BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 8 (Perea) - Alternative fuel and vehicle technologies:
funding programs.
Amended: August 12, 2013 Policy Vote: EQ 8-1, T&H 9-2
Urgency: Yes Mandate: No
Hearing Date: August 26, 2013 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 8 would extend until January 1, 2024, extra
charges on vehicle registrations, boat registrations, and tire
sales in order to fund the AB 118, Carl Moyer, and AB 923
programs. This bill would also extend the authority of local air
districts to impose vehicle registration surcharges in their
area.
Fiscal Impact:
Annual revenues of $180 million (special fund) for various
AB 118 programs until 2024, of which $20 million be directed
for the construction and operation of a hydrogen fueling
network in FY 13-14, FY 14-15, and FY 15-16 and up to $20
million in the remaining years.
Annual tire fee additional revenue of approximately $34
million (special fund) for the Carl Moyer Program beginning
January 1, 2015 through 2024.
Annual costs in the hundreds of thousands of dollars to
the ARB, CEC, and Bureau of Automotive Repair to continue to
administer various air quality and alternative fuel programs
and associated reporting requirements which will be fully
covered by the surcharge extensions.
Background: The California Alternative and Renewable Fuel,
Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007
[AB 118 (Núñez) Chapter 750/2007] increased vehicle registration
fees (+$3), Smog Abatement Fee (+$8), boat registration fees
($10/$20), and special identification plates (+$5) until January
1, 2016 to fund three programs:
1. The Alternative and Renewable Fuel and Vehicle
Technology Program (ARFVTP), administered by the California
Energy Commission (CEC), provides grants, revolving loans,
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loan guarantees, and other financial to accelerate the
development and deployment of clean, efficient, low carbon
alternative fuels and technologies. ARFVTP is funded by $2
of the vehicle registration fee and receives approximately
$100 million per year total.
2. The Air Quality Improvement Program (AQIP), administered
by the Air Resources Board (ARB) in consultation with local
air districts, funds projects that reduce criteria air
pollutants, improve air quality, and provide research for
alternative fuels and vehicles, vessels, and equipment
technologies. AQIP is funded by smog abatement fees, boat
registration fees, and special identification plate fees
and receives between $30-36 million per year.
3. The Enhanced Fleet Modernization Program (EFMP), under
which ARB, in consultation with Bureau of Automotive Repair
(BAR), pays to permanently remove cars and small trucks
from operation through voluntary retirement by their
owners. EFMP is funded by $1 of the vehicle registration
fee and receives approximately $30 million per year.
The Carl Moyer Memorial Air Quality Standards Attainment Program
(Moyer Program) [AB 1571 (Villaraigosa), Chapter 923/1999],
administered by ARB and local air districts, funds the
incremental cost of cleaner-than-required vehicles, engines, and
equipment. The primary objective of the program is to achieve
air quality emission reductions that would not otherwise occur
through regulations or other legal mandates. The Moyer Program
is funded by vehicle registration surcharges adopted by local
air districts in nonattainment areas. Authority to assess these
fees sunset on January 1, 2015.
The Moyer Program was expanded by AB 923 (Firebaugh), Chapter
707/2004 to cover additional pollutants and engines and imposed
an additional $1 fee on tire sales to fund the Moyer Program and
CalRecycle, and establishes air quality improvement programs
through local air districts. AB 923's provisions sunset on
January 1, 2015.
The Alternative Fuels Law required CEC and the ARB to develop
and adopt a state plan to increase the use of alternative fuels
by June 30, 2007. In response, the CEC and ARB published the
State Alternative Fuels Plan in 2007 and set alternative fuel
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use goals of 9% in 2012, 11% in 2017, and 26% by the year 2022.
Proposed Law: This bill would extend all the surcharges for the
AB 118 programs, the Moyer Program, and AB 923 until January 1,
2024. All fees would be extended at their current rate.
The ARFVTP program, which would be amended to specifically make
intelligent transportation systems an eligible project, to
require the allocation of funds to be based on a cost-benefit
score, and to award financial assistance to provide at least 100
publically available hydrogen fueling stations. Specifically on
the hydrogen set-aside:
Beginning June 30, 2014, ARB would be required to
annually aggregate the number of hydrogen-fueled vehicles
that vehicle manufactures project to be sold or leased over
the next three years. Based on this information, the ARB
would be required to evaluate, and report to the CEC, the
need for additional publicly available hydrogen-fueling
stations for the next three years and how that need may be
best met.
The funding would be $20 million annually for three
years plus up to $20 million for an additional eight years
for grants, loan incentive programs, revolving loan
programs, or other forms of financial assistance.
The funds must be deployed in a manner to achieve a
network sufficient to provide convenient fueling to vehicle
owners and to expand that network to support a growing
market for hydrogen fueled vehicles.
The CEC would have four years to encumber the
appropriation.
The CEC may cease providing funding for the building of
hydrogen fueling stations if the CEC, in consultation with
the ARB, determines that the private sector is establishing
publically available hydrogen fueling stations without
government support.
The CEC and ARB would be required to annually report on
progress towards establishing a hydrogen fueling network
and the remaining cost and timing to establish a network of
100 publically available hydrogen fueling stations.
The AQIP program would be amended to require that funding be
given according to a benefit-cost score that is based on the
reasonably expected or potential criteria pollutant emissions
reduced achieved per dollar awarded. Additional preference may
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be given for projects that reduce toxic air pollutants,
contribute to better regional air quality, achieve climate
change benefits, support vehicle market transformation to
low-carbon or zero-emission technology, and leverage private
capital investments. Also, any consumer incentives for
light-duty vehicles could not be greater than compensations
given to customers under the EFMP.
This bill would require ARB, by July 1, 2013, to convene a
working group to evaluate the policies and goals of the Moyer
Program and AB 923.
This bill also deletes reference to the obsolete Carl Moyer
Memorial Air Quality Standards Attainment Trust Fund and its
accounts and instead makes reference to the Air Pollution
Control Fund.
Related Legislation: SB 11 (Pavley/Cannella) is essentially
identical to AB 8 and is currently being held on the Assembly
Suspense File.
Staff Comments: In respect to the AB 118 program, this bill
would result in annual revenues of approximately $180 million
from extension of various vehicle, vessel, and other air
quality-related surcharges. This would result in approximately
$105 million for ARFVTP, approximately $45 million for AQIP, and
approximately $30 million for EFMP.
This bill represents a departure from the discretion the
Legislature granted the CEC in determining the best way to
allocate ARFVTP funds in order to "develop and deploy innovative
technologies that transform California's fuel and vehicle types
to help attain the state's climate change policies." Under the
current structure, the CEC prepares an investment plan with a
stakeholder advisory committee to outline the program's funding
priorities. Funds are awarded according to the investment plan.
In contrast, this bill would predetermine the minimum amount of
spending that must be spent on hydrogen.
From 2008 to 2010, CEC awarded $22.7 million to fund 11 public
hydrogen fueling stations and one hydrogen transit stations.
These stations are expected to be operational sometime late this
year to mid-2014. The FY 11-12/12-13 proposed awards were
recently announced allocating an additional $12 million for
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seven stations. This solicitation received $15 million in
applications for up to $28.6 million in funding. The draft
2013-14 investment plan included an additional $20 million for
hydrogen infrastructure funding. Staff notes that if the most
recent round of funding is indicative of future demand for
financial assistance, combined with the four year encumbrance
period allowed under this bill, it is possible that a
substantial backlog of available funding in the ARFVTP could
develop.
In the current round of solicitations, funding is being made
available as grants for up to 65% of the project costs (75% was
offered in the earlier round of funding). According to the CEC,
higher funding compared to other alternative fuels is necessary
as hydrogen is at a much earlier stage of fueling infrastructure
development.
According to the CEC, the average cost for hydrogen fueling
stations with a fillable supply has been $2.2 million in past
solicitations. Stations with onsite generation cost between $3
and $4 million. Assuming the average cost of building the
initial fueling network stays the same, that most fueling
stations are based on fillable supplies (vs. onsite generation),
and that the CEC continues to only give grants for 65% of the
costs, supporting the establishment of 100 publically available
stations will cost approximately $145 million. This bill would
provide between $60 and $220 million for hydrogen
infrastructure.
Staff notes that by funding early fueling stations in
preparation for the early commercial rollout of hydrogen fueled
vehicles in 2015-17, the state is helping to mitigate the
industry's risk that these vehicles will become a viable market.
Under this bill, the payoff for the state to mitigate this risk
would be secondary- the air quality improvements and greenhouse
gas (GHG) emission reductions that will be a result of a change
in fuel use. In order to reach the 2050 GHG reduction targets
set by ARB, nearly all vehicles will need to be zero emission by
2050.