BILL ANALYSIS Ó
AB 577
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
577 (Bonilla) - As Amended May 5, 2015
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| |Natural Resources | |9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill establishes the Biomethane Collection and Purification
Grant Program (Program) at the California Energy Commission
(CEC) and allocates $13 million, upon appropriation by the
Legislature, from cap and trade revenues to fund the program.
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Specifically, this bill:
1)Allocates $13 million from the Greenhouse Gas Reduction Fund
(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 co-locate biomethane producers with
vehicle fleets to generate biomethane for conversion to
transportation fuel.
b) The location of biomethane sources and their proximity
to natural gas pipeline injection sites.
4)Requires CEC to prioritize projects that provide the maximum
greenhouse gas (GHG) reductions
FISCAL EFFECT:
1)Cost pressures of up to $13 million (GGRF) to fund the
Program.
2)Unknown increased administrative costs for CEC to develop and
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implement the Program.
COMMENTS:
1)Purpose. According to the author, 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. This bill seeks
to promote the development and commercialization of biogas in
California by providing incentives for purification
technology, infrastructure, and projects to upgrade existing
facilities to meet the state's standards.
2)Background. The anaerobic digestion of biodegradable organic
matter produces biogas, consisting 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.
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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
are produced at in-state ethanol and biodiesel facilities.
According to the CEC, despite its many benefits, bioenergy
production uses only 15% of California's available biomass
waste, and production is decreasing. The CEC's Bioenergy
Action Plan identifies the following recommended actions:
a) Increase research and development of diverse bioenergy
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 provides funding to achieve the recommended actions
of facilitating access to transmission, pipelines, and other
distribution networks.
3)AB 32 Cap and Trade Revenues. The California Global Warming
Solutions Act of 2006 (AB 32) requires ARB to adopt a
statewide GHG emissions limit equivalent to 1990 levels by
2020 and adopt regulations, including market-based compliance
mechanisms, to achieve maximum technologically feasible and
cost-effective GHG emission reductions.
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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 available for appropriation by the
Legislature.
The 2014-15 Budget Act allocates cap and trade revenues for
the 2014-15 fiscal year and establishes a long-term plan for
the allocation of cap-and-trade revenues beginning in fiscal
year 2015-16.
The Budget continuously appropriates 35% of cap-and-trade
funds for investments in transit, affordable housing, and
sustainable communities. Twenty-five percent of the revenues
are continuously appropriated to continue the construction of
high-speed rail. The remaining 40% will be appropriated
annually by the Legislature for investments in programs that
include low-carbon transportation, energy efficiency and
renewable energy, and natural resources and waste diversion.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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