BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 678


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          Date of Hearing:  May 13, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          678 (O'Donnell) - As Amended April 21, 2015


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          |             |Transportation                 |     |16 - 0       |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          


          SUMMARY:  This bill requires the Air Resources Board (ARB), in  
          conjunction with the California Energy Commission (CEC), to  
          develop the Energy Efficient Ports Program (EEPP) to fund energy  
          efficiency upgrades and investments at public ports.   








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          Specifically, this bill:  


          1)Requires ARB, in conjunction with the CEC, to develop and  
            implement the EEPP to fund efficiency upgrades and investments  
            at public ports that help reduce emissions of criteria  
            pollutants, toxic air contaminants, and greenhouse gases  
            (GHGs).


          2)Requires that projects eligible for funding in the EEPP  
            include, but are not limited to:


                  a)        Installation of solar technologies at marine  
                    terminals, warehouses, and other freight facilities.
                  b)        Replacement of conventional lighting with  
                    light emitting diodes.


                  c)        Installation of cold ironing or shorepower  
                    equipment and vessels beyond those required by  
                    existing regulations.


                  d)        Deployment of zero- and near-zero emission  
                    vehicles and infrastructure technologies including,  
                    but not necessarily limited to, stationary fuel cells,  
                    energy storage and battery, and battery electric  
                    trucks.


                  e)        Projects that reduce grid-based energy demand.





          3)Requires ARB, in consultation with the CEC, to develop  








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            guidelines for the implementation of the EEPP consistent with  
            the California Global Warming Solutions Act of 2006 pursuant  
            to AB 32 (Nunez), Chapter 488, Statutes of 2006.


          4)Authorizes funds from the Greenhouse Gas Reduction Fund  
            (GGRF), upon appropriation by the Legislature, to be used for  
            the EEPP.


          FISCAL EFFECT:


          1)Unknown cost pressures, likely in the tens of millions of  
            dollars, on the GGRF to fund the EEPP.


          2)Increased costs to ARB of approximately $1.5 million (GGRF) to  
            develop and implement the program and calculate GHG benefits.


          3)Increased costs, likely in the $150,000 range (GGRF) for CEC  
            to provide consultation.


          COMMENTS:


          1)Purpose.  According to the author and the sponsor, the Pacific  
            Merchant Shipping Association, the maritime and ports industry  
            have made an estimated $1.8 billion investment into  
            infrastructure necessary to implement ARB's shorepower  
            requirements and, as a result, have kept thousands of tons of  
            criteria pollutants from entering the atmosphere. However, the  
            port's energy demands have grown substantially and there are a  
            number remaining emissions reduction improvements that still  
            need to be made to help reduce port-generated emissions.  










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            This bill establishes a program to help California ports  
            reduce power demands, operating costs, and overhead and  
            counteract the electricity impacts of At-Berth regulations.  


          2)At-Berth Regulation. In December of 2007, ARB approved an  
            early action item aimed towards reducing the maritime  
            industry's carbon footprint.  The "Airborne Toxic Control  
            Measure for Auxiliary Diesel Engines Operated on Ocean-Going  
            Vessels At-Berth in a California Port" Regulation, commonly  
            referred to as the At-Berth Regulation, directs vessels docked  
            at-berth in California ports to use shore power instead of  
            running their onboard diesel engines. The ship's power load is  
            seamlessly transferred to a shore side power supply without  
            disruption to onboard services, eliminating the negative  
            side-effects of auxiliary engine combustion. The regulation  
            specifically requires at least 50 percent of the vessels  
            docked at-berth to utilize shore power in 2014, eventually  
            reaching 70 percent in 2017, and 80 percent by 2020. As a  
            result, more and more vessels are demanding larger quantities  
            of electrical power.



          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.  

            The 2014-15 Budget Act allocates cap-and-trade revenues for  








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            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.  


          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)  
          319-2081