BILL ANALYSIS Ó
AB 2223
Page 1
Date of Hearing: April 4, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 2223
(Gray) - As Amended March 28, 2016
SUBJECT: Greenhouse Gas Reduction Fund: manure digesters
SUMMARY: Continuously appropriates $100 million annually from
the Greenhouse Gas Reduction Fund (GGRF) to the California
Department of Food and Agriculture (CDFA) to fund incentives for
dairy digesters and other dairy methane reduction projects and
management practices.
EXISTING LAW:
1)Requires the Air Resources Board (ARB), pursuant to California
Global Warming Solutions Act of 2006 [AB 32 (Nunez), Chapter
488, Statutes of 2006], to adopt a statewide greenhouse gas
(GHG) emissions limit equivalent to 1990 levels by 2020 and
adopt regulations to achieve maximum technologically feasible
and cost-effective GHG emission reductions. AB 32 authorizes
ARB to permit the use of market-based compliance mechanisms to
comply with GHG reduction regulations, once specified
conditions are met.
2)Establishes the GGRF and requires all moneys, except for fines
and penalties, collected by ARB from the auction or sale of
allowances pursuant to a market-based compliance mechanism
AB 2223
Page 2
(i.e., the cap-and-trade program adopted by ARB under AB 32)
to be deposited in the GGRF and available for appropriation by
the Legislature.
3)Continuously appropriates:
a) 10% of the GGRF for the Transit and Intercity Rail
Capital Program;
b) 5% for the Low Carbon Transit Operations Program;
c) 20% for the Affordable Housing and Sustainable
Communities Program; and,
d) 25% for high speed rail.
4)Establishes the GGRF Investment Plan and Communities
Revitalization Act to set procedures for the investment of GHG
allowance auction revenues. Authorizes a range of GHG
reduction investments and establishes several policy
objectives, including:
a) Maximize economic, environmental, and public health
benefits;
b) Foster job creation;
c) Complement efforts to improve air quality;
d) Direct investment toward the most disadvantaged
communities and households in the state;
e) Provide opportunities for businesses, public agencies,
nonprofits, and other community institutions to participate
in and benefit from statewide efforts to reduce GHG
emissions; and,
f) Lessen the impacts and effects of climate change on the
state's communities, economy, and environment.
AB 2223
Page 3
5)Requires the investment plan to allocate (1) a minimum of 25%
of the available moneys in the GGRF to projects that provide
benefits to identified disadvantaged communities, and (2) a
minimum of 10% of the available moneys in the GGRF to projects
located within identified disadvantaged communities.
FISCAL EFFECT: Continuously appropriates $100 million from the
GGRF to CDFA for dairy manure management.
COMMENTS:
1)Existing GGRF funding and programs. The 2014-15 Budget Act
allocated GGRF revenues for the 2014-15 fiscal year and
established a long-term plan for the allocation of GGRF
revenues beginning in fiscal year 2015-16. Thirty-five
percent of GGRF is continuously appropriated for investments
in transit, affordable housing, and sustainable communities.
Twenty-five percent is continuously appropriated to continue
the construction of the high-speed rail project. The
remaining 40% is subject to annual appropriation by the
Legislature for investments in programs that include
low-carbon transportation, energy efficiency and renewable
energy, and natural resources and waste diversion. An
expenditure plan for the 40% was not included in the 2015-16
Budget Act, with the exception of $227 million appropriated to
continue funding for specified existing programs. The
remaining 2015-16 revenues, along with 2016-17 revenues, are
available for appropriation this year.
The 2016 Annual Report of Cap and Trade Auction Proceeds
includes an analysis of funds spent within and benefiting
disadvantaged communities, excluding high speed rail spending.
According to the report, 39% of expenditures were for
projects located within disadvantaged communities and 51% of
AB 2223
Page 4
the overall funding benefited disadvantaged communities.
Listed below are the major GGRF program areas, administering
agency, and funding to date:
a) Transportation and Sustainable Communities
i) High Speed Rail, High Speed Rail Authority
(Authority), $750 million
ii) Transit and Intercity Rail Capital Program,
Transportation Agency, $225 million
iii) Low Carbon Transit Operations Program, Department of
Transportation (Caltrans), $125 million
iv) Affordable Housing and Sustainable Communities
Program, Strategic Growth Council (SGC), $530 million
v) Low Carbon Transportation, ARB, $325 million
b) Clean Energy and Energy Efficiency
i) Low-Income Weatherization Program, Community
Services and Development (CSD), $154 million
ii) Energy Efficiency in Public Buildings, California
Energy Commission (CEC), $20 million
iii) Agricultural Energy and Operational Efficiency,
AB 2223
Page 5
Department of Food and Agriculture (CDFA), $75 million
iv) Water-Energy Efficiency, Department of Water
Resources (DWR), $75 million
c) Natural Resources and Waste Diversion
i) Wetlands and Watershed Restoration, Department of
Fish and Wildlife (DFW), $27 million
ii) Urban Forestry, Forest Health Restoration, and
Reforestation, Department of Forestry and Fire Protection
(CalFIRE), $42 million
iii) Waste Diversion, Department of Resources Recycling
and Recovery (CalRecycle), $31 million
The Governor's 2016-17 Budget proposes just under $3.1 billion
in expenditures:
d) Continuous Appropriations
i) High Speed Rail, Authority, $500 million
ii) Low Carbon Transit Operations, State Transit
Assistance, $100 million
iii) Transit and Intercity Rail Capital Program,
Transportation Agency, $200 million
AB 2223
Page 6
iv) Affordable Housing and Sustainable Communities
Program, SGC, $400 million
e) Fifty Percent Reduction in Petroleum Use
i) Transit and Intercity Rail Capital Program,
Transportation Agency, $400 million
ii) Low Carbon Road Program, Caltrans, $100 million
iii) Low Carbon Transportation and Fuels, ARB, $500
million
iv) Biofuel Facility Investments, CEC, $25 million
f) Local Climate Action
i) Transformative Climate Communities, SGC, $100
million
g) Short-Lived Climate Pollutants
i) Black Carbon Woodsmoke and Refrigerants, ARB, $60
million
ii) Waste Diversion, CalRecycle, $100 million
AB 2223
Page 7
iii) Climate Smart Agriculture - Healthy Soils and Dairy
Digesters, CDFA, $55 million
h) Safeguarding California/Water Action Plan
i) Water and Energy Efficiency, CDFA and DWR, $30
million
ii) Drought Executive Order, CEC, $60 million
iii) Wetlands and Watershed Restoration/CalEcoRestore,
DFW, $60 million
i) Safeguarding California/Carbon Sequestration
i) Healthy Forests and Urban Forestry, CalFIRE, $180
million
ii) Urban Greening, Natural Resources Agency, $20
million
j) Energy Efficiency/Renewable Energy
i) Energy Efficiency for Public Buildings, Department
of General Services, $30 million
ii) California Lending for Energy and Environmental
Needs Center, I Bank, $20 million
AB 2223
Page 8
iii) Energy Corps, Conservation Corps, $15 million
iv) Energy Efficiency Upgrades/Weatherization,
Department of Community Services and Development, $75
million
v) Renewable Energy and Energy Efficiency Projects,
University of California, California State University,
$60 million
2)Short-lived climate pollutants. Short-lived climate
pollutants (SCLPs) are GHGs that remain in the atmosphere for
less time than carbon dioxide, but have a much greater climate
impact. SLCPs include black carbon, fluorinated gases, and
methane, which is the primary GHG emitted by dairies.
According to ARB, methane is the principal component of
natural gas and is also produced biologically under anaerobic
conditions in ruminants, landfills, and waste handling. While
methane does not linger in the atmosphere as long as carbon
dioxide, it is over 80 times more potent than carbon dioxide
over the first 20 years. Methane is responsible for about 20%
of current climate change, and methane concentrations continue
to increase globally. There is increasing concern that
continued warming will cause massive releases of methane from
thawing arctic permafrost and dissolve frozen methane deposits
on the sea floor. ARB's Draft Short-Lived Climate Pollutant
Reduction Strategy identifies dairies as the source of 35% of
the state's methane emissions. The Strategy identifies a
number of technologies and processes that have the potential
to greatly reduce dairy methane emissions.
3)Author's statement:
AB 2223
Page 9
i) AB 2223 provides $100 million annually [to]
incentivize the widespread adoption of dairy digesters
and other dairy methane reduction projects. The ARB's
strategy to improve manure management calls for putting
digesters on more than several hundred dairies in the
state and identifies a CDFA estimate of at least $100
million per year needed to support the development of
necessary manure management infrastructure.
In addition, dairy digesters would help California meet its
organic diversion and bioenergy goals, because dairy
manure can be mixed with other organic materials diverted
from landfills or wastewater treatment plants.
4)Suggested amendment. This bill continuously appropriates $100
million from the GGRF. Continuous appropriations diminish the
Legislature's ability oversee and adjust a program during each
budget cycle. In order to ensure proper legislative oversight
over GGRF expenditures, the committee may wish to amend the
bill to remove the continuous appropriation and clarify that
up to $100 million is available, upon appropriation, for
purposes of the bill.
5)Double referral. This bill has also been referred to the
Assembly Agriculture Committee.
REGISTERED SUPPORT / OPPOSITION:
Support
AB 2223
Page 10
Agricultural Council of California
Agricultural Energy Consumers Association
California Dairies, Inc.
California Farm Bureau Federation
California Grain and Feed Association
Dairy Farmers of America
Dairy Institute
Milk Producers Council
Western United Dairymen
Opposition
CalChamber
CalTax
Sierra Club California
Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)
319-2092