BILL ANALYSIS Ó AB 2343 Page 1 Date of Hearing: April 18, 2016 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 2343 (Cristina Garcia) - As Amended April 11, 2016 SUBJECT: Greenhouse Gas Reduction Fund: study SUMMARY: Requires the Department of Finance (DOF) to include in its annual report to committees of the Legislature information relating to the economic impacts of Greenhouse Gas Reduction Fund (GGRF) expenditures. 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 (i.e., the cap-and-trade program adopted by ARB under AB 32) AB 2343 Page 2 to be deposited in the GGRF and available for appropriation by the Legislature. 3)Establishes the GGRF Investment Plan and Communities Revitalization Act (Act) to set procedures for the investment of GHG allowance auction revenues. Authorizes a range of GHG reduction investments and establishes policy objectives. 4)Specifies that moneys appropriated from the GGRF through investments may include funding to reduce GHG emissions through: a) Energy efficiency, clean and renewable energy generation, distributed renewable energy generation, transmission and storage, and other related actions; b) The development of state-of-the-art systems to move goods and freight, advanced technology vehicles and vehicle infrastructure, advanced biofuels, and low-carbon and efficient public transportation; c) Strategic planning and development of sustainable infrastructure projects; d) Investments in programs implemented by local and regional agencies, local and regional collaboratives, and nonprofit organizations coordinating with local governments; and, e) Funding research, development, and deployment of innovative technologies, measures, and practices related to programs and projects funded pursuant to the Act. 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. AB 2343 Page 3 6)Requires each state agency to annually prepare and submit to the Secretary of the California Environmental Protection Agency (CalEPA) a report that includes: a) A list of those measures that have been adopted and implemented by the state agency to meet GHG emission reduction targets and a status report of the actual GHG emissions reduced as a result of the measures; b) A timetable for adoption of any additional measures needed to meet GHG emissions reduction targets; c) An estimate of the department's own GHG emissions and an explanation of any increase or decrease compared to the previous year's emissions. 7)Requires CalEPA, on or before January 1 of each year, to compile and organize the information submitted by state agencies into a clear, standardized format and provide the information on its website as a "state agency GHG emission reduction report card." 8)Beginning March 1, 2014, and annually thereafter, requires DOF to report to the appropriate committees of the Legislature the status of projects funded by the GGRF and their outcomes. Requires that the report include a description of how the administering agencies have fulfilled the funding requirements for disadvantaged communities. THIS BILL requires DOF to include in its annual report to committees of the Legislature a comparison of all of the following: 1)The levels of investment funded across the state; 2)The GHG emissions reductions resulting from the investments; and, AB 2343 Page 4 3)The economic benefits associated with the investments, including, but not limited to, the jobs created and salaries and wages associated with those jobs. FISCAL EFFECT: Unknown 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 the overall funding benefited disadvantaged communities. AB 2343 Page 5 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), $850 million ii) Transit and Intercity Rail Capital Program, Transportation Agency, $265 million iii) Low Carbon Transit Operations Program, Department of Transportation (Caltrans), $145 million iv) Affordable Housing and Sustainable Communities Program, Strategic Growth Council (SGC), $610 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) Climate Smart Agriculture, Department of Food and Agriculture (CDFA), $75 million AB 2343 Page 6 iv) Water-Energy Efficiency, Department of Water Resources (DWR), $70 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 (CAL FIRE), $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: a) 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 2343 Page 7 iv) Affordable Housing and Sustainable Communities Program, SGC, $400 million b) 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 c) Local Climate Action i) Transformative Climate Communities, SGC, $100 million d) Short-Lived Climate Pollutants i) Black Carbon Woodsmoke and Refrigerants, ARB, $60 million ii) Waste Diversion, CalRecycle, $100 million AB 2343 Page 8 iii) Climate Smart Agriculture - Healthy Soils and Dairy Digesters, CDFA, $55 million e) 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 f) Safeguarding California/Carbon Sequestration i) Healthy Forests and Urban Forestry, CAL FIRE, $180 million ii) Urban Greening, Natural Resources Agency, $20 million g) 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 2343 Page 9 iii) Energy Corps, Conservation Corps, $15 million iv) Energy Efficiency Upgrades/Weatherization, CSD, $75 million v) Renewable Energy and Energy Efficiency Projects, University of California, California State University, $60 million 1)GGRF reporting. ARB and DOF are required to submit various reports to the Legislature relating to the states's cap-and-trade program and GGRF expenditures. The primary report is ARB's Scoping Plan, which lays out ARB's plan to reduce greenhouse gas GHG emissions to 1990 levels by 2020. The Scoping Plan was first adopted in 2008 and must be updated every five years. ARB is also tasked with developing a short-lived climate pollution reduction strategy. ARB also prepares an annual report of climate investments using cap-and-trade funds. DOF is required to develop a three-year investment plan for cap-and-trade funding. DOF is required to annually report to the Legislature on the status of projects funded by the GGRF and their outcomes. The Act requires that, where applicable and to the extent feasible, GGRF allocations be used for co-benefits, including: economic, environmental, and public health benefits; job creation; complement efforts to improve air quality; direct investments toward disadvantaged communities; provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from GHG emissions reductions efforts; and, lessen impacts of climate change on the state's communities, economy, and environment. However, there is no clear reporting mechanism to inform the Legislature and the public about the economic and job benefits have resulted from programs funded by the GGRF. This bill would require DOF to include information about the economic AB 2343 Page 10 benefits associated with GGRF programs in its existing report to the Legislature. 2)Author's statement: AB 2343 seeks to augment the current annual report to the Legislature on the status and outcomes of projects funded from the GGRF. This bill requests that additional information be provided so that legislators can easily compare levels of investment across the state and compare economic benefits associated with those investments, including jobs created and the salaries and wages associated with those jobs. REGISTERED SUPPORT / OPPOSITION: Support None on file Opposition None on file Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916) AB 2343 Page 11 319-2092