BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2206


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          Date of Hearing:  April 18, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 2206  
          (Williams) - As Introduced February 18, 2016


          SUBJECT:  Biomethane:  interconnection and injection into common  
          carrier pipelines:  research


          SUMMARY:  Requests that the California Council on Science and  
          Technology (CCST) complete a study analyzing issues relating to  
          minimum heating value and maximum siloxane specifications for  
          biomethane injected into common carrier gas pipelines.


          EXISTING LAW:  


          1)Requires the Public Utilities Commission (PUC) to adopt  
            pipeline access rules to ensure gas corporations provide  
            nondiscriminatory open access to the pipeline system for  
            biomethane, regardless of the type or source of the biogas.
          2)Requires the California Energy Commission (CEC) to identify  
            impediments that limit procurement of biomethane in  
            California, including, but not limited to, impediments to  
            interconnection and offer solutions to those impediments.


          3)Directed the Office of Environmental Health Hazard Assessment  
            (OEHHA) and the Air Resources Board (ARB), in consultation  
            with other state agencies, to perform certain tasks related to  








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            the human health effects of biogas and biomethane.


          THIS BILL:


          1)Requests CCST to undertake and complete a study analyzing  
            issues relating to minimum heating value and maximum siloxane  
            specifications adopted by the PUC for biomethane before it can  
            be injected into common carrier gas pipelines.


          2)Requires each gas corporation operating common carrier  
            pipelines in California to proportionately contribute to the  
            expenses to undertake the study with the cost recoverable in  
            rates if CCST agrees to undertake and complete the study.


          3)Authorizes the PUC to modify certain available monetary  
            incentives to allocate some of these incentive moneys to pay  
            for the costs of the study.


          4)Requires, if CCST agrees to undertake and complete the study,  
            the PUC, within six months of its completion, to reevaluate  
            requirements and standards adopted for injection of biomethane  
            into common carrier pipelines and, if appropriate, change  
            those requirements and standards or adopt new requirements and  
            standards, giving due deference to the conclusions and  
            recommendations made in the study.


          5)Requires CCST to:


             a)   Consider and evaluate other states' standards, the  
               source of biomethane, the dilution of biomethane after it  
               is injected into the pipeline, the equipment and technology  
               upgrades required to meet the minimum heating value  








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               specifications, including the impacts of those  
               specifications on the cost, volume of biomethane sold,  
               equipment operation, and safety. 


             b)   Consider whether different sources of biogas should have  
               different standards or if all sources should adhere to one  
               standard for the minimum heating value and maximum  
               permissible level of siloxanes.  The study shall develop  
               the best science reasonably available and not merely be a  
               literature review.


             c)   Complete the study within nine months from entering into  
               a contract to complete the study.


          6)Requires the PUC to reevaluate its requirements and standards  
            for biomethane injection in common carrier pipelines and, if  
            appropriate, change those requirements and standards or adopt  
            new requirements and standards, giving due deference to the  
            conclusions and recommendations made in the study by CCST.


          FISCAL EFFECT:  Unknown


          COMMENTS:  


          1)Background.  In implementing the requirement to adopt pipeline  
            access rules for biomethane [pursuant to AB 1900 (Gatto),  
            Chapter 602, Statutes of 2012], the PUC issued Decision  
            14-01-034 adopting concentration standards for 17 Constituents  
            of Concern (these include ammonia, biologicals, hydrogen,  
            mercury, and siloxanes), and the monitoring, testing,  
            reporting, and recordkeeping protocols for biomethane to be  
            injected into the gas utilities' pipelines. 
            In June 2015, the PUC adopted D.15-06-029, and concluded that  








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            the costs of complying with the standards and protocols  
            adopted by D.14-01-034 should be borne by the biomethane  
            producers.  However, consistent with AB 1900 and to provide  
            initial support to the developing biomethane market, the PUC  
            included a five-year monetary incentive program to encourage  
            biomethane producers to design, construct, and to successfully  
            operate biomethane projects that interconnect with the gas  
            utilities' pipeline systems so as to inject biomethane that  
            can be safely used at an end user's home or business.  As  
            described in this decision, each biomethane project that is  
            built over the next five years, or sooner if the program funds  
            are exhausted before that period, can receive 50% of the  
            project's interconnection costs, up to $1.5 million, to help  
            offset these costs upon the successful interconnection and  
            operation of the facility. 


            According to the author, since the new standards were adopted,  
            not one new pipeline biogas project has been built and the  
            only one currently in operation - the Point Loma Wastewater  
            Treatment facility in San Diego County - has said that it  
            could not meet the new standards.


          2)Author's statement:
          California is a leader in the fight against climate change.  The  
          state has adopted dozens of policies to increase low carbon  
          fuels, renewable energy, energy efficiency, recycling, carbon  
          sequestration and more.  But, California must reduce emissions  
          from the gas sector and encourage in-state refining of biofuel  
          to meet long term climate goals.  Natural gas use has been  
          increasing in recent years and will likely to continue to do so  
          given the rapid increase in gas fired power plants and the  
          historically low price in natural gas.  Alternatively,  
          biomethane, which can be produced from biological material, can  
          provide immediate and significant greenhouse gas reductions and  
          other benefits.  However, the cost to comply with pipeline  
          regulatory requirements make pipeline biomethane  
          cost-prohibitive.








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          The (PUC) recently adopted the regulatory requirements for  
          biomethane injected into the natural gas pipeline.  These  
          include both chemical contaminant and thermal heating value  
          requirements.  However, the standards apply to biomethane even  
          when dilution in the pipeline means the biomethane will only be  
          1% of the total gas that reaches the first end user.  As such,  
          the contaminant and thermal values could be very different than  
          if the biomethane is 100%.  AB 2206 directs the PUC to contract  
          with (CCST) to analyze the contaminant and thermal requirements  
          including standards in other states as well as the different  
          sources of biomethane and the impacts on cost and safety.


          3)Issues with heating value and siloxanes.  It is unclear  
            if the lower heat content of biogas will adversely impact  
            end use equipment (such as gas turbines, water heaters,  
            cook stoves, furnaces, etc.) which were not designed to  
            be used with lower heat gas.  Current utility heating  
            values are 990 British thermal units per standard cubic  
            feet (btu/scf).  Biomethane proponents prefer a heat rate  
            of 950 to 970 btu/scf.  In an earlier decision the PUC  
            relied on to reach its decision on heating value in this  
            proceeding, the PUC found that heating value could have  
            an effect on auto-ignition, flashback, and combustion  
            dynamics (D.06-09-039).  The PUC also relied on a  
            National Gas Council (NGC) paper done in conjunction with  
            representatives of liquefied natural gas (LNG) suppliers,  
            natural gas pipelines, utilities, power generators,  
            industrial process gas users, appliance manufacturers,  
            and natural gas processors.  This paper found that  
            understanding the historical composition of gas in a  
            region is essential to establishing acceptable  
            interchangeability standards, and that for home  
            appliances, that "(a)ppliance performance degrades when  
            the appliance is operated with gas that is not  
            interchangeable with the gas used to tune the appliance  
            when it was first installed."








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            The PUC went on to state:


          The proponents of biomethane have not introduced any  
          scientific evidence in this proceeding to demonstrate that  
          lowering the heating value to 950 or 970 btu/scf will not  
          cause end use equipment problems.  Instead, the biomethane  
          proponents rely on the argument that since other states  
          allow biomethane to have a minimum heating value of 950  
          btu/scf, or close to that number, that California should  
          likewise lower its minimum heating value.  That argument is  
          insufficient justification to lower the heating value when  
          such a change could affect the integrity and safety of end  
          use equipment.  As the 2009 GTI (Gas Technology Institute)  
          Report notes, 'Low BTU gas may have detrimental effects on  
          end use equipment and may not be compatible with many  
          systems.'


            Siloxane is found in gas produced at wastewater facilities and  
            is a waste product of detergents and cosmetics.  During  
            combustion of biogas containing siloxanes, silicon is released  
            and can combine with free oxygen or various other elements in  
            the combustion gas.  Deposits are formed containing mostly  
            silica or silicates but can also contain calcium, sulphur,  
            zinc, and phosphorous.  These deposits can accumulate and must  
            be removed by chemical or mechanical means.


            According to the PUC decision setting standards for pipeline  
            biomethane, "(t)he biomethane proponents have not provided any  
            evidence to substantiate the argument that these 17  
            constituents of concern will not harm human health, or affect  
            the integrity and safety of the pipeline and pipeline  
            facilities."


            To the extent that CCST is able to "develop the best science  
            reasonably available and not merely be a literature review" as  








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            specified in the bill, then this study may aid in settling  
            these issues.


          4)Double referral.  This bill passed the Assembly Utilities and  
            Commerce Committee by a vote of 15-0 on April 6, 2016.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          American Biogas Council


          Atlas ReFuel


          Bioenergy Association of California


          Central Coast Forest Association


          Clean Energy


          CR&R Incorporated


          Sanitation Districts of Los Angeles County


          TSS Consultants









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          West Biofuels




          Opposition


          None on file




          Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916)  
          319-2092