BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1191
                                                                  Page  1

          Date of Hearing:   May 15, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                  AB 1191 (Patterson) - As Amended:  March 21, 2013 

          Policy Committee:                              Natural  
          ResourcesVote:16-0
                        Transportation                          9-0

          Urgency:                          State Mandated Local Program:  
          No     Reimbursable:              

           SUMMARY

           This bill requires the California Energy Commission (CEC) to  
          conduct the transportation forecasting and assessment activities  
          of the Integrated Energy Policy Report (IEPR) annually beginning  
          until 2020.  This bill also requires the CEC to include an  
          evaluation of the availability, cost and source of credits  
          issued under the Air Resource's Board (ARB) Low Carbon Fuel  
          Standard (LCFS) in the assessment. 

           FISCAL EFFECT  

          Unknown increased special fund costs to the CEC, in the hundreds  
          of thousands of dollars, for increased reporting requirements.

           COMMENTS  

           1)Background.   The California Global Warming Solutions Act (AB  
            32, Núñez-Pavely, Chapter 488, Statutes of 2006) 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.  

            AB 32 also requires ARB to adopt early action measures to  
            reduce GHG emissions.  The transportation sector is  
            responsible for approximately 40% of California's total GHG  
            emissions.

            In 2007, Governor Schwarzenegger issued Executive Order  
            S-01-07, specifying a statewide goal to reduce the carbon  








                                                                  AB 1191
                                                                  Page  2

            intensity of California's transportation fuels by at least 10%  
            by 2020.  The order required ARB to consider adopting a LCFS  
            to implement this goal, either as an early action measure or  
            in other regulatory proceedings.  In 2009, ARB adopted the  
            LCFS as a regulation to be phased-in beginning in 2010. 

            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 GHG emissions reduction programs.  The regulation  
            requires reviews in 2012 and 2015, including availability of  
            fuels and economic impacts.

           2)Credit check.   The proponents of this bill suggest that  
            sufficient credits may not be available to economically comply  
            with the LCFS as the targets increase.  They point to their  
            own study as evidence, though ARB disputes the study's  
            assumptions and conclusions.  

            This bill poses the CEC as a neutral party to evaluate the  
            sufficiency of LCFS credits.  The subject matter is consistent  
            with the CEC's existing transportation fuel analysis and  
            reporting duties.





           Analysis Prepared by  :    Jennifer Galehouse / APPR. / (916)  
          319-2081