clean electricity generation to power the high-speed rail system (Chester and Hovarth, 2012).

The order in which the state makes these investments and transforms the energy and transportation systems is important from both an economic and environmental perspective. Therefore, it is essential that the state is taking steps to continue this transition and to set the direction for future investments and programmes. Setting in place goals for energy and water efficiency improvements will help to avoid an over-investment in new, clean electricity generation to meet energy demands. Cleaning up the state's energy generation mix is key for insuring that increased electrification, especially in the transportation sector, does not result in an increase in GHG or air pollution emissions.

Charting a path to 2050

Meeting the state's 2050 GHG emission goal will require a pace of reduction of around 11.4 million metric tons CO2-equivalent per year, which is nearly two and a half times the pace of reductions required to meet the 2020 AB 32 target (California Air Resources Board, 2014).

California has committed itself to making these emission reductions and doing so in the most cost-effective manner. Getting the state onto this path is certain to continue the debate and conversation around the costs and benefits of making this transition and the impacts on California's economy. As discussed earlier, oil companies have been active and vocal opponents of California's GHG emission reduction policies, which is sure to continue. Public support for AB 32 and its associated policies has generally been very high among likely voters in California. However, it is unclear how this support will fare as the public experiences both the benefits and costs associated with emission reduction efforts. These are factors that the state will have to consider and address internally as it moves forward to tackle climate change. However, considering these factors in state policy efforts is just part of a calculus that includes working with other regions and countries worldwide. By broadening its efforts, California is demonstrating that subnational actions can make a big contribution towards the fight against global climate change, to the promotion of low-carbon development and the encouragement of the international community to take similarly aggressive steps.

A pioneer in electricity efficiency

For over twenty years the electricity consumption per person in California has been stable and is less than half the average per capita consumption of the United States.
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California: A pioneer in reducing greenhouse gas emissions

GHG emissions in California have declined since 2000 and are approaching 1990 levels, while remaining above the targets set by the AB 32 and the emissions of many countries with similar living standards.
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California in the international climate race

California aims to reduce the state's GHG emissions to those of the European Union by 2020.
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