BILL ANALYSIS Ó
SB 20
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Date of Hearing: June 30, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
SB
20 (Pavley) - As Amended June 20, 2016
SENATE VOTE: (Not Relevant)
SUBJECT: Low Carbon Fuels Council
SUMMARY: Establishes the Low Carbon Fuels Council (Council) and
requires the Council to have five members, including state
agencies and appointees, with expertise and background on the
production of low carbon fuels.
EXISTING LAW:
1)Pursuant to the California Global Warming Solutions Act (AB
32), requires ARB to adopt a statewide greenhouse gas (GHG)
emissions limit equivalent to 1990 levels by 2020 and to adopt
rules and regulations to achieve maximum technologically
feasible and cost-effective GHG emission reductions.
2)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
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($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
technologies. The two primary programs adopted by ARB
pursuant to AQIP are the Clean Vehicle Rebate Program
(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.
3)Pursuant to Governor Schwarzenegger's Executive Order S-01-07,
sets a statewide goal to reduce the carbon intensity (CI) of
California's transportation fuels by at least 10% by 2020.
The order required ARB to consider adopting a Low Carbon Fuel
Standards (LCFS) to implement this goal. In 2009, ARB adopted
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the LCFS as a regulation. The LCFS attributes CI values to a
variety of fuels based on direct and indirect GHG emissions,
including land use changes caused by production of biofuels.
The LCFS permits producers of certain low CI fuels to opt in
to LCFS regulation for the purpose of generating credits,
which can be banked and used for compliance, sold to regulated
parties, and purchased and retired by regulated parties. In
addition, LCFS credits can be exported to other GHG emission
reduction programs.
4)Defines "very low carbon transportation fuel" to mean a liquid
or gaseous transportation fuel having no greater than 40% of
the carbon intensity of the closest comparable petroleum fuel
for that year, as measured by the methodology in the LCFS
regulation. Requires the carbon intensity for the
transportation fuel to include the indirect land use change
emission if an agricultural commodity that is a food product
is used as a feedstock for the production of the
transportation fuel.
THIS BILL:
1)Establishes the Council and requires Council to have five
members and specifies the following members:
a) Chair of ARB;
b) Chair of the CEC;
c) Two members with scientific, economic, or industry
professional backgrounds in the production of low carbon
fuels, one appointed by the Speaker of the Assembly and one
by the Senate Committee on Rules; and,
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d) One member with educational and professional
qualifications and general knowledge and interest in the
production of low carbon fuels appointed by the Governor.
2)Requires members to serve a term of four years and allows
reappointment.
3)Requires members to be reimbursed for actual and necessary
expenses and requires members to be compensated a $100 each
day per diem.
4)Requires Council meetings to comply with Bagley-Keene Open
Meeting Act.
5)Requires the Council to do the following:
a) Coordinate state agencies' activities that are related
to acceleration and development of instate production of
low carbon fuels;
b) Identify and address gaps in existing programs, polices,
or activities that could impede the instate construction of
new or the expansion of existing, low carbon fuel
production facilities; and,
c) Provide recommendations to the Legislature for changes
in the law needed to achieve the goals of the Council.
6)Authorizes the Council to sponsor conferences, symposia, and
other public forums to seek a broad range of public advice.
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FISCAL EFFECT: Unknown
COMMENTS:
1)Author's statement:
CEC allocates approximately $40 million dollars every
two years
for grants (ranging from $3-5 M) for capital
expenditures related to the construction or
retrofitting of a low carbon fuels facilities located
in-state. ARB is proposing to allocate $40 million
for a low carbon fuels production incentive program.
At this time the ARB is proposing to do a per gallon
incentive based on the carbon intensity and whether
the fuel provides benefits to the disadvantaged
communities. Currently, there are no discussions
about how the CEC and ARB programs will coordinate,
whether those facilities that receive a grant from the
CEC would be eligible for an ARB production incentive,
or whether there is a process to streamline the
application process. Low carbon fuel facilities are a
large capital investment, and in order to convince a
facility to come to California, the state needs to do
everything it can to maximize funding opportunities
and ensure they two programs are coordinating.
2)Low Carbon Fuels. In 2011, the state began implementing the
LCFS, which requires the oil industry to gradually reduce the
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CI of gasoline and diesel by 10% by 2020 by phasing in lower
carbon fuels. The regulations were adopted pursuant to
Executive Order S-01-07 and were readopted in September 2015.
ARB rates the CI of transportation fuels and establishes the
level of credits generated by production of the fuel. Fuel
producers can reduce the carbon intensity of their fuels or
purchase credits to comply with the LCFS. According to ARB,
the carbon-intensity of California's transportation fuel pool
has been reduced by just over 2%.
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 the ARFVTP,
the AQIP and EFMP. ARFVTP funds projects by various public
and private groups that "develop and deploy innovative
technologies that transform California's fuel and vehicle
types to help attain the state's climate change policies."
The CEC prepares an investment plan, in coordination with a
stakeholder advisory committee, which outlines the ARFVTP's
funding priorities. AB 118 requires the advisory committee to
include representatives from state agencies; fuel and vehicle
technology consortia; labor, environmental, and
community-based justice and health organizations; academic
groups; consumer advocates; workforce training groups; and
private industry. Once an investment plan is completed, CEC
receives and solicits bids for projects, awarding funds based
on eligibility criteria. Monies appropriated to the ARFVTP
come from temporary increases in smog abatement fees, vehicle
registration fees, vessel registration fees and certain other
vehicle fees. According to the CEC, as of December 31, 2015,
it has awarded over $600 million to advance the goals of the
program. Alternative fuel production and infrastructure has
received over half of that funding.
In addition to the ARFVTP, AB 118 also created the AQIP, to be
administered by the ARB. According to CEC, while the ARFVTP
focuses primarily on achieving state GHG reduction goals
within the transportation sector, the AQIP is primarily
responsible for reducing air pollutants from the
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transportation sector. Also, according to CEC, the two
programs have worked in concert to maximize the benefits to
the state and avoid duplication of efforts. For instance, the
ARFVTP has invested in light-duty electric vehicle charging
infrastructure, regional planning, and manufacturing projects,
while the AQIP has provided deployment incentives for
light-duty electric vehicles through the CVRP. ARFVTP has
supported the demonstration of early hybrid and electric truck
and bus models, while the AQIP has provided deployment
incentives for such vehicles through the Hybrid and
Zero-Emission Truck and Bus Voucher Incentive Project and
other planned larger-scale pilot deployment projects.
Finally, AQIP has also provided loans to assist fleets in
modernizing their diesel trucks. Prior to the availability of
GGRF, the ARFVTP provided $49.1 million in funding to backfill
CVRP needs, as well as an additional $4 million in HVIP
incentives. Beginning with fiscal year 2014-2015, ARB
combined the AQIP and the Greenhouse Gas Reduction Fund (GGRF)
Low-Carbon Transportation Investments into one funding plan.
In AQIP's fiscal year 2016-17 funding plan ARB proposed a new
program to allocate $40 million to very low carbon fuel
production. This funding will be limited to renewable fuels
that are produced in California and would be further limited
to those fuels which meet a designated carbon intensity
threshold.
California Governor's Office of Business and Economic
Development (GO-Biz) has appointed a Zero Emission Vehicle
(ZEV) infrastructure deputy to assist in the development of
ZEV infrastructure including the development of hydrogen
production and fueling stations. The ZEV infrastructure
deputy has worked with local governments and various companies
to remove barriers to developing ZEV infrastructure.
The Council established by this bill is designed to coordinate
these different efforts and identify gaps and make
recommendations to the legislature to address those gaps.
However, the council lacks any environmental justice (EJ)
voices to provide the perspective of Californians most
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impacted by pollution from transportation fuels. In addition,
the bill requires the Council to address gaps in existing
programs, polices, or activities but does not provide the
Council authority over those programs. Finally, the bill
fails to define low carbon fuels. This may be problematic
because there is no definition of that term in statue.
4)Amendments. The author and Committee may wish to consider the
following amendments:
a) Ensure there is EJ representation on the Council;
b) Add a representative from GO-Biz;
c) Define low carbon fuels;
d) Clarify the council's authority; and,
e) Put an additional focus on very low carbon fuels.
REGISTERED SUPPORT / OPPOSITION:
Support
Coalition for Renewable Natural Gas
Opposition
None on file
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Analysis Prepared by:Michael Jarred / NAT. RES. / (916)
319-2092