BILL ANALYSIS Ó
AB 638
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 638 (Skinner) - As Amended: April 13, 2011
Policy Committee: Natural
ResourcesVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the Air Resources Board (ARB) and the
California Energy Commission (CEC) to work to reduce
California's onroad petroleum fuel use and to increase use of
alternative transportation fuels. Specifically, this bill
requires ARB and CEC to:
1)Adopt policies and regulations to:
a) Reduce, by 2020, onroad petroleum fuel use by at least
15% below the 2003 level.
b) Increase, by 2022, the use of alternative transportation
fuels by at least 26% of total onroad and offroad vehicle
fuel use.
2)Report to the Legislature on January 1, 2014, and every third
year thereafter, on progress toward the targets.
FISCAL EFFECT
The bill provides broad discretion to ARB and CEC to devise
regulations and policies to achieve the bill's goals.
Therefore, the actual costs of achieving those goals are
dependent upon future implementation choices made by ARB and CEC
and are wide ranging. Possible costs include:
1) Costs to ARB of an unknown amount, but possibly in the
hundreds of thousands of dollars, in 2011-12 and 2011-13,
as well as minor costs in the tens of thousands of dollars
thereafter. (Air Pollution Control Fund.)
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The ARB reports significant costs from the Air Pollution
Control Fund, up to $725,000 in 2011-12 and $870,000 in
2012-13, for five-to-six staff members to:
a) Adopt regulations and policies to reduce on-road
petroleum fuel use and increase on- and off-road
alternative fuel use.
b) Develop a strategy and target for petroleum use
reduction by light, medium, heavy-duty, and alternative
vehicles.
c) Assess how future guidelines, regulations and
investments affect fuel use targets.
d) Update economic analysis used for state regulations to
improve accuracy of future petroleum fuel price
assessments.
e) Identify barriers to reaching fuel use targets.
f) Report to the Legislature on progress toward the fuel
use targets.
(ARB contends that the activity required by the bill is not
duplicative of any current activity required by other statute,
regulation, or order, including the Low Carbon Fuel Standard.)
2) Unknown but significant costs to the CEC, likely in the
range of several hundred thousand dollars in 2011-12 and
2012-13, and minor ongoing costs in the tens of thousands
of dollars, to perform work similar to that described by
the ARB. (Alternative and Renewable Fuel and Vehicle
Technology (AB 118 Fund or other special fund).
COMMENTS
1)Rationale . The author notes the state's overwhelming reliance
on petroleum for its transportation needs and the negative
consequences that result, including vulnerability to supply
interruptions and fuel price volatility and degraded
environmental quality. The author acknowledges existing goals
and programs to reduce the use of petroleum fuels and to
increase the use of alternative fuels but contends,
nonetheless, that it is important that the Legislature codify
these goals and require ARB and CEC to plan and regulate to
achieve them.
2)Background.
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a) State Has Plans to Reduce Petroleum Use, Increase
Alternative Fuel Use. AB 2076 (Shelley, Chapter 936,
Statutes of 2000) directed CEC and ARB to develop and adopt
recommendations for the governor and the Legislature on a
California strategy to reduce petroleum dependence. In
response, in August 2003, the agencies released a report,
Reducing California's Petroleum Dependence, which
recommends that California adopt a policy to reduce
gasoline and diesel fuel demand to 15% below 2003 demand
levels by 2020 and maintain that level for the foreseeable
future. The report also presented strategies by which the
demand reduction goal could be achieved and recommended
that the goal be established in statute.
Similarly, AB 1007 (Pavley, Chapter 371, Statutes of 2005)
required ARB and CEC to develop and adopt a plan to
increase the use of alternative fuels without adversely
affecting air quality or water quality, or causing negative
health effects. In response, in December 2007, the
agencies released the State Alternative Fuels Plan, which
declared the following alternative fuels use goals as
plausible: 9% of transportation fuels by 2012, 11% by
2017, and 26% by 2022. The plan also recommended
establishment of a Clean Alternative and Renewable Fuel,
Vehicle and Advanced Technology Initiative to provide
annual funding of $100 million to $200 million to advance
innovative and pioneering technologies, a recommendation
achieved with passage of AB 118 (Núñez, Chapter 750,
Statutes of 2007).
b) Greenhouse Gas Regulation Requires Reduction in
Carbon-intensity of Fuels. As part of its regulation of
greenhouse gas emissions pursuant to AB 32 (Núñez, Chapter
488, Statutes of 2006), ARB has adopted a low-carbon fuel
standard (LCFS), which requires reduction in the
carbon-intensity of California transportation fuels of at
least 10% by 2020. Achievement of the LCFS may reduce
Californian's use of petroleum fuels and increase their use
of alternative fuels.
3)Bill Potentially Inconsistent with Itself, Existing Programs .
As noted in the policy committee analysis, the petroleum
reduction target and alternative fuel increase target in this
bill may not jibe with one another, nor with existing
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programs. The bill's two, related targets may be achieved
independently but in ways that run to counter the bill's other
target. For example, reducing petroleum use by 15% could be
achieved in a number of ways, including increased fuel
efficiency or decreased miles travelled. However, the
achievement of the petroleum reduction goal in these ways may
not realize the bill's other goal of increasing alternative
fuel use so that it represents 26% of all fuels used.
Similarly, the state could increase the portion of its fuel
use represented by alternative fuels by increasing the supply
of alternative fuels available, even as overall fuel use
increased. Such an outcome, however, would not necessarily
result in a 15% reduction in petroleum use.
Likewise, pursuit of the bill's goals may run counter to
existing policy and programs. For example, seeking to
increase the state's use of alternative fuels could result in
the use of fuels with high carbon content or, when considered
from the perspective of a life-cycle analysis, result in
greater emissions of greenhouse gases. Such an outcome would
achieve at least one of the bill's goals but would be in
conflict with the LCFS. In addition, producers of such
carbon-intensive fuels, citing the provisions of this bill,
could claim eligibility to the state's alternative fuels
funding, such as AB 118 monies.
It seems that the ambiguities inherent to this bill could be
remedied easily by amendments that specify that ARB and CEC
are to develop policies and regulations to achieve the bill's
goals in ways that compliment both of those goals and that are
consistent with the state's other fuels policies and programs,
such as the LCFS.
4)Support. This bill is supported by the American Lung
Association, South Coast Air Quality Management District and a
long list of industry and public health organizations that
support the reduction of petroleum use and the increased use
of alternative fuels.
5)Opposition. The bill is opposed by the California Dump Truck
Owners Association and the Western States Petroleum
Association, the members of which are subject to ARB's air
quality regulations and who are concerned about the costs ARB
and CEC will incur as a result of this bill, when the
opponents fear will be borne by regulated parties.
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Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081