BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 1176 Hearing Date: 6/30/2015
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|Author: |Perea |
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|Version: |6/1/2015 |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant|Erin Riches |
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SUBJECT: Advanced Low-Carbon Diesel Fuels Access Program
DIGEST: This urgency bill establishes the 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.
ANALYSIS:
California Global Warming Solution Act of 2006 and Greenhouse
Gas Reduction Fund
AB 32 (Núñez, Chapter 488, Statutes of 2006) requires the state
Air Resources Board (ARB) to develop a plan by 2020of how to
reduce emissions to 1990 levels. AB 32 also requires ARB to
ensure that greenhouse gas (GHG) emission reduction requirements
and programs, to the extent feasible, direct public and private
investment toward the most disadvantaged communities in the
state. It authorizes ARB to adopt a schedule of fees to be paid
by GHG emission sources regulated under AB 32 and deposited into
the Greenhouse Gas Reduction Fund (GGRF), available upon
appropriation by the Legislature to carry out AB 32
requirements.
SB 535 (De León, Chapter 830, Statutes of 2012) requires the
Department of Finance, when developing the three-year investment
plan for GGRF monies, to allocate 25% of these funds to projects
that provide benefits to disadvantaged communities, and a
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minimum of 10% to projects located within disadvantaged
communities.
Low Carbon Fuel Standard
The Low Carbon Fuel Standard (LCFS) was established through a
Governor's Executive Order in January 2007. ARB adopted the
LCFS regulation in April 2009, effective the following year.
The LCFS aims to reduce GHG emissions from the transportation
sector by about 16 million metric tons by 2020. It is also
designed 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 (CI) of transportation fuels used in
California by an average of 10% by 2020. It consists of two
elements: a cap on total GHG emissions from the entire fuel
sector, and a carbon credit-trading mechanism that incentivizes
the production and use of low-carbon fuels. Petroleum
importers, refiners, and wholesalers may either develop their
own low-carbon fuel products or buy LCFS credits from other
companies that sell low-carbon alternative fuels such as
biofuels, electricity, natural gas, or hydrogen. The CI has
been frozen at 1% since 2013 as a result of litigation, but ARB
plans to re-adopt the LCFS this year. After re-adoption, the CI
will begin to decrease toward the 10% reduction required by
2020.
The baseline LCFS fuels are reformulated gasoline mixed with
corn-derived ethanol and low -ulfur 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 also establishes ARFVTP, administered by 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,
AB 1176 (Perea) Page 3 of ?
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.
Carl Moyer Memorial Air Quality Standards Attainment Program
(Carl Moyer Program)
Existing law, AB 1571 (Villaraigosa, Chapter 923, Statutes of
1999), 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 provides approximately $60 million for
projects each year throughout the state.
AB 118 Advanced Technology Demonstration Projects
This program, administered by ARB, provides grants to local air
districts and other public agencies to fund advanced technology
vehicle, equipment, or emission-control projects that are not
yet commercialized.
This bill:
1)Establishes the Advanced Low-Carbon Diesel Fuels Access
Program under the CEC, in consultation with ARB.
2)Requires the program to provide capital assistance for
projects to expand low-carbon diesel fueling infrastructure in
communities that are disproportionately impacted by
environmental hazards and where additionally the greatest air
quality impacts can be identified.
3)Defines "low-carbon diesel fuel" as a biomass-based diesel
fuel that meets the following criteria:
a. Meets LCFS requirements.
b. Contains a minimum of 21% biomass-based content.
c. Complies with the Commercialization of Alternative
Diesel Fuels regulation once the regulation becomes final.
d. Has a recognized carbon intensity under the LCFS
regulation of at least 50% lower than the petroleum diesel
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baseline carbon intensity valuation.
e. Does not produce higher levels of oxides of nitrogen
(NOx) or particulate matter (PM) than petroleum diesel
fuel.
4)Defines "low-carbon diesel fueling infrastructure" as
equipment to store and dispense low-carbon diesel fuel to
motor vehicles that is open to the public. Eligible equipment
includes, but is not limited to, storage, tanks, piping,
fittings, fuel dispensers, signage, and point-of-sale systems.
5)Provides for the program to be funded with GGRF monies, upon
appropriation by the Legislature.
6)Requires the CEC, by March 1, 2016, to develop guidelines to
ensure the program focuses on communities that are
disproportionately impacted by environmental hazards and where
the greatest vehicular pollution is identified, and to select
disadvantaged communities for funding in consultation with the
California Environmental Protection Agency.
7)Requires the CEC, in evaluating projects for funding, to
prioritize the following characteristics:
a. Occurs in or near disadvantaged communities.
b. Demonstrates potential for co-benefits or
multi-benefits, including reducing significant emissions of
criteria pollutants or toxic air contaminants.
c. Quantifies and measures cost-effectiveness and impacts
on disadvantaged and low-income populations.
d. Demonstrates the ability to leverage additional public
or private funding.
e. Demonstrates the ability to obtain immediate benefits.
f. Includes marketing and education outreach strategies
designed to increase the effectiveness of program goals.
8)Prohibits the program from funding a project that is already
required to be undertaken pursuant to state, federal, or local
laws.
COMMENTS:
Purpose. The author states that a significant number of
disadvantaged communities are located in the San Joaquin Valley,
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which is impacted by heavy freight traffic moving along the
Interstate 5 and Highway 99 corridors, and along Interstate 710
from the Ports of Long Beach and Los Angeles to the Pomona
Freeway (SR 60) in east Los Angeles. Both regions consistently
rank among the top 25 most polluted locations in the U.S. and
frequently significantly exceed federal air-quality standards.
Medium- and heavy-duty diesel vehicles can immediately reduce
emissions by using low-carbon alternative and renewable
biomass-based diesel fuels such as renewable hydrocarbon diesel
and low blends of biodiesel. By helping to fund the development
and deployment of alternative and renewable fueling
infrastructure, this bill can help provide greater access to
advanced low-carbon diesel fuels and facilitate immediate and
tangible reductions of GHG emissions and criterion pollution in
the state's most impacted and disadvantaged communities.
Appropriate use of GGRF funds? GGRF funds are intended to help
reduce GHG emissions. This bill provides GGRF funding for
low-carbon diesel fueling infrastructure that includes equipment
such as signage and point-of-sale systems. It is unclear how
ARB could quantify the GHG emissions of such equipment. The
sponsor of this bill, Propel Fuels, states that focusing
investments in low-carbon fueling infrastructure in
disadvantaged communities is a highly cost-effective and
environmentally impactful way to provide immediate and
substantial reductions of GHG emissions and the associated
co-benefits.
Opening up the marketplace? The committee understands that the
only company currently producing fuel that meets the
requirements of this bill is Propel Fuels, the sponsor of this
bill. The committee recognizes, however, that in order to
achieve GHG reductions, a market for these fuels must be
created, which may well require state assistance in terms of
infrastructure support. By infusing state funds into this
market, this bill could help other companies enter it.
Do we need another program? There are already multiple programs
under CEC and ARB to fund infrastructure related to clean cars.
The committee may wish to weigh the benefits of creating another
new program against providing more funding to existing programs.
Technical amendments. The prior version of this bill
additionally required CEC and ARB to allocate at least 50% of
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ARFVTP and Air Quality Improvement Program funds to projects
providing direct benefits to, or serving or located in,
disadvantaged communities. This provision was removed in the
Assembly Appropriations Committee, along with a $35 million
appropriation of GGRF monies for the program created by this
bill. However, a provision was inadvertently left in that would
authorize CEC, as part of ARFVTP, to amend a contract, grant,
loan, or other agreement or award to extend its terms by two
years if the monies are reprioritized by CEC to apply toward a
project that provides benefits to disadvantaged communities.
The author will accept amendments to remove this provision.
Double-referred. This bill has also been referred to the Senate
Environmental Quality Committee.
Related Legislation:
AB 904 (Perea) - establishes the Clean Reused Vehicle Rebate
Project to provide incentives for the purchase or lease of used
electric vehicles and requires ARB to coordinate with other
programs to enhance outreach to low-income and moderate-income
communities. AB 904 is also being heard by this committee
today.
AB 692 (Quirk) - requires 3% of the aggregate amount of
transportation fuel purchased by state agencies to be procured
from very low-carbon fuel sources. AB 692 is also being heard
by this committee today.
Assembly Votes:
Floor: 78-0
Appr: 13-0
Trans: 15-1
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 24, 2015.)
SUPPORT:
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Propel Fuels (sponsor)
Coalition for Clean Air
Fresno Chamber of Commerce
San Joaquin Valley Air Pollution Control District
San Joaquin Valley Regional Transportation Planning Agencies
OPPOSITION:
None received
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