BILL ANALYSIS Ó AB 590 Page 1 Date of Hearing: April 13, 2015 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 590 (Dahle) - As Introduced February 24, 2015 SUBJECT: Greenhouse Gas Reduction Fund SUMMARY: Establishes the Biomass State Cost Share Account (Account) within the Greenhouse Gas Reduction Fund (GGRF) and requires an unspecified amount to be transferred annually from the GGRF to the Account, to be available upon appropriation to the California Energy Commission (CEC) for purposes of maintaining the current level of biomass power generation in the state and revitalizing currently idle facilities in strategically located regions. EXISTING LAW: 1)Requires the Air Resources Board (ARB), pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. 2)Authorizes ARB to permit the use of market-based compliance mechanisms to comply with GHG reduction regulations, once specified conditions are met. AB 590 Page 2 3)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 Fund and available for appropriation by the Legislature. 4)Establishes the GGRF Investment Plan and Communities Revitalization Act [AB 1532 (John A. Pérez), Chapter 807, Statutes of 2012] to set procedures for the investment of GHG allowance auction revenues. AB 1532 authorizes a range of GHG reduction investments and establishes several additional policy objectives. 5)Requires the investment plan to allocate: 1) a minimum of 25% of the available moneys in the fund to projects that provide benefits to identified disadvantaged communities; and, 2) a minimum of 10% of the available moneys in the fund to projects located within identified disadvantaged communities [SB 535 (De Leon), Chapter 830, Statutes of 2012]. FISCAL EFFECT: Unknown COMMENTS: 1)Background. 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 percent 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 percent will be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable AB 590 Page 3 energy, and natural resources and waste diversion. No funds have been specifically appropriated for biomass power generation. 2)Author's statement: California is in danger of losing the one asset it has to divert forest fuel reduction residues and other wood waste materials today. In the last 12 months alone California has closed five biomass facilities due to expiring contracts and poor economics. That's a loss of 108 MWs of baseload renewable power and hundreds of jobs, both at the plants and in the fuel supply infrastructure. California's RPS program is failing to provide any incentive to procure biomass power for a more balanced portfolio of renewables. Despite the call for environmental and economic benefit considerations in the RPS program, the only growth that is occurring in the renewable industry is coming from solar and wind. By 2020, when the state is mandated to procure 33 percent of its electricity supply from renewables, intermittents could account for some three-quarters of total renewables while half of the biomass plants in the state will be closed. 3)Double referral. This bill has been double referred to the Utilities and Commerce Committee. REGISTERED SUPPORT / OPPOSITION: Support California Biomass Energy Alliance (sponsor) AB 590 Page 4 Associated Builders and Contractors of California AGRA Marketing Brahma Group C & S Waste Solutions of Lassen County CR&R Incorporated CT Bioenergy Consulting California Chapters of the Solid Waste Association of North America (SWANA) California Forestry Association Covanta Energy EWP Renewable Corporation IHI Power Services Independent Energy Producers Association AB 590 Page 5 Kochergen Frams Composting Lake County Waste Solutions Nortech Waste Old Durham Wood Orange County Business Council Pacific Recycling Solutions Pacific-Ultra Power Chinese Station Rio Bravo Fresno Rural County Representatives of California Sierra County Sierra Pacific Industries Sustainable Forest Action Coalition TriCo Welding Supplies AB 590 Page 6 Ukiah Waste Solutions Wilson Ag 55 individuals Opposition California Chamber of Commerce Center for Biological Diversity Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916) 319-2092 AB 590 Page 7