BILL ANALYSIS Ó
AB 2576
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Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2576 (Gray) - As Amended April 11, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill allocates up to $20 million from AB 32 cap-and-trade
revenues (Greenhouse Gas Reduction Fund) to CalRecycle, upon
appropriation, for market development payments of $50 per ton of
state-generated cullet used for glass manufacturing in the
state. This bill requires market development payments to achieve
greenhouse gas (GHG) emissions reductions not otherwise required
by law.
FISCAL EFFECT:
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1)Cost pressures of up to $20 million (Greenhouse Gas Reduction
Fund) for the market development program at CalRecyle.
2)Increased ongoing annual costs of approximately $235,000
(Greenhouse Gas Reduction Fund) for the California Air
Resources Board (ARB) to revise funding guidelines, develop
quantification methods and consult with CalRecycle.
3)Increased ongoing annual costs of between $250,000 and
$400,000 (Greenhouse Gas Reduction Funds) for CalRecyle to
administer a $20 million program.
COMMENTS:
1)Purpose. According to the author, furnace-ready recycled
glass (cullet) is expensive and hard to acquire. Single-stream
recycling systems result in low-quality glass that cannot be
used in a furnace. Often, this glass is disposed of in
landfills rather than recycled. This bill is intended to
provide an incentive to glass manufacturers to fund the use of
recycled cullet, thereby reducing GHG emissions and their
costs.
2)Background. The California Global Warming Solutions Act of
2006 (AB 32) requires ARB to adopt a statewide GHG emissions
limit equivalent to 1990 levels by 2020 and adopt regulations,
including market-based compliance mechanisms, to achieve
maximum technologically feasible and cost-effective GHG
emission reductions.
As part of the implementation of AB 32 market-based compliance
measures, ARB adopted a cap-and-trade program that caps the
allowable statewide emissions and provides for the auctioning
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of emission credits, the proceeds of which are quarterly
deposited into the GGRF available for appropriation by the
Legislature.
The 2014-15 Budget Act allocated cap-and-trade revenues for
the 2014-15 fiscal year and established a long-term plan for
the allocation of cap-and-trade revenues beginning in fiscal
year 2015-16.
The Budget continuously appropriates 35% of cap-and-trade
funds for investments in transit, affordable housing, and
sustainable communities. Twenty-five percent of the revenues
are continuously appropriated to continue the construction of
high-speed rail. The remaining 40% are to be appropriated
annually 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 totaling $3.1 billion, are available for
appropriation this year.
3)Glass recycling in California. California is home to four
glass manufacturers: Owens Illinois has facilities in Vernon
and Tracy; Ardagh Glass has a facility in Madera; and, Gallo
Glass has a facility in Modesto. Until last fall, Owens
Illinois also operated a plant in Oakland.
The California Beverage Container Recycling and Litter Reduction
Act (Bottle Bill):
requires glass beverage containers to contain 35% recycled
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content. In addition to the benefits of recycling (e.g.,
reductions in virgin material use, reduced landfilling, energy
savings, and providing markets for recycled materials),
recycled cullet produces significantly fewer GHG emissions
than virgin glass production. According to the Glass
Packaging Institute, every six tons of recycled cullet used in
glass manufacturing reduces GHG emissions by one ton.
The Bottle Bill allocates $10 million annually for quality
incentive payments of up to $60 per ton of color sorted
(green, brown, or clear) recycled glass cullet to glass
recyclers. Recyclers sell the recycled cullet to glass
manufacturers based on market pricing.
4)Leaky emissions. Leakage refers to GHG emissions reductions
in state that are replaced by increased GHG emissions out of
state. AB 32 requires ARB to design measures to minimize
leakage. Industries for which production is highly emissions
intensive, which results in high compliance costs, and
industries facing strong competition from out-of-state
producers are generally at highest risk of leakage. Glass
manufacturing is classified by ARB as a high risk industry and
glass manufacturers receive a base amount of free allowances.
Analysis Prepared by:Jennifer Galehouse / APPR. / (916)
319-2081
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