BILL ANALYSIS Ó
AB 692
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Date of Hearing: May 27, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
692 (Quirk) - As Amended April 20, 2015
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| |Accountability and | |6 - 3 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires each state agency purchasing transportation
fuels to buy 3% very low carbon transportation fuels (VLCF)
beginning January 1, 2017. The requirement increases 1% each
AB 692
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year until 2024. Specifically, this bill:
1)Declares that increasing the supply of low carbon fuels will
help the state achieve its greenhouse 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%.
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.
FISCAL EFFECT:
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Increased unknown annual costs in the low millions (3%
requirement in 2017) potentially increased to the tens of
millions (10% in 2024) for the added costs of procuring low
carbon transportation fuels as defined by the bill.
COMMENTS:
1)Rationale. According to the author, existing state policies
and incentive programs for the development and
commercialization of low-carbon fuels have not resulted in
sufficient development and supplies of such fuels. This bill
requires the state to procure specified amounts of very low
carbon fuels which will result in increased supplies and
reduced GHG emissions.
2)Background. In 2007, Governor Schwarzenegger issued Executive
Order S-1-07, calling for a reduction of at least 10% in the
carbon intensity (CI) of California's transportation fuels by
2020. The order instructed the California Environmental
Protection Agency to coordinate activities between the
University of California, the California Energy Commission and
other state agencies to develop and propose a draft compliance
schedule to meet the 2020 target.
The Order further directed ARB to consider initiating
regulatory proceedings to establish and implement the LCFS.
In response, ARB adopted the LCFS regulation in 2009, to be
implemented beginning in 2010. 2010 was a reporting year and
the first CI reduction requirement of 0.25% began in 2011.
The target increased to 0.5% in 2012 and 1% in 2013.
To date, fuel suppliers have over-complied, predominantly by
blending ethanol with gasoline, which is preferred in the near
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term because ethanol blending is required by the federal
Renewable Fuel Standard and does not require significant
changes in fueling and vehicle infrastructure. However,
natural gas, biodiesel and electricity have also been used in
significant amounts to comply with the LCFS.
ARB proposes to readopt the LCFS regulation in July, with a
target of 2% in 2016, 3.5% in 2017, 5% in 2018, 7.5% in 2019,
and 10% in 2020 and thereafter.
3)Amendments. The author is proposing amendments that would
modify this bill by requiring an aggregate state procurement
goal rather than 3% for every state agency that purchases
transportation fuel. The author may wish to also consider
consolidating reporting requirements and allowing the use of
AB 32 cap and trade revenues (Greenhouse Gas Reduction Fund)
to offset any increased costs to state agencies.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081