BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: AB 2564
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|Author: |Cooper |
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|Version: |4/20/2016 |Hearing | 6/29/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Air Quality Improvement Program: Clean Vehicle Rebate
Project.
ANALYSIS:
Existing law:
1) Establishes the Air Quality Improvement Program (AQIP), to be
administered by the California Air Resources Board (ARB) in
consultation with local air districts, to provide competitive
grants to fund projects to reduce criteria air pollutants,
improve air quality, and support research to improve the air
quality impacts of alternative fuels and vehicles, vessels,
and equipment technologies. (Health and Safety Code (HSC)
§44274).
2) Establishes the Charge Ahead Initiative administered by ARB
with the goals of reaching at least one million zero-emission
and near-zero-emission vehicles by January 1, 2023, and
increasing accessibility for disadvantaged, low-income, and
moderate-income communities. ARB is required to establish
programs that further increase access to and direct benefits
for disadvantaged, low-income, and moderate-income
communities and consumers from electric transportation. (HSC
§44258 et seq.)
3) Under the California Global Warming Solutions Act of 2006
(also known as AB 32), requires ARB to determine the 1990
statewide greenhouse gas (GHG) emissions level and approve a
statewide GHG emissions limit that is equivalent to that
AB 2564 (Cooper) Page 2
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level, to be achieved by 2020, and to adopt GHG emissions
reductions measures by regulation. ARB is authorized to
include the use of market-based mechanisms to comply with
these regulations. (HSC §38500 et seq.)
4) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury, requires all moneys, except for fines and
penalties, collected pursuant to a market-based mechanism be
deposited in the fund. (Government Code §16428.8)
5) Prohibits the state from approving allocations for a measure
or program using GGRF moneys except after determining that
the use of those moneys furthers the regulatory purposes of
AB 32, and requires moneys from the GGRF be used to
facilitate the achievement of reductions of GHG emissions in
California. (HSC §39712)
This bill requires ARB, in consultation with the California
Energy Resources Conservation and Development Commission (CEC),
local air districts and the public, to adopt regulations for the
Clean Vehicle Rebate Project (CVRP), adopted pursuant to AQIP,
that do the following:
1) Lower CVRP income limits to $125,000 for single filers,
$170,000 for heads of households, and $250,000 for joint
filers, as specified, for all eligible vehicles except fuel
cell electric vehicles.
2) Prioritize rebate payments for low-income consumers.
3) Increase rebate amounts by $500 per rebate for consumers with
household incomes less than or equal to 300% of the federal
poverty level for all eligible vehicles.
4) Include outreach to low-income households.
Background
1) Background on Clean Vehicle Rebate Project. AB 118 (Núñez,
Chapter 750, Statutes of 2007) established the Alternative
and Renewable Fuels and Vehicle Technology (ARFVT) program,
the Enhanced Fleet Modernization Program (EFMP), and the Air
Quality Improvement Program (AQIP). The three programs are
AB 2564 (Cooper) Page 3
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intended to promote vehicle and fuel technology that reduces
air pollution and GHG emissions statewide. AB 118 provides
funding to the programs through surcharges on vehicle and
vessel registrations, which was extended by AB 8 (Perea,
Chapter 401, Statutes of 2013) until 2023.
The primary purpose of the AQIP, administered by ARB in
consultation with local air districts, is to fund projects to
reduce criteria air pollutants, improve air quality, and
provide funding for research on air quality impacts of
alternative fuels and vehicles.
Pursuant to their authority under AQIP, ARB developed the
Clean Vehicle Rebate Project (CVRP), administered by ARB's
contractor, the California Center for Sustainable Energy. The
CVRP is intended to encourage and accelerate zero- and
near-zero emission, on-road light-duty vehicle deployment and
technology innovation. CVRP provides rebates for purchasing
or leasing a new battery electric vehicle (BEV) of up to
$4,000, up to $3,000 for a plug-in hybrid electric vehicle,
and up to $6,000 for a hydrogen fuel cell electric vehicle
(FCEV).
CVRP supplemented by GGRF. 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 Greenhouse Gas Reduction
Fund (GGRF). Last year, CVRP was one of the few
non-continuously appropriated programs to receive an
appropriation from GGRF ($90 million for low carbon
transportation investments, with ARB approving $75 million of
that for CVRP). To date, CVRP has spent $320 million ($178
million from GGRF) to provide over 150,000 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. Funding for CVRP is currently exhausted, and all
applications for rebates submitted after June 10, 2016 are
being placed on a rebate waitlist.
2) CVRP statistics. Survey data compiled by the Center for
Sustainable Energy reveals that 77% of the survey respondents
have household incomes of over $100,000/year, with about half
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of those consumers at household incomes over $200,000. The
data also shows that three quarters of the CVRP rebate
recipients are men, and that 83% of all survey respondents
are college graduates. Of the 150,000 rebates, about 9,300 or
6%, have gone to residents of disadvantaged communities.
Approximately 22,000 rebates ($56 million) were used on
vehicles whose prices range from $70,000 to over $100,000.
3) 1.5 million clean cars by 2025. In 2012, The Governor's
Executive Order B-16-2012 set milestones for zero-emission
vehicles, including a target of over 1.5 million
zero-emission vehicles will be on California roads by 2025.
Additionally, SB 1275 (de Leon, Chapter 530, Statutes of
2014), through the Charge Ahead Initiative established a goal
of one million zero and near-zero emission vehicles by 2023.
Currently, Californians have purchased around 200,000 of
these vehicles.
4) SB 1275 and income cap. Amidst concerns that the CVRP was
primarily benefiting wealthy car buyers who would have likely
bought an alternative vehicle regardless of the rebate,
legislation was introduced in 2014 to address issues of
equity and cost effectiveness in the program. SB 1275 (de
León, Chapter 530, Statutes of 2014) requires ARB to increase
access to zero-emission and near-zero emission vehicles for
lower and moderate income Californians and disadvantaged
communities. SB 1275 also required eligibility to be limited
based on income. In response, ARB, on March 28, 2016, set an
income cap of $250,000 for single filers, $340,000 for
head-of-household filers, and c) $500,000 for joint filers.
According to ARB, these income eligibility limits are
consistent with Proposition 30, approved by California voters
in 2012.
Additionally, ARB modified the program to increase rebates by
$1,500 for consumers with household incomes less than or
equal to 300% of the federal poverty level (about $73,000 for
a family of four).
According to ARB's approved funding plan that proposed the
income eligibility limits, "The income eligibility limit
should support continued growth of the ZEV market to meet the
broader SB 1275 goals to deploy 1 million ZEVs by 2023 and
establish a self-sustaining market and the Governor's goal of
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1.5 million ZEVs by 2025. To meet this principle, staff is
striving to establish income eligibility for the project in a
way that targets incentives towards those likely to value the
rebate most in deciding to make a ZEV purchase." In response
to stakeholders recommending lower income eligibility limits
for CVRP rebates, the plan states, "[Staff] is concerned that
if the limit is set too low it would limit growth of the ZEV
market at this key early stage thereby impacting California's
ability to meet the ZEV deployment targets established by SB
1275 and the Governor."
This bill reduces the current CVRP income eligibility caps by
half, and increases the rebate for those at or below 300% of
the federal poverty level by $500.
Comments
1) Purpose of Bill. According to the author, "AB 2564 aims to
make clean vehicles more accessible to California drivers
living in communities with poor air quality by limiting
eligibility by income, increasing rebates levels for
lower-income consumers and improving outreach."
2) Regulations. AB 118 requires ARB to administer AQIP, in
consultation with local air districts, and to develop
guidelines to implement the program. AB 118 specifies that
prior to adoption of the guidelines, ARB is required to hold
at least one public hearing, and to hold at least three
public workshops in different regions of the state. The
Office of Administrative Law (OAL) approved regulations
implementing AQIP in 2009.
The CVRP program, adopted pursuant to authority under AQIP,
is not currently implemented through a regulatory process.
Instead, each fiscal year, ARB adopts a funding plan for
programs funded through AQIP, including CVRP. The 2015-16 FY
plan for AQIP adjusted income level eligibility for CVRP
rebates and increased rebate levels for low-income consumers.
AB 2564 would require ARB to adjust CVRP income eligibility
levels and increase rebates for low-income consumers through
a regulatory process, which entails following the
administrative procedures act, and final approval by OAL. As
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regulatory processes can be lengthy, the changes required in
this bill may not take effect until 2018.
3) Income limits. As noted in the background, ARB recently
established income eligibility limits for CVRP rebates. In
setting these thresholds, ARB staff noted the goal of better
targeting those consumers who are influenced in their
decision to buy a ZEV by the availability of rebate. AB 2564
sets income eligibility levels that reduce ARB's income
thresholds by half.
Although income limits at reasonable levels is a simple, and
potentially effective method of targeting low and
middle-income consumers who place greater weight on
availability of clean vehicles when making decisions to buy a
zero-emission or near-zero emission vehicles, setting these
income limits at a level that is too low may impede market
adoption in certain areas. Consumers with an income that
would make them high-income earners in some areas of the
state might be middle-income earners in high cost of living
areas, such as Santa Clara and Marin counties, and therefore
may place more weight on rebates when deciding what type of
car to buy. ARB staff, in the AQIP investment plan for FY
2016-17, expressed concern that lowering CVRP income limits
beyond their recommendations ($250,000 for single filers,
$500,000 for joint filers) could negatively impact ZEV market
development in the state.
4) Premature? As ARB just recently established income caps at
the end of March for CVRP-a little over two months prior to
the depletion of CVRP funds-this measure may be premature.
Additionally, AB 2654, by setting CVRP limits in statute,
removes ARB's discretion to adjust income limits based on
market developments or any other factors.
If the committee believes this measure is necessary, an
amendment is needed to allow ARB to increase the income
limits if ARB finds that the income caps pursuant to this
measure are negatively impacting the goals of the program.
Related/Prior Legislation
AB 1851 (Gray) creates and expands a broad array of incentive
programs to increase the sales and use of certain clean air
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vehicles. The bill was held on the Assembly Appropriations
suspense file.
AB 1710 (Calderon), requires ARB, in coordination with CEC, 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
was held on the Assembly Appropriations suspense file.
SOURCE: Author
SUPPORT:
Rural County Representatives of California
OPPOSITION:
California Electric Transportation Coalition
The Alliance of Automobile Manufacturers
ARGUMENTS IN
SUPPORT: The Rural County Representatives of California
state that the bill improves equity of the CVRP by improving
outreach efforts in
all eligible low-income households and not limiting it to
disadvantaged
communities. They also note this will encourage applications for
eligible low-
income households in an additional 29 counties.
ARGUMENTS IN
OPPOSITION: The Alliance of Automobile Manufacturers
opposes the bill because they argue the income eligibility
threshold for ZEV
rebates were recently enacted by the ARB and that those
thresholds use voter-
approved figures to determine high-income. They also state that
reducing
maximum income thresholds do not make ZEVs more affordable for
middle or
lower income consumers, and further note that in the last two
years, ZEV sales
have stagnated at approximately 3%, and requirement under this
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bill will make the
15% requirement for ZEV sales by 2025 considerably more
challenging to meet.
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