BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 1275 (De León) - Charge Ahead California Initiative.
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 1275 would establish the Charge Ahead
California Initiative, to be administered by the Air Resources
Board (ARB) with the goals of placing at least 1 million
zero-emission and near-zero-emission vehicles in service by
2023, to create a self-sustaining industry for these vehicles,
and increase access to those vehicles in disadvantaged
communities. The bill would require ARB to consult with
specified entities and stakeholders to adopt a funding plan for
specified programs to meet the goals of the Initiative, require
ARB to make specified changes to certain vehicle rebate and
voucher incentive programs, and establish specified new
programs. The bill would also require ARB to expand the
Enhanced Fleet Modernization Program to allow for public
transportation and car-sharing vouchers as an alternative to
vehicle replacement vouchers.
Fiscal Impact:
ARB indicates it will incur costs of approximately $619,000
and 4 PY in 2014-15, and ongoing costs of $454,000 and 3 PY
ongoing to adopt the specified funding plan and administer
the components of that plan. (Greenhouse Gas Reduction Fund
-GGRF)
ARB indicates it will incur ongoing costs of approximately
$165,000 and 1 PY beginning in 2014-15 to develop and
administer each of the following new programs specified in
the bill: a loan-loss credit enhancement program, a car
sharing program in disadvantaged communities, and deployment
of a charging infrastructure program. (GGRF) Actual costs
and staffing needs would depend upon the amount of funding
dedicated to the specified programs.
ARB indicates it will incur annual costs of $344,000 and 2
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PY, beginning in 2016-17, to develop and implement a
certification program for truck and bus hybrid and
zero-emission vehicle retrofits and remanufactures. (GGRF)
Unknown ongoing costs to fund additional program
expenditures, likely in the millions to tens of millions
annually. (GGRF)
Background: 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. The fees and
surcharges established by AB 118 provide approximately $180
million annually for the following programs.
The Enhanced Fleet Modernization Program (EFMP) is administered
by ARB in consultation with the Bureau of Automotive Repair for
vehicle retirement, and in consultation with local air districts
for vehicle replacement. This program provides for the
voluntary retirement of passenger vehicles and light- and
medium-duty trucks that are high polluters. Under the state
retirement component of EFMP, the owner of a high-polluting
vehicle may apply to ARB for a voucher of up to $1,500 towards a
replacement vehicle under specified conditions. Under the local
replacement component of EFMP, the owner of a high-polluting
vehicle may apply to participating local air quality management
districts for a voucher of up to $2,500 towards a replacement
vehicle or a public transit voucher, as specified.
Approximately 25,000 high-polluting vehicles were retired
through the state component of EFMP in 2012-13. Less than two
dozen replacement vouchers have been issued under the local
component of EFMP since its inception in 2010.
The Alternative and Renewable Fuel and Vehicle Technology
Program (ARFVTP) is administered by the State Energy Resources
Conservation and Development Commission (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.
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The Air Quality Improvement Program (AQIP) is comprised of three
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.
Specifically AQIP includes the following component programs:
The Clean Vehicle Rebate Program (CVRP), administered by ARB's
contractor, the California Center for Sustainable Energy,
provides rebates of up to $2,500 for purchasing or leasing a
new zero-emission vehicle (ZEV) or plug-in hybrid electric
vehicle.
The Hybrid and Zero-Emission Truck and Bus Voucher Incentive
Project (HVIP), administered by ARB and its contractor
CALSTART, provides vouchers to California fleet owners to help
purchase hybrid and zero-emission trucks and buses.
AB 118 Advanced Technology Demonstration Projects,
administered by ARB, provides grants to local air districts
and other public agencies to fund advanced-technology vehicle,
equipment, or emission-control projects that are not yet
commercialized.
The On-Road Heavy-Duty Vehicle Air Quality Loan Program (Truck
Loan Assistance Program), administered by ARB and the
California Pollution Control Financing Authority, provides
loans to fleets to help implement ARB emissions reduction
regulations related to trucks, buses, and heavy-duty
(tractor-trailer) vehicles.
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.
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Proposed Law: SB 1275 would require ARB to update the EFMP
guidelines to ensure that public transit or car sharing vouchers
are available as an alternative to vehicle replacement vouchers,
and that those vouchers be equal in value to a vehicle
replacement voucher. Car sharing is defined as a model of
vehicle rental where users who are preapproved members can rent
vehicles for short periods of time.
SB 1275 would also require ARB to administer a new Charge Ahead
California Initiative with the goals of placing at least 1
million zero-emission and near-zero-emission vehicles in service
by 2023, to create a self-sustaining industry for these
vehicles, and increase access to, and placement of those
vehicles in disadvantaged communities. The bill would require
ARB, in consultation with CEC, air districts, and public
stakeholders to do the following:
Adopt a plan by June 30, 2015 that establishes an
estimate of the total funding necessary for specified
programs and projects to meet the Initiative's goals. The
programs funded would include the CVRP, HVIP, various
components of the ARFVT, precommercial demonstration
projects of advanced freight and transit technology for
goods and passenger movement, and specified new programs.
Update the funding plan at least every three years
through January 1, 2023.
Adopt revisions to CVRP criteria and guidelines by June
30, 2015 to ensure rebate levels are phased down in
multiyear increments and to expand access and eligibility
to low- and moderate-income persons, as specified.
Adopt revisions to HVIP by June 30, 2015 to ensure
program eligibility for a truck and bus retrofitted or
remanufactured to be a zero- or near-zero-emission vehicle.
Establish programs that increase access and benefits for
disadvantaged and low- and moderate-income communities from
electric transportation, including: loan and loss reserve
financing, car sharing programs, and charging
infrastructure in multi-unit dwellings in disadvantaged
communities.
Require these new programs to provide adequate outreach
to disadvantaged and low- and moderate-income communities.
Related Legislation: SB 1204, currently pending in this
Committee, would require ARB, in conjunction with the CEC, to
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administer a California Clean Truck, Bus, and Off-Road Vehicle
and Equipment Technology 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. Funding for the program would be from
the GGRF and priority would be given to projects located in
disadvantaged communities.
Staff Comments: SB 1275 requires ARB, in consultation with
specified entities to adopt a financing plan to fund specified
projects and programs at a level that is necessary to achieve
the specified goals. As noted above, the various
vehicle-related fees and surcharges imposed under AB 118 provide
approximately $180 million annually to fund most of the programs
identified in this bill, but it is unlikely that this amount is
sufficient to also meet the goals of the Charge Ahead California
Initiative. Although the bill does not explicitly authorize the
use of GGRF funds, the findings and declarations in the bill
state that low carbon transportation, low-carbon freight, and
zero-emission passenger transportation are eligible and
recommended expenditures from the GGRF. It is unclear how much
additional revenues would be needed to both maintain existing
expenditures on AB 118 programs and make the additional
investments specified in this bill, but staff estimates the bill
could require additional allocations in the millions to tens of
millions, which could be from the GGRF.
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,
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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. The
Legislature has yet to act on the Administration's proposal, but
it could be modified through the budget process to incorporate
the goals and expenditures envisioned by this bill.