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