BILL ANALYSIS AB 222 Page 1 Date of Hearing: April 27, 2009 ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE Felipe Fuentes, Chair AB 222 (Adams) - As Amended: April 14, 2009 SUBJECT : Energy: biofuels SUMMARY : Allows facilities that covert solid waste into energy or chemicals to count as a renewable electricity generation facility for the purpose of California's Renewable Portfolio Standard (RPS) and for renewable grant programs administered by the by the California Energy Commission (CEC). Allows local governments to count solid waste that is converted into energy toward their recycling diversion goals. EXISTING LAW : 1)Requires retail sellers of electricity, except local publicly owned electric utilities, to increase their existing level of renewable resources by 1% of sales per year such that 20% of their retail sales are procured from eligible renewable resources by 2017. 2)Defines eligible renewable resources to include all generation from an in-state renewable electricity generation facility that uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology. 3)Requires cities, counties and regional agencies to divert at least 50% of their solid waste from landfills. 4)Permits a city, county, or regional agency to count up to 10 % of their 50 % mandated solid waste diversion from transformation or biomass conversion under limited circumstances. 5)Defines "transformation" as incineration, pyrolysis, distillation, or biological conversion other than composting. "Transformation" does not include composting, gasification, or AB 222 Page 2 biomass conversion. 6)Defines "gasification" as a technology that uses a noncombustion thermal process to convert solid waste to a clean burning fuel for the purpose of generating electricity, and that, at minimum, meets all the following criteria: a) The technology does not use air or oxygen in the conversion process, except ambient air to maintain temperature control. b) The technology produces no discharges of air contaminants or emissions, including greenhouse gases. c) The technology produces no discharges to surface or groundwaters of the state. d) The technology produces no hazardous waste. e) To the maximum extent feasible, the technology removes all recyclable materials and marketable green waste compostable materials from the solid waste stream prior to the conversion process and the owner or operator of the facility certifies that those materials will be recycled or composted. f) The facility where the technology is used is in compliance with all applicable laws, regulations, and ordinances. g) The facility certifies to California Integrated Waste Management Board (CIWMB) that any local agency sending solid waste to the facility is in compliance with this division and has reduced, recycled, or composted solid waste to the maximum extent feasible, and CIWMB makes a finding that the local agency has diverted at least 30 percent of all solid waste through source reduction, recycling, and composting. THIS BILL : 1)Allows conversion at a biorefinery to count toward a utility's RPS obligation and to potentially participate in CEC grant programs. AB 222 Page 3 2)Defines "biorefinery" to mean a facility that uses a noncombustion thermal, chemical, biological or mechanical conversion process to produce marketable produces, including but not limited to renewable fuels, chemicals, and electricity. 3)Repeals the definition of "gasification". 4)Adds "biorefinery" to the definition of a solid waste facility in the CIWMA, and eliminates "gasification facility" from the same definition. This allows biorefinery to count waste sent to a biorefinery toward a local agencies diversion goals. FISCAL EFFECT : Unknown. COMMENTS : According to the author, the purpose of this bill is to encourage the production of low-cost biofuels and green power from California's own sustainable resources, and thereby contribute to economic stimulus, local job creation, national security, energy independence and a cleaner environment. The author believes these goals can be achieved by clarifying that solid waste conversion facilities that convert municipal solid waste into electricity count toward a utility's RPS and by creating incentives for local governments to provide the conversion facilities with the solid waste fuel stocks. 1) Background : The term "conversion technologies" refers to a wide variety of different technologies that heat or "cook" solid waste in order to reduce its volume, using the byproduct to produce energy or other new products. Conversion technologies include pyrolysis and gasification. These technologies heat solid waste at extremely high temperatures (over 1300F in gasification) to produce gas and liquid residues that are typically burned to produce energy. Biochemical conversion processes use acid or enzymatic processes to split the chemical bonds of the feedstock (in this case solid waste). Resulting sugars can be fermented to make ethanol for fuel, and acids for industrial uses. All of these technologies produce toxic air pollutants. 2) The Renewable Portfolio Standard : The RPS requires investor-owned utilities and certain other retail sellers to achieve a 20% renewable portfolio by 2010. The RPS defines renewable resources to include, among other technologies, a AB 222 Page 4 municipal solid waste conversion facility that meets specific environmental standards. These standards include requirements that: a) The technology does not use air or oxygen in the conversion process, b) The technology produces no discharge of air contaminants, c) The technology produces no discharges to surface or ground water, d) The technology produces no hazardous waste, and e) To the extent feasible, the technology removes all recyclable, materials from the solid waste. This bill would change the term for a "municipal solid waste conversion" to "biorefinery." It would also change the definition so that instead of meeting the specific restriction above, the biorefinery would be allowed to have discharges of air contaminants, water, and hazardous waste provided the facility was in full compliance with the standards set by the California Air Resources Board (ARB), and the California Water Resources Control Board (Water Board) that apply to any other manufacturing processes. This bill could also be read to allow a biorefinery that uses a fuel stock other than solid waste to not have to comply with ARB or Water Board regulations. The committee and the author may wish to consider amending the bill to require that the biorefinery meet or exceed standards set by ARB, WRCB, and the local air quality districts irrespective of fuel source used. 4) Other renewable programs : The CEC oversees grant programs for renewable research and development. These programs spend over $135 million per year on renewable energy projects. The legislative goals of Renewable R&D program are to increase the amount of electricity generated from eligible renewable energy resources per year. This bill would allow biorefineries to participate in the grant programs. However, the definition of biorefineries includes facilities that "produce marketable products" and do not produce electricity or a renewable fuel. Consequently, this bill could allow grant funds that are intended to be spent on developing sources of renewable electricity on projects that do not meet that goal. The committee and the author may wish to consider AB 222 Page 5 amending the bill to provide that a biorefinery must produce electricity or a renewable fuel . 5) Diversion credit for conversion technologies : This bill removes "conversion technology" from the definition of transformation. This change will result in the material processed by conversion technology to "count" towards a jurisdiction's 50% recycling rate. Opponents of this bill believe that this change in statute could result in an actual decrease in recycling in California since the conversion technologies do not recycle material for reuse, but instead consume them. They believe that most conversion technologies can only operate using goods that are recyclable today as the fuel source. To ensure that the bill does not result in reducing recycling rates in California the author and the committee may wish to consider amending the bill to remove the provision allowing solid waste consumed in a biorefinery to count toward a city's diversion requirements, but still allow biorefineries to count toward the RPS. RELATED LEGISLATION AB 64 (Krekorian/Bass) increase California's RPS to 33% by 2020 and changes the definition of eligible renewable resources to allow solid waste conversion facilities to count toward the RPS if they have no emissions of air pollutants or groundwater or surface water discharges. SB 14 (Simitian) increase California's RPS to 33% by 2020. REGISTERED SUPPORT / OPPOSITION : Support Agricultural Council of California Alternative Resources, Inc. (ARI) BioEnergy Producers Association Biomass Coordinating Council (BCC) Blue Line Transfer, Inc. Card Construction Clean Cities Coalition AB 222 Page 6 Clements Environmental Commercial Industrial Waste Applications, Inc. County Sanitation Districts of Los Angeles Desert Valley Disposal Services Global Energy, Inc. ICM, Inc. Inland Empire Disposal Association (IEDA) Innovative Logistics Solutions, Inc. (ILS) Interstate Waste Technologies, Inc. Los Angeles City Councilmember Greig Smith Los Angeles County Solid Waste Management Committee Los Angeles County Solid Waste Management Task Force Marin Resource Recovery Marin Sanitary Service Mid State Solid Waste & Recycling Miller De Wulf Corporation North Valley Coalition of Concerned Citizens Inc. Palm Springs Disposal Services Pena's Disposal, Inc. Rainbow Disposal Co., Inc. Redwood City Planning Commission San Bernardino County Board of Supervisors Sempra Energy Solid Waste Association of North America (SWANA) Solid Waste Association of Orange County (SWAOC) ThermoChem Recovery International, Inc. (TRI) UCLA Recycling and Municipal Solid Waste Management Certificate Training Program Waste To Energy, LLC Opposition California Resource Recovery Association (CRRA) Californians Against Waste Global Alliance for Incinerator Alternatives (GAIA) Greenaction Sierra Club California Analysis Prepared by : Edward Randolph / U. & C. / (916) 319-2083