BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 678 (O'Donnell) - Energy Efficiency and Greenhouse Gas
Reductions Ports Program.
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|Version: August 18, 2015 |Policy Vote: E., U., & C. 8 - |
| | 0, E.Q. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 24, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 678 would create a grant program that may be funded
by the Greenhouse Gas Reduction Fund (GGRF) to provide financial
assistance for energy efficiency upgrades and investments at
public ports.
Fiscal
Impact:
$1.7 million annually (special fund) for administration of the
grant program by ARB
$450,000-$750,000 per $10 million of grant funding (special
fund) for review of energy plans submitted as part of a grant
application.
Cost pressures in the millions of dollars (special fund) to
fund port projects
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Background: The California Global Warming Solutions Act of 2006 (referred
to as AB 32, HSC §38500 et seq.) requires the California Air
Resources Board (ARB) to determine the 1990 statewide greenhouse
gas (GHG) emissions level, to approve a statewide GHG emissions
limit equivalent to that level that will be achieved by 2020,
and to adopt GHG emissions reductions measures by regulation.
ARB is authorized to include the use of market-based mechanisms
to comply with the regulations. Under this authority, the ARB
initiated the cap-and-trade program. All monies, except for
fines and penalties, collected pursuant to the cap-and-trade
program deposited in the Greenhouse Gas Reduction Fund (GGRF)
(Government Code §16428.8).
Existing law requires that the GGRF only be used to facilitate
the achievement of reductions of GHG emissions consistent with
AB 32 (HSC §39710 et seq.). To this end, the Department of
Finance, in consultation with the ARB and any other relevant
state agencies, is required to develop, as specified, a
three-year investment plan for the moneys deposited in the GGRF.
The investment plan must allocate a minimum of 25% of the funds
to projects that benefit disadvantaged communities and to
allocate 10% of the funds to projects located within
disadvantaged communities. Additionally, the ARB, in
consultation with CalEPA, is required to develop funding
guidelines for administering agencies receiving allocations of
GGRF funds that include a component for how agencies should
maximize benefits to disadvantaged communities.
Proposed Law:
This bill would require the ARB to develop the Energy
Efficiency and Greenhouse Gas Reductions Ports Program to fund
energy efficiency upgrades and investments at public ports that
reduce emissions of criteria pollutants, toxic air contaminants,
and GHGs. Eligible projects would be required to reduce GHG
emissions and would specifically include, but are not limited
to:
Installation of renewable energy generation facilities
Replacement of conventional lighting with LED lighting
at the ports
Installation of technologies that reduce emissions from
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diesel auxiliary endings on container ship that are beyond
actions required by regulations
Deployment of zero and near-zero emission vehicles and
infrastructure technologies
Projects at reduce grid-based energy demand from cargo
handling
Priority would be given based on the extent to which GHG
emissions are reduced and to the extent that the projects
provides environmental and public health co-benefits including
improved air and water quality.
To be eligible for funding, a port must develop and adopt an
energy plan in consultation with the electric utility that
provides service to the port that is approved by the CEC.
The ARB would be required o to consult with the CEC to develop
guidelines for the program that are consistent with AB 32 and
GGRF expenditure requirements and guidelines.
This bill would allow the GGRF to be used to fund this grant
program.
Staff
Comments: To develop and administer the grant program proposed
by this bill the ARB estimates that it would need approximately
9 positions at a cost of $1.6 million assuming a grant program
with $50 million in annual funding.
The CEC assumes it would need between 3 and 5 positions at a
cost between $450,000 and $750,000 annually per $10 million in
grant program funding. These costs are based on the assumption
that all 11 public ports in California would apply for
assistance and the review of the port's energy plan would only
be in the context of the application. Staff notes that the bill
requires the CEC to approve a port energy plan that is developed
in consultation with the respective electric utility providing
service to the port. The commission is authorized to require
changes before approving the plan. Given that the CEC has very
limited authority over publically owned utilities and no
authority over investor-owned utilities, its ability to require
changes to an energy plan could only be effective in the context
of a grant application. If the intent of this bill is for the
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CEC to review full energy plans, the CEC would be higher.
Staff notes that the bill does not establish any criteria for
the CEC's review and approval of a port energy plan. AB 628
(Gorell) Chapter 741, Statutes of 2013 established minimum
content for an energy management plan developed by a port
including, among other things, an electric or natural gas load
forecast, a description of measures to be taken to reduce air
emissions from vehicle use, and short and long term objectives
for implementation of the plan. The CPUC is authorized to offer
technical assistance in the preparation of the plan and is
required to encourage electric or gas corporations to
participate in the development of the plan. It is not clear if
the port energy plan called for this bill is meant to reference
the energy management plans in PRC §25990 added by AB 628.
However, providing the CEC some basis on which to judge energy
plans, whether by referencing PRC §25990 or by specifying other
criteria in the bill, would potentially reduce initial costs to
the CEC and ARB in developing grant criteria.
Staff notes that some of the specified eligible project types,
while having benefits, may not be the highest use of state
funds. Specifically, replacing conventional lighting with LEDs
is a proven way to achieve dramatic electricity savings. Given
that LEDs are a well-established technology with prices that
have dropped significantly in the past few years and that the
electricity savings are immediate and large, it is unclear
whether such projects still need to be incentivized. Also, in
regards to projects that involve technologies installed on
vessels, such as cold ironing or shorepower equipment, there are
no assurances that the vessels spend a certain amount of time at
California ports so that state funds may be expended without
commensurate air quality benefits to the state. This issue would
potentially be addressed by the requirement that the grant
program consider the extent that a project would provide
environmental and public health co-benefits, so that projects
would not compete well in the grant program.
Staff also notes that eligible projects specified in this bill
may also be funded through other grant incentive programs,
including programs funded by GGRF, in particular the deployment
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of zero and near-zero emission vehicles and infrastructure
technologies. Managing multiple programs for the same project
types can increase overall administrative costs to the state.
Staff notes that there are multiple bills being considered by
both houses of the Legislature that propose projects that would
be eligible to receive GGRF funds. It is unclear how these bills
will interact with each other. Staff notes that a discussion on
the spending of GGRF is anticipated in August as part of a
budget discussion.
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