BILL ANALYSIS Ó
AB 2564
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Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
AB 2564
(Cooper) - As Amended April 12, 2016
SUBJECT: Clean Vehicle Rebate Project: income eligibility
SUMMARY: Reforms the Clean Vehicle Rebate Project (CVRP) by
increasing outreach and rebate levels for low-income
Californians. Lowers income limits for CVRP.
EXISTING LAW:
1)Establishes the California Alternative and Renewable Fuel,
Vehicle Technology, Clean Air, and Carbon Reduction Act of
2007 [AB 118 (Nunez), Chapter 750, Statutes of 2007]. AB 118
is funded through temporary increases in vehicle registration
fees ($3), smog abatement fees ($8), boat registration fees
($10/20), and special identification plate fees ($5).
Collection of these fees is authorized until 2024 pursuant to
AB 8 (Perea), Chapter 401, Statutes of 2013. The fees support
three major programs:
a) The Air Quality Improvement Program (AQIP), administered
by the Air Resources Board (ARB) in consultation with local
air districts, funds projects that reduce criteria air
pollutants, improve air quality, and provide research for
alternative fuels and vehicles, vessels, and equipment
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technologies. The two primary programs adopted by ARB
pursuant to AQIP are the CVRP and the Hybrid and Zero
Emissions Truck and Bus Voucher Incentive Program (HVIP).
AQIP is funded by smog abatement fees, boat registration
fees, and special identification plate fees and receives
between $30-36 million per year from these sources.
b) The Enhanced Fleet Modernization Program (EFMP), under
which ARB, in consultation with the Bureau of Automotive
Repair (BAR), pays to permanently remove cars and small
trucks from operation through voluntary retirement by their
owners. EFMP is funded by $1 of the vehicle registration
fee and receives approximately $30 million per year.
c) The Alternative and Renewable Fuel and Vehicle
Technology Program (ARFVTP), administered by California
Energy Commission (CEC), provides grants and other
financial incentives to accelerate the development and
deployment of clean, efficient, low carbon alternative
fuels and technologies. ARFVTP is funded by $2 of the
vehicle registration fee and receives approximately $100
million per year.
2)Requires 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.
3)Establishes the Greenhouse Gas Reduction Fund (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) to be deposited in the
GGRF and available for appropriation by the Legislature.
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4)Establishes the GGRF Investment Plan and Communities
Revitalization Act [AB 1532 (John A. Pérez), Chapter 807,
Statutes of 2012] to set procedures for the investment of GHG
allowance auction revenues. AB 1532 authorizes a range of GHG
reduction investments and establishes several additional
policy objectives.
5)Requires the investment plan to allocate (1) a minimum of 25%
of the available moneys in the GHGRF 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 [SB 535
(de León), Chapter 830, Statutes of 2012].
6)Establishes the Charge Ahead California Initiative pursuant to
SB 1275 (de León), Chapter 530, Statutes of 2014, that, among
other things, included the goal of placing into service at
least one million zero emissions vehicles (ZEV) and near-zero
emission vehicles (NZEV) by January 1, 2023, and increasing
access for disadvantaged, low-income, and moderate-income
communities and consumers to ZEVs and NZEV vehicles.
THIS BILL:
1)Requires outreach to disadvantaged communities to increase
consumer awareness about CVRP. Prioritizes rebates payments
for low-income consumers.
2)Increases rebate amounts by $500 per rebate for consumers with
household incomes less than or equal to 300% of the federal
poverty level. Increased rebate amounts are available for
fuel-cell electric vehicles, battery electric vehicles, and
plug-in hybrid electric vehicles.
3)Lowers CVRP income limits to $125,000 single filer, $170,000
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for head of household, and $250,000 for joint filers. Excludes
fuel cell electric vehicles from the income limit.
FISCAL EFFECT: Unknown
COMMENTS:
1)Background. In 2007, AB 118 established three new programs
intended to promote vehicle and fuel technology that reduces
air pollution and GHG emissions statewide. These programs are
AQIP, EFMP, and ARFVTP.
AQIP provides financial incentives for public and private
groups and individuals to adopt smog and diesel particulate
pollution reducing technology that concurrently reduces GHG
emissions. Two of AQIP's flagship projects, CVRP and HVIP,
represent the program's largest funding commitments. AQIP has
also provided incentives for biofuels research, hybrid truck
testing, lawn and garden equipment replacement, zero-emission
all-terrain agricultural work vehicle rebates, advanced
technology demonstration, and hybrid off-road equipment pilot
projects. CVRP provides rebates for ZEV and NZEV, including
plug-in hybrid vehicles, battery electric vehicles, fuel cell
electric vehicles, and neighborhood electric vehicles.
The demand for CVRP has steadily increased over time and
surpassed funding available through AB 118. Originally the
funding gap was covered with loans from various funds. In the
2014-15 Budget Act, $200 million was appropriated to AQIP from
the GGRF. Last year, CVRP was one of the few non-continuously
appropriated programs to receive an appropriation from GGRF.
Despite that, CVRP may still run out of funding prior to the
enactment of this year's budget, and the administrator may
need to establish a wait list. To date, CVRP has spent over
$300 million ($160 million from GGRF) to provide over 142,000
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rebates. ARB proposes to spend an additional $230 million on
CVRP from the $500 million requested appropriation for low
carbon transportation and fuels in the Governor's 2016-17
fiscal year budget.
2)Money for nothing. As CVRP expenditures have grown, there
have been concerns about the equity of the program and its
cost effectiveness. Some the statistics that demonstrate the
equity issues with CVRP include:
a) Over 50% of rebate recipients' household incomes are
over $150,000 a year;
b) Over 20% of rebate recipients' household incomes are
over $250,000 a year;
c) 88% of recipients are Caucasian;
d) 75% of recipients are male;
e) 83% are college graduates;
f) Approximately 22,000 rebates ($56 million) were used on
vehicles whose prices range from $70,000 to over $100,000;
and,
g) One assembly district (28) had 7,881 rebates costing
over $17 million while another assembly district (32) had
85 rebates costing approximately $180,000.
These equity issues were recognized when the Legislature
passed SB 1275 (de León), Chapter 530, Statutes of 2014, which
established the Charge Ahead California Initiative to increase
access to ZEVs and NZEVs for lower income Californians and
disadvantaged communities. SB 1275 also required eligibility
to be limited based on income. In response to SB 1275, ARB,
on March 28, 2016, set an income cap of:
AB 2564
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a) $250,000 for single filers;
b) $340,000 for head-of-household filers; and,
c) $500,000 for joint filers.
In addition, rebate amounts will be increased by $1,500 per
rebate for consumers with household incomes less than or equal
to 300% of the federal poverty level.
CVRP raises questions of cost effectiveness because it is
unclear how many additional ZEV and NZEVs are on the road
because of CVRP. According to UCLA Luskin Center, many new
car buyers would purchase plug-in hybrids without a rebate.
In fact, 33% of plug-in hybrids are purchased without a
rebate. Research has also shown that CVRP induced a 7%
increase in sales and California spends $30,000 for each
additional ZEV and NZEV sold. The UCLA Luskin Center
recommends targeting rebates for lower income Californians to
make CVRP more cost effective. Another issue is only 18% of
car-owning households in California even are aware that CVRP
exists. Rebates could be more cost effective if more
Californians knew about them. In addition, for those who did
know about the rebates and did purchase a vehicle, the top two
motivations were 1) saving money on fuel costs, and 2)
reducing environmental impacts. Therefore, the price of gas
and the environmental benefits of the vehicles may have more
impact on purchasing decisions than CVRP.
1)This bill. This bill attempts to improve equity and cost
effectiveness of CVRP by implementing two recommendations from
an ARB discussion document. The bill also goes further on
actions ARB has already taken to address equity and cost
effectiveness. These recommendations include increasing
awareness about CVRP by requiring outreach in disadvantaged
communities and prioritizing rebates payments for low-income
consumers. This bill also increases rebate amounts by $500
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per rebate for consumers with household incomes less than or
equal to 300% of the federal poverty level. ARB's current
income limits would not affect many rebate recipients and
still include very high-income Californians. This bill lowers
the CVRP income limits to $125,000 single filer, $170,000 for
head of household, and $250,000 for joint filers.
2)Amendment. The author and committee may wish to consider
amendments to expand the outreach component of the bill to all
consumers with household incomes less than or equal to 300% of
the federal poverty level.
3)Related Legislation.
AB 1851 (Gray) creates and expands a broad array of incentive
programs to increase the sales and use of certain clean air
vehicles. The bill is awaiting hearing in the Assembly Revenue
and Taxation Committee.
AB 1710 (Calderon), requires ARB, in coordination with the
Commission, on or before January 1, 2019, to develop and
implement a comprehensive program to promote advanced-technology
light-duty vehicle deployment in the state to drastically
increase the use of ZEVs to meet the state's emissions reduction
goals. The bill is awaiting hearing in the Assembly Revenue and
Taxation Committee.
REGISTERED SUPPORT / OPPOSITION:
AB 2564
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Support
None on file
Opposition
None on file
Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092