BILL ANALYSIS Ó AB 678 Page 1 Date of Hearing: May 13, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 678 (O'Donnell) - As Amended April 21, 2015 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Transportation | |16 - 0 | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- 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. AB 678 Page 2 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 AB 678 Page 3 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. AB 678 Page 4 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 AB 678 Page 5 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