BILL ANALYSIS SB 1340 SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator S. Joseph Simitian, Chairman 2009-2010 Regular Session BILL NO: SB 1340 AUTHOR: Kehoe AMENDED: Introduced FISCAL: Yes HEARING DATE: April 19, 2010 URGENCY: No CONSULTANT: Caroll Mortensen SUBJECT : ENERGY: ALTERNATIVE FUELS AND VEHICLE TECHNOLOGIES SUMMARY : Existing law , under the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 (Health and Safety Code 44270 et seq.): 1) Contains general provisions relating to both the Alternative and Renewable Fuel and Vehicle Technology Program and the Air Quality Improvement Program that: a) Defines "full fuel-cycle assessment" to be an evaluation and comparison of environmental and health impacts in the life cycle of fuel, including certain matters (e.g., feedstock production, fuel production, and vehicle operation). b) Authorizes the State Energy Resources Conservation and Development Commission (CEC) and the State Air Resources Board (ARB) to determine definitions of terms used for the programs and to identify revenue streams for programs. c) Provides that for purposes of both programs, eligible projects cannot include those required to be undertaken pursuant to state or federal law. 2) Creates the Alternative and Renewable Fuel and Vehicle Technology Program that: SB 1340 Page 2 a) Requires the CEC to provide competitive grants, revolving loans, loan guarantees, or loans to certain interests (e.g., public agencies, businesses, fleet owners, consumers) to develop and deploy innovative technologies that change the state's fuel and vehicle types to help attain the state's climate change policies. (44272(a)). b) Requires the CEC to provide preferences to those projects maximizing the program goals based on certain project criteria (e.g., consistency with climate change policy, ability to reduce criteria air pollutants and air toxics, provide nonstate matching funds). (44272(c)). c) Lists projects eligible for funding under the program. d) Provides single source contract authority. e) Provides funding through various fees. 3) Under the California Global Warming Solutions Act of 2006 (CGWSA) (Health and Safety Code 38500 et seq.): a) Requires the ARB to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and sets various requirements to meet this requirement. b) Requires ARB to develop a "Scoping Plan" that provides guidelines on achieving GHG reductions. This bill : 1)Clarifies that funding from the Alternative and Renewable Fuel and Vehicle Technology Program may be made available to homeowners of electric vehicles to retrofit their electrical sources for an in-home charging station. 2)Deletes an obsolete reference. SB 1340 Page 3 COMMENTS : 1) Purpose of Bill . According to the author, "Currently the Alternative and Renewable Fuel and Vehicle Technology Program does not have a program set up to address the needs of plug-in electric vehicles (PEV's) or plug-in hybrid electric vehicle (PHEV's) owners who will have to have their homes (garage to power-box) upgraded to handle the additional power needs of these vehicles to properly and safely charge them." 2) Background . The Alternative and Renewable Fuel and Vehicle Technology Program authorizes the CEC to develop and deploy alternative and renewable fuels and advanced transportation technologies to help attain the state's climate change policies. CEC has an annual program budget of approximately $100 million to support projects that: Develop and improve alternative and renewable low-carbon fuels. Optimize alternative and renewable fuels for existing and developing engine technologies. Produce alternative and renewable low-carbon fuels in California. Decrease, on a full fuel cycle basis, the overall impact and carbon footprint of alternative and renewable fuels and increase sustainability. Expand fuel infrastructure, fueling stations, and equipment. Improve light-, medium-, and heavy-duty vehicle technologies. Retrofit medium- and heavy-duty on-road and non-road vehicle fleets. Expand infrastructure connected with existing fleets, public transit, and transportation corridors. Establish workforce training programs, conduct public education and promotion, and create technology centers. The funds come from additonal fees on vehicle and vessel registrations as well as $10 million from The Public Interest Research, Development and Demonstration Fund. The December 2008 ARB Scoping Plan identified on-road transportation as the single largest sector responsible for SB 1340 Page 4 California GHG emissions representing 36% of all emissions. A 2010 Public Policy Institute of California study, Climate Change Challenges, Vehicle Emissions and Public Health in California, concluded that increased use of battery-electric vehicles would provide the greatest public health benefit per unit of GHG emission reduction among the possible alternative fueling and vehicle technologies on the horizon. The report also notes, however, that electric vehicles involve "high cost and uncertainty" because they "depend on technological breakthroughs and broader market penetration to reduce cost and meet performance targets." 1) Clarification . CEC does not currently have an electrical vehicle upgrade program in place. The Alternative and Renewable Fuel and Vehicle Technology Program provides that "Alternative and renewable fuel infrastructure, fueling stations, and equipment" shall be eligible for funding under this program. Alternative and renewable fuel projects include "electricity, ethanol, dimethyl ether, renewable diesel, natural gas, hydrogen, and biomethane among others." Taken together, it would seem that CEC currently has the authority to create a program such as the one in this bill. This bill clarifies that cost offsets for in-home charging stations are an eligible expense. 2) Recommendations . The author may wish to amend line 1-13, page 5 to read, "A cost-effective program to provide funding for homeowners who purchase a plug-in electric vehicle to offset costs associated with modifying electrical sources to includean in-homea residential plug-in electric vehicle charging station" for clarification purposes. 3) Related legislation . AB 1304 (Saldana, 2009) would have exempted the sale, storage, use, or other consumption of electric vehicles from sales tax until January 1, 2015. (Held in Assembly Appropriations Committee.) 4) Previous Committee . SB 1340 was approved by the Senate Transportation and Housing Committee on April 6, 2010 (6-1). SOURCE : Senator Kehoe SB 1340 Page 5 SUPPORT : California Air Pollution Control Officer's Association, Bay Area Quality Management District, Nissan North America, Sierra Club California OPPOSITION : None on file