BILL ANALYSIS Ó SB 1204 Page 1 SENATE THIRD READING SB 1204 (Lara and Pavley) As Amended August 19, 2014 Majority vote SENATE VOTE :26-10 TRANSPORTATION 12-2 APPROPRIATIONS 13-4 ----------------------------------------------------------------- |Ayes:|Lowenthal, Linder, |Ayes:|Gatto, Bocanegra, | | |Achadjian, Ammiano, | |Bradford, | | |Bloom, Bonta, Buchanan, | |Ian Calderon, Campos, | | |Daly, Frazier, Holden, | |Eggman, Gomez, Holden, | | |Nazarian, Quirk-Silva | |Linder, Pan, Quirk, | | | | |Ridley-Thomas, Weber | |-----+--------------------------+-----+--------------------------| |Nays:|Gatto, Waldron |Nays:|Bigelow, Donnelly, Jones, | | | | |Wagner | ----------------------------------------------------------------- SUMMARY : Creates a new program to be administered by the California Air Resources Board (ARB) and funded with cap and trade revenues to develop zero and near-zero emission truck, bus, and off-road vehicle and equipment technologies and related projects. Specifically, this bill : 1)Creates the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (Program) to be administered by ARB in conjunction with the State Energy Resources Conservation and Development Commission (CEC) using cap and trade auction proceeds to develop, demonstrate, pilots, and deploy zero and near-zero emission truck, bus, and off-road vehicle and equipment technologies with priority given to projects in disadvantaged communities. 2)Limits expenditure of Program funds for projects that: a) Develop technology, demonstrate, and pilot commercial deployment of zero and near-zero emission medium- and heavy-duty truck technology, including projects that facilitate clean goods movement with no less than 20% of funding going toward early commercial deployment of existing zero and near-zero emission heavy duty truck technology until January 1, 2018. SB 1204 Page 2 b) Develop zero and near-zero emission bus technology, demonstrate pre-commercial pilots, and provide early commercial deployments, including pilots of multiple vehicles at one site or region; c) Develop, demonstrate, pilot, and deploy zero and near-zero emission off-road vehicle and equipment in port, agricultural, marine, construction, and rail sectors; d) Develop purchase incentives, including point-of-sale incentives, for commercially available zero and near-zero emission truck, bus, and off-road vehicle and equipment technologies and fueling infrastructure to accelerate market acceptance; and, e) Develop projects that support greater commercial motor vehicle freight efficiency and greenhouse gas (GHG) emissions reductions, including advanced intelligent transportation systems, autonomous vehicles, and other freight information and operations technologies. 3)Requires that ARB, in consultation with CEC, develop guidance, as specified, for the implementation of the Program. 4)Provides that projects required pursuant to state or federal law, rules, regulations, are not eligible for funding under the Program. 5)Requires ARB, in consultation with CEC, to create an annual framework and plan that articulates the overarching vision for the Program, outlines performance criteria, and describes agency roles. FISCAL EFFECT : According to the Assembly Appropriations Committee: 1)Unknown ongoing cost pressures to fund Program expenditures and grants, likely in the tens of millions of dollars annually Greenhouse Gas Reduction Fund (GGRF). 2)Increased annual costs to ARB, from the GGRF, of approximately $450,000 to develop eligibility criteria for zero emission bus and truck retrofits and remanufactures. SB 1204 Page 3 3)Increased annual costs to ARB, from the GGRF, of approximately $200,000 to augment the Air Quality Improvement Program (AQIP) program plan and guidelines to provide guidance to the Program. 4)Increased annual costs to ARB, from the GGRF, to develop and implement non-vehicle projects that support greater freight efficiency and GHG reductions. 5)One-time costs to the CEC, from the GGRF, to assist in the development of a multiyear framework and plan. Ongoing absorbable costs. COMMENTS : Given that cars and trucks are responsible for nearly 40% of California's GHG emissions; it stands to reason that addressing transportation sector emissions represents the logical next step toward achieving the state's emissions reduction goals. To this end, California has worked diligently to address transportation sector emissions across many platforms, but particularly toward replacing existing fleets (light-duty through heavy-duty) with zero and near-zero emissions vehicles and equipment. While the light-duty fleet sector has made much progress, turning over the fleet for medium- and heavy-duty vehicles has not had the same level of success despite the fact that these vehicles represent a significant source of GHG and fine particulate matter emissions. While programs at ARB and CEC address both light- and heavy-duty vehicle sectors, the authors believes that additional, focused efforts are needed for the medium- and heavy-duty zero and near-zero-emission vehicles and equipment to improve market penetration and make the purchase and use of this technology a viable, and affordable option for medium- and heavy-duty fleet operators. Generally, there are two major programs in place to address the medium- and heavy-duty vehicle sector reside within ARBs and CEC: the AQIP and Renewable Fuel and Vehicle Technology Program (ARFVTP). AQIP: AQIP is administered by ARB in consultation with local air districts. This program is funded through surcharges on vehicle registration fees, a portion of vessel registration fees, a portion of the smog abatement fee, and an increase in SB 1204 Page 4 the fee for identification plates for various types of vehicles such as farm trailers and logging vehicles, operated on public roads. This program provides competitive grants to fund projects to improve the air quality impacts of alternative fuels and vehicles, vessels, and equipment technologies. AQIP encompasses several programs, including the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). HVIP, which is administered by ARB and its contractor, CALSTART, provides vouchers to California fleet owners to help purchase hybrid and zero-emission trucks and buses. ARFVTP: ARFVTP is administered by the CEC and provides 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, for example, development, improvement, and production of alternative and renewable low-carbon fuels; improvement of light-, medium-, and heavy-duty vehicle technologies; and expansion of infrastructure connected with existing fleets, public transit, and transportation corridors. To achieve greater widespread deployment of clean medium- and heavy-duty vehicles, the authors believe that additional standards and technology studies and development need to be performed. The authors contend that additional funding is needed to fully develop and test actual systems, with a focus on performance improvements and cost reduction. They cite a need for early demonstration projects to explore performance and integration challenges which need to be followed up with larger pre-commercial demonstrations to evaluate real world performance. Once these systems are developed and tested, the authors note that targeted incentive programs must be created to achieve full market penetration. The authors point out that many of the efforts that are needed to develop and deploy zero and near-zero emission medium and heavy duty vehicles, are not fully addressed in AQIP and ARFVTP. They note that while it may be possible to add these requirements into AQIP and ARFVTP, they contend that greater progress would likely be achieved by creating a single overarching program that is singularly focused on developing and deploying these vehicles. For example, the development of SB 1204 Page 5 studies and advanced research, including advanced technology business case and feasibility studies to develop standards do not fall neatly into AQIP or ARFVTP and the same is true for development of pre-commercial commercial demonstration programs. The authors note that some existing technological development and deployment (incentives) programs can be tailored to address medium- and heavy-duty transportation sector needs, but given that much of the effort in these programs is currently going toward light-duty clean cars, it is unclear whether or not adding these programs into existing efforts would produce the desired results. This concern has led the authors to introduce this bill which creates a separate and distinct program with the singular focus of developing and deploying these technologies so that the goal of fleet turnover can be achieved. The authors believe that by combining all efforts for this transportation sector into one program, along with increased investments, will ultimately result in broad full-scale deployment of these clean vehicles, particularly in disadvantaged communities. Analysis Prepared by : Victoria Alvarez / TRANS. / (916) 319- 2093 FN: 0004925