BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 857 Hearing Date: 6/30/2015
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|Author: |Perea |
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|Version: |6/23/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Erin Riches |
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SUBJECT: California Clean Truck, Bus, and Off-Road Vehicle and
Equipment Technology Program
DIGEST: This bill establishes a five-year set-aside of 50% or
$100 million, whichever is greater, per year of funds from the
California Clean Truck, Bus, and Off-Road Vehicle and Equipment
Technology Program (SB 1204 Program) for commercial deployment
of existing zero- and near-zero-emission heavy-duty Class 7 and
8 trucks that meet or exceed the state Air Resource Board's
(ARB) optional low nitrogen oxide (NOx) emissions standard.
ANALYSIS:
Optional Low NOx Standard
ARB regulations provide for an optional reduced NOx emission
standard for on-road heavy-duty engines of 0.02 grams per brake
horsepower-hour oxides of nitrogen (NOx). This standard is
intended to encourage engine manufacturers to introduce new
technologies to reduce NOx emissions below the current mandatory
on-road heavy-duty diesel engine emission standards for model
years 2010 and later.
Low Carbon Fuel Standard
The Low Carbon Fuel Standard (LCFS) was established through a
Governor's Executive Order in January 2007, and adopted by ARB
in regulation effective in 2010. The LCFS aims to reduce
greenhouse gas (GHG) emissions from the transportation sector by
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about 16 million metric tons by 2020. It is also intended to
reduce California's dependence on petroleum, create a lasting
market for clean transportation technology, and stimulate the
production and use of alternative low-carbon fuels. The LCFS
requires producers of petroleum-based fuels to reduce the carbon
intensity of transportation fuels used in California by an
average of 10% by 2020. The baseline LCFS fuels are
reformulated gasoline mixed with corn-derived ethanol and
low-sulfur diesel. Lower carbon fuels may include ethanol,
biodiesel, renewable diesel, or blends of these fuels with
gasoline or diesel as appropriate. Compressed natural gas may
also be a low-carbon fuel, as well as hydrogen and electricity.
Alternative and Renewable Fuel and Vehicle Technology Program
(ARFVTP)
Existing law establishes ARFVTP under the California Energy
Commission (CEC). ARFVTP funds 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. FY 2014-15 funding for this program is $100 million.
Proposition 1B: Highway Safety, Traffic Reduction, Air Quality,
and Port Security Bond Act of 2006
Proposition 1B, approved by voters in November 2006, included $1
billion for the Goods Movement Emission Reduction Program, a
partnership between ARB and local air districts to reduce air
pollution emissions and health risks from freight movement along
California's trade corridors. This program has to date provided
funding for approximately 12,000 cleaner trucks. For the next
funding cycle, ARB proposes to fund trucks in amounts ranging
from $10,000 to $200,000 for Class 6 to Class 8.
Advanced Technology Demonstration Projects
Existing law establishes Advanced Technology Demonstration
Projects under CEC. This program provides grants to local air
districts and other public agencies for zero-emission drayage
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trucks and multi-source facility projects. Approximately $60
million is proposed for this program for FY 2015-16.
Carl Moyer Memorial Air Quality Standards Attainment Program
(Carl Moyer Program)
Existing law establishes the Carl Moyer Program under ARB. This
program provides grants through the state's 35 local air quality
management and air pollution control districts (air districts)
for deployment of engines, equipment, and emission-reduction
technologies that are cleaner than required by current laws or
regulations. The program, which provides approximately $60
million for projects each year throughout the state, is funded
through vehicle registration fee surcharges and tire fees.
Air Quality Improvement Program (AQIP)
Existing law establishes AQIP, administered by ARB in
consultation with local air districts. AQIP is funded through a
variety of sources, including Greenhouse Gas Reduction Fund
(GGRF) monies. AQIP provides competitive grants for projects
that improve the air quality impacts of alternative fuels and
vehicles, vessels, and equipment technologies. AQIP encompasses
several programs.
Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project
(HVIP)
HVIP, which is part of AQIP, is administered by ARB and its
contractor, CALSTART. HVIP provides vouchers to California
fleet owners to help purchase hybrid and zero-emission trucks
and buses weighing 5,000 lbs. or more. ARB's FY 2015-16 Funding
Plan, which the ARB board will vote on at its June 25, 2015,
meeting, allocates $12 million to HVIP.
Low NOx Truck Incentives
Low NOx truck incentives, also under AQIP, provide funding for
heavy-duty trucks 14,000 lbs. or greater with engines certified
to the lower NOx standards. ARB is proposing an additional
incentive for the use of alternative fuels. The FY 2015-16 AQIP
Funding Plan allocates $7 million for this program.
California Clean Truck, Bus, and Off-Road Vehicle and Equipment
Technology Program (SB 1204 Program)
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SB 1204 (Lara, Chapter 524, Statutes of 2014) created a new
program to fund development, demonstration, pre-commercial
pilot, and early commercial deployment of zero- and
near-zero-emission truck, bus, and off-road vehicle and
equipment technologies. SB 1204 authorizes GGRF funding for
this program and requires it to prioritize projects located in
disadvantaged communities. ARB's FY 2015-16 AQIP Funding Plan,
which the ARB board will vote on at its June 25, 2015, meeting,
allocates $148 million in GGRF funds to the SB 1204 Program.
The program will officially commence on July 1, 2015.
Specifically, SB 1204 requires this program to fund:
1)Development, demonstration, and pilot commercial deployment of
zero- and near-zero-emission medium- and heavy-duty truck
technology, with at least 20% of funding going to early
commercial deployment of existing zero- and near-zero-emission
heavy-duty truck technology until January 1, 2018;
2)Development of zero- and near-zero-emission bus technology,
demonstration, pre-commercial pilots, and early commercial
deployments;
3)Development, demonstration, pilots, and deployment of zero and
near-zero emission off-road vehicles and equipment in port,
agricultural, marine, construction, and rail sectors;
4)Development of purchase incentives for commercially available
zero- and near-zero-emission truck, bus, and off-road vehicle
and equipment technologies and fueling infrastructure; and
5)Development of projects that support greater goods movement
efficiency and GHG emissions reductions, including advanced
intelligent transportation systems and autonomous vehicles,
among other technologies.
SB 1204 requires ARB, in evaluating potential projects to be
funded, to prioritize projects that demonstrate benefit to
disadvantaged communities, support for projects addressing
technology and market barriers not addressed by other programs,
and support for enabling technologies that benefit multiple
technology pathways, among other characteristics.
This bill:
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1)Establishes a five-year set-aside beginning January 1, 2018,
of 50% or $100 million, whichever is greater, per year of SB
1204 Program funds to support the commercial deployment of
existing zero- and near-zero-emission heavy-duty truck
technology that meets or exceeds ARB's optional low NOx
standard.
2)Beginning in 2018, prohibits a heavy-duty truck with an
internal combustion engine receiving SB 1204 Program funds
from using a fuel with a carbon intensity of more than 79% of
the carbon intensity of diesel, as defined in the LCFS.
3)Authorizes ARB to reduce the maximum fuel carbon intensity in
subsequent years if it finds that greater reduction is
commercially feasible and the CEC finds that there is a
sufficient available renewable energy fuel supply. Such a
reduction shall apply to funds awarded. Provides that this
requirement shall not alter or affect the amount of credits or
grants for which a low-carbon fuel provider or truck operator
is eligible.
4)Beginning January 1, 2018, for purposes of program
eligibility, defines a "heavy-duty truck" as one with a gross
vehicle weight rating of 26,001 pounds or more.
COMMENTS:
Purpose. The author states that there is a deficiency of clean,
low-carbon, heavy-duty vehicles involved in goods movement that
can provide an immediate and cost-effective solution to
achieving much-needed criteria and GHG emission reductions to
clean the air, improve public health, and help the state meet
its climate goals. In the South Coast and San Joaquin air
districts, nearly 80% of smog-forming pollutants, such as NOx,
come from mobile sources; heavy-duty vehicles are the number one
producer of NOx. Federal ozone standards require at least a 65%
reduction in NOx emissions by 2023 and an 80% reduction by 2032.
In addition, California's climate goals require an 85% to 90%
reduction in GHG emissions by 2050. A significant portion (40%)
of the state's GHG emissions come from mobile sources.
The sponsor of this bill, the Southern California Gas Company,
states that by creating incentives for truck purchasers, many of
whom are involved in goods movement, the state can help buy down
the initial cost of heavy-duty ultra-low-emission trucks and
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thereby help expand the alternative heavy-duty truck market by
deploying new technology and accelerating the retirement of
older high-polluting trucks. The sponsor states that replacing
just 1,000 heavy-duty diesel trucks with cleaner trucks is
equivalent to removing more than 3,000 gasoline-fueled cars from
the road in terms of GHG reductions, and taking more than 80,000
cars off the road in terms of NOx reductions. The sponsor
indicates that the severity of the state's air quality issues,
particularly in the San Joaquin and South Coast areas, calls for
a significant investment in deployment of clean heavy-duty
trucks as quickly as possible.
Where will the money go? Although no heavy-duty engine has yet
been certified to meet ARB's optional low NOx standard, the
author states that manufacturers report that new technologies
will be available in the transportation marketplace within three
years that could meet this standard. To achieve widespread
deployment, financial incentives will be necessary to buy down
the capital costs of technology purchases. The committee
understands that there is only one engine manufacturing company
currently working on this technology; the sponsors note that
infusing state funds into this sector could encourage others to
enter the market.
Jumping the gun? The SB 1204 Program was established by
legislation just last year and is not even scheduled to
officially begin allocating funds until July 1, 2015. The
sponsor indicates that the set-aside for heavy-duty trucks
included in SB 1204 was intended to target Class 7 and 8 trucks.
ARB, however, notes that it has customarily defined heavy duty
as greater than 14,000 lbs. Since the program is not even
allocating funds yet, the committee may wish to consider holding
this bill and instead allowing the program to run its course for
at least a year before significantly revising program
allocations.
Winners and losers. By directing such a large portion of
program funds to deployment of Class 7 and 8 trucks that meet
the optional low NOx standard, this bill effectively removes
incentive funds from technological development of medium-duty
trucks. The committee understands that there are currently
zero- and near-zero-emission trucks in commercial deployment,
but only in the lower weight classes (14,001-26,000 lbs.), which
are excluded from the set-aside in this bill. It will take some
time before these technologies are ready for the Class 7 and 8
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weight classes (26,001 lbs. or greater). Advanced technologies
typically begin in the lower weight classes before moving to
heavier weight classes. By directing incentive funds away from
lower weight classes, this bill could stifle technological
innovations related to those trucks. In addition, since there
are not yet any engines available that have been certified to
the low NOx standard, it is difficult to predict what the demand
for these vehicles will be in 2018 to 2023. Finally,
medium-heavy-duty trucks, such as drayage trucks used at ports
and to transport goods to inland warehouses, are ubiquitous and
contribute significantly to GHG emissions. The committee may
wish to consider amending the bill to significantly reduce both
the amount and the length of the set-aside in order to preserve
some funding for medium-duty technology.
Appropriate use of GGRF funds? Opponents of this bill also
state this bill would direct funding intended to reduce GHG
emissions (e.g., GGRF monies) to truck projects without any
regard for the projects' impacts on GHGs. GGRF funds should be
used to promote the cleanest possible options, including new
emerging technologies that have both a GHG and a criteria
pollutant benefit. However, this bill could have the effect of
restricting funding only to conventional natural-gas
technologies using limited amounts of renewable fuels, passing
up projects that are cleaner over the long term. While
deployment of clean heavy-duty truck technologies is a
commendable goal, the current ARB and CEC programs are working
together to provide funds for a range of new clean technologies
and to ensure that funding is available to assist both existing
and emerging technologies. Opponents note that programs such as
ARFVTP already provide assistance to natural gas projects that
appear to be the focus of this bill.
Undoing a deal? This bill was amended in the Assembly Natural
Resources Committee to require a heavy-duty truck receiving SB
1204 Program funds under this bill to use a minimum of 10%
renewable fuel. The author amended this bill on June 23, 2015,
to remove this requirement and instead require a recipient to
use a fuel with a carbon intensity of greater than 79% of the
carbon intensity of diesel, as defined in the LCFS. The author
states that the amendment is intended to help address opposition
concerns about ensuring GHG reductions. However, this amendment
appears to violate the agreement made in the Assembly.
Double-referred. This bill has also been referred to the
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Environmental Quality Committee.
Related Legislation:
SB 513 (Beall) - would expand the eligible uses of funds raised
by local air districts under the Carl Moyer Air Quality
Standards Attainment Program and the local AB 923 incentive
programs. SB 513 is pending in the Assembly Transportation
Committee.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 24, 2015.)
SUPPORT:
Southern California Gas Company (sponsor)
Alhambra Chamber of Commerce
Anaheim Chamber of Commerce
Antelope Valley Air Quality Management District
Antelope Valley Board of Trade
Antelope Valley Boys and Girls Club
Bienvenidos Community Health Center
Black Chamber of Orange County
Boys and Girls Club of Greater Ventura
Boys Republic
Building Industry Association of Southern California
Burbank Chamber of Commerce
California Center for Public Policy
California Natural Gas Vehicle Coalition
Central City Association
Cesar Chavez Foundation
Charter Oak Unified School District
City of Beaumont
City of Commerce
City of Fountain Valley
City of Palm Desert
City of Pomona
City of South Gate
City of Tulare
Clean Energy
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County of Kern Board of Supervisors
County of Madera Board of Supervisors
County of Tulare Board of Supervisors
Cummins Westport Inc.
Discovery Cube Science Center
Duarte Unified School District
El Concilio Family Services
El Monte/South El Monte Chamber of Commerce
Foothill Workforce Investment Board
Hanford Chamber of Commerce
Industry Manufacturers Council
Inland Action
Inland Empire Chamber Legislative Alliance
Inland Empire Economic Partnership
Irvine Chamber of Commerce
Kern County Superintendent of Schools
Kheir Clinic
Los Angeles Business Council
Los Angeles Area Chamber of Commerce
Orange County Business Council
Orange County Taxpayers Association
Pacific Asian Counseling Services
San Diego Gas and Electric
San Gabriel Valley Consortium on Homelessness
San Joaquin Valley Air Pollution Control District
Sempra Energy Utilities
Temple City Chamber of Commerce
United Chambers of Commerce, San Fernando Valley and Region
United Parcel Service
Valley Family Center
Valley Presbyterian Hospital
OPPOSITION:
Alameda-Contra Costa Transit District
American Lung Association of California
Clean Power Campaign
Environment California
Hino Motor Sales U.S.A.
Natural Resources Defense Council
Physicians for Social Responsibility, Los Angeles Chapter
Sierra Club California
Union of Concerned Scientists
Valley Improvement Projects
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