BILL ANALYSIS Ó AB 857 Page 1 ASSEMBLY THIRD READING AB 857 (Perea) As Amended May 5, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+---------------------+---------------------| |Transportation |16-0 |Frazier, Achadjian, | | | | |Baker, Bloom, | | | | |Campos, Chu, Daly, | | | | |Dodd, Eduardo | | | | |Garcia, Gomez, Kim, | | | | |Linder, Medina, | | | | |Melendez, Nazarian, | | | | |O'Donnell | | | | | | | |----------------+------+---------------------+---------------------| |Natural |9-0 |Williams, Dahle, | | |Resources | | | | | | | | | | | |Cristina Garcia, | | | | |Hadley, Harper, | | | | |McCarty, Rendon, | | | | |Mark Stone, Wood | | | | | | | |----------------+------+---------------------+---------------------| |Appropriations |17-0 |Gomez, Bigelow, | | | | |Bonta, Calderon, | | AB 857 Page 2 | | |Chang, Daly, Eggman, | | | | |Gallagher, | | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | | | |Jones, Quirk, | | | | |Rendon, Wagner, | | | | |Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: After 2018, re-establishes the priorities of the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (Technology Program) by providing that no less than 50% (or $100 million, whichever is greater) of program funds go to certain heavy-duty trucks that meet specified emissions standards. Specifically, this bill: 1)Requires that 50% of Greenhouse Gas Reduction Fund (GGRF) funds appropriated to the Technology Program (or $100 million, whichever is greater), during the period between January 2, 2018 and January 1, 2023, be allocated to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology [trucks with a gross vehicle weight rating (GVWR) of 26,001 lbs. or more] that meet or exceed low NOx (Nitrogen oxides) standards (0.02 grams per brake horsepower-hour oxides of nitrogen). 2)Recasts existing provisions and makes related, clarifying amendments. FISCAL EFFECT: According to the Assembly Appropriations Committee, increased first year costs of $842,000 and ongoing AB 857 Page 3 annual costs of $1,017,000 for staffing and $1,000,000 in contracts to perform the following duties: 1)Develop guidelines and procedures to implement the program. 2)Develop grant solicitations for new projects. 3)Conduct fleet audits and data analysis. 4)Conduct on-site inspections. 5)Update GGRF and fiscal procedures to manage cash flow and changes resulting from the program. 6)Review grant solicitations, process and track funding disbursements. COMMENTS: Existing law requires Air Resources Board (ARB) to develop a plan to reduce GHG emissions to 1990 levels by 2020, requires ARB to ensure that GHG emissions reduction requirements and programs, to the extent feasible, direct public and private investment toward the most disadvantaged communities in the state, and authorize ARB to adopt a schedule of fees to be paid by GHG emission sources into the GGRF, which is available upon appropriation by the Legislature, to carry out emission reduction requirements. AB 118 (Núñez), Chapter 750, Statutes of 2007 established the Air Quality Improvement Program (AQIP), funded through various fees and surcharges on vehicles, to provide competitive grants to fund projects that improve air quality. The AQIP encompasses several programs, including the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program (HVIP), which is administered by ARB and AB 857 Page 4 provides vouchers to California fleet owners to help purchase hybrid and zero-emission trucks and buses. AB 118 also established the ARFVTP, which is administered by the California Energy Commission (Commission) and provides funding for development and deployment of alternative and renewable fuels and advanced transportation technologies to help attain the state's climate change goals. Eligible projects include, for example, development, improvement, and production of alternative and renewable low-carbon fuels; improvement of light-, medium-, and heavy-duty vehicle technologies; and expansion of infrastructure connected with existing fleets, public transit, and transportation corridors. In 2014, SB 1204 (Lara), Chapter 524, Statutes of 2014 established the Technology Program which is administered by ARB in conjunction with the Commission. The intent of SB 1204 was to create a single, overarching program to develop and deploy heavy-duty vehicles primarily because the author felt that heavy-duty vehicles were not being adequately addressed in HVIP and AQIP. Specifically, the Technology Program, until January 1, 2018, provides GGRF funds for projects that develop technology, demonstrate and pilot commercial and early-commercial deployment of zero and near-zero emission medium- and heavy-duty truck technology, and facilitate clean goods movement. The Technology Program works to develop zero- and near-zero- emission technologies for specified vehicles and equipment not only for trucks, but also for off-road vehicles and equipment at the ports as well as in agricultural, marine, and rail sectors. Within the Technology Program, funding priority is generally given to projects that demonstrate benefit to disadvantaged communities, the ability to leverage additional public and private funding, and provide the potential for co-benefits. According to the author, air pollution continues to affect human health disproportionately in disadvantaged communities and especially along transportation corridors. He notes that in the South Coast and San Joaquin Valley Air Districts, nearly 80% of AB 857 Page 5 smog forming pollutants, such as NOx, come from mobile sources--primarily, large transport trucks. The author also notes that manufactures claim that new technologies will be available in the transportation marketplace within the next three years that could meet near-zero emissions levels (90% NOx reduction over the current standard). The author notes, however, that to achieve widespread deployment of these new technologies, financial incentives need to be in place to help "buy down" the capital costs of this improved technology. To help incentivize the adoption of these new technologies, the author has introduced this bill which would reestablish the priorities of the Technology Program for five years beginning on January 2, 2018 and ending on January 1, 2023. Specifically, this bill would require, during that five-year period, that 50% of Technology Program funds (or $100 million, whichever is greater) be used for the deployment of certain heavy-duty vehicles - those weighing 26,001 lbs. GVWR or greater that meet a low NOx standard (i.e., meet or exceed an emission standard of 0.02 grams per brake horsepower-hour oxides of nitrogen). Supporters of this bill, which include, among others, natural gas industry representatives, contend that the bill will create incentives for zero- and near-zero emission heavy-duty truck purchases that will help purchasers afford the initial costs of these cleaner trucks. They contend that these incentives will help accelerate retirement of older, high polluting trucks; help grow the clean, alternative fuel truck market; and stimulate additional investments in the next generation of zero- and near-zero emission truck technologies. Writing in opposition to this bill, the Union of Concerned Scientists (UCS) and the American Lung Association in California (ALAC) note that transportation sector emissions need to be targeted, but they believe that the bill, unnecessarily, directs a very large fraction of GGRF funds exclusively to commercial AB 857 Page 6 deployment of the heaviest of trucks, thereby limiting funding for other important emissions reducing projects. They also contend that this bill fails to address specified GHG emissions reductions despite the fact that the money is coming from the GGRF, which is predicated on reducing global warming pollution. UCS and ALAC also contend that this bill would prematurely limit future technology investments, such as hybrid or plug-in hybrid trucks, which could be zero-emission capable but would not be eligible for prioritized funding unless they were also certified to the low-NOx standard. They note that precluding these types of technologies could exclude promising options for emissions reductions and air quality improvements within and well beyond the 2018 to 2023 timeframe. Lastly, UCS and ALAC point out that natural gas-powered heavy-duty trucks will be certified to low-NOx emissions levels within the next few years and will undoubtedly qualify for funding under this bill; however, GHG emissions reductions from these vehicles remains uncertain given that there is frequent methane leakage that occurs during natural gas extraction, distribution, and refueling as well as from the vehicle itself. Please see the policy committee analysis for full discussion of this bill. Analysis Prepared by: Victoria Alvarez / TRANS. / (916) 319-2093 FN: 0000667 AB 857 Page 7