BILL ANALYSIS Ó
AB 1023
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1023 (Eggman) - As Amended: March 21, 2013
SUBJECT : Air resources: greenhouse gas emissions
SUMMARY : Establishes the Greenhouse Gas Reduction through
Recycling, Composting, and Recycled Content Manufacturing
Program (Program), which requires the Department of Resources
Recycling and Recovery (CalRecycle) to develop incentives for
waste reduction, recycling, composting, and recycled content
manufacturing projects that reduce greenhouse gas (GHG)
emissions.
EXISTING LAW:
1)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.
2)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.
3)Establishes the Greenhouse Gas Reduction Fund (Fund), to be
appropriated by the Legislature, for moneys (except fines and
penalties) collected by ARB from the auction or sale of
allowances pursuant to ARB's cap-and-trade program.
4)Establishes the Greenhouse Gas Reduction Fund Investment Plan
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and Communities Revitalization Act (AB 1532), which:
a) Requires the California Environmental Protection Agency
(CalEPA) to identify disadvantaged communities based on
geographic, socioeconomic, public health, and environmental
hazard criteria for investment opportunities related to AB
1532.
b) Authorizes the Legislature to appropriate moneys from
the Fund to facilitate the achievement of GHG emission
reduction goals by, among others, increasing in-state
diversion of municipal solid waste from disposal through
waste reduction, diversion, and reuse.
c) Requires the Department of Finance (DOF) to prepare a
three-year investment plan that would identify priority
programmatic investments of moneys that will facilitate the
achievement of feasible and cost-effective GHG emissions
reductions toward achievement of GHG reduction goals and
targets by sector.
d) Requires the investment plan to allocate a minimum of 25
percent of the available moneys in the Fund to projects
that benefit the disadvantaged communities identified by
CalEPA and a minimum of 10 percent of the available moneys
to projects located within communities identified by
CalEPA.
THIS BILL : Establishes the Greenhouse Gas Reduction through
Recycling, Composting, and Recycled Content Manufacturing
Program (Program), which:
1)Requires CalRecycle, in coordination with ARB, to provide
incentives or grants for waste reduction, recycling,
composting, and recycled content manufacturing projects that
reduce GHG emissions in the state.
2)Requires CalRecycle, in consultation with ARB, to annually
identify industry sectors that can reduce their GHG emissions
through the increased use of recycled content or by recovering
putrescible materials that would emit GHGs if disposed.
3)Specifies that the industry sectors CalRecycle may identify
include, but are not limited to, the following:
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a) Composting and anaerobic digestion;
b) Recycled container glass manufacturing;
c) Food processing;
d) Recycled paper and paperboard packaging; and,
e) Recycled plastic manufacturing.
4)Upon identifying eligible sectors, requires CalRecycle to
develop a market development program to provide incentives for
those sectors to make investments for waste reduction,
recycling, composting, and recycled content manufacturing
projects that would reduce GHG emissions.
5)States that the funds expended shall not exceed $30 million
annually.
6)Requires CalRecycle to give priority to projects benefitting
disadvantaged communities, as identified by ARB. Requires
that 25 percent of funds allocated be disbursed for projects
that benefit these communities and that 10 percent be
disbursed for projects located within these communities.
7)Specifies that CalRecycle shall implement the requirements of
the bill using funds appropriated by the Legislature for this
purpose.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, this bill "allocates AB 32
cap-and-trade auction proceeds to fund recycling, organics
processing, and recycled content manufacturing projects that
reduce [GHG] emissions." The author states that, "the state has
successfully supported recycling industries in the past through
direct incentive payments for California-based processors of
recycled materials and manufacturers that use this material."
Moreover, "supporting the burgeoning anaerobic digestion
industry supports multiple policy priorities, including creating
an ultra-low-carbon fuel that reduces emissions in the
transportation sector and generating renewable energy through
distributed generation."
Background. According to ARB, a total reduction of 80 million
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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 2012-13 Budget Act authorized DOF to allocate at least $500
million from cap-and-trade revenue, and make commensurate
reductions to General Fund expenditure authority, to support the
regulatory purposes of AB 32. AB 1532 establishes a long-term
spending strategy for moneys in the Fund, including procedures
for deposit and expenditure of cap-and-trade auction revenues
pursuant to an investment plan.
The Governor's proposed 2013-14 Budget includes a brief
discussion of Administration priorities for investment,
emphasizing investments in the transportation and energy sectors
from which large reductions in GHG emissions are possible. In
addition, areas to be examined during the planning process
include sustainable agriculture practices (including the
development of bioenergy), forest management and urban forestry,
and the diversion of organic waste to bioenergy and composting.
Pursuant to AB 1532, DOF and ARB have developed a draft
three-year investment plan for the auction proceeds. The draft
identifies the state's GHG emission 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. The draft plan will be considered by ARB on April
25, 2013. DOF will submit the final plan to the Legislature in
May 2013. Funding will be appropriated to state agencies by the
Legislature and Governor through the annual Budget Act,
consistent with the plan.
Waste reduction and GHGs . 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
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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.
Conflicting funding priorities ? This bill does not identify a
funding source for the Program; given the implausibility of
funding from General Fund, the GHG reduction projects included
in the bill are candidates for funding from cap-and-trade
auction revenues. In order to avoid potential conflicts in
planning and administration of funds, the committee may wish to
amend the bill to clarify that any funds appropriated for this
purpose are consistent with the existing AB 1532 requirements.
The committee may wish to consider further clarifying that the
requirement that CalRecycle shall implement this chapter upon
the appropriation of funds by the Legislature includes the
development of any standards and guidelines.
Additional amendments . The committee may wish to amend the bill
to:
1)Correct a drafting error on page 3, line 11 by striking out
"Division 25" and inserting "Division 25.5."
2)Strike out the term "putrescible" on page 4, line 11 and
replace it with "organic" to provide clarity and to be
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consistent with other CalRecycle programs.
3)Make related technical changes.
REGISTERED SUPPORT / OPPOSITION :
Support
Californians Against Waste (sponsor)
California Association of Recycling Market Development Zones
Northern California Recycling Association
Waste Management, Inc.
Opposition
California Chamber of Commerce
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092