BILL ANALYSIS Ó SB 20 Page 1 SENATE THIRD READING SB 20 (Pavley) As Amended August 15, 2016 Majority vote SENATE VOTE: (Not Relevant) ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+-----------------------+-------------------| |Natural |5-2 |Williams, Cristina |Jones, Harper | |Resources | |Garcia, Hadley, Mark | | | | |Stone, Wood | | | | | | | |----------------+-----+-----------------------+-------------------| |Appropriations |11-3 |Gonzalez, Bloom, |Bigelow, Chang, | | | |Bonilla, Bonta, |Obernolte | | | |Eggman, Eduardo | | | | |Garcia, Quirk, | | | | |Santiago, Weber, Wood, | | | | |McCarty | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Establishes the Low Carbon Fuels Council (Council) and SB 20 Page 2 requires the Council to have six members with the Chair of the California Energy Commission (CEC), or his or her designee, serving as the chair of the Council. Specifically, this bill: 1)Specifies the following membership of the Council: a) Chair of Air Resources Board (ARB) or designee; b) Chair of the CEC or designee; c) Director of the Governor's Office of Business and Economic Development (GO-BIZ) or designee; d) Two members with scientific, economic, or industry professional backgrounds with expertise in the production, financing, distribution, or marketing development of low carbon fuels and very low carbon fuels, one appointed by the Speaker of the Assembly and one by the Senate Committee on Rules; and, e) One member that is a representative of a bona fide nonprofit environmental justice organization that advocates for clean air and pollution reduction appointed by the Governor. 2)Requires members appointed by Assembly, Senate, and Governor to be reimbursed for actual and necessary expenses and requires members to be compensated a $100 each day per diem. Prohibits the Council from meeting more than four times a year. SB 20 Page 3 EXISTING LAW: 1)Pursuant to the California Global Warming Solutions Act (AB 32 (Núñez), Chapter 488, Statutes of 2006), requires the 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 (Núñez), 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. 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 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 SB 20 Page 4 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. FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill likely increases state costs, potentially in the $250,000 to $500,000 range. While some of the costs may be absorbed by the state agencies represented on the Council, it is unclear what entity will pay the additional costs of the public members, the coordination of state activities, the sponsorship of other public activities, and the information required to prepare the report to the Legislature. COMMENTS: In 2011, the state began implementing the LCFS, which requires the oil industry to gradually reduce the 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 Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP), the Air Quality Improvement Program (AQIP) and Enhanced Fleet Modernization Program. 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 SB 20 Page 5 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 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 Clean Vehicle Rebate Program (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 Greenhouse Gas Reduction Fund (GGRF), the ARFVTP provided $49.1 million in funding to backfill CVRP needs, as well as an additional $4 million in Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) incentives. SB 20 Page 6 Beginning with fiscal year 2014-2015, ARB combined the AQIP and the 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 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, identify gaps in these efforts and make recommendations to the legislature to address those gaps. Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0004083