BILL ANALYSIS Ó
AB 1375
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Date of Hearing: April 29, 2013
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1375 (Chau) - As Amended: April 23, 2013
SUBJECT : Clean Technology Investment Account
SUMMARY : Requires the Air Resources Board (ARB) to expend
auction revenue funds appropriated from the Greenhouse Gas
Reduction Fund in the form of grants to specified nonprofit
corporations to accelerate development, demonstration and
deployment of transformative technologies that will, or have the
potential to, reduce greenhouse gas (GHG) emissions and foster
job creation.
EXISTING LAW :
1)Requires ARB, pursuant to California Global Warming Solutions
Act of 2006 (AB 32), to adopt a statewide GHG emissions limit
equivalent to 1990 levels by 2020 and adopt regulations to
achieve maximum technologically feasible and cost-effective
GHG emission reductions.
2)Authorizes ARB to permit the use of market-based compliance
mechanisms to comply with GHG reduction regulations, under
limited circumstances once specified conditions are met.
3)Establishes the GHG Reduction Fund and requires all moneys,
except for fines and penalties, collected by ARB from the
auction or sale of allowances pursuant to a market-based
compliance mechanism (i.e., the cap-and-trade program adopted
by ARB under AB 32) to be deposited in the Fund and available
for appropriation by the Legislature.
4)Establishes the GHG Reduction Fund Investment Plan and
Communities Revitalization Act (AB 1532) to set procedures for
the investment of GHG allowance auction revenues. AB 1532
authorizes a range of GHG reduction investments, including
funding in research, development, and deployment of innovative
technologies, measures, and practices related to GHG reduction
programs and projects funded pursuant to the Investment Plan.
THIS BILL :
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1)Establishes the Clean Technology Investment Account within the
GHG Reduction Fund.
2)Requires that moneys in the Account be expended by ARB, upon
appropriation, by awarding grants to California 501(c)(3)
nonprofit corporations to design and implement programs that
accelerate the development, demonstration and deployment by
companies and entrepreneurships of transformative technologies
that will reduce or have the potential to reduce GHG emissions
and foster job creation in California.
3)Requires ARB to give priority to nonprofit corporations that
have one or more of the following:
a) Demonstrated ability to accelerate innovative
technologies intended to reduce GHG emissions.
b) Demonstrated ability to attract private capital.
c) Access to broad network of resources.
d) Operate as part of a larger (national or
international) effort that it can leverage.
e) Ability to match public funds with private
resources.
4)Requires ARB to develop and adopt project evaluation and
solicitation guidelines prior to disbursing grants. The
guidelines shall be published and subject to a public meeting.
5)Exempts the guidelines from the Administrative Procedure Act.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background. According to ARB, a total reduction of 80 million
metric tons (MMT), or 16 percent compared to business as
usual, is necessary to achieve the 2020 limit. Approximately
78 percent of the reductions will be achieved through
identified 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 that
covers an estimated 600 entities. The first two quarterly
AB 1375
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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 (AB 1464) authorized Department of
Finance (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 (John A. Pérez) 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. AB 1532
specifically authorizes funding for research, development, and
deployment of innovative technologies, measures, and practices
related to GHG reduction programs and projects funded pursuant
to the investment plan.
Pursuant to AB 1532, DOF and ARB are developing a three-year
investment plan for the auction proceeds. The investment plan
will identify the state's GHG emission reduction goals and
priority programs for investment of proceeds to support
achievement of those goals. 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.
In February 2013, ARB released an investment plan "concept
paper" and held public workshops to solicit public input. A
draft investment 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.
2)Bill should focus on purposes rather than recipients. This
bill includes a detailed description of non-profit corporation
that would be eligible and preferred for funding, which
matches the profile of the bill's sponsor, CleanTech Open.
However, the experience of existing research funding programs
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such as the Public Interest Energy Research program indicate
that a broader pool of eligible recipients may be more
appropriate, including educational institutions, government
entities and for-profit corporations. The author and the
committee may wish to consider eliminating the language
directing funds to specified non-profits (page 3, lines 8-30).
3)APA exemption not necessary for adoption of guidelines. This
bill unnecessarily provokes the question of application of the
APA to "guidelines" by including an exemption. The author and
the committee may wish to consider eliminating the APA
exemption (page 3, lines 38-40).
4)Cart before horse? The purposes described in this bill are
already eligible for funding from cap and trade auction
revenue under AB 1532 and research is prominently featured in
the draft investment plan. To avoid requiring ARB to
prematurely or unnecessarily establish guidelines required by
the bill, the author and the committee may wish to consider
clarifying that ARB's obligations under this bill are
contingent on the appropriation of funds.
REGISTERED SUPPORT / OPPOSITION :
Support
CleanTech Open (sponsor)
California Clean Energy Fund
Chuck Reed, Mayor, City of San Jose
CleanTech Energy
Ecotone Creative
Faludi Design
Gridtest Systems
Haetl Ltd.
Joint Venture Silicon Valley
Palo Alto Research Center (a Xerox Company)
Opposition
California Chamber of Commerce
California Manufacturers & Technology Association
California Taxpayers Association
Western States Petroleum Association
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
AB 1375
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319-2092