BILL ANALYSIS �
AB 1021
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1021 (Eggman) - As Amended: April 22, 2013
SUBJECT : Alternative energy: recycled feedstock
SUMMARY : Makes projects that use "recycled feedstock" eligible
for sales and use tax exclusions (STEs) authorized by the
California Alternative Energy and Advanced Transportation
Financing Authority (CAEATFA).
EXISTING LAW:
1)Establishes the California Global Warming Solutions Act of
2006 (AB 32), which:
a) Requires the California Air Resources Board (ARB) to
adopt regulations requiring the reporting and verification
of statewide GHG emissions;
b) Requires ARB to adopt a statewide GHG emissions limit
equivalent to 1990 emissions levels, to be achieved by
2020; and,
c) Authorizes ARB to use market-based compliance mechanisms
to comply with the regulations.
2)Establishes the California Integrated Waste Management Act of
1989, which requires local jurisdictions to divert 50 percent
of solid waste generated from landfill disposal and
establishes a state policy goal that 75 percent of solid waste
generated statewide be diverted from landfill disposal by
2020.
3)Authorizes CAEATFA to provide financing for facilities that
use alternative energy sources and technologies. CAEATFA can
issue revenue bonds (without voter approval), make loans, loan
loss reserves, loan guarantees, and authorize STEs to develop
and commercialize alternative energy projects and "advanced
transportation technologies" that conserve energy, reduce air
pollution, and promote economic development and jobs.
THIS BILL :
AB 1021
Page 2
1)Expands the definition of a "project" eligible for a sales tax
exemption to include tangible personal property that processes
or utilizes recycled feedstock that is intended to be reused
in the production of another product or soil amendment.
2)Defines "recycled feedstock" as material that would otherwise
be destined for disposal, having completed its intended use
and product lifecycle, that is intended to be reused in the
production of another product or soil amendment.
FISCAL EFFECT : Unknown. The total impact of all CAEATFA
approved STEs to the General Fund is limited to $100 million
annually. According to CAEATFA, all projects that are approved
for the STE have demonstrated that any costs to the state will
be offset by the increased economic activity created by the
project.
COMMENTS :
This bill . According to the author, "increased recycling
efforts are proven to be an important job creation tool, play an
essential role in diverting waste from landfills, and have
beneficial impacts in reducing greenhouse gas (GHG) emissions,
and therefore play an important role in helping California
achieve its GHG emission reduction targets. There is more
potential to develop the market for recycled content in
California and to generate more jobs in California. AB 1021 is
intended to tap into that potential through expanding the [STE]
so that it includes the purchase of equipment used to process
recycled feedstock."
Why recycling ? According to ARB, a total reduction of 80
million metric tons (MMT), or 16 percent compared to business as
usual, is necessary to reduce statewide GHG emissions to 1990
levels by 2020. ARB intends to achieve approximately 78 percent
of the reductions through direct regulations. ARB proposes to
achieve the balance of reductions necessary to meet the 2020
limit (approximately 18 MMT) through a cap-and-trade program.
The first two quarterly auctions of allowances in the
cap-and-trade program were held in November 2012 and February
2013. The next auction (the last of the current fiscal year) is
scheduled for May 16, 2013. The Department of Finance and ARB
have developed a draft three-year investment plan for the
auction proceeds. The draft identifies the state's GHG emission
AB 1021
Page 3
reduction goals and priority programs and identifies three
sectors as investment priorities: sustainable communities and
clean transportation; energy efficiency and clean energy; and,
natural resources and waste diversion.
Traditional recycling and organics management provide
significant GHG reductions over landfilling. Recycling
materials avoids the GHG emissions generated by extracting raw
materials, primary processing, and the transportation of those
materials. Recycling has also been shown to create local jobs
in California, rather than importing raw materials from
overseas. Recycling is extremely cost-effective. For example,
for every one percent increase in recycled content used in glass
manufacturing, there is a corresponding one percent decrease in
air emissions from glass manufacturing plants, as well as
related reductions from the reduced need for raw materials.
Composting and other organics processing technologies, including
anaerobic digestion, reduce GHGs by avoiding the emissions that
would be generated by the material's decomposition in a
landfill. Landfill gas is generated by the decomposition of
organic materials such as food, paper, wood, and yard waste.
Fifty percent of landfill gas is methane, a GHG 21 times more
potent than carbon dioxide. While most modern landfills have
systems in place to capture methane, significant amounts
continue to escape into the atmosphere. According to ARB's GHG
inventory, approximately 7 million tons of CO2 equivalent are
released annually. That number is expected to increase to 8.5
million tons of CO2 equivalent by 2020. Soil amendments
produced by organic waste have been shown to improve soil health
and structure, increase drought resistance, and reduce the need
for water, chemical fertilizers, and pesticides.
In addition to GHG emissions reductions, expanded recycling
(including organic waste processing) is needed to achieve the
state's ambitious 75 percent recycling goal.
STE eligibility. CAEATFA is authorized to provide eligible
projects financial assistance in the form of a STE on property
used for the "design, manufacture, production, or assembly" of
advanced transportation technologies or alternative energy
source products, components or systems, as prescribed. To date,
CAEATFA has approved financial assistance to private entities
for projects that include: electric vehicle manufacturing,
AB 1021
Page 4
solar photovoltaic manufacturing, landfill gas capture and
production, biogas capture and production (at dairies and waste
water treatment plants), demonstration hydrogen fuel production,
electric vehicle battery manufacturing, and biomass processing
and fuel production.
Applicants must meet criteria developed by CAEATFA. In order to
qualify for a STE, the applicant must demonstrate that the
property to be purchased will be used to design, manufacture,
produce, or assemble an eligible advanced transportation
technology or alternative source product - including energy
efficiency - component or system. Eligible projects must meet
evaluation criteria relating to the fiscal and environmental
benefits of the project and to compare those benefits to the
cost of the STE. While there are no maximum or minimum limits
on individual STEs, the program is limited to $100 million
annually.
Suggested amendments . The committee may wish to make two
technical amendments to the bill:
1)Correct a drafting error on page 5, line 5 by striking out
"system" and replacing it with "systems."
2)Strike out, "or that processes or utilizes recycled feedstock"
on page 7, lines 36 and 37.
REGISTERED SUPPORT / OPPOSITION :
Support
Californians Against Waste (sponsor)
California Association of Recycling Market Development Zones
California Electronic Asset Recovery
California Manufacturers and Technology Association
ECS Refining
Electronic Recyclers International
Epic Plastics
Northern California Recycling Association
Global P.E.T., Inc.
Peninsula Packaging Company
Peninsula Plastics Recycling, Inc.
Sims Recycling Solutions
Waste Management, Inc.
Western Plastics Association
AB 1021
Page 5
Opposition
None on file
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092