BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            AB 590
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          |Author:    |Dahle                                                |
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          |Version:   |7/9/2015               |Hearing      | 7/15/2015      |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Rebecca Newhouse                                     |
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          SUBJECT:  Greenhouse Gas Reduction Fund.

            ANALYSIS:
          
          Existing law:  
          
          1) Under the California Global Warming Solutions Act (AB 32),  
             requires the Air Resources Board (ARB) to adopt a statewide  
             greenhouse gas (GHG) emissions limit equivalent to 1990 levels  
             by 2020 and to adopt rules and regulations to achieve maximum  
             technologically feasible and cost-effective GHG emission  
             reductions.  ARB is authorized to adopt a regulation that  
             establishes a market-based compliance mechanism for sources  
             that emit GHGs.  (Health and Safety Code (HSC) §35800 et seq.)

          2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
             State Treasury, requires all moneys, except for fines and  
             penalties, collected pursuant to a market-based mechanism be  
             deposited in the fund and requires the Department of Finance,  
             in consultation with the state board and any other relevant  
             state agency, to develop, as specified, a three-year  
             investment plan for the moneys deposited in the GGRF.   
             (Government Code §16428.8)

          3) Prohibits the state from approving allocations for a measure  
             or program using GGRF moneys except after determining that the  
             use of those moneys furthers the regulatory purposes of AB 32,  
             and requires moneys from the GGRF be used to facilitate the  
             achievement of reductions of GHG emissions in California.   
             (HSC §39712)







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          4) Authorizes expenditures from the GGRF for investments that  
             reduce GHG emissions through, among other things, clean energy  
             and renewable energy generation and advanced biofuels.  (HSC  
             §39712).

          5) Requires at least 25% of available moneys in the GGRF to go  
             toward projects that provide benefits to disadvantaged  
             communities, and at least 10% to projects located within  
             disadvantaged communities.  (HSC §39713)

          6) Under the Renewable Portfolio Standard (RPS) requires  
             investor-owned utilities (IOUs), publicly owned utilities  
             (POUs) and certain other retail sellers of electricity, to  
             achieve 33% of their energy sales from an eligible renewable  
             electrical generation facility by December 31, 2020.  (Public  
             Utilities Code §399.11 et seq.)

          7) Provides that eligible renewable electrical generation  
             facilities must use biomass, solar thermal, photovoltaic,  
             wind, geothermal, renewable fuel cells, small hydroelectric,  
             digester gas, limited non-combustion municipal solid waste  
             conversion, landfill gas, ocean wave, ocean thermal, and tidal  
             current to generate electricity, and requires that renewable  
             electrical generation facilities must meet certain  
             requirements, as specified (Public Resources Code §25741).

          This bill:  

          1) Authorizes the use of GGRF moneys, upon appropriation, to the  
             State Energy Resources Conservation and Development Commission  
             (CEC) for monthly incentive payments to maintain the current  
             level of biomass power generation and geothermal energy  
             generation in the state and to revitalize currently idle  
             facilities in certain regions.

          2) Specifies that solid-fuel biomass electrical generation  
             facilities are eligible for incentive funding if the energy is  
             generated: 

             a)    On and after January 1, 2016. 

             b)    Using biomass wood wastes and residues, or geothermal  
                resources, and is sold to a load-serving entity. 








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             c)    At a facility with generation capacity of over three  
                megawatts (MW). 

             d)    In state and sold to customers in state.

          3) Requires CEC, in prioritizing projects eligible for grants, to  
             maximize the reduction of GHG emissions achieved for each  
             dollar awarded.

          4) Requires CEC, in consultation with ARB, to ensure that  
             projects receiving funding achieve net GHG emission  
             reductions.

          5) Requires facilities seeking funding to demonstrate to CEC that  
             the facility is a solid-fuel biomass facility and is RPS  
             certified and requires the applicant to submit monthly  
             invoices to CEC to document eligible generation.

          6) Requires CEC to review the submitted invoices and make monthly  
             incentive payments based on eligible generation and incentive  
             rate.  
            
          Background
          
          1) Cap and trade auction revenue.  ARB has conducted 11  
             cap-and-trade auctions.  The first 10 have generated almost  
             $1.6 billion in proceeds to the state. 

             Several bills in 2012, and one in 2014, provided legislative  
             direction for the expenditure of auction proceeds including: 

                       SB 535 (de Leon, Chapter 830, Statutes of 2012)  
                  requires that 25% of auction revenue be used to benefit  
                  disadvantaged communities and requires that 10% of  
                  auction revenue be invested in disadvantaged communities.  


                       AB 1532 (J. Perez, Chapter 807, Statutes of 2012)  
                  directs the Department of Finance to develop and  
                  periodically update a three-year investment plan that  
                  identifies feasible and cost-effective GHG emission  
                  reduction investments to be funded with cap-and-trade  
                  auction revenues.  AB 1532 specifies that GGRF moneys may  








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                  be allocated to reduce GHG emissions through investments  
                  including, but not limited to, energy efficiency, and  
                  clean and renewable energy generation.

                       SB 1018 (Budget and Fiscal Review Committee,  
                  Chapter 39, Statutes of 2012) created the GGRF, into  
                  which all auction revenue is to be deposited.  The  
                  legislation requires that before departments can spend  
                  moneys from the GGRF, they must prepare a record  
                  specifying, among other things, how the expenditures will  
                  be used, and how the expenditures will further the  
                  purposes of AB 32. 

                       SB 862 (Budget and Fiscal Review Committee, Chapter  
                  36, Statutes of 2014) requires the ARB to develop  
                  guidelines on maximizing benefits for agencies  
                  administering GGRF funds and guidance for administering  
                  agencies on GHG emission reduction reporting and  
                  quantification methods. 

             Legal consideration of cap-and-trade auction revenues.  The  
             2012-13 budget analysis of cap-and-trade auction revenue by  
             the Legislative Analyst's Office noted that, based on an  
             opinion from the Office of Legislative Counsel, the auction  
             revenues should be considered mitigation fee revenues, and  
             their use requires that a clear nexus exist between an  
             activity for which a mitigation fee is used and the adverse  
             effects related to the activity on which that fee is levied.   
             Therefore, in order for their use to be valid as mitigation  
             fees, revenues from the cap-and-trade auction must be used to  
             mitigate GHG emissions or the harms caused by GHG emissions. 

             In 2012, the California Chamber of Commerce filed a lawsuit  
             against the ARB claiming that cap-and-trade auction revenues  
             constitute illegal tax revenue.  In November 2013, the  
             superior court ruling declined to hold the auction a tax,  
             concluding that it's more akin to a regulatory fee.  The  
             plaintiffs filed an appeal with the 3rd District Court of  
             Appeal in Sacramento in February of last year.

             AB 32 auction revenue investment plan.  The first three-year  
             investment plan for cap-and-trade auction proceeds, submitted  
             by Department of Finance, in consultation with ARB and other  
             state agencies in May of 2013, identified sustainable  








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             communities and clean transportation, energy efficiency and  
             clean energy, and natural resources and waste diversion as the  
             three sectors that provide the best opportunities, in that  
             order, for achieving the legislative goals and supporting the  
             purposes of AB 32.  

             Budget allocations.  The 2014-15 Budget allocates $832 million  
             in GGRF revenues to a variety of transportation, energy, and  
             resources programs aimed at reducing GHG emissions.  Various  
             agencies are in the process of implementing this funding.  SB  
             862 (Budget and Fiscal Review Committee), the 2014 budget  
             trailer bill, established a long-term cap-and-trade  
             expenditure plan by continuously appropriating portions of the  
             funds for designated programs or purposes.  The legislation  
             appropriates 25% for the state's high-speed rail project, 20%  
             for affordable housing and sustainable communities grants, 10%  
             to the Transit and Intercity Rail Capital Program, and 5% for  
             low-carbon transit operations.  The remaining 40% is available  
             for annual appropriation by the Legislature. 

          1) Biomass and energy generation.  There are various ways in  
             which biomass, or organic material, can be converted into  
             usable forms of energy including heat, steam, electricity,  
             natural gas, and liquid fuels.  For example, the decomposition  
             of food wastes in anaerobic environments generates renewable  
             gas, or biomethane, and other feedstocks, such as tallow, that  
             can be processed to produce renewable diesel fuel. 

             Solid biomass can be converted to electricity through  
             non-combustion processes, termed "gassification" or  
             "pyrolosis" which decompose the material at very high heat in  
             low-oxygen atmospheres.  There are relatively few of these  
             types of conversion facilities in California, and most are  
             small scale research or demonstration units that generate or  
             plan to generate anywhere from a fraction of a megawatt to  
             several megawatts using biomass.

             The oldest and simplest known method of creating energy from  
             biomass, however, is the combustion of solid organic  
             feedstock, such as wood and agricultural wastes, to generate  
             electricity.  

             Biomass electrical generation in California.  According to the  
             bill's sponsor, California Biomass Energy Alliance (CBEA),  








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             there are 25 solid-fuel biomass electric generating facilities  
             in California, distributed across 18 counties.  CBEA also  
             states that the California biomass industry uses approximately  
             8 million tons of the state's solid wastes and residues  
             annually, and produces around 565 MW of electricity. 

             Biomass and RPS.  Current law identifies biomass as a  
             renewable resource, which can be used by electrical generation  
             facilities to generate electricity that qualifies as  
             RPS-eligible, following CEC certification.  This electricity  
             can then be purchased by utilities to meet the RPS requirement  
             that 33% of their energy sales come from renewable energy by  
             2020. 

             The California Energy Commission defines biomass as any  
             organic material not derived from fossil fuels, including  
             agricultural crops, agricultural wastes and residues, waste  
             pallets, crates, dunnage, manufacturing, and construction wood  
             wastes, landscape and right-of-way tree trimmings, mill  
             residues that result from milling lumber, rangeland  
             maintenance residues, sludge derived from organic matter, and  
             wood and wood waste from timbering operations.

             Biomass conversion and GHGs.  Although biofuels are  
             carbon-based fuels, the carbon in biofuels is already part of  
             the active global carbon cycle in which carbon exchanges  
             rapidly between the atmosphere and plant matter.  This is in  
             contrast to fossil fuels, that, when extracted and burned,  
             remove carbon from permanent geologic stores and add it as net  
             new carbon to the atmosphere.  For this reason, biofuels  
             combusted for electricity are broadly considered carbon  
             neutral.  Additionally, like all renewable energy generation,  
             bioenergy production avoids the production of an equivalent  
             amount of energy from fossil fuels. 

             Alternative fates.  In assessing other GHG emission reduction  
             benefits of using biomass for energy production, alternative  
             fates of that biomass, such as open burning, landfilling,  
             accumulation, mulching, and composting, must also be  
             considered.  
                                       
             The alternative fates of biomass residue can result in higher  
             emissions of more potent GHGs emitted, in addition to toxic  
             and criteria air pollutants.  Specifically, open burning of  








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             biomass leads to significantly higher release of methane and  
             black carbon due to the inefficient combustion; anaerobic  
             decomposition of biomass in landfills results in methane; and  
             accumulation of forest residues can provide fuel for severe  
             wildfires, destroying huge swaths of forests and eliminating  
             their GHG sequestration potential.  For composting, although  
             methane emissions can be largely avoided with well aerated  
             operations, new research suggests that the amount of GHGs and  
             types of other gasses produced appears to be highly variable,  
             and is influenced by feedstocks, management practices, and  
             climate.

             However, the use of compost can potentially provide net GHG  
             emission reduction benefits.  Composting transforms organic  
             materials into a nutrient-rich soil amendment capable of  
             improving depleted or disturbed soil environments, reducing  
             the need for external fertilizers, thereby reducing GHGs from  
             the use and production of those fertilizers.  Additionally,  
             compost application also improves water retention in soils,  
             reducing water demand in agricultural applications, reducing  
             energy use associated with transporting and distributing  
             water.  Recent studies have also shown that the application of  
             compost can improve sequestration of atmospheric carbon in  
             soils.

             Not all biomass, though, can be composted.  For instance,  
             whereas some agricultural wastes may decompose efficiently  
             through a composting operation, wood wastes are not readily  
             compostable.

          2) Composting and mulching biomass.  The controlled aerobic  
             decomposition of organic material such as leaves, twigs, grass  
             clippings, and food scraps results in compost, which can be  
             used a nutrient rich soil amendment.  Mulch is the soil  
             covering used to control weeds or erosion, retain moisture in  
             soil, and insulate soil from cold weather.  Organic materials  
             commonly used for mulch include wood chips, ground up  
             landscape trimmings, shredded bark, coarse compost material,  
             straw, and shredded paper.  According to the 2010 CalRecycle  
             survey of composting and mulch infrastructure in the state,  
             composters and processors receive a wide array of feedstocks  
             in California, and process an estimated total of over 9  
             million tons of organic material per year.  Specifically, the  
             survey reported that 72% of all respondents process some  








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             quantity of green material and another 52% of all respondents  
             process wood waste (which technically, as defined by  
             CalRecycle regulations, is a subset of green material).   
             However, some of this green material ends up in landfills.  In  
             2003, approximately 2.1 million tons of the total tons  
             processed were comprised of green material used as landfill  
             alternative daily cover. 

          3) MSW thermal conversion.  Municipal solid waste (MSW),  
             according to CalRecycle, is composed of primarily food and  
             greenwaste (e.g., lumber, leaves, etc.) at about 47%, with the  
             next highest contributors being paper, plastic and metal waste  
             comprising 17.3%, 9.6%, and 4.6%, respectively.  There are  
             currently three commercial facilities in the state that use  
             combustion technology to combust unprocessed or minimally  
             processed MSW.  Collectively, they have the capacity to  
             process 2,500 tons per day of MSW and produce about 68 MW of  
             electrical power.  Only one of the three existing power plants  
             using MSW feedstock, Covanta Stanislaus, is certified as an  
             RPS-eligible electrical generating facility.

          4) Geothermal energy.  Due to its location on the Pacific's "ring  
             of fire" and because of tectonic plate conjunctions,  
             California contains the largest amount of geothermal electric  
             generation capacity in the United States.  According to CEC,  
             in 2014, geothermal energy in California produced 12,183  
             gigawatt-hours (GWh) of electricity.  Combined with another  
             700 GWh of imported geothermal power, geothermal energy  
             produced over 6.18% of the state's total system power. There  
             are a total of 43 operating geothermal power plants in  
             California with an installed capacity of 2,689 MW.

             The largest concentration of geothermal plants is located  
             north of San Francisco in the Geysers Geothermal Resource Area  
             in Lake and Sonoma Counties.

             According to the CEC, "geothermal energy is a significant  
             source of renewable energy in California.  The [CEC] promotes  
             development of geothermal energy resources and technologies  
             through research, development and demonstration partnerships  
             and consultant contracts, as well as through financial  
             assistance to eligible applicants via competitive project  
             solicitations.  Funding is provided through the Energy  
             Commission's Geothermal Grant and Loan Program and the Public  








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             Interest Energy Research Program."

          5) Geothermal amendments taken in Senate Energy Committee.   
             Amendments taken in the Senate Energy, Utilities and  
             Communications Committee add geothermal energy facilities as  
             eligible facilities to receive the incentive payments  
             established through this bill, if the facilities meet  
             specified requirements.  According to the staff analysis for  
             that committee in outlining the rationale and proposed  
             amendment, "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 addition to net GHG emissions reductions."
            
          Comments
          
          1) Purpose of Bill.  According to the author, "Wildfire  
             suppression costs are an increasing drain on the state budget.  
              In 2014-15, CalFire burned through its $209 million wildfire  
             budget by the end of the September - just three months into  
             the fiscal year.  In the summer of 2014, federal fire-fighting  
             costs were $175 million in Siskiyou County alone.  The costs  
             of suppressing fires far exceed what we pay for prevention and  
             fuel reduction.  CalFire's statewide budget for fuel reduction  
             projects under its existing grant program is roughly $30  
             million.

             "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  








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             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.

             "Without these biomass resources, the health, environmental  
             and economic well-being of these regions which rely on them  
             are damaged.  Cost sharing strategies are essential to  
             resolving this."

          2) Alternatives to biomass combustion.  The sponsor of the bill  
             argues that compared with open burning, decomposing biomass in  
             landfills, and accumulated forest residue, biomass combustion  
             for electrical generation provides GHG emissions reductions,  
             and a whole host of environmental and economic benefits.

             The question then arises: Is the only other option for  
             managing forest and agriculture biomass waste to avoid those  
             negative environmental and public health impacts to use it as  
                                                feedstock in a solid biomass power plant?

             In fact, certain biomass wastes can also be mulched and used  
             for ground cover, and composted to produce healthy soils, with  
             numerous other cobenefits.  If mulching or composting is  
             considered as the alternative fate for the material, it is not  
             as clear that biomass combustion to produce electricity  
             generation is environmentally preferred. 

             However, as previously noted, some biomass feedstocks, such as  
             wood wastes, are not readily composted, and for those wastes,  
             composting may not be a feasible alternative fate.  In  
             contrast, agricultural wastes, currently used as feedstock for  
             a dozen or so biomass powerplants in the central valley, can  
             be composted.  However, in many areas of the central valley,  
             composting is not a viable option due to the lack of  
             sufficient composting infrastructure.

             With 2014-15 GGRF funds, CalRecycle recently awarded about  
             $5.5 million from the GGRF for two composting operations in  
             the San Joaquin and South Coast air districts. 
              








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          3) Still emits criteria air pollutants.  Of the 25 solid-biomass  
             powerplants, 13 are located in the central valley and  
             primarily use agricultural wastes as their biomass feedstock.   
             The Central Valley has some of the worse air pollution in the  
             country and is an extreme (highest designation) nonattainment  
             area for the federal ozone standard.  Ozone is regulated at  
             the federal and state level because it is a primary  
             contributor to smog formation and has a number of negative  
             health effects including irritated respiratory system, reduced  
             lung function, aggravated asthma and inflammation and damage  
             of the lining of the lung.  Active children are the group at  
             highest risk from ozone exposure.

             NOx and volatile organic compounds (VOCs) react in sunlight to  
             form ozone and are regulated by the local air district in  
             order to meet the federal and state ozone standard. 

             Because biomass powerplants are all permitted through a local  
             air district, and are required to have emissions control  
             equipment to reduce emissions of NOx, VOCs and other air  
             pollutants, based on local air district requirements, there  
             are substantially fewer emissions when biomass is used as a  
             feedstock for electricity generation, than when that same  
             biomass is burned in the open.  However, as discussed above,  
             burning the biomass or leaving it to accumulate are not the  
             only options for biomass disposal.  Certain biomass feedstocks  
             can be processed through chipping, mulching, and composting,  
             which may provide significant air quality benefits, especially  
             in regard to the emission of ozone precursors and other  
             criteria air pollutants.  However, as previously noted, some  
             biomass feedstocks are not well suited for these alternative  
             management options.  In other cases, the composting facilities  
             or mulching operations may not be available or sufficient to  
             take in the quantity of biomass waste generated in an area. 

          4) A low bar.  AB 590 authorizes every medium to large  
             RPS-certified biomass plant operating and selling electricity  
             in California to receive incentive funding from the GGRF.   
             Recent amendments to AB 590 require the CEC to prioritize  
             funding based on GHG emissions reductions, as those can vary  
             significantly depending on the feedstock, transportation,  
             facility and other factors.  However, nothing in the bill  
             requires facilities to reduce criteria air emissions, or  
             operate with some threshold efficiency.  Under AB 590, all of  








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             these RPS-certified facilities would receive an incentive no  
             matter the inefficiencies of the plant, how old, or polluting  
             the technology, or how long it has been since the facility  
             invested in upgraded emissions control technology.  

          5) Additional GHG emissions reductions?  Under AB 590, biomass  
             power plants and geothermal plants qualify for a subsidy  
             funded through GGRF if they meet several specified  
             requirements.  If those powerplants are already in operation,  
             ostensibly already providing GHG and other benefits over  
             certain alternative fates of the biomass, those GGRF incentive  
             payments would not necessarily be going toward any additional  
             GHG emissions reductions.  The author notes that GHG emissions  
             reductions from the biomass powerplant component of the bill  
             are achieved primarily through avoided shutdowns of plants, or  
             idled plants that are put back on line, since this avoids  
             alternative fates of the biomass material that could emit  
             substantially more GHG and criteria air emissions. However,  
             how does the bill ensure that moneys from the GGRF for this  
             program only go toward achieving GHG emissions reductions that  
             wouldn't have occurred on the natural?  

          6) Displacing fossil fuels and what else?  All renewable energy  
             potentially displaces energy produced from fossil fuels.   
             However, the proponents argue that, for biomass powerplants,  
             there are additional and significant reductions of GHG  
             emissions, and criteria and toxic air emissions from biomass  
             powerplants when compared to the alternative fates of that  
             material (such as decomposing to methane, allowing it to  
             accumulate as fuel for large-scale wildfires, or open burning  
             of the material).  The author and proponents also note that  
             many biomass powerplants are in danger of closing and that  
             these alternative fates of biomass will occur, and result in  
             significant emissions increases, unless their industry is  
             provided incentive payments to support their operations in the  
             near term. According to the author and proponents, this  
             provides ample justification for the use of GGRF moneys. 

             Is this also the case for geothermal resources? Are there any  
             GHG emission reduction benefits from geothermal resources,  
             other than potentially displacing some quantity of fossil  
             fuel-based energy, which provide a similar rationale or  
             justification of GGRF subsidies? 









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          7) Could be many reasons for a shutdown or an idled plant.   
             According to the sponsor, GHG emissions reductions would be  
             primarily achieved through this program through the avoidance  
             of biomass plant shutdowns, and revitalizing idle biomass  
             power plants.  However, there is no recognition in the bill of  
             the variety of reasons plants may need to shut down, or why  
             they remain idle.  This could be due to a whole host of  
             factors, many of which that may not necessarily warrant state  
             subsidies to keep the plant in operation, or subsidize the  
             start up and running of the plant. 

          8) Treated wood waste and biomass?  Treated wood contains  
             hazardous chemicals that pose a risk to human health and the  
             environment.  Arsenic, chromium, copper, creosote, chromated  
             copper arsenate (CCA) and pentachlorophenol are among the  
             chemicals used to preserved wood and are known to be toxic or  
             carcinogenic.  Treated wood is commonly used to build  
             telephone poles, road signs and marine pilings as well as  
             decks, play structures and raised garden beds.  Insects and  
             mold can damage wood over time.  To prevent that damage, wood  
             is often treated with these pesticides and preservatives.   
             Treated wood waste (TWW) has its own statute directing the  
             Department of Toxic Substances Control to develop regulations  
             managing this waste stream.  However, concern has been raised  
             that these regulations rely almost exclusively on  
             self-enforcement on the part of the generator, and therefore  
             do not ensure adequate tracking of the waste, or ensure that  
             the waste generators or hauler are complying with proper  
             handling requirements.

             According to DTSC, the agricultural and construction sectors  
             are among the largest generators of TWW.  Additionally, the  
             author notes that biomass power plants process roughly 3.7  
             million tons of urban wood wastes each year.  Due to lax  
             regulations regarding the tracking of TWW, and the fact that  
             in many cases it is not possible to know by examining the wood  
             waste whether it is treated or not, there are questions as to  
             whether TWW could be ending up as solid-biomass powerplant  
             feedstock. 

          9) Not just biomass conversion, MSW may count as well.  AB 590  
             would establish incentive payments for RPS-eligible biomass  
             powerplants.  RPS-eligible biomass powerplant facilities are  
             limited to CEC approved biomass feedstocks, which is broadly  








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             defined as organic matter not derived from fossil fuels.   
             However, one powerplant, Covanta Stanislaus, was grandfathered  
             into the RPS program, and in an RPS-eligible facility, despite  
             the fact that its feedstock is municipal solid waste (some  
             significant fraction of which is biomass).  Based on the  
             language of the bill, Covanta Stanislaus may also eligible to  
             receive GGRF subsidies under AB 590.
              
          10)To what end?  The author states the subsidies under AB 590 are  
             needed to protect current biomass resources to ensure the  
             health, environmental, and economic well-being of these  
             regions which rely on them are not damaged.  However,  
             subsidies from the GGRF will not be available in perpetuity.   
             What is being done to ensure that the biomass industry will be  
             competitive and self-sustaining in the future?  When will  
             subsidies from the GGRF no longer be needed? 

          11)Expanded to geothermal powerplants.  Recent amendments have  
             expanded the bill beyond biomass powerplants to geothermal  
             resources as well.  As noted earlier, there are 43 operating  
             geothermal power plants in California.  This addition  
             significantly expands the bill, in terms of potential cost  
             pressures on the GGRF. 

          12)Piece by piece.  GGRF investments must facilitate the  
             achievement of GHG emissions reductions.  However, after that  
             requirement is fulfilled, there are a number of other policy  
             goals that should be considered, including benefits to  
             environmental quality, resource protection, public health and  
             the economy, as well as benefits to disadvantaged communities.  
              And although the fund is growing, it is still a limited  
             source of revenue.  In order to create an optimized investment  
             strategy from GGRF moneys, proposals should not be considered  
             in isolation, but be assessed in aggregate to determine what  
             suite of measures best meets the requirements of the fund,  
             uses resources most efficiently, and maximizes policy  
             objectives. 

             As budget discussions on a cap-and-trade investment strategy  
             have been pushed to later this session, an opportunity exists  
             to have a comprehensive discussion on the universe of GGRF  
             proposals currently in the Legislature, during budget  
             negotiations this summer.  If the Legislature feels that the  
             program established through AB 590 is an appropriate  








          AB 590 (Dahle)                                          Page 15 of  
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             expenditure of GGRF moneys, then this measure should also be  
             considered through the budget process for cap-and-trade  
             expenditures, along with all other measures proposing to  
             expend, or authorize for expenditure, GGRF moneys.




            DOUBLE  
          REFERRAL:
          
          This measure was heard in Senate Energy, Utilities and  
          Communications Committee on June 30, 2015, and passed out of  
          committee with a vote of 10-0.
           
           SOURCE:                    California Biomass Energy Alliance  

           SUPPORT:               (As listed in the Senate Energy, Utilities and  
                         Communications analysis from 6/30/2015)

          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








          AB 590 (Dahle)                                          Page 16 of  
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          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
          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
          Ecology Auto Parts, Inc.
          Fondest Farms Trucking, LLC
          G & F Agricultural Service, Inc.
          Gardiner Farms, LLC
          Galton Solid Waste Management, Inc.
          Greenleaf Power, LLC
          Greenwaste Recovery, Inc.
          Hedrick 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








          AB 590 (Dahle)                                          Page 17 of  
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          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
          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
          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  








          AB 590 (Dahle)                                          Page 18 of  
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          most economically depressed areas of the state.
          
            ARGUMENTS IN  
          OPPOSITION:    Opponents state that AB 590 will hurt 
          disadvantaged communities already overly burdened by pollution;  
                         it will further 
          degrade air quality in the Central Valley and around the state  
                         from emissions of 
          high levels of criteria air pollutants due to biomass  
                         incineration; and it will 
          increase, rather than decrease GHG emissions, thereby violating  
                         requirements for 
          the use of cap-and-trade moneys.  

           
                                           
                                      -- END --