BILL ANALYSIS Ó
AB 1191
Page 1
Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 1191 (Patterson) - As Amended: March 21, 2013
SUBJECT : Energy: assessments and forecasts
SUMMARY : Requires the California Energy Commission (CEC) to
conduct the transportation forecasting and assessment activities
of the Integrated Energy Policy Report (IEPR) on an annual basis
from 2014 to 2020. Requires, as part of this annual reporting,
to evaluate the sufficiency of credits issued under the
California Air Resources Board's (ARB) low carbon fuel standard
(LCFS) regulations. Specifically, this bill :
1)Makes findings and declarations that:
a) Transportation fuels and the transportation energy
sector provide the means of mobility for many activities
and users;
b) CEC is charged with the responsibility of conducting
forecasting and assessment activities, including the
assessment of risks of supply disruptions and other events
on the availability and the price of transportation fuels
and on the state's economy;
c) Recognize the importance of information contained in the
IEPR for use by other state agencies;
d) Recognize that the LCFS applies to all providers of
transportation fuels in California and directed ARB to
determine if the LCFS could be adopted as a discrete early
action measure; and
e) Recognize that the LCFS was adopted as regulation by
ARB.
1)Requires CEC to conduct the transportation forecasting and
assessment elements of the IEPR annually (rather than
biennially) from 2014 to 2020.
2)Requires CEC, as a part of this annual evaluation until 2020,
to evaluate the sufficiency of credits issued under the LCFS
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regulations, including data on the projected and actual costs
of credits, availability and source of credits, and excess or
deficiency of credits.
EXISTING LAW :
1)Requires the CEC to assess energy infrastructure trends and
issues facing California and to develop and recommend energy
policies for the state to address and resolve such issues as
part of the IEPR on a biennial basis. The IEPR specifically
requires the CEC to conduct transportation fuel forecasting
and assessment activities including:
a) Assessment of trends in transportation fuels supply,
demand and prices;
b) Forecasts of statewide and regional transportation
energy demand;
c) Evaluation of the sufficiency of transportation fuel
supplies, including feedstock supplies, production and
refining capacity;
d) Assessment of the risks of supply disruptions, price
shocks or other events;
e) Evaluation of alternative transportation energy
scenarios;
f) Examination of the success of introduction, prices, and
availability of clean-burning transportation fuels; and,
g) Recommendations to reduce dependence on petroleum fuels
and decrease environmental impacts from transportation
energy use.
1)Requires ARB to adopt a statewide greenhouse gas (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, pursuant
to the California Global Warming Solutions Act (AB 32 (Nunez)
Chapter 488, Statutes of 2006).
2)Pursuant to the LCSF regulation adopted by ARB, sets a
statewide goal to reduce the carbon intensity of California's
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transportation fuels by at least 10% by 2020.
FISCAL EFFECT : Unknown
COMMENTS : In 2007, Governor Schwarzenegger issued Executive
Order S-1-07, calling for a reduction of at least 10% in the
carbon intensity of California's transportation fuels by 2020.
The executive order instructed the California Environmental
Protection Agency to coordinate activities between the
University of California, the CEC and other state agencies to
develop and propose a draft compliance schedule to meet the 2020
target.
The executive order further directed ARB to consider initiating
regulatory proceedings to establish and implement the LCFS. In
response, ARB identified the LCFS as an early action item and
adopted a regulation in 2009. The regulation required that the
first carbon intensity reduction target requirement of 0.25%
starting in 2011. The target increased to 0.5% in 2012 and 1.0%
in 2013. To date, fuel suppliers have over-complied,
predominantly by blending ethanol with gasoline, which is
preferred in the near-term because ethanol blending is required
by the federal renewable fuel standard and does not require
significant changes in fueling and vehicle infrastructure.
However, natural gas, biodiesel and electricity also have been
used in significant amounts to comply with the LCFS.
The LCFS regulation includes provisions permitting credits to be
generated from certain alternative fuels and requiring that all
fuels, including those used to generate credits, demonstrate a
physical pathway into the state. Credits are awarded based on
fuel performance that exceeds a regulatory standard. Credits
can be banked indefinitely and used for compliance, sold to
other regulated parties, and exported to other greenhouse gas
emissions reduction programs. The regulation requires reviews
in 2012 and 2015, including availability of fuels and economic
impacts.
This bill would require CEC, in the development of its IEPR, to
provide information on the supply and availability of existing
and new fuels on an annual basis, rather than every other year.
Providing this information to decisionmakers on a more frequent
basis and integrating the reporting by ARB on the sufficiency of
LCFS credits into the IEPR will provide them with a better
understanding of statewide LCFS compliance as well as the
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ability to anticipate future impacts on the costs and
availability of traditional transportation fuels.
According to the sponsor of this bill, "the LCFS is one of the
most complex and challenging California regulations adopted that
requires refiners and importers of conventional fuel to lower
the carbon intensity of fuel by 10% by 2020. This reduction in
carbon intensity is intended to take place through the
introduction of alternative fuels like lower carbon ethanols,
biodiesel, natural gas, electricity or hydrogen. However, given
the state of technology, available volumes and the necessary
alternative vehicles, it is extremely unlikely that enough
alternative fuels are available or able to be deployed in
volumes that would allow compliance with the regulation. The
infeasibility of compliance is supported by a Boston Consulting
Group study that found compliance was likely infeasible,
potentially creating significant impacts on the cost and
availability of traditional transportation fuels."
Chevron's commitment to biofuels : In a March 14, 2013 special
letter to the Sacramento Bee, Chevron Corporation indicates that
"Over the last five years, we have collaborated with the U.S.
Department of Energy, various universities and several advanced
biofuels startup companies, and have established a joint venture
with Weyerhaeuser. We have also conducted in-house innovative
research and development, testing more than 100 different
feedstocks and 50 conversion technologies to identify ways to
make low-carbon fuel that would be commercial, scalable and
affordable for customers. If and when these hurdles are
overcome, capital investment will surely follow? However, all of
this activity has led us to conclude that the LCFS, as currently
written, is not achievable due to technology, resource and
market limitations. In fact, we are convinced the costs to
California businesses, consumers and the economy are likely to
be profound - and are as yet unrecognized by most people."
Double referral : This bill has been double-referred and was
approved by the Assembly Natural Resources Committee on April
15, 2013 (9-0 vote).
REGISTERED SUPPORT / OPPOSITION :
Support
Western States Petroleum Association (sponsor)
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California Manufacturers & Technology Association
Opposition
None on file
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093