BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: AB 904 ----------------------------------------------------------------- |Author: |Perea | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |7/14/2015 |Hearing | 7/15/2015 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Joanne Roy | | | | ----------------------------------------------------------------- SUBJECT: Air Quality Improvement Program: Clean Reused Vehicle Rebate Project. ANALYSIS: Existing law: 1) Creates the Air Quality Improvement Program (AQIP), administered by California Air Resources Board (ARB), in consultation with local air districts, to provide competitive grants to fund projects to reduce criteria air pollutants, improve air quality, and support research to improve the air quality impacts of alternative fuels and vehicles, vessels, and equipment technologies. (Health and Safety Code (HSC) §44274). 2) Creates the Clean Vehicle Rebate Program (CVRP), within the AQIP, to promote accelerated widespread commercialization of zero-emission vehicles (ZEVs) by providing rebates of up to $5,000 for the purchase or lease of per eligible light-duty vehicle. This program was not created through statute, but instead was developed and initiated by ARB pursuant to ARB's existing statutory authority through AQIP. 3) Creates the Enhanced Fleet Modernization Subaccount to implement the Enhanced Fleet Modernization Program (EFMP) developed by ARB, in consultation with the Bureau of Automotive Repair, that allows for the voluntary retirement of AB 904 (Perea) Page 2 of ? high-polluting passenger vehicles and light-duty and medium-duty trucks. (HSC §44125). 4) Under the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007, requires the State Energy Resources Conservation and Development Commission (commonly referred to as the California Energy Commission) (CEC) to implement the Alternative and Renewable Fuels and Vehicle Technology Program to fund measures to develop and deploy technologies and alternative and renewable fuels in the marketplace to help attain the state's climate change policies. (HSC §43865 et seq.). 5) Creates the Advanced Clean Cars Program (ACCP) administered by ARB that sets forth air quality and emissions reductions requirements for certain vehicle models and assures the development of certain clean air vehicles. 6) Creates the Charge Ahead Initiative, which outlines the vision of placing one million electric cars, trucks, and buses on California roadways and directs ARB to draft a financial plan to meet that goal and ensure that disadvantaged communities can participate. (HSC §44258 et seq.) 7) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund and requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop, as specified, a three-year investment plan for the moneys deposited in the GGRF. (Government Code §16428.8) 8) Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712) 9) Defines "used vehicle" as a vehicle that has been sold, or has been registered with the Department of Motor Vehicles, or has been sold and operated upon the highways, or has been registered with the appropriate agency of authority, of any AB 904 (Perea) Page 3 of ? state, District of Columbia, territory or possession of the United States or foreign state, province, or manufacturer in the sales or distribution work of such manufacturer. (Vehicle Code §665). This bill: 1) Requires ARB to establish a Clean Reused Vehicle Rebate Project (CRVRP) by July 1, 2017, to provide an applicant with any of the following: a) A rebate or other incentive of up to $1,800 for acquisition of an eligible used vehicle from a licensed dealer. Restricts the rebate availability to counties in which less than 2% of the total CRVRP rebates have been issued, or counties which are located in air districts that have been designated by ARB as a state nonattainment area and does not meet National Ambient Air Quality Standards. b) A rebate or other incentive of an unspecified dollar amount for the replacement or refurbishment of a battery and related components for an eligible used vehicle, for an extended warranty for the battery and related components, or for both. c) A rebate or other incentive of an unspecified dollar amount for an extended service warranty to cover unexpected vehicle repairs not covered by the manufacturer's warranty related to unique problems in eligible used vehicles. 2) Provides that "eligible used vehicle" only includes the same types of vehicles that are eligible for a rebate under CVRP. 3) Limits rebates or other incentives issued under this program to one per vehicle. 4) Limits rebates or other incentives issued under this program to low- and moderate-income consumers living in disadvantaged communities. 5) Requires ARB to coordinate CRVRP with CVRP, EFMP, and the Charge Ahead Initiative, as follows: a) Coordinate CRVRP eligibility with EFMP eligibility. AB 904 (Perea) Page 4 of ? b) Ensure appropriate outreach and targeting to low- and moderate-income communities to encourage participation. c) Expand financing mechanisms, including, but not limited to, a loan or loan-loss reserve credit enhancement program to increase consumer access to zero-emission and near-zero-emission financing and leasing options, to help increase participation rates among low- and moderate-income consumers. 6) Requires ARB to establish safeguards for CRVRP to prevent fraudulent activity by sellers and acquirers of eligible used vehicles and practices that could prevent intended CRVRP recipients from benefiting from this program. Background 1) Batteries: General. One of the key elements of any electric vehicle is its battery. A battery is an electrochemical energy storage device that can release an electrical charge when needed. It generally consists of an anode, a cathode, and an electrolyte (separator). Batteries may be made up of one or more cells, which can be connected together (in series) to provide a higher voltage. For example, a typical 12-volt car battery is made up of six cells connected together internally and a battery pack for a battery electric vehicle ( ) may have hundreds of individual cells. Battery characteristics that are particularly important for automotive use include their energy density and power density. Energy density is a measure of how much energy a battery can hold. The higher the energy density, the longer it will last before needing to be recharged. Power is the rate at which energy is used. Power density is the measure of how much power a battery can deliver on demand - how quickly it can release energy and conversely, how quickly it can be recharged. Battery types are typically identified by the materials that make up one or more of components of the battery. Common types of automotive batteries include lead-acid, which are used in conventional cars; nickel-metal hydride, which are commonly used in hybrid vehicles; lithium-ion, which are becoming the battery of choice for plug-in hybrids, battery electric vehicles, and some conventional hybrids; lithium polymer, which AB 904 (Perea) Page 5 of ? can be found in some hybrid vehicles; and, lithium iron phosphate, which are now being used in hybrids and BEVs. The estimated price of a replacement battery to a consumer generally ranges from $3,000 to $6,000, but the price is dependent on the manufacturer. On the high end, a battery can cost approximately $12,000. 2) Batteries: longevity and warranties. If a battery fails, the entire battery must be replaced. Currently, there is just one manufacturer (BMW), which is set up to do modular replacement of a battery (for the BMW i3), meaning the entire battery would not need to be replaced. However, this type of modular replacement for BEV batteries is in its infancy. Several manufacturers of plug-in vehicles offer 9-year/100,000 mile battery warranties. The National Renewable Energy Laboratory states that today's batteries may last 12 to 15 years in moderate climates and eight to 12 years in extreme climates. Although manufacturers have not published pricing for replacement batteries, some are offering extended warranty programs with monthly fees. If a battery needs to be replaced outside the warranty, it may be a significant expense. 3) Air Quality Improvement Program (AQIP). The AQIP, which was established by the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 (AB 118 (Nuñez, Chapter 750, Statutes of 2007), is a voluntary incentive program administered by ARB to finance, through grants, revolving loans, or loan guarantees, projects that improve air quality, promote research on the air quality impacts of alternative fuels and advanced technology vehicles, and support work force training. AQIP is funded through, among other things, surcharges on vehicle registration fees and a portion of the Smog Abatement Fee (paid to register vehicles less than six model years old and therefore exempt from smog check). AQIP also receives a significant amount of Greenhouse Gas Reduction Fund (GGRF) moneys. 4) Clean Vehicle Rebate Project (CVRP). CVRP, which is part of AB 904 (Perea) Page 6 of ? AQIP, is funded by ARB and administered by the Center for Sustainable Energy, in order to promote the production and use of zero-emission vehicles, including electric, plug-in hybrid electric and fuel cell vehicles. CVRP enables the purchaser or lessee of an eligible vehicle to receive a rebate. A consumer can apply for a rebate within 18 months of purchasing or leasing an eligible vehicle. The consumer must retain ownership of the vehicle in California for at least 30 consecutive months after the purchase or lease date or reimburse ARB for part of or the entire rebate amount. Rebates are distributed on a first-come, first-served basis and issued within 90 days of application approval. CVRP provides a rebate of up to $5,000 for purchasing or leasing a new zero-emission vehicle or plug-in hybrid electric vehicle. Specifically, a consumer may obtain a $5,000 rebate for a hydrogen fuel-cell vehicle; a $2,500 rebate for a zero-emission, battery electric vehicle; a $1,500 voucher for a plug-in hybrid electric vehicle; or, a $900 rebate for a neighborhood electric vehicle or a zero-emission motorcycle. As of June 23, 2015, CVRP has issued 109,660 rebates ($231.8M) since March 2010. There is no cap on the number of rebates that may be issued, but rebates are subject to funding availability and the program has more than once been forced to stop issuing rebates and create a waiting list due to funds running out. 5) Public Fleet Pilot Project. Administered by CSE for ARB, the Public Fleet Pilot Project offers up to $15,000 in rebates for the purchase of new, eligible zero-emission and plug-in hybrid light-duty vehicles. The project replaces standard CVRP rebates with increased incentives for public agencies operating in the state's disadvantaged communities. Up to $2.877 million in funding from GGRF is available for California public entities fleets located in or serving disadvantaged communities. The Public Fleet Pilot Project benefits disadvantaged communities by providing immediate air pollution emission reductions while stimulating local deployment of the next generation of zero-emission and plug-in hybrid electric light-duty vehicles. The Public Fleet Pilot Project is administered as a set-aside within CVRP. AB 904 (Perea) Page 7 of ? 6) Enhanced Fleet Modernization Program (EFMP). a) Plus-Up Program. ARB is currently implementing the new EFMP Plus-Up Program (Plus-Up) in the San Joaquin and South Coast air districts. Plus-Up provides additional incentives above and beyond EFMP base incentives for individuals in disadvantaged communities who retire high-polluting vehicles and replace them with used or new hybrid, plug-in hybrid, or zero-emission vehicles. Eligible participants can receive incentives ranging from $1,500 to $5,000, depending on the vehicle type that is purchased and the income level of the applicant. The EFMP, Plus-Up, and CVRP rebates can be "stacked" for a total of up to $12,000. b) Car scrappage programs: EFMP provides for the voluntary "retirement" (scrappage) of high-polluting passenger vehicles and light- and medium-duty trucks. EFMP has a statewide component and a local component. Under the statewide component, ARB administers the Consumer Assistance Program (CAP), in consultation with the Bureau of Automotive Repair. This program offers a $1,500 voucher to low-income vehicle owners, or a $1,000 voucher to other owners, to retire a high-polluting vehicle. Under the local component, ARB administers a program, authorized in the San Joaquin Valley and South Coast air districts, to replace high-polluting vehicles. In addition to the "retirement" vouchers described above, the local EFMP program offers a $2,500 "replacement" voucher to low-income vehicle owners to replace a high-polluting vehicle by either purchasing a vehicle eight years old or newer, or using the voucher toward public transit. 7) Charge Ahead Initiative. SB 1275 (de León, Chapter 530, Statutes of 2014) establishes the Charge Ahead California Initiative, which outlines a vision of placing 1 million electric cars, trucks, and buses on California's roads by 2023 and directs ARB to provide incentives to increase the availability of zero-emission vehicles and near-zero-emission vehicles, particularly in disadvantaged communities. Pursuant to SB 1275, ARB's FY 2015-16 Funding Plan includes, among other programs and actions: a) $163M for CVRP, which includes an income cap to exclude high-income consumers and higher rebate AB 904 (Perea) Page 8 of ? levels for lower income consumers; b) increased investments for light-duty pilot projects in disadvantaged communities including $20M to expand air district administered retire-and-replace pilot programs that help low-income residents afford the cleanest cars. Comments 1)Purpose of Bill. According to the author, "AB 904 provides an opportunity for California to increase access to electric vehicles for those with the most need. California has some of the most polluted areas in the country and requires extensive and immediate transformation for its disadvantaged communities. This bill will provide an immediate, tangible, and measureable benefit for low-moderate income Californians who largely purchase used vehicles in contrast to new ones. In the long run making electric vehicles accessible to low-moderate income Californians will speed up technological development and increase the demand and deployment of electric vehicle technology in our state. This bill builds consumer confidence in the market by establishing a battery warranty and encourages those who may not have the means to take the risk with new technology to purchase a long term saving investment for their everyday transportation needs." 2)Existing programs and projects benefitting disadvantaged communities. According to ARB, several vehicle incentive programs and projects exist that specifically address disadvantaged communities, including: a) EMFP Plus-Up: Promotes advanced technology vehicle replacements (new or used) for lower-income consumers. ARB has recently initiated a pilot project under EFMP in the San Joaquin Valley and greater Los Angeles area to help low-income individuals and families in disadvantaged communities (as determined by CalEnviroScreen) to retire older, polluting vehicles and purchase cleaner and more fuel-efficient cars. The program provides increasingly larger cash payments for the lowest-income families to move up to the very cleanest cars. For example, under this program, it is possible for a family that meets the income guidelines to receive up to $12,000 toward the purchase of an electric vehicle. Eligible vehicles must be less than eight years old and get 20 mpg or greater, such as a Toyota Prius. AB 904 (Perea) Page 9 of ? Plus-Up also allows for recipients to be eligible for vouchers for public transit passes, between $2,500 and $4,500 in value, depending on income level. ARB states that Plus-Up is funded Fiscal Year (FY) 2014-15 for $3 million; and expects to provide $20 million in FY 2015-16 with the intent of expanding the program to other areas in the state. Does the Plus-Up Pilot Project, which focuses on providing individuals and families in disadvantaged communities with potentially up to $12,000 to purchase cleaner vehicles (that are less than eight years old), satisfy the goals of this bill, if not more due to the air emission reductions as well? b) Public Fleet Incentive Pilot Project: Offers rebates of up to $15,000 for public fleets to reduce emissions in or near disadvantaged communities. The project launched in February 2015; rebates for 86 vehicles totaling $430,000 were reserved by April 30, 2015. (FY 2015-16: $5M). (See Background #5 for more detail.) c) Car Sharing and Mobility Option Pilot Project: Provides funding to establish advanced technology clean car sharing fleets in or near disadvantaged communities to offer an alternate mode of transportation and encourage use of advanced technology cars. (FY 2015-16: $5M). d) Financing Assistance Pilot Project: Provides financing assistance, such as loan loss guarantees for financial institutions, or through non-profit organizations that are already lending to lower income consumers, to support consumers in or near disadvantaged communities in the purchase of an advanced technology vehicle. (FY 2015-16: $4M). e) Agricultural Worker Vanpools in the San Joaquin Valley Pilot Project: Provides incentives for the purchase of new eligible zero-emission, plug-in hybrid, and hybrid passenger vans to turn over the existing fleet or to expand availability to new riders. Eligibility is limited to projects that serve disadvantaged community census tracts in the San Joaquin Valley. AB 904 (Perea) Page 10 of ? (FY 2015-16: $3M). f) Car scrappage programs (See Background #6(b) for more detail): i) CAP: Provides consumers with $1,000, and $1,500 for low-income consumers, to retire a vehicle that meets certain eligibility guidelines. (FY 2014-15: $23.5M). ii) EFMP: Retirement-only program: Provides customers with $1,000, and $1,500 for low-income consumers, for vehicles that meet certain eligibility guidelines. Starting July 1, 2015, EFMP will be limited to low-income consumers, and they will receive $1,500 incentive for vehicle retirement. (FY 2014-15: $25.9M). iii) EFMP: Retirement-and-replacement program: Provides funds to consumers to retire an older vehicle and replace it with a new, cleaner model. ARB provides grants to the San Joaquin Valley Air Pollution Control District and South Coast Air Quality Management District to implement the program in their jurisdictions. (FY 2014-15: $2.8M) The several existing programs and projects listed above, as well as the accompanying tens of millions of dollars of funding, provide air emission benefits and place cleaner vehicles in those communities. Because this bill proposes to add an entirely new program that is very similar to the ones above, a question arises as to whether doing so would be considered unnecessary. 3)Coordinate among programs or incorporate within existing programs? Pursuant to several legislative directives, such as SB 1275 (de León, Chapter 530, Statutes of 2014), ARB is currently implementing several programs aimed at helping low-income consumers and consumers in disadvantaged communities. AB 904 requires ARB to coordinate the proposed CRVRP with the CVRP, EFMP, and the Charge Ahead California Initiative. However, because there appears to be much overlap in these programs, can the objectives of this bill be met via the several programs and projects currently in place? Establishing a new program or project is time consuming and costly; and adding another one to the fray may result in redundancy and confusion. AB 904 (Perea) Page 11 of ? The Committee may wish to consider whether it would be more prudent, time saving, and cost effective for ARB to incorporate some of the proposed mechanisms/benefits in this bill such as extended warranties or replacement of batteries into existing programs. 4)Is legislation necessary? This bill would establish CRVRP as part of AQIP. As noted above, CVRP was not created through statute, but instead was developed and initiated pursuant to ARB's existing statutory authority under AQIP. This bill proposes to establish CRVRP as part of AQIP. A question arises as to whether legislation is necessary to create CRVRP considering ARB already has existing statutory authority through AQIP. 5)What is the funding? This bill does not specify a funding source or amount for the proposed CRVRP, which would be established as part of AQIP. a) Funding sources for AQIP. As noted above, AQIP is funded through, among other things, surcharges on vehicle registration fees and a portion of the Smog Abatement Fee, and receives a significant amount of GGRF. Under AQIP, CVRP is highly subscribed and has more than once run out of funds midyear and been forced to establish a waiting list. It is unclear whether a new funding source would be established for CRVRP. If CRVRP takes from existing AQIP funds, how would this affect the current programs and projects, such as CVRP? b) Potential GGRF? As noted earlier, AQIP receives a significant amount of GGRF. GGRF investments must facilitate the achievement of GHG emissions reductions. Considering this bill does not likely reduce GHG emissions because no high-polluting cars are required to be retired, it seems questionable whether the proposed CRVRP would be eligible to receive GGRF moneys. 6)Potential of double-dipping. This bill provides that an eligible used vehicle only includes the same vehicles that are eligible for rebate pursuant to CVRP. According to ARB, 70% to AB 904 (Perea) Page 12 of ? 75% of vehicles eligible for CVRP rebates have received them. Considering that approximately three out of four cars eligible have received the CVRP rebate, this bill may provide another rebate or incentive for the same vehicle, but without the environmental benefit of further reducing air pollution. 7)Incentives. This bill provides for incentives to purchase eligible used clean vehicles. The term "incentive" is very broad. Common forms of incentives may be either financial or non-financial. Examples of financial incentives include a rebate (buyer receives cash after making the purchase), a voucher (buyer receives what is essentially a coupon to take to a dealer who will deduct the voucher amount from the cost and submit to ARB for payment), or a loan with favorable terms. Non-financial incentives may include HOV lane access, free charging or free hydrogen fuel, or free/reduced parking costs. Also, while incentives often target the consumer, incentives are sometimes structured around the dealer or lending institution, such as a loan loss guarantee program. Various forms of incentives have different advantages and disadvantages based on the type of behavior meant to be encouraged. The types of incentives intended for this bill is unclear. 8)Fraud. Although this bill requires ARB to establish safeguards for CRVRP against fraudulent activity, there is concern that fraud potential with this bill is high. For example, although a vehicle is limited to one CRVRP rebate or incentive, this bill could result in unknowing consumers becoming victims of sellers who may not be honest about whether the vehicle had already received a CRVRP rebate or other incentive at the time of purchase. In addition, there is no standard of information for a consumer or ARB to know the value and price of a used car because they are dependent on the condition of that particular vehicle. How is ARB expected to prevent fraud on a used car? 9)How would ARB implement a warranty program? This bill proposes to establish CRVRP, which would include an extended warranty for a battery and related components and an extended service warranty to cover unexpected vehicle repairs. Manufacturers currently do not have warranty programs for batteries only. ARB would have to either develop a battery warranty program or work with the manufacturers to help them develop a battery warranty program. This would be a completely new program area for ARB. AB 904 (Perea) Page 13 of ? a) How long would an extended warranty be? This bill would provide an applicant an extended service warranty to cover unexpected vehicle repairs not covered by the manufacturer's warranty related to unique problems in eligible used vehicles. Although not included in the bill, parameters on an extended warranty that should be considered include: minimum warranty requirements, incentive type (point of sale rebate, rebate toward warranty purchase for a used advanced technology vehicle), and minimum warranty coverage in years and mileage. b) What should a warranty cover? Car warranties tend to have limits on what they cover. For example, some may not cover damage as a result of negligent care or an accident caused by the owner. Or there may be requirements to maintain a car in a specified manner in order for a warranty to apply. A question arises as to whether similar conditions would apply to the warranties proposed in this bill. Also, what types of mechanical issues are considered "unique problems"? This bill is unclear as to what kinds of unique problems would be covered by a warranty. 10)What are long-term or other costs and considerations to keep in mind for the clean car owner? a) What happens after the incentive/warranty ends or does not cover the cost of repair/replacement? A longer-term challenge for a clean car owner may be maintenance and repair of the vehicle over its lifetime. Batteries gradually lose their maximum charge over time. At a certain point, they become too weak to power a car. Eventually, it will be worthwhile to replace the battery to get back the vehicle's original capabilities. The applicant under this program would be purchasing a used vehicle, which means that the battery is already further along in its life at the time of purchase. As noted earlier, the estimated cost to replace a battery is generally in the range of $3,000 to $6,000, and if a battery fails, the entire battery must be replaced. If a warranty does not cover the cost of replacement or the warranty has expired, is the cost of replacing the battery feasible for that purchaser? If not, is it possible that the owner may get stuck in a situation that they cannot easily afford to get out of or be left without a working vehicle entirely? AB 904 (Perea) Page 14 of ? b) Other considerations for the clean car owner. Depending on the type of clean vehicle, a home charging station may be required. The cost varies for a home charging station based on the type of charger and location (home vs. multi-dwelling unit). ARB estimates that for a residential application, installation costs would range from approximately $1,500 to $6,000. A charger added to the design of a new structure would cost much less than retrofitting an older unit that has old wiring. In addition, as with any electrical appliance, there are also energy costs and potential maintenance and repairs of equipment to consider. Another consideration is whether the vehicle owner lives in a rental - It is possible the landlord might be reluctant to add a home charging station on the property. In general, the owner will need to consider the availability and accessibility of charging stations in the area in which the vehicle is expected to be driven. Additionally, owners would eventually be responsible for the maintenance, which could include replacing the battery and beyond the provisions of this bill. Will it be financially feasible for the owner to maintain a car that requires a battery that costs thousands of dollars? If a purchaser in a disadvantaged community must choose between a used conventional vehicle and used clean vehicle, is it possible that the purchaser, as well as the environment, may get more "bang for the buck" by choosing a newer, conventional vehicle? Plenty of newer, conventional vehicles exist that are subject to fuel efficiency standards, NOx and other pollutant criteria standards. For the vehicle purchaser, is it more prudent to buy a newer, conventional vehicle that may have a longer lifespan than a clean vehicle; as well as a battery maintenance cost of $50 as opposed to thousands of dollars? 11)Could no requirement for the retirement of a polluting vehicle result in no improvement in air quality? This bill establishes CRVRP as part of AQIP. Pursuant to AQIP, grants are provided to fund clean vehicle and equipment projects that reduce criteria and toxic air pollutants; ARB is directed to evaluate proposed projects based on potential reduction of criteria or toxic air pollutants, cost-effectiveness, contribution to regional air AB 904 (Perea) Page 15 of ? quality improvement, and ability to promote the use of clean alternative fuels and vehicle technologies. Removing the legacy fleet of older, polluting vehicles is what will make the difference in improving air quality in disadvantaged communities. This bill does not require a recipient of a CRVRP benefit to scrap an older, polluting vehicle in order to receive a rebate or incentive to buy a clean, reused vehicle. Rather than reducing the number of polluting cars on the road, is it possible that this bill may simply add more cars? For example, if a CRVRP recipient did not own a car previously and instead used public transit for transportation, would this bill increase the number of cars in the community, potentially worsening traffic? Because of an increase in number of cars on the road, motor vehicles may sit in traffic longer, which in turn may create more air pollution. Although the individual vehicle may not create more emissions, it may cause others to do so. A question arises as to how much this proposal will improve environmental quality overall in disadvantaged communities when the bill does not reduce the number of older, polluting cars. 12) Broader impacts on the environment. a) From where does the electricity come? Although battery electric vehicles (EVs) produce zero emissions from the vehicles themselves, and hybrid electric vehicles and plug-in hybrid electric vehicles (PHEVs) produce fewer emissions than vehicles using internal combustion engines alone, there are emissions produced by, or other environmental impacts resulting from, the sources of electricity they use. For example, like internal combustion engines, coal-fired generating stations emit carbon dioxide, which is a GHG; and nuclear generating stations produce radioactive waste products that remain toxic for thousands of years. The life cycle emissions of an EV or PHEV depend on the source of electricity used to charge it, which vary by region. In geographic areas that use relatively low-polluting energy sources for electricity production, plug-in vehicles typically have a life cycle emissions advantage over similar AB 904 (Perea) Page 16 of ? conventional vehicles that run on gasoline or diesel. In regions that depend heavily on conventional fossil fuels for electricity generation, PHEVs and EVs may not demonstrate a strong life cycle emissions benefit. A National Academy of Science study from 2013, Alternative Vehicles and Fuels, states that, while the environmental costs of an electric vehicle depends on many things, how you power it is still the most important. Different regional grids provide different emission levels relative to operating an electric vehicle because of how each energy mix is comprised. According to a National Academy of Science assessment in 2010, the power grid must produce a majority of electricity from non-fossil fuel in order to realize the potential of electric vehicles. Although clean vehicles may reduce the amount of air pollution, it seems prudent to keep in mind potential, broader impacts to the environment. b) Other environmental considerations. Energy is used to mine iron, lithium, and the rare earth elements; to smelt and process raw materials; to transport all these materials to the factory; and to manufacture the cars, the batteries and everything associated with them. What kind of energy is consumed for each of these steps and what are their environmental impacts? The metals, solvents and processing chemicals required for the manufacturing of these batteries release GHG like sulfur hexafluoride (SF6), which is over 20,000 times as effective in global warming potential as carbon dioxide. SF6 gas decomposes to form toxics like sulfur/metal-fluoride gases, sulfur-oxyfluorides, and hydrofluoric and sulfuric acids. If multitudes of electric vehicles are expected to be built in the future, then toxic compounds and how they are addressed are issues that will have to be tackled in order to build a sustainable future. 13) Conclusion. This bill raises many concerns. Several programs and projects already exist that would seem to achieve the goals of this bill. If not, then perhaps components of this bill may be incorporated into one or more of these programs. Also, it appears ARB already has existing statutory authority through AB 904 (Perea) Page 17 of ? AQIP to create CRVRP. The bill is unclear as to the funding source and amount for CRVRP. There is opportunity for double-dipping to occur with each used vehicle sold under this proposal. It is questionable how ARB could enforce against potential fraud on a used vehicle. The types of incentives considered in this bill are unclear. Long-term costs and considerations for the clean vehicle purchaser are of concern. Most importantly, would this bill improve the air quality in disadvantaged communities? Considering the issues raised above, the Committee may wish to consider whether there are sufficient answers to these questions and concerns to move this legislation forward. 14) Double referral. This bill has been referred to the Senate Committees on Transportation & Housing and Environmental Quality. This bill is scheduled to be heard in Senate Transportation & Housing Committee on July 14, 2015. Related/Prior Legislation AB 1176 (Perea) would establish an Advanced Low-Carbon Diesel Fuels Access Program to fund low-carbon diesel fueling infrastructure projects in communities that are disproportionately impacted by environmental hazards and where the greatest air quality impacts can be identified. AB 1176 was heard in Senate Transportation Committee on June 30, 2015. SB 1275 (de León, Chapter 530, Statutes of 2014) established the Charge Ahead California Initiative under ARB to provide incentives to increase the availability of zero-emission vehicles and near-zero-emission vehicles, particularly in disadvantaged communities. SB 459 (Pavley, Chapter 437, Statutes of 2013) required ARB, in consultation with the Bureau of Automotive Repair, to update EFMP regulations by June 30, 2015. SB 459 required the guidelines to include a variety of new policies, including allowing for retirement and replacement vouchers of larger amounts, focusing the program more heavily on lower-income owners, and streamlining program requirements to facilitate participation. SB 359 (Pavley, Chapter 415, Statutes of 2013) required ARB, in consultation with Bureau of Automotive Repair, to update the EFMP AB 904 (Perea) Page 18 of ? guidelines, as specified, by June 30, 2015. SB 535 (de León, Chapter 830, Statutes of 2012) requires the Department of Finance, when developing the three-year investment plan for cap-and-trade moneys, to allocate 25% of these funds to projects that provide benefits to disadvantaged communities, and at least 10% to projects located within disadvantaged communities. DOUBLE REFERRAL: This measure will be heard in Senate Transportation and Housing Committee on July 14, 2015. SOURCE: Author SUPPORT: American Lung Association of California California Environmental Justice Alliance Coalition for Clean Air Communities for a Better Environment Environment California The Greenlining Institute Latino Coalition for a Healthy California Natural Resources Defense Council San Joaquin Valley Air Pollution Control District Valley Clean Air Now OPPOSITION: None received -- END --