BILL ANALYSIS Ó
AB 577
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 577
(Bonilla) - As Amended April 6, 2015
SUBJECT: Biomethane: grant program
SUMMARY: Establishes the Biomethane Collection and Purification
Grant Program (Program) and allocates an unspecified portion of
the Greenhouse Gas Reduction Fund (GGRF) for the Program.
EXISTING LAW:
1)Requires the Air Resources Board (ARB), pursuant to California
Global Warming Solutions Act of 2006 [AB 32 (Nunez), Chapter
488, Statutes of 2006], to adopt a statewide greenhouse gas
GHG emissions limit equivalent to 1990 levels by 2020 and
adopt regulations to achieve maximum technologically feasible
and cost-effective greenhouse gas (GHG) emission reductions.
AB 32 authorizes ARB to permit the use of market-based
compliance mechanisms to comply with GHG reduction
regulations, once specified conditions are met.
2)Establishes the GGRF 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 GGRF and available for appropriation by
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the Legislature.
3)Establishes the GGRF Investment Plan and Communities
Revitalization Act to set procedures for the investment of GHG
allowance auction revenues. Authorizes a range of GHG
reduction investments and establishes several additional
policy objectives.
4)Requires the investment plan to allocate a minimum of 25% of
the available moneys in the GGRF to projects that provide
benefits to disadvantaged communities and a minimum of 10% of
the available moneys in the GGRF to projects located within
identified disadvantaged communities.
5)The Renewables Portfolio Standard (RPS) requires
investor-owned utilities (IOUs), publicly owned utilities
(POUs) and certain other retail sellers of electricity, in
order to fulfill unmet long-term resource needs, to procure
eligible renewable energy resources to meet the following
portfolio targets:
a) 20% on average from January 1, 2011 to December 31,
2013.
b) 25% by December 31, 2016.
c) 33% on and after December 31, 2020.
6)Provides that eligible renewable generation facilities must
"use" biomass, solar thermal, photovoltaic, wind, geothermal,
renewable fuel cells, small hydroelectric, digester gas,
limited non-combustion municipal solid waste conversion,
landfill gas, ocean wave, ocean thermal or tidal current.
7)Defines "biogas" as gas that is produced from the anaerobic
decomposition of organic material.
8)Defines "biomethane" as biogas that meets standards adopted by
the California Energy Commission (CEC) for constituents found
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in biomethane to reasonably ensure the protection of human
health and pipeline integrity and safety. Requires CEC to
update the standards at least every five years.
9)Prohibits the injection of biogas into a common carrier
pipeline unless the biogas meets the state standards and
prohibits the sale, supply, or transport of biogas collected
from a hazardous waste landfill.
10)Requires all generators of significant quantities of organic
waste to arrange for recycling of that material and requires
local governments to develop and implement organic waste
recycling plans.
11)Establishes a statewide recycling goal of 75% by 2020.
THIS BILL:
1)Requires ARB to allocate an unspecified percentage of monies
from the GGRF, upon appropriation by the Legislature, to CEC
to award grants pursuant to the Program.
2)Establishes the Program and requires CEC to develop and
implement grants for projects that build or develop collection
and purification technology, infrastructure, and projects that
upgrade existing biomethane facilities to meet the state's
biomethane standards.
3)When awarding grants, requires CEC to consider:
a) Opportunities to collocate biomethane producers with
vehicle fleets to generate biomethane and convert it to
transportation fuel at the same location; and,
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b) Location of biomethane sources and their proximity to
natural gas pipeline injection sites.
4)Requires CEC to prioritize projects that provide the maximum
GHG reductions for each dollar awarded.
FISCAL EFFECT: Unknown
COMMENTS:
1)Author's statement:
AB 577 seeks to promote the development of biogas in
California. Biogas, gas that is generated from organic
waste, provides a more sustainable and cleaner alternative
to natural gas. If 10% of California's natural gas use is
replaced with biogas, GHG emissions would be reduced by
tens of millions of metric tons. The biogas market in
California has not been developed because the collection
and purification can be incredibly costly. For example,
meeting the pipeline purification standards for biogas in
California can add 40% or more to total project costs. The
natural gas sector is under the cap as of January 2015 and
proceeds from their purchase of carbon credits are expected
to exceed at least $1 billion (emphasis in original).
Investing a portion of that money into the development of
biogas will collect emissions that would have been released
otherwise and simultaneously reduce demand for natural gas
and petroleum.
AB 577 does not pick a technology, but allows for different
uses of biogas to be selected at each site to account for
varying factors, including proximity to existing natural
gas pipelines. AB 577 creates a smart and fair approach.
This bill will significantly reduce GHG emissions, promote
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biogas development in a sustainable manner, and reduce the
barriers identified in the California Energy Commission's
Bioenergy Action Plan.
2)Biogas. The anaerobic digestion of biodegradable organic
matter produces biogas, which consists of methane, carbon
dioxide, and other trace amounts of gases. Depending on where
it is produced, biogas can be categorized as landfill gas or
digester gas. Landfill gas is produced by decomposition of
organic waste in a municipal solid waste landfill. Digester
gas is typically produced from livestock manure, sewage
treatment or food waste. According to a CEC estimate, 358
megawatts (MW) is potentially available from new landfill gas
development. Of these landfills, some are small and are
therefore unlikely to be developed for gas by 2020.
Biogas can also be used in place of gasoline or diesel for
transportation. According to a November 2014 report by the
Bioenergy Association of California, California could generate
as much as 10% of its total gas consumption (2,415 gasoline
gallon equivalents) from organic waste, or the equivalent of
7,000 megawatts of renewable power.
Biogas has significant GHG emissions reduction potential; a
recent report by the International Panel on Climate Change
states that methane has 34 times the heat-trapping effects of
carbon dioxide over a 100 year period. Biogas produced from
the anaerobic digestion of organic waste (i.e., food and green
waste) has a negative carbon intensity (-15), wastewater
treatment biogas has a carbon intensity of 7.89, dairy
digester biogas has a carbon intensity of 13.45, and landfill
biogas has a carbon intensity between 11.26 and 15.56. For
comparison, the carbon intensity of gasoline is 99.18, and
diesel is 98.3. Other environmental benefits of biogas
include locally sourced renewable energy, improved air and
water quality and other ecosystem benefits, waste reduction,
as well as reducing California's dependence on fossil fuels
and vulnerability to wildfire (for forestry biomass).
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Current bioenergy production in California includes 33 biomass
plants that generate a combined 600 megawatts of electricity
(nearly 2 percent of California's total electricity supply);
11 dairy digesters that produce electricity, combined heat and
power, and biogas; 500 megawatts of electricity is generated
at biogas facilities at wastewater treatment plants and
landfills; and, 50 to 100 million gasoline gallon equivalent
produced at in-state ethanol and biodiesel facilities.
The CEC's Bioenergy Action Plan states:
Despite its many benefits, bioenergy production uses only
15% of California's available biomass waste, and production
is decreasing. Regulatory and financial incentives for
renewable power do not adequately monetize the many
benefits of bioenergy, and regulatory barriers compound
these challenges. Some incentives for bioenergy have been
inconsistent or discontinued while others have failed to
account for the additional costs and benefits of biomass.
Environmental, waste disposal, public health, and pipeline
safety regulations often complicate bioenergy permitting
and development and sometimes contradict each other. Access
to transmission lines, pipelines and other distribution
networks also pose significant challenges to bioenergy
development.
Some of these challenges require additional research and
demonstration to ensure that bioenergy production is
environmentally and economically sustainable. Other
barriers require regulatory changes, including permit
streamlining and consolidation, utility procurement
requirements, financial incentives that reflect the many
benefits of bioenergy, and other changes.
The Plan identifies the following "recommended actions:"
a) Increase research and development of diverse bioenergy
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technologies and applications, as well as their costs,
benefits, and impacts.
b) Continue to develop and make accessible information
about the availability of organic wastes and opportunities
for bioenergy development.
c) Streamline and consolidate permitting of bioenergy
facilities and reconcile conflicting regulatory
requirements to the extent possible.
d) Assess and monetize the economic, energy, safety,
environmental, and other benefits of biomass.
e) Facilitate access to transmission, pipelines, and other
distribution networks.
This bill would provide funding that could be used to achieve
the recommended action of facilitating access to transmission,
pipelines, and other distribution networks.
4 Previous legislation.
a) AB 1900 (Gatto), Chapter 602, Statutes of 2012 clarified
the requirements with respect to injecting biomethane into
common carrier pipelines.
b) AB 2196 (Chesbro), Chapter 605, Statutes of 2012
clarified the standards for RPS eligibility for biomethane
injected into a common carrier pipeline.
5 Suggested amendments.
a) This bill currently directs an unspecified percentage of
the GGRF to fund the grants established by the bill. The
author has proposed amending the bill to allocate $100
million for this purpose. The committee may wish to accept
the author's amendment and replace the unspecified
percentage with $13 million.
b) This bill requires that the funds be appropriated to ARB
to allocate to CEC for purposes of the bill. The committee
may wish to amend the bill to appropriate the funds to CEC
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directly.
REGISTERED SUPPORT / OPPOSITION:
Support
Bioenergy Association of California
CR&R Incorporated
California Association of Sanitation Agencies
Clean Energy and Clean Energy Renewable Fuels
East Bay Municipal Utility District
Los Angeles County Integrated Waste Management Task Force
Sanitation Districts of Los Angeles County
Opposition
CalChamber
AB 577
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Cal Tax
Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)
319-2092