BILL ANALYSIS                                                                                                                                                                                                    



                                                                AB 222
                                                                       

                      SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                        Senator S. Joseph Simitian, Chairman
                              2009-2010 Regular Session
                                           
           BILL NO:    AB 222
           AUTHOR:     Adams and Ma
           AMENDED:    July 8, 2009
           FISCAL:     Yes               HEARING DATE:     June 28, 2010
           URGENCY:    No                CONSULTANT:       Caroll  
           Mortensen
            
           SUBJECT  :    ENERGY: BIOFUELS

            SUMMARY  :    
           
            Existing law  :

           1)Requires retail sellers of electricity to meet 20% of sales  
             from eligible renewable resources by December 31, 2010.   
             This is known as the Renewable Portfolio Standard (RPS)  
             (Public Utilities Code 399.11et seq.). 

           2)Defines renewable resources eligible under the RPS as  
             biomass, solar thermal, photovoltaic, wind, geothermal, fuel  
             cells using renewable fuels, small hydroelectric generation,  
             digester gas, municipal solid waste conversion, landfill  
             gas, ocean wave, ocean thermal, or tidal current.

           3)Further defines "solid waste conversion" for purposes of the  
             RPS to mean 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 meets all of  
             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 as  
                defined in Health and Safety Code (HSC) 38505.

              c)   The technology produces no discharges to surface or  









                                                                AB 222
                                                                 Page 2

                groundwaters of the state.

              d)   The technology produces no hazardous wastes.

              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 at which the technology is used is in  
                compliance with all applicable laws, regulations, and  
                ordinances.

              g)   The technology meets any other conditions established  
                by the California Energy Commission (CEC).

              h)   The facility certifies that any local agency sending  
                solid waste to the facility diverted at least 30% of all  
                solid waste it collects through solid waste reduction,  
                recycling, and composting.  For purposes of this  
                paragraph, "local agency" means any city, county, or  
                special district, or subdivision thereof, which is  
                authorized to provide solid waste handling services.

            Under the California Integrated Waste Management Act (Act) of  
           1989  :

           1)Requires each city or county source reduction and recycling  
             element to include an implementation schedule that shows a  
             city or county must divert 25% of solid waste from landfill  
             disposal or transformation by January 1, 1995, through  
             source reduction, recycling, and composting activities, and  
             must divert 50% of solid waste on and after January 1, 2000.  
              (Public Resources Code (PRC) 41780).

           2)Defines "gasification" to mean 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 of the  
             following criteria: 










                                                                AB 222
                                                                 Page 3

              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, as  
                defined in HSC 38505(g).

              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 the board 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 the board makes a finding that the local agency has  
                diverted at least 30% of all solid waste through source  
                reduction, recycling, and composting.

           3)Defines "solid waste disposal," "disposal," or "dispose" to  
             mean the final deposition of solid wastes onto land.  (PRC  
             40192). 

           4)Defines" solid waste facility" to include a solid waste  
             transfer or processing station, a composting facility, a  
             gasification facility, a transformation facility, and a  
             disposal facility.  For purposes of Part 5 (PRC 45000),  
             "solid waste facility" additionally includes a solid waste  
             operation that may be carried out pursuant to an enforcement  
             agency notification, as provided in regulations adopted by  









                                                                AB 222
                                                                 Page 4

             the board.  (PRC 40194).

           5)Defines "transformation" as incineration, pyrolysis,  
             distillation, or biological conversion other than  
             composting.  "Transformation" does not include composting,  
             gasification, or biomass conversion.  (PRC 40201).

            This bill  :

           1) Allows energy generated from a "biorefinery" to count under  
              the RPS as long as the biorefinery conforms to existing air  
              and water quality laws.

           2) Adds a definition of "biorefinery" to the RPS that means a  
              facility that uses a nonincineration, thermal, chemical,  
              biological, or mechanical conversion process, or a  
              combination of those processes, to produce a clean burning  
              fuel for the purposes of generating electricity or a  
              renewable fuel from either carbonaceous material, not  
              derived from fossil fuels or from a solid waste feedstock.   
              Carbonaceous materials include, but are not limited to, any  
              of the following:

              a)    Dedicated energy crops.

              b)    Agricultural crop residues.

              c)    Bark, lawn, yard, and garden clippings.

              d)    Leaves, silvicultural residue, and tree and brush  
                 prunings.

              e)    Wood, wood chips and wood waste.

              f)    Nonrecyclable pulp or nonrecyclable paper materials.

              g)    Waste fat, oils, and greases.

           3) Requires a biorefinery to satisfy all of the following  
              criteria:

              a)    Meet or exceed standards set by the State Air  
                 Resources Board (ARB), local air pollution control  









                                                                AB 222
                                                                 Page 5

                 districts, or local air quality management districts  
                 regarding air contaminants or emissions, including  
                 greenhouse gases, as defined in HSC 38505(g).

              b)    Meet or exceed standards set by the State Water  
                 Resources Control Board or regional water quality  
                 control boards regarding discharges to surface waters or  
                 groundwaters of the state.

              c)    Routinely test the ash or other residue from the  
                 facility at least once quarterly, or on a more frequent  
                 basis as determined by the agency responsible for  
                 regulating the testing and disposal of ash or residue.   
                 Notwithstanding HSC 25143.5, if hazardous wastes are  
                 present, the ash or residue is sent to a class 1  
                 hazardous waste disposal facility.

              d)    Preprocess the solid waste feedstock to remove, to  
                 the maximum extent feasible, all recyclable materials  
                 prior to the conversion process.

              e)    Meet all of the requirements of Division 30 of the  
                 PRC commencing with 40000 for solid waste handling  
                 prior to the conversion process.

              f)    Is in compliance with all applicable laws,  
                 regulations, and ordinances.

           4) States that a facility utilizing anaerobic digestion is not  
              a biorefinery.

           5) Requires biorefinery operators to submit an annual report  
              to the CEC summarizing the percentage of feedstock  
              processed through the facility that is derived from fossil  
              fuel sources.

           6) Allows only the nonfossil biogenic portion of the feedstock  
              processed through a biorefinery to be considered eligible  
              for RPS credit.

           7) Adds a "biorefinery that processes solid waste" to the  
              definition of "solid waste facility".










                                                                AB 222
                                                                 Page 6

           8) Deletes "pyrolysis", "biomass conversion" and  
              "distillation" for the definition "transformation" and  
              states that biomass conversion, anaerobic digestion and  
              solid waste conversion at a biorefinery is NOT  
              "transformation".

           9) Adds a definition of "anaerobic digestion" to mean the  
              process using the bacterial breakdown of compostable  
              organic material in the absence of oxygen and meeting other  
              parameters as established by the IWMB.

           10)Disallows solid waste diverted to a biorefinery to 'count'  
              for diversion credit for the 50% diversion mandated.

           11)Allows solid waste diverted to a biorefinery to 'count'  
              toward diversion credit if the diversion rate is changed in  
              the future to greater than 50%. 

            COMMENTS  :

            1)Purpose of Bill  .  According to the authors, the purpose of  
             this bill is to encourage the production of low-cost  
             biofuels and green power by converting municipal solid waste  
             into a fuel source that can be used to produce renewable  
             electricity.  The authors and supporters believe these goals  
             can be achieved by permitting solid waste conversion  
             facilities that convert municipal solid waste into  
             electricity to count toward a utility's RPS and by creating  
             incentives for local governments to fuel the conversion  
             facilities with solid waste fuel stocks.

            2)What are Conversion Technologies/Biorefineries?   According  
             to the IWMB, conversion technologies, or as referred to in  
             AB 222, "biorefineries", are facilites that can process  
             organic materials for energy and use three main  
             pathways-thermochemical, biochemical, and physicochemical.   
             Forms of energy that can be produced include heat, steam,  
             electricity, natural gas, and liquid fuels.

              Thermochemical conversion  processes include combustion,  
             gasification, and pyrolysis.  Thermochemical conversion is  
             characterized by higher temperatures and faster conversion  
             rates.  It is best suited for lower moisture feedstocks.   









                                                                AB 222
                                                                 Page 7

             Thermochemical routes can convert all of the organic portion  
             of suitable feedstocks.  The inorganic fraction (ash) of a  
             feedstock does not contribute to the energy products but may  
             contribute to fouling of high temperature equipment,  
             increased nutrient loading in wastewater treatment and  
             disposal facilities, and in some cases by providing  
             marketable coproducts or adding disposal cost.  Inorganic  
             constituents may also accelerate some of the conversion  
             reactions. 

              Biochemical conversion  processes include aerobic conversion  
             (i.e., composting), anaerobic digestion (which occurs in  
             landfills and controlled reactors or digesters), and  
             anaerobic fermentation (for example, the conversion of  
             sugars from cellulose to ethanol).  Biochemical conversion  
             proceeds at lower temperatures and lower reaction rates.   
             Higher moisture feedstocks are generally good candidates for  
             biochemical processes.  The lignin fraction of biomass can  
             not be converted by anaerobic biochemical means and only  
             very slowly through aerobic decomposition.  As a  
             consequence, a significant fraction of woody and some other  
             fibrous feedstocks exits the process as a residue that may  
             or may not have market value.  The residue called digestate  
             can be composted.

              Physiochemical conversion  involves the physical and chemical  
             synthesis of products from feedstocks (for example,  
             biodiesel from waste fats, oils, and grease--known as FOG)  
             and is primarily associated with the transformation of fresh  
             or used vegetable oils, animal fats, greases, tallow, and  
             other suitable feedstocks into liquid fuels or biodiesel. 

              Concerns with Biorefineries  .  While these technologies have  
             been used to process solid waste in some form or fashion,  
             they have not been widely accepted as alternatives to  
             landfills in the United States.  There are some pilot, bench  
             scale and other types of projects located in California and  
             other states and countries.  UC Riverside has completed  
             numerous studies on these various technologies, but  
             questions still remain regarding proven track records and  
             consistent emmissions data.  This is especially true of the  
             thermochemical processes that use mixed wastes as  
             feedstocks.  Concerns still remain regarding the safety and  









                                                                AB 222
                                                                 Page 8

             viability of these technologies and the potential impact  
             they have on the existing solid waste infrastructure and  
             recycling markets in California.
              
           3)Renewable Portfolio Standard Background  .  The RPS was  
             adopted in 2002 with a primary goal of reducing air  
             emissions from electricity generation to improve public  
             health.  To achieve that goal the investor-owned (IOU) and  
             publicly owned utilities (POU), along with other retail  
             electricity providers, are required to procure 20% of  
             electricity sales from specified renewable resources.  Since  
             that time more than 900 megawatts of new renewable  
             generation has been brought on-line.  Nearly 6,700 MW of  
             renewable generation has been contracted to come online in  
             the coming years.
            
           4)Proposed Definition of "Biorefinery" vs. existing definition  
             of "Solid Waste Conversion"  .  Current law (PRC  
             25741(b)(3)), which AB 222 is proposing to repeal, defines  
             solid waste conversion using noncombustion technologies as  
             an eligible resource under the RPS program.  The primary  
             difference between current law, and the modified definition  
             proposed in this bill, is that under current law "discharges  
             of air contaminants or emissions, including greenhouse gases  
             as defined in Section 38505 of the Health and Safety Code"  
             are prohibited.  To be RPS eligible AB 222 merely requires  
             that the biorefinery be in compliance with ARB, local air  
             pollution district air quality requirements and other  
             required permits (which would be the case whether the  
             facility and feedstock was RPS eligible or not).  The  
             consequence is that AB 222 proposes to define, as RPS  
             eligible, processes and technologies that are directly  
             contrary to the goal of the RPS - to reduce air emissions.   
             The sponsor reports that "independently-verified emissions  
             test results show that thermochemical conversion  
             technologies are able to meet existing local, state and  
             federal emissions limits."  As mentioned above, these are  
             existing requirements and would be required of any new  
             facility or technology.

           It should also be noted that the definition of 'gasification'  
             and 'solid waste conversion' were added with AB 2770  
             (Matthews) Chapter 740, Statutes of 2002.  At that time,  









                                                                AB 222
                                                                 Page 9

             proponents of certain gasification technologies claimed that  
             they could meet the new definition and assisted in the  
             drafting of that bill.

            5)RPSs Concerns  .  The proposed definition of "biorefinery"  
             poses a policy problem for RPS in that it sets a different,  
             and arguably lower, emission standards for these activities  
             than the other RPS eligible activities.  Some contend that  
             the existing definition of "solid waste conversion" is  
             problematic and scientifically inaccurate.

            6)Recycling Markets  .  According to the Integrated Waste  
             Management Board (IWMB), the statewide solid waste diversion  
             rate for 2007, which was calculated and announced as 2008  
             was drawing to a close, rose from 54% in 2006 to 58% in  
             2007.  Overall, during 2007 Californians were able to divert  
             about 53.5 million tons of solid waste away from landfills  
             and into higher and better uses, but approximately 40  
             million tons of waste were disposed.

           Since fall 2008, recycling markets in California and worldwide  
             have suffered the effects of the slow-down in the economy.   
             While markets are rebounding, it does demonstrate the  
             vulnerability of California's diversion efforts by depending  
             on foreign markets as outlets for recyclables.  Also, as the  
             proponents point out, the exportation of recyclable  
             materials to other countries can pose health and safety and  
             environmental problems for the receiving counties if there  
             are not standards in place to safely manage those materials.  
              This highlights the need to do more to reduce waste  
             generation and increase traditional recycling markets,  
             including processing capacity, in California.  Efforts that  
             are consistent with the existing waste management hierarchy  
             of source reduction and recycling/composting should be  
             expanded and explored before options such as biorefineries  
             are accepted as solid waste management options.  Uncertainty  
             of the repercussions on the current recycling markets and  
             infrastructure by using other options such as biorefineries  
             is unclear and could be detrimental if it becomes  
             "convenient" to utilize these types of facilities.  Also,  
             since these facilities require a certain amount of feedstock  
             to viably operate, there is no incentive to reduce materials  
             going to these facilities.  









                                                                AB 222
                                                                 Page 10

            
            7)How does California compare  ?  Proponents of biorefineries  
             often point to what other states and countries are doing on  
             issues of waste management and recycling programs.  They  
             state that in many other places biorefineries are the chosen  
             method of management preferable to traditional incinerators  
             and landfilling and are widely accepted.  Claims are made  
             that California will lose millions in jobs and funding if  
             these new technologies are not embraced. However, it could  
             be argued that California has made a much greater  
             investment, both in terms of capital, as well as programs  
             and policy, in resource recovery and recycling programs.   
             Many states exploring other options to landfilling often  
             have not made the investment in waste reduction, recovery  
             and recycling that California has.

           To that end, it should be noted, that while California is  
             often looked to as a leader in the waste management arena,  
             we also trail far behind others in what can be done  
             regarding resource recovery.  For example, in Denmark, where  
             waste incineration is common place, it should be noted that  
             the Danes have more stringent waste reduction and recycling  
             policies in place than those in California.  They have  
             established product and packaging waste reduction laws,  
             heavy fines for disposal of recyclable materials and the  
             fees to incinerate what is leftover are very high.

           On a related issue, the feedstocks being proposed for  
             biorefineries are directly related to emissions.  The more  
             constant the feedstock the more predictable the emission,  
             but a consistent feedstock can be hard to establish and  
             difficult to maintain when talking about solid waste. It  
             varies from day to day, season to season, generator to  
             generator and jurisdiction to jurisdiction.  The flow of  
             waste is controlled by hundreds of hauling and management  
             agreements and passes through dozens of jurisdictions.  What  
             gets disposed is dependent on a wide variety of factors  
             including recycling markets and can be as mundane as what  
             landfill is still accepting waste that day.  It is difficult  
             and labor intensive to produce a solid waste feedstock that  
             is consistent enough to predict, and establish controls for,  
             safe emissions.










                                                                AB 222
                                                                 Page 11

           Thus, it is critical to compare the laws, policies, programs,  
             feedstocks and other like factors in place when comparing  
             data on the effects of biorefineries.  This includes the  
             evaluation of the effect biorefineries have on waste flows,  
             recycling markets and infrastructure, recovery and recycling  
             programs (both existing and potential). With investment in  
             biorefineries comes the expectation that they keep operating  
             and processing a feedstock.  Is mixed solid waste the best  
             feedstock for this scenario?

            8)Support and Opposition Concerns  .  Proponents contend that  
             this bill is necessary to 'level the playing' field for  
             these technologies and are necessary tools for local  
             jurisdictions to meet their diversion mandates.  They also  
             point to the lack of clarity and certainty for permitting of  
             these facilities as a barrier.

             The opponents raise issues of lack of data on the safety and  
                                                 the questionable performance records of these technologies.   
             They also raise the threat to the existing recycling markets  
             and the uncertainties that these new facilities bring to the  
             growth of those markets.

            9)Additional Policy Concerns  .  In addition to the issues  
             raised above, the content of the bill poses implementation  
             challenges and does not seem to accomplish the authors'  
             objectives.  Currently, there do not appear to be any  
             statutory barriers to the siting, construction or operation  
             of these facilities.  However, proponents claim that there  
             is confusion among regulators and a clear siting and  
             permitting system is necessary.

             Also, regarding diversion requirements, the statute  
             currently only "counts" for disposal of those wastes that  
             are sent to a solid waste landfill and transformation  
             facilities.  Thus, the current statutory framework and the  
             IWMB's guidance documents do not prohibit waste being sent  
             to nondisposal facilities from counting for diversion  
             credit. 

            10)Amendments Needed  .
            
              a)   To address the uncertainty of the effect of  









                                                                AB 222
                                                                 Page 12

                biorefineries being included in the RPS and waste  
                management programs, amendments are needed to strike  
                references to 'credit' for RPS and diversion.

              b)   To focus the effort on the issue of uncertainty  
                related to siting and permitting biorefineries, the bill  
                should be amended to revert the definitions of  
                "transformation" and to eliminate confusion on siting and  
                permitting of biorefineries.  Thus the bill should be  
                amended to:

                i)     Revert back to the definition of "transformation"  
                  as it was prior to 2002 with passage of AB 2770  
                  (Matthews) with the addition of biorefineries in the  
                  definition of "transformation".  This would clearly  
                  place these facilities in the "disposal" category for  
                  the purposes of counting diversion credit and payment  
                  of the state tipping fee on the waste processed at the  
                  facility.  It would require them to obtain a permit  
                  consistent with the waste stream they handle and  
                  process and subject them to inclusion in the Countywide  
                  Siting Element to insure they 'fit' with the existing  
                  waste management infrastructure.
                  
                ii)    Remove 'gasification' from the definition of solid  
                  waste facility.

            SOURCE  :        Bioenergy Producers Association  

           SUPPORT  :       adaptiveARC
           Agricultural Council of California
           Antelope Valley Clean Cities
           Balboa Pacific Corporation
           Biomass Coordinating Council
           Bosschieter Consulting
           California Air Resources Board
           California Association of Professional Employees
           California Chamber of Commerce 
           California Energy Commission
           California Farm Bureau Federation
           California Manufacturers and Technology Association
           California Refuse Recycling Council
           California State Association of Counties









                                                                AB 222
                                                                 Page 13

           California State Association of Electrical Workers
           California State Pipe Trades Council
           Cities of Azusa, Bell, Bell Gardens, Duarte, Glendale,  
                          Hawthorne, La Puente, Long Beach, Los Angeles,  
                          Maywood, Palmdale, Pico Rivera, San Diego,  
                          Torrance, San Marino, Vernon
           Claremont Chamber of Commerce
           Clean Cities Coalition
           Clean Fuels Development Coalition
           Clements Environmental 
           County Sanitation Districts of Los Angeles County
           Department of Resources Recycling and Recovery
                          Department of the Navy 
           Fulcrum BioEnergy, Inc.
           Global Energy, Inc.
           ICM, Inc.
           INEOS Bio 
           International Union of Operating Engineers
           Interstate Waste Technologies
           League of California Cities
           Long Beach Coalition for a Safe Environment
           Los Angeles County Board of Supervisors
           Los Angeles County Solid Waste Management
               Committee/Integrated Waste Management Task Force
           Marin Resource Recovery
           Marin Sanitary Service
           New Planet Energy, LLC
           North Valley Coalition of Concerned Citizens, Inc.
           Orange County Board of Supervisors
           Pacific Gas and Electric Company 
           Phoenix Biomass Energy, Inc. 
           Redwood City Planning Commission
                          Regional Council of Rural Counties
           Remediation Earth, Inc.
           Republic Services, Inc.
           Sacramento Municipal Utility District
           Salinas Valley Solid Waste Authority
           San Bernardino County Board of Supervisors
           San Gabriel Valley Council of Governments
           San Gabriel Valley Economic Partnership
           San Luis Obispo County Integrated Waste Management
              Authority
           Sanitation Districts of Los Angeles County









                                                                AB 222
                                                                 Page 14

           Sempra Energy
           Solid Waste Association of North America 
           Southern California Edison
           Sustainable Conservation
           Ternion Bio Industries
           ThermoChem Recovery International, Inc.  
           Ventura Regional Sanitation District
           Waste to Energy, LLC
           Western States Council of Sheet Metal Workers
           Yolo County Board of Supervisors
           21 individuals
            
           OPPOSITION  :    Alameda County Waste Management Authority and  
                          Recycling Board (StopWaste.org)
                          American Lung Association of California
                          Breathe California
                          California Conference of Machinists
                          California League of Conservation Voters
                          California Resource Recovery Association
           California Teamsters Public Affairs Council
                          Californians Against Waste
                          Center for Biological Diversity
                          Central Valley Air Quality Coalition;  
                          Legislative Cmt
                          Clean Water Action
                          Coalition for Clean Air
                          Environment California
                          Environmental Defense Fund
                          Global Anti-Incinerator Alliance
                          Greenaction
           International Longshore & Warehouse Union
                          Natural Resources Defense Council
           Northern California Recycling Association
           Planning and Conservation League
           Recology
                          San Francisco Mayor Gavin Newsom
           San Francisco City and County, Dept of the Environment
                          Sierra Club California
           Union of Concerned Scientists