BILL ANALYSIS Ó
AB 590
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Date of Hearing: May 13, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
590 (Dahle) - As Amended May 4, 2015
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| |Utilities and Commerce | |15 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill creates the Biomass State Cost Share Account within
the Greenhouse Gas Reduction Fund (GGRF) for expenditures by the
California Energy Commission (CEC) to provide monthly incentives
to maintain the current level of biomass power generation in the
AB 590
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state and revitalize idle facilities in strategically located
regions.
FISCAL EFFECT:
1)Transfers $552 million from the GGRF to the Biomass Cost Share
Account (created by this bill) over five years as follows:
a) In 2015-15 fiscal year, $74 million,
b) In 2016-17 fiscal year, $118 million, and
c) In 2017-18, 2018-19, 2019-20 fiscal years, $120 million
annually.
Funds transferred to the Biomass Cost Share Account would
require appropriation by the Legislature.
1)Annual CEC administrative costs between $1.8 and $2.3 million
(GGRF) for the duration of the program.
2)Annual costs between $175,000 and $316,000 (GGRF) for the Air
Resources Board to coordinate with CEC on program development,
implementation and the quantification of GHG reductions to
establish the legal nexus for the use of cap and trade revenue
funds.
COMMENTS:
AB 590
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1)Purpose. According to the author, 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 expired contracts and poor economics. This bill provides
cost sharing strategies essential for resolving this problem.
2)Background. Biomass is a waste and byproduct consisting of
organic residues from plants and animals which are obtained
primarily from harvesting and processing agricultural and
forestry crops, and can be utilized as fuels for producing
energy. Examples of biomass include, forest slash, urban wood
waste, lumber waste, agricultural wastes, etc.
At its peak, California's biomass industry produced 800
megawatts (MW) of electricity from 66 direct combustion
biomass facilities. By 1996, the energy production from
biomass had dwindled to about 590 MW. Currently there are
still about 30 direct combustion biomass facility operations
with a capacity of 640 MW. The reduction in biomass energy
produced was a result of the expiration of price support and
incentives provided to the biomass industry from the state.
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 b) regulations, including market-based compliance
mechanisms, to achieve maximum technologically feasible and
cost-effective GHG emission reductions.
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.
AB 590
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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.
No funds have been specifically appropriated for biomass power
generation.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081