BILL ANALYSIS Ó AB 284 Page 1 Date of Hearing: April 15, 2013 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Wesley Chesbro, Chair AB 284 (Quirk) - As Amended: April 8, 2013 SUBJECT : Energy: Road to 2050 Board SUMMARY : Requires the California Energy Commission (CEC) to convene the Road to 2050 Board (2050 Board) to commission studies to determine the best process for meeting the "2050 goal" [i.e., reducing greenhouse gas (GHG) emissions by 80 percent by 2050]. EXISTING LAW : 1)Requires the CEC to assess energy infrastructure trends and issues facing California and develop and recommend energy policies for the state to address and resolve such issues as part of the biennial Integrated Energy Policy Report (IEPR). 2)Pursuant to the California Global Warming Solutions Act (AB 32), requires the Air Resources Board (ARB) to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. 3)Requires electric utilities and certain other retail sellers of electricity to procure eligible renewable energy resources to meet the following portfolio targets: a) 20 percent on average from January 1, 2011 to December 31, 2013. b) 25 percent by December 31, 2016. c) 33 percent by December 31, 2020 and each year thereafter. THIS BILL : 1)Requires the CEC to convene the 2050 Board to contract with an independent research group to determine the best process for meeting the "2050 goal," which the bill defines as reducing AB 284 Page 2 GHG emissions by 80 percent from 1990 levels by 2050. 2)Provides that the 2050 Board consists of representatives from the CEC, ARB, Public Utilities Commission, California Environmental Protection Agency, California Independent System Operator and the Governor's Office. 3)Requires the 2050 Board to adopt a 2050 Report by January 1, 2015 and every four years thereafter to provide guidance to state and local infrastructure decision-making processes. The 2050 Report must contain: a) An overview of the overall GHG reductions as a result of California's energy and environmental policies. b) Consistent metric integration among the state agencies to ensure the analysis of the information included in the report is reliable and determines cost-effectiveness. c) Milestones to represent the progress made towards the 2050 goal and a determination if a change in course of action is appropriate. d) Different scenarios describing the best possible roadmap to achieve the 2050 goal. The scenarios shall (1) be based on policies in effect, and existing technologies and infrastructures at the time of the report, (2) contain separate roadmaps to determine the best process towards the 2050 goal, and (3) include a marginal cost curve analysis to better assess the cost-effectiveness of each given scenario. 4)Authorizes the 2050 Board to contract with an independent research group to prepare the report. 5)Requires the 2050 Board to hold a public hearing every two years regarding the 2050 Report. FISCAL EFFECT : Unknown COMMENTS : 1)Author's statement : Strategies to achieve AB 32 goals have varied in scope, AB 284 Page 3 length and complexity. One strategy has been the creation of different programs to incentivize the use of energy efficiency, alternative energy and alternative fuel technologies. However, there lacks a state-wide strategic or cohesive structure to encourage communication and coordination on AB 32-associated programs. Furthermore, the implementation of California's ambitious energy and environmental goals are the responsibility of a group of fragmented state agencies that lack a comprehensive plan to effectively move forward and synchronize to ensure maximum efficiency. According to a recent Legislative Analyst's Office (LAO) report, Energy Efficiency and Alternative Energy Programs, "the state currently lacks a comprehensive framework that fully coordinates these activities to help ensure that the state's goals are being met in the most cost-effective manner." Furthermore, a December 2012 report by the Little Hoover Commission, Rewiring California: Integrating Agendas for Energy Reform, states, "the state lacks the ability to impose order on the multitude of proceedings that determine how these policies unfold, order which is essential to ensuring the state maximizes progress toward each of its policy goals." 2)Visions of 2050. The prevailing opinion among climate scientists is that achieving an 80 percent reduction in GHG emissions compared to 1990 levels by 2050 is necessary to stabilize the global climate. Questions about what it may take to achieve such dramatic reductions have been asked before. In the California context, the 2011 report California's Energy Future - The View to 2050 was sponsored by the California Council on Science and Technology and funded by the CEC and the Stephen Bechtel Fund. The View to 2050 report assessed technology requirements for reducing GHG emissions in California to 80 percent below 1990 levels by 2050, a target established by Executive Order S-3-05 in 2005. The following information is excerpted from the report: By 2050, California's population is expected to grow AB 284 Page 4 from the 2005 level of 37 million to 55 million. Even with moderate economic growth and business-as-usual efficiency gains, we will need roughly twice as much energy in 2050 as we use today. To achieve the 80 percent reduction goal, California's GHG emissions will need to fall from 470 MtCO2e/yr (million metric tons of CO2 equivalent per year) in 2005 to 85 MtCO2e/yr in 2050, with most of those emissions (77 MtCO2e/yr) coming from the energy sector. Accomplishing this will require a reduction from about 13 tons CO2e per capita in 2005 to about 1.6 tons CO2e per capita in 2050. The following four key actions can feasibly reduce California greenhouse gas emissions to roughly 60 percent below 1990 levels (150 MtCO2e/yr) by 2050: o Aggressive efficiency measures for buildings, industry and transportation to dramatically reduce per capita energy demand. o Aggressive electrification to avoid fossil fuel use where technically feasible. o Decarbonizing electricity supply while doubling electricity production, and developing zero-emissions load balancing approaches to manage load variability and minimize the impact of variable supply for renewables like wind and solar. o Decarbonizing the remaining required fuel supply where electrification is not feasible. Leaving any of these off the table will significantly increase the 2050 emissions. We could further reduce 2050 greenhouse gas emissions to 80 percent below 1990 levels with significant innovation and advancements in multiple technologies that eliminate emissions from fuels. All of these solutions would require intensive and sustained investment in new technologies plus innovation to bridge from the laboratory to reliable operating systems in relatively short timeframes. There are many additional technologies that reduce AB 284 Page 5 emissions from fuels. In combination these could achieve the required additional emission cuts from 60 to 80 percent. Many require multiple simultaneous strategies, some are industrially complex and costly and some are actually offsets, but all of them require research and innovation. Possible breakthrough technologies such as carbon neutral fuel from sunlight or advances in nuclear power could be game changers. These would allow us to produce abundant electricity or fuel with nearly zero emissions. 1) Meanwhile, back in 2013. Notwithstanding the big-picture significance of the analysis proposed by this bill, the bill itself prompts several practical questions that should be addressed. It's not clear what the Board's powers and duties are. If the Board's primary function is to hire the research group, and the likely source of funds is from the CEC, then it would seem to be more efficient and straightforward to simply authorize the CEC hire the research group. On the other hand, if the Board is intended to have broader decision-making authority, then its powers and procedures should be clearly delineated. Its composition should also be carefully examined. For example, the CAISO should not be a voting member on a public decision-making body because it is not a public agency. It also seems unusual, and awkward, to have the Governor's Office on the board because the Governor's interests would be represented already by the agency members. If the report's purpose goes beyond information, it's not clear. To the extent the report may be interpreted to have any binding effect on state and local decisions, a host of issues will be raised. First is that the report may be prepared under contract by a private entity without all the usual process checks that apply to public agencies. The intended number and frequency of reports and hearings is also unclear. 2) Double referral . This bill has been doubled-referred to the Assembly Utilities and Commerce Committee. REGISTERED SUPPORT / OPPOSITION : AB 284 Page 6 Support California Municipal Utilities Association East Bay Municipal Utility District Sacramento Municipal Utility District Opposition None on file Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916) 319-2092