BILL ANALYSIS Ó
AB 692
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Rudy Salas, Chair
AB 692
(Quirk) - As Amended April 20, 2015
SUBJECT: Low-carbon transportation fuels
SUMMARY: Requires each state agency that is a buyer of
transportation fuels to buy 3% of very low carbon transportation
fuels (VLCF), as defined, beginning January 1, 2017, increasing
by 1% per year thereafter until 2024. Specifically, this bill:
1)Declares that increasing the supply of low carbon fuels will
help the state achieve its green house gas (GHG) reduction
goals, but that existing incentives have not resulted in
sufficient development.
2)Requires, beginning January 1, 2017, the Department of
Transportation (CalTrans), the Department of General Services
(DGS), and any other state agency that is a buyer of
transportation fuels, to procure 3% of the total amount of
fuel purchased from VLCF sources. Requires that amount to
increase by 1% every year until January 1, 2024, at which time
the amount would be 10%.
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3)Requires each state agency to submit a report to the
Legislature each year from 2018 to 2026.
4)Defines VLCF as a liquid or gaseous fuel having no greater
than 40% the carbon intensity of the closest comparable
petroleum fuel, as measured by the low carbon fuel standards
(LCFS) methodology.
5)Provides that this bill does not replace or modify any
existing standards or requirements imposed by the LCFS
regulation.
EXISTING LAW:
1)Requires, under the California Global Warming Solutions Act
(AB 32), the Air Resources Board (ARB) to adopt a statewide
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.
2)Establishes, via Executive Order S-01-07, a statewide goal to
reduce the carbon intensity of California's transportation
fuels by at least 10% by 2020.
FISCAL EFFECT: Unknown
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COMMENTS: This bill was double referred to the Assembly
Committee on Natural Resources, which considered the merits of
this bill by focusing on the states air quality goals, GHG
emission reductions and the role of the LCFS program. This
analysis will focus on the jurisdictional issues of the Assembly
Accountability and Administrative Review Committee, including
fuel procurement, agency capacity and the program reporting
specified in this bill.
In order to achieve the goals set out in this bill, capacity
must be established in three different areas. First, there must
be a market that is able to provide types, quality and
quantities of VLCFs to state agencies. Second, state agencies
must have the capacity to store and distribute these alternate
fuels to the appropriate vehicles within their fleets. Finally,
state agencies must have enough vehicles within their fleets to
consume the requisite percentage of total fuel usage.
Recent author's amendments reduce the size of the fuel market
that agencies could participate by reducing the required carbon
intensity for VLCFs from 50% to 40%. This change effectively
reduces the use of conventional crop-based fuels, such as
sugarcane ethanol, and focuses more on local, waste-based fuels,
such as biomethane. Although this does promote the development
of VLCFs, it also reduces the size of the fuel market that
agencies must utilize. However, the entry of the State of
California into VLCF markets will significantly increase demand.
Increased demand will eventually lead to increased capacity to
meet this demand. It is unclear whether increased market
capacity will develop at a pace required to meet the state's
demand.
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State agencies must be able to procure, store and distribute
VLCFs in a cost effective manner to the appropriate vehicles in
the field. Some VLCFs are able to be mixed in to existing
fuels, while others are not and need to be handled separately.
Inquiries to state agencies have begun the process of developing
data on fuel storage and distribution capacities, but to date,
no data has been received to inform this issue. To the extent
that agencies must create new processes to handle, store and
distribute these fuels, new cost will be incurred.
Ultimately, to achieve the goals set out in this bill, the state
must have enough vehicles in the fleet to consume the
appropriate percentage of VLCFs. Over time, state agencies can
replace aging traditional vehicles with vehicles that can
consume VLCFs, thus steadily increasing VLCF use and decreasing
carbon emissions. Again, inquiries to state agencies have begun
the process of developing data on the percentage of vehicles
that can use VLCFs, but to date, no data has been received to
inform this issue.
This bill contains reporting language that requires each state
agency to report to the Legislature the progress of the low
carbon transportation fuel program. The author may wish to
consider designating a single state agency (i.e. ARB, DGS) to
collect data from individual state agencies and report to the
Legislature both individual state agency data, as well as,
aggregate data that provides a statewide perspective.
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REGISTERED SUPPORT / OPPOSITION:
Support
Biodico Sustainable Biorefineries
California Biodiesel Alliance
Coalition for Renewable Natural Gas
Dupont
Opposition
None on file
Analysis Prepared by:William Herms / A. & A.R. / (916) 319-3600
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