BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 590 Hearing Date: 6/30/2015
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|Author: |Dahle |
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|Version: |6/16/2015 As Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Jay Dickenson |
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SUBJECT: Greenhouse Gas Reduction Fund
DIGEST: This bill authorizes a program to subsidize the
generation of electricity at existing in-state biomass
facilities three megawatts and larger. The program would be
funded from the Greenhouse Gas Reduction Fund, upon
appropriation.
ANALYSIS:
Existing law:
1)Requires the California Air Resources Board (ARB), pursuant to
the California Global Warming Solutions Act of 2006, to adopt
rules and regulations that would reduce greenhouse gas (GHG)
emissions in the state to 1990 levels by 2020. (Health and
Safety Code §§38500 to 38599)
2)Establishes the Greenhouse Gas Reduction Fund (GGRF), and
requires all moneys collected by the ARB from the auction or
sales of allowances, pursuant to a market-based compliance
mechanism, be deposited in the fund and made available for
appropriation. (Government Code §16428.8)
3)Establishes the GGRF Investment Plan and Communities
Revitalization Act to set procedures for the investment of
regulatory fee revenues derived from the auction of GHG
allowances. (Health and Safety Code §§39710 to 39720)
4)Requires the GGRF Investment Plan to allocate: (a) at least
25 percent of the available moneys in the fund to projects
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that provide benefits to disadvantaged communities, and (b) at
least 10 percent of moneys in the fund to projects located
within disadvantaged communities. (Health and Safety Code
§§39711 to 39723)
5)Requires each of California's three large investor-owned
utilities to procure a share of 250 megawatts (MW) of
bioenergy from smaller facilities as follows: (a) 110 MW from
biogas from wastewater treatment, municipal organic waste
diversion, food processing, and codigestion; 90 MW from dairy
and other agricultural bioenergy; and (c) 50 MW from bioenergy
using byproducts of sustainable forest management.
This bill:
1)Makes available monies in the GGRF, upon appropriation, to the
California Energy Commission (CEC) to make monthly incentive
payments to maintain the current level of biomass power
generation in the state and to revitalize idle biomass
facilities in certain regions.
2)Limits funding eligibility to solid-fuel biomass electrical
generation facilities if the energy is generated:
On and after January 1, 2016.
Using biomass wood wastes and residues,
and is sold to a load-serving entity.
At a facility with generation capacity of
over three MW.
In state and sold to customers in state.
1)Requires facilities seeking funding to (a) demonstrate to CEC
that the facility is a solid-fuel biomass facility and is
certified for the Renewable Portfolio Standard (RPS) and to
(b) submit monthly invoices to CEC.
Background
Energy generation from biomass. "Biomass" refers to animal and
plant residues that result from agricultural and forestry
practices. Such residues include forest slash, urban wood
waste, lumber waste, and agricultural waste.
Biomass has been used in California as a fuel to produce energy.
According to CEC, the state's generation of solid-fuel biomass
electricity peaked at 800 MW installed capacity during the
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period 1990-93; thereafter, production diminished with the
expiration of price supports.<1> According to the bill's
sponsor (the California Biomass Energy Alliance (CBEA)), there
are 25 solid-fuel biomass electric generating plants in state
using wood wastes and residues. Combined, these 25 plants
produce more than 565 MW of electricity. According to CEC,
these facilities may be RPS eligible if they generate
electricity using a biomass fuel.<2>
The CBEA reports trouble for the state's biomass industry.
According to CBEA, in the past year, five solid-fuel plants have
closed because of an inability to cover costs. Half the
remaining plants face expiring contracts. When those contracts
expire, the biomass plants will likely be unable to compete on
costs with either conventional natural-gas-fired power plants or
with other renewable energy resources, such as solar power or
wind. The plants, therefore, are likely to close.
The bill's proponents contend that such an outcome is counter to
the public interest. This is because, the proponents note,
solid-fuel biomass facilities provide numerous benefits, in
addition to electric power. Specifically, proponents contend
the generation of electricity from biomass reduces pollution -
both GHGs and criteria air pollutants - by diverting waste from
landfills or open burns and by displacing fossil fuel use.
Proponents also cite the economic benefits associated with
biomass facilities, including nearly 1,000 direct jobs, many of
them located in the state's most economically depressed areas.
These environmental and economic benefits, proponents note, are
not valued in the price paid by electric utilities for
biomass-generated electricity.
Biomass facilities can reduce pollution. As described in the
preceding paragraph, electricity generation using biomass has
the potential to reduce pollution, both GHGs and criteria
pollutants. This potential is well established. However, the
ARB cautions that whether a specific biomass facility actually
reduces net GHG emissions or other pollutants depends upon a
number of factors, including pollution associated with
transportation of the biomass to the facility, the source of the
feedstock used by the facility, and the operating practices of
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<1> http://www.energy.ca.gov/biomass/biomass.html
<2>
http://www.energy.ca.gov/2013publications/CEC-300-2013-005/CEC-30
0-2013-005-ED7-CMF-REV.pdf
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the facility itself. In fact, the ARB's Short-lived Climate
Pollutant Reduction Strategy Concept Paper identifies biomass
facilities as a source of very small particulates, which are
contaminants that harm human health and which contain "black
carbon," a climate pollutant.<3>
Uses of GGRF must reduce GHGs. This bill seeks to subsidize the
operation of biomass facilities larger than 3 MW with monies in
the GGRF. Yet, this bill appropriates no funds for this
purpose. Nor does the 2015-16 Budget, as of yet, though
negotiations over use of those funds are pending. Rather, the
bill authorizes CEC to establish a funding program for biomass
facilities. Funding for the program would come from the GGRF,
upon appropriation by the Legislature.
The Legislature established the GGRF to govern the investment of
regulatory fee revenues derived from the auction of GHG
allowances pursuant to the cap-and-trade program adopted by ARB
under the California Global Warming Solutions Act of 2006 (AB 32
(Nuñez/Pavley), Chapter 488, Statutes of 2006). In doing so,
the Legislature established parameters for uses of money in the
fund, paramount among them that it be used to facilitate the
reduction of GHGs in California. The program established by the
bill must reduce GHGs to be in compliance with the law.
Therefore, the author and committee may wish to amend this bill
to, at a minimum, limit eligibility for funding to a facility
that demonstrates to ARB that generation of electricity by the
facility using solid-fuel biomass results in net reduction of
GHG emissions. In addition, the author and committee may wish to
amend the bill to direct CEC, in prioritizing projects eligible
for program grants, to maximize the reduction of GHG emissions
achieved by a project for each dollar awarded.
Broader than biomass. The author and sponsor want to subsidize
the operation of biomass facilities in danger of closing in
order to enable the achievement of environmental and economic
benefits, as described above. However, biomass facilities are
not the only type of in-state renewable energy facilities in
danger of closing and with the potential to provide broad
environmental and economic benefits. Therefore, the author and
committee may wish to consider broadening the scope of the
program created by this bill to make eligible for funding other
types of existing renewable energy resources that have the
potential to provide environmental and economic benefits in
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<3> http://www.arb.ca.gov/cc/shortlived/concept_paper.pdf
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addition to net GHG emissions reductions.
Better in the budget. While this bill establishes a program by
which CEC is to make grants for biomass facilities, the bill
makes no appropriation of funds. Such an appropriation, should
one occur, will likely result from the budget process. In
addition, the Legislature may attach control language to any
such appropriation, which would govern uses of the money and its
administration. The Legislature has deferred action on
appropriations from the GGRF for this budget cycle and will
likely take action on such appropriations later this summer.
The committee may wish to defer action on this bill in deference
to the budget process.
Double Referral. Should this bill be approved by this committee,
it will be re-referred to the Senate Committee on Environmental
Quality for its consideration.
Prior/Related Legislation
AB 577 (Bonilla) bill establishes a grant program, funded by the
GGRF, for biomethane projects. The bill is currently under
consideration by this committee.
AB 1532 (John A. Perez, Chapter 807, Statutes of 2012) created
the GGRF Investment Plan and Communities Revitalization Act to
set procedures for the investment of regulatory fee revenues
derived from the auction of GHG allowances pursuant to the
cap-and-trade program adopted by the ARB under the California
Global Warming Solutions Act of 2006.
SB 1122 (Rubio, Chapter 612, Statutes of 2012) required
statewide procurement of up to 250 MW of renewable energy from
small biomass or biogas technologies that utilize low emission
technologies.
SB 535 (De León, Chapter 830, Statutes of 2012) required the
GGRF Investment plan to allocate specific funds to projects that
provide benefits to identified disadvantaged communities, and to
projects located within identified disadvantaged communities.
AB 32 (Nuñez/Pavley, Chapter 488, Statutes of 2006) enacted the
Global Warming Solutions Act of 2006, which created a statewide
GHG emission limit that would reduce emissions to 1990 levels by
2020.
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FISCAL EFFECT: Appropriation: No Fiscal
Com.: Yes Local: No
ASSEMBLY VOTES:
Assembly Floor (80-0)
Assembly Appropriations Committee (17-0)
Assembly Governmental Organization Committee(21-0)
SUPPORT:
California Biomass Energy Alliance (source)
ALW Enterprises, Inc.
Agra Marketing
Almond Hullers and Processors Association
Ampersand Chowchilla Biomass
Associated Builders and Contractors of California
Associated California Loggers
Basic Logging
Beneficial Ag Services
Brahma Group, Inc.
Burney Forest Products
C & S Waste Solutions of Lassen County
CR&R Incorporated
CT Bioenergy Consulting, LLC
Cal Ag Recovery
California Chapters of the Solid Waste Association of North
America
California Farm Bureau Federation
California Forestry Association
California Grain and Feed Association
California Licensed Foresters Association
California Pear Growers Association
California Licensed Foresters Association
California State Association of Counties
Cascade Resource Consultants
Central Coast Forest Association
City of Bakersfield Mayor, Harvey L. Hall
Clean Harbors Environmental Service, Inc.
County of Del Norte
County of Humboldt
County of Kern
County of Lassen
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County of Riverside Supervisor of the 4th District, John J.
Benoit
County of Sierra
Covanta Delano, Inc.
DPS Inc.
Del Logging, Inc.
Del Monte Foods, Inc.
EWP Renewable Corporation
Ecoology Auto Parts, Inc.
Fondse Farms Trucking, LLC
G & F Agricultural Service, Inc.
Gardiner Farms, LLC
Gilton Solid Waste Management, Inc.
Greenleaf Power, LLC
GreenWaste Recovery, Inc.
Headrick Logging
Humboldt Redwood Company
IHI Power Services Corporation
Independent Energy Producers Association
J.T. Thorpe & Son, Inc.
Karuk Tribe
Kochergen Farms Composting, Inc.
Lake County Waste Solutions
Lassen County Fire Safe Council
Lassen Forest Products, Inc.
Los Angeles County Solid Waste Management Committee/Integrated
Waste
Management Task Force
Merced Power, LLC
Nortech Waste LLC
North of the River chamber of Commerce
Old Durham Wood, Inc.
Pacific Gas and Electric Company
Pacific Recycling Solutions
Pacific-Ultrapower Chinese Station
Propel AG Services, LLC
Quincy Library Group
Rio Bravo Fresno
Rosedale Ranch
Rural County Representatives of California
San Joaquin Valley Air Pollution Control District
Selma Disposal & Recycling
Shadd Trucking
Sierra Land & Farming, LLC
Sierra Pacific Industries
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Sonoma Compost
Sustainable Forest Action Coalition
Tri Co Welding Supplies, Inc.
Trinity Construction Company
Tuolumne County Board of Supervisors Natural Resources Committee
Tuolumne County Economic Development Authority
Ukiah Waste Solutions
Vision Recycling
Wadham Energy LP
Wasco Real Properties I, LLC
Wegis & Young
Western Ag Chipping, LLC
Wheelabrator Shasta
Wilson Ag
Z-Best Composting Facility
Several Individuals
OPPOSITION:
Association of Irritated Residents
Biofuelwatch
California Communities Against Toxics
California Environmental Justice Alliance
California Tax Foundation
Center for Biological Diversity
Center on Race, Poverty & the Environment
Clean Water Action
Sierra Club California
West Berkeley Alliance for Clean Air and Safe Jobs
ARGUMENTS IN SUPPORT: Proponents contend the state needs to
subsidize operation of the state's biomass facilities to ensure
their continued operation so that the state may continue to
realize numerous benefits, including reduction in GHGs and
criteria pollutants, production of renewable energy, diversion
from landfill, and economic activity, especially in some of the
most economically depressed areas of the state.
ARGUMENTS IN OPPOSITION: Opponents argue that biomass
facilities have the potential to increase the net emission of
GHG and criteria pollutants that harm human health, particularly
in areas of the state suffering from the worst air pollution and
environmental harm. Still other opponents question the legality
of collection of cap-and-trade regulatory fees and, therefore,
oppose the creation of programs to disperse revenues derived
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from those fees.
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