BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 1204 (Lara) - California Clean Truck, Bus, and Off-Road
Vehicle and Equipment Technology Program.
Amended: May 6, 2014 Policy Vote: T&H 11-0; EQ 6-1
Urgency: No Mandate: No
Hearing Date: May 19, 2014 Consultant: Mark McKenzie
This bill meets the criteria for referral to the Suspense File.
Bill Summary: SB 1204 would require the Air Resourced Board
(ARB), in conjunction with the Energy Resources Conservation and
Development Commission (CEC), to administer a California Clean
Truck, Bus, and Off-Road Vehicle and Equipment Technology
Program (program) to fund specified projects to develop and
demonstrate technologies for zero- and near-zero emission medium
and heavy duty trucks, buses, and off-road vehicles and
equipment. The program would be funded with revenues from the
Greenhouse Gas Reduction Fund (GGRF) and priority would be given
to projects located in disadvantaged communities.
Fiscal Impact:
ARB indicates it will incur costs of approximately $644,000
in 2015-16 as follows: $344,000 and 2 PY of staff to develop
and adopt program guidelines, and an additional $300,000 to
conduct market research for the development of performance
criteria and metrics for deployment incentives. (GGRF)
ARB indicates it will incur ongoing costs of approximately
$344,000 and 2 PY to develop a multiyear framework and plan,
and to administer the program. Actual costs and staffing
needs would depend upon the amount of funding dedicated to
the program, which is unspecified in the bill.
CEC indicates it will incur one-time costs of approximately
$250,000 and 2 PY of staff to assist in the development of a
multiyear framework and plan. Ongoing costs for
consultation with ARB would be absorbable. (GGRF)
Unknown ongoing costs to fund program expenditures and
grants, likely in the tens of millions annually. (GGRF)
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Background: Existing law, AB 32 (Nunez), Chap. 488/2006,
requires ARB to adopt greenhouse gas (GHG) emission reduction
measures to ensure that statewide emissions are reduced to 1990
levels by 2020. As part of the implementation of AB 32
market-based compliance measures, ARB adopted a cap-and-trade
program that caps the allowable statewide emissions and provides
for the auctioning of emission credits, the proceeds of which
are quarterly deposited into the GGRF. Existing law, SB 535
(deLeón), Chap. 830/2012, requires that a minimum of 10 percent
of cap-and-trade revenues fund projects located within
disadvantaged communities, and that 25 percent of available
revenues fund projects that benefit those communities. To date,
ARB has conducted six auctions of GHG emission allowances,
generating approximately $663 million.
Existing law, AB 118 (Nunez), Chap. 750/2007, established
additional surcharges and fees on vehicle and vessel
registrations and certain identification plates, and increased
the smog abatement fee as funding sources for several new air
quality and emission reduction programs. Specifically, AB 118
established the Air Quality Improvement Program (AQIP),
comprised of three specified programs administered by ARB in
conjunction with local air districts that provide, among other
things, vouchers for the purchase of hybrid and zero-emission
trucks and buses, and grants that fund advanced technology
vehicle, equipment, or emission-control projects that are not
yet commercialized. AB 118 also established the Alternative and
Renewable Fuel and Vehicle Technology Program (ARFVTP),
administered by CEC, to provide funding for development and
deployment of alternative and renewable fuels and advanced
transportation technologies to help attain the state's climate
change goals. Eligible projects include, among other things,
improvement of light-, medium-, and heavy-duty vehicle
technologies, and retrofitting medium- and heavy-duty on-road
and off-road vehicle fleets. The fees and surcharges
established by AB 118 provide approximately $180 million
annually for these programs.
Proposed Law: SB 1204 would establish the California Clean
Truck, Bus, and Off-Road Vehicle and Equipment Technology
Program to fund the development, demonstration, pre-commercial
pilot, and early commercial development of zero- and near-zero
emission truck, bus, and off-road vehicle and equipment
technologies. Specifically, this bill would:
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Require ARB, in consultation with CEC, to develop
guidelines for the implementation of the program that are
consistent with AB 32 and SB 535.
Require the guidelines to, among other things, outline
performance metrics for deployment incentives, ensure
investments are coordinated with AQIP and ARFVTP programs,
promote investment in medium- and heavy-duty trucking,
structure purchase incentives to increase sales of the
cleanest vehicles in disadvantaged communities and ensure
remanufactured and retrofitted vehicles qualify for
incentives, and maximize leveraging of federal or private
funding.
Specify that ARB, in conjunction with CEC, would
administer the program with moneys appropriated from the
GGRF.
Limit projects funded by the program to: (1)
development, demonstration, pre-commercial pilots, and
early commercial deployments of zero- and near-zero
emission medium- and heavy-duty truck, bus, and off-road
vehicle and equipment technologies, and (2) purchase
incentives for commercially-available zero- and near-zero
emission truck, bus, and off-road vehicle and equipment
technologies and fueling infrastructure.
Authorize ARB to fund studies, technology development,
and demonstration projects focused on improving performance
and financial payback, multi-vehicle and early commercial
scale deployments, and deployment of early commercially
available advanced vehicles and equipment.
Explicitly specify that projects that must be undertaken
pursuant to state or federal law, district rules or
regulations, government entity memoranda of understanding,
or other legally binding agreements are not eligible
projects.
Require ARB to give priority to projects that benefit
disadvantaged communities, leverage additional funding,
have the potential for co-benefits or replication, have
regional and collaborative benefits, and support
technologies with broad market and emission reduction
potential and address barriers not addressed elsewhere.
Require ARB, in consultation with CEC, to create a
multiyear framework and plan developed through a public
process that articulates a vision for moving technologies
through the commercialization process, outlines specified
technology categories that may be funded, and describes the
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roles of agencies and a process for collaboration.
Related Legislation: SB 1275 (de León), pending before this
committee, would require ARB to expand the Enhanced Fleet
Modernization Program to provide for ridesharing and car-sharing
vouchers as an alternative to vehicle replacement vouchers. SB
1275 would also establish the "Charge Ahead California
Initiative" to establish a plan to implement the goals of
placing at least 1 million zero-emission and near-zero-emission
vehicles in service by 2023, and increasing access to these
vehicles for disadvantaged and low- and moderate-income
communities.
Staff Comments: The California Clean Truck, Bus, and Off-Road
Vehicle and Equipment Technology Program established by this
bill is focused on the medium- and heavy-duty vehicle sector and
funded through the GGRF. The projects that would be eligible
for expenditure under this bill could currently be funded
through the existing AQIP and ARFVTP programs. Rather than
creating new programs, the Legislature may wish to consider
augmenting existing programs with additional GGRF allocations.
The Governor's 2014-15 proposed budget includes appropriations
of $850 million in cap-and-trade revenues to fund various
projects and programs designed to reduce GHG emissions. As part
of the Administration's overall strategy, ARB submitted a Budget
Change Proposal (BCP) requesting $200 million from the GGRF and
15 PY of staff to support the expansion of existing clean
transportation programs that provide incentives for sustainable
freight technology, zero and low-emission vehicles, and clean
trucks and buses. According to the BCP, these funds would
benefit disadvantaged communities through the retirement and
replacement of older, high-emitting vehicles with low-emission
passenger vehicles in these communities, and supporting the
demonstration of advanced freight technology to move cargo,
which will benefit communities near freight hubs. This proposal
is consistent with the May 2013 Cap-and-Trade Auction Proceeds
Investment Plan, which emphasizes investments in existing
programs in sectors which have the greatest GHG emissions,
namely transportation, energy, waste, and natural resources,
with proposed investments commensurate with relative emissions.
Investment in existing programs, rather than creating new
programs, expedites investments in GHG-reducing projects. Staff
notes that this bill, which establishes a new program for
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investment of GGRF funds, is not consistent with ARB's budget
proposal, but the Legislature has yet to act on the
Administration's proposal. It could be modified to incorporate
the goals and expenditures envisioned by this bill.