BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1900 - Gatto Hearing Date:
June 25, 2012 A
As Amended: June 14, 2012 FISCAL B
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DESCRIPTION
Current law requires the California Public Utilities Commission
(CPUC) to specify the maximum amount of vinyl chloride that may
be found in landfill gas injected into pipelines and prohibits a
regulated gas utility from purchasing landfill gas if that
landfill gas, when supplied to any existing gas customer,
exceeds the standard.
This bill requires the CPUC to identify all constituents found
in landfill gas that is to be injected into a gas pipeline that
could harm the general public or cause damage to pipeline
facilities and to set maximum amounts of those constituents that
may be injected into those pipelines along with testing
protocols to be used before injection.
This bill prohibits a gas producer from knowingly selling,
supplying, transporting, or purchasing gas collected from a
hazardous waste landfill.
This bill requires the CPUC to consider adopting pilot projects
to promote the in-state production and distribution of
biomethane and to public hearings to identify impediments to the
procurement of biomethane generation and interconnection. A
report on the outcome of those hearings would be required to be
included in the CPUC's quarterly progress report on the
Renewables Portfolio Standard.
This bill requires the CPUC to develop rules to ensure open
access to gas corporation pipelines for any party to effectuate
the delivery of gas.
This bill will become operative only if AB 2196 (Chesbro) also
takes effect.
BACKGROUND
Biomethane in California - Biomethane is a renewable fuel that
is produced at several types of facilities, including dairy
farms and landfills. The gas can be collected and then
transported to a generation facility where it can be used to
make electricity. Transportation of biofuels via truck or rail
is not economically feasible. Transport via pipeline is the
preferred method. This energy release allows biogas to be used
as a fuel. The methane can also be used onsite, such as at
dairies, in anaerobic digesters where it is typically used in a
combustion engine to convert the energy in the gas into
electricity and heat.
As a result of state law, California's major gas corporations,
Sempra Utilities and Pacific Gas and Electric (investor-owned
utilities or IOUs), operate common carrier pipelines but will
not allow biomethane from landfills to be injected into the
pipelines they operate.
Landfill gas may have constituents present that could adversely
impact human health. Some constituents (e.g. lead, arsenic,
cadmium) could cause cancer or birth defects. Since the
delivery of the gas to a household appliance could inadvertently
provide close exposure to these constituents, IOUs do not allow
landfill or dairy gas into their pipelines. IOUs are also
concerned about potential damage to the pipelines themselves,
depending upon what is in the gas - moisture, for example, could
cause corrosion.
The California Energy Commission (CEC) estimates that 358
megawatts (MW) is potentially available from new landfill gas
development. Of these landfills, some are small and are
therefore unlikely to be developed for gas by 2020. Many are
not near a gas transmission line. According to the Assembly
Natural Resources Committee, of ten landfills operated by Waste
Management, four are sufficiently close to a suitable pipeline
with a sufficient volume of gas to be considered for development
for landfill gas. Waste Management estimates around 150 MW of
in-state gas that could be developed in California for delivery
to a generation facility. There is also the potential to
produce electricity at a landfill if it were equipped with a
small generation facility (such as a fuel cell). As electricity
generators these facilities would count toward a utility's
requirements under the Renewable Portfolio Standard (RPS).
Owners and developers of landfill gas facilities can also bid
into the utility RPS solicitations, the Reverse Auction
solicitations, and the Feed in Tariff (Re-Mat). Some landfills
currently have fuel cells or combustion turbines and use the
electricity generated on site.
IOU Procurement - California's three largest electric utilities
all have contracts in their renewable portfolios which use
biomethane gas onsite at dairies and landfills to generate
electricity. San Diego Gas and Electric has 13 landfill gas
projects totaling almost 40 MW and a few small dairy digester
gas projects. Southern California Edison advises that it has 14
landfill and dairy contracts with a total capacity of 139 MW.
PG&E reports 8 dairy contracts for 10 MW and 13 landfill gas
contracts with a total capacity of 62 MW. The statewide total
is 48 contracts for a total capacity of 252 MW.
2011 Bioenergy Action Plan - A 2006 executive order set a target
of generating 20 percent of the state's renewable energy from
biopower (biomass to electricity) by 2010 and maintaining this
ratio through 2020. To achieve those targets, the CEC developed
an action plan in 2006 and updated that plan last year with the
"2011 Bioenergy Action Plan." That plan summarized the barriers
to deployment of biomethane as:
California utilities do not have uniform biomethane
quality standards and the standards in place may not be
appropriate for biomethane, most standards were designed
for natural gas injection;
Current utility tariffs require project developers to
pay for the costs of the interconnection which is a large
cost barrier;
The commercially available conversion technologies, such
as anaerobic digestion, are generally limited to high
moisture (non-woody) feedstocks;
New technologies are in development, but have high
capital costs and other economic, regulatory, and
development barriers; and
Statute currently prohibits the injection of landfill
gas, despite allowing landfill gas from out-of-state to be
scheduled into California; other states allow landfill gas
to be injected into their systems that deliver gas into the
California system.
COMMENTS
1. Author's Purpose . The author reports that current law
sets strict standards for the use of landfill gas in
natural gas pipelines in California which are so stringent
that they operate as a ban on landfill gas from entering in
pipelines completely. Restrictions against landfill gas
rose out of fear in the 1980's that landfill gas contained
harmful amounts of vinyl chloride, a chemical known to
cause cancer. The Gas Technologies Institute has since
shown that vinyl chloride is not present in harmful levels,
if at all, in landfill gas. These statutes and regulations
have stifled the growth of the biomethane industry in
California. Additionally other biomethane producers, such
as waste-water treatment facilities and dairy farms, have
intimated that regulation surrounding biomethane has made
it impossible to compete with other state-subsidized
renewables, such as solar, in an attempt to develop a
diverse renewables portfolio for the state.
Consequently, in-state biomethane producers, including
landfills, waste-water treatment facilities, and dairy
farms, are presented with the following options: (1) don't
collect he harmful greenhouse gas at all and let it seep
into the atmosphere; (2) if an entity is required by law to
collect the gas (as in the case of landfills) use the gas
to generate power onsite; or (3) flare the gas. Due to
strict South Coast Air Quality standards which neglect to
take into account the carbon offset of using biomethane
instead of fossil fuel natural gas, most southern
California landfills are forced to flare their gas, wasting
the potential to generate electricity from the fuel and
creating an emission to boot. And most dairy farmers don't
have an incentive to do capture biomethane at all, which is
21 times more potent than carbon dioxide as a greenhouse
gas. This pollutes the atmosphere and is a waste of
renewable fuel which could be used as a dispatchable
baseload renewable, satisfying both the RPS needs of the
state and evening-out and supporting the intermittency of
other renewables.
2. CPUC Role . Historically the CPUC has been required to
set the gas pipeline safety standard and testing
requirements for maximum levels of vinyl chloride for
methane gas in utility pipelines. This bill expands the
standard to include all potentially harmful constituents
including lead, arsenic or cadmium. However it is not
apparent that the CPUC is staffed to provide the scientific
analysis needed to develop these standards. Consequently,
they would be likely to have to rely heavily on outside
entities to develop the standards, and particularly the gas
corporations. To ensure a scientific analysis, the
committee may want to work with the Environmental Quality
Committee, to which this bill will be referred next, to
consider another agency for this task such as the Office of
Environmental Health Standard Assessment which routinely
does scientific evaluation of risks posed by hazardous
substances.
3. New Standards ? The author's intent is that the CPUC
adopt new gas safety standards for non-hazardous landfill
gas but the bill specifically provides that the commission
is not required to revise any standard currently in effect.
To achieve the author's intent, the committee may wish to
consider directing the commission to adopt new standards in
accordance with the provisions of this bill.
4. Study Duplication/Necessity ? For several years the CEC
has coordinated extensive research on the use of biogas for
electricity and transportation. Their work resulted in two
comprehensive studies on the subject the most recent of
which was the "2011 Bioenergy Action Plan." This bill
directs the CPUC to conduct hearings to identify
impediments to the use of biomethane for electricity
generation including interconnection challenges. The CEC
studies addressed these issues and specifically addressed
the issue of interconnection identified in this bill. They
reported that "electric grid interconnection challenges
have inhibited the development of distributed or
community-level energy projects in rural areas, including
bioenergy projects. California must address these
challenges to increase development of bioenergy projects."
Given the work of the CEC, the necessity of another study
is not apparent but should it go forward, the committee may
wish to consider directing the CEC to continue the review
rather than the CPUC, to the extent necessary, since the
CEC already has a foundation of policy work in this area.
5. Pilot Projects . This bill requires the CPUC to consider
adopting pilot projects to demonstrate the impact of the
injection of biomethane into gas pipelines and promote
in-state production and distribution of biomethane. The
CPUC has already acted to fund research demonstration and
development projects through the Electric Program
Investment Charge (EPIC). The funding is directed to
public interest investments in applied research and
development, technology demonstration and deployment,
market support, and market facilitation, of clean energy
technologies and approaches for the benefit of electricity
ratepayers. The CPUC specifically set-aside 20% of the
technology demonstration and deployment funds for 2012-2014
being administered by both the CEC and the utilities to
fund bioenergy projects or activities. This will total $15
million a year for three years. To avoid duplication of
effort and funding, the committee may wish to consider
striking this section since biogas demonstration projects
have already been directed and funded by the CPUC in
concert with the CEC and IOUs.
6. Double Referral . Should this bill be approved by the
committee, it should be re-referred to the Senate Committee
on Environmental Quality for its consideration as "Do
Pass." In the interest of time, amendments taken in this
committee will be accepted and processed by the
Environmental Quality Committee.
ASSEMBLY VOTES
Assembly Floor (72-1)
Assembly Appropriations Committee (17-0)
Assembly Natural Resources Committee
(6-3)
Assembly Utilities and Commerce Committee
(11-1)
POSITIONS
Sponsor:
Author
Support:
BioFuels Energy, LLC
Bloom Energy
Burbank Water and Power
California Association of Sanitation Agencies
California Municipal Utilities Association
California State Council of Laborers
Californians Against Waste
Cambrian Energy
Coalition for Renewable Natural Gas
Cornerstone Environmental Group, LLC
County Sanitation Districts of Los Angeles County
First Southwest Company
Glendale Water and Power, if amended
Pasadena Water and Power, if amended
Regional Council of Rural Counties
SCS Energy
Sacramento Municipal Utility District
Sonoma County Water Agency
South Coast Air Quality Management District
Waste Management
Oppose:
None on file.
Kellie Smith
AB 1900 Analysis
Hearing Date: June 25, 2012