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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          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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