BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Bob Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 189 Hearing Date: 04/15/2014
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|Author: |Hueso |
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|Version: |3/26/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Rebecca Newhouse |
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Subject: Clean Energy and Low-Carbon Economic and Jobs Growth
Blue Ribbon Committee
ANALYSIS:
Existing law:
1. Under the California Global Warming Solutions Act of 2006
requires the California Air Resources Board (ARB) to
determine the 1990 statewide greenhouse gas (GHG) emissions
level and approve a statewide GHG emissions limit that is
equivalent to that level, to be achieved by 2020, and to
adopt GHG emission reduction measures by regulation (Health
and Safety Code §38500 et seq.). The Act requires the ARB to
appoint an Economic and Technology Advancement Advisory
Committee (ETAAC) to advise on technological research and
development opportunities.
2. 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, and requires the Department of
Finance, in consultation with the state board and any other
relevant state agency, to develop, as specified, a three-year
investment plan for the moneys deposited in the GGRF.
(Government Code §16428.8)
3. Requires moneys from the GGRF be used to facilitate the
achievement of reductions of GHG emissions in this state
consistent with the California Global Warming Solutions Act
of 2006. Annual budget appropriations of GGRF funds are
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required to be consistent with the investment plan. (Health
and Safety Code §39712)
4. Requires the GGRF investment plan to allocate, at a
minimum, 25% of the funds to benefit disadvantaged
communities, and to allocate 10% of GGRF monies within
disadvantaged communities. (HSC §39713)
5. Under the California Alternative and Renewable Fuel,
Vehicle Technology, Clean Air, and Carbon Reduction Act of
2007 (HSC §43865 et seq.) funded through various vehicle and
vessel related surcharges, requires the State Energy
Resources Conservation and Development Commission (CEC) to
implement the Alternative and Renewable Fuels and Vehicle
Technology Program (ARFVTP) to provide funding measures to
develop and deploy technologies and alternative and renewable
fuels in the marketplace to help attain the state's climate
change policies. The CEC is required to develop an
investment plan for the program in consultation with an
advisory committee, pursuant to specified requirements. An
evaluation of the efforts funded by the ARFVTP that includes
research, development, and deployment efforts funded by this
program is required every two years, beginning in 2011.
6. Under the California Clean Energy Jobs Act, (Proposition 39
passed on November 6, 2012) requires that $550 million be
transferred to the Clean Energy Jobs Fund for five fiscal
years, beginning in 2013, is available for appropriation by
the Legislature for eligible projects to improve energy
efficiency and expand clean energy generation in schools.
The Act also creates a Citizen's Oversight Board to review
and assess effectiveness of expenditures from the Fund.
(Public Resources Code §26200)
7. Under the Electric Utility Industry Restructuring Act,
authorizes the Public Interest Renewable Energy Program
administered by the CEC, to support the operation of existing
renewable facilities as well as the development of new and
emerging renewable technologies.
8. Establishes the Governor's Office of Business and Economic
Development (GO-Biz) within the Governor's Office for the
purpose of serving as the lead state entity for economic
strategy and marketing of California on issues relating to
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business development, private sector investment and economic
growth. (GOV §§12096 - 12098.5)
9. Under the California Green Collar Jobs Act of 2008
(Unemployment Insurance Code §15000), establishes the Green
Collar Jobs Council to focus on developing the framework,
funding, strategies, programs, policies, partnerships, and
opportunities necessary to address the growing need for a
highly skilled and well-trained workforce to meet the needs
of California's emerging green economy.
10. Establishes the Commission for Economic Development to
provide continuing bipartisan legislative, executive branch
and private sector support and guidance for the best possible
overall economic development of the state. (GOV §§14999.8 and
14999.9)
This bill:
1. Creates the Clean Energy and Low-Carbon Economic and Jobs
Growth Blue Ribbon Committee to consist of five members
appointed by the Governor and two members appointed by the
Speaker of the Assembly and the Committee on Rules and requires
the members to have expertise in economic, financial,
clean-energy economic growth, job creation, workforce
standards, and employment opportunities for disadvantaged
workers.
2. Requires the Committee to advise state agencies on the most
effective ways to spend clean energy and greenhouse gas-related
funds in order to implement policies to maximize economic and
employment benefits in the state and requires the Committee to
do the following:
A. Develop guidance for tracking and reporting jobs outcomes
for state clean energy and low-carbon investments and use
that information to evaluate jobs outcomes.
B. Develop guidance to measure the quantity and quality of
jobs created by state investments in clean energy and
low-carbon investments, as well as guidance to measure the
geographic and demographic distribution of jobs, in
consultation with the Labor and Workforce Development
Agency.
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C. Advise state agencies on the most effective ways to
require responsible contractor standards, and minimum worker
training and skill certifications to ensure high-quality
work for state clean energy and low-carbon investments, and
the most effective ways to connect disadvantaged communities
and other target populations to good quality jobs created by
those investments.
D. Advise state agencies on the most effective ways to align
state clean energy and low-carbon training funds with
existing state workforce development investments and
strategies.
E. Provide annual updates to the Governor and appropriate
policy and fiscal Legislative committees on the committee's
activities.
3. Requires CEC, PUC, ARB, and any other state agency responsible
for implementing clean energy and low-carbon policies and
programs to submit an annual progress report to the Governor
and appropriate Legislative committees describing how they
implemented or responded to the advice, guidance, and any
recommendations provided by the Blue Ribbon committee.
4. Specifies that the above reporting requirement is inoperative
on January 1, 2021.
Background
1.Workforce and Economic Development Efforts at the State Level.
There are a number of entities throughout state government aimed
at increasing workforce and economic development efforts, with a
particular emphasis on emerging technology, green jobs and the
green economy.
GO-Biz: The Governor's Office of Business and Economic
Development Office (GO-Biz) serves as California's single point
of contact for economic development and job creation efforts.
GO-Biz markets the business and investment opportunities
available in California by working in partnership with local,
regional, federal, and other state public and private
institutions to encourage business development and investment in
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the state.
The iHub Program within GO-Biz designate 'iHubs' within the
state to stimulate partnerships, economic development, and job
creation by leveraging assets to provide an innovation platform
for startup businesses, economic development organizations,
business groups, and venture capitalists. These assets may
include, but are not limited to, research parks, technology
incubators, universities, and federal laboratories.
Commission for Economic Development: The commission, consisting
of the Lieutenant Governor as Chairperson, three each appointed
by Senate Committee on Rules and Assembly Speaker, and 10
members appointed by the Governor, was established to provide
bipartisan legislative, executive branch and private sector
support and guidance for the best possible overall economic
development of the state. The commission is tasked with:
(a) Assessing specific regional or local economic
development problems and making recommendations for solving
problems.
(b) Providing a forum for ongoing dialogue on economic
issues between state government and the private sector.
(c) Recommending, where deemed appropriate, legislation to
require evaluation of demonstration and ongoing economic
development projects and programs to ensure continued cost
effectiveness.
(d) Identifying and reporting important secondary effects
on economic development of programs and regulations which
may have other primary purposes.
(e) Undertaking specialized studies and preparing
specialized reports at the request of the Governor or
Legislature.
(f) Reporting its activities, findings and recommendations
to the Governor and the Legislature annually.
(g) Considering programs to further the economic
development of the state.
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California Workforce Investment Board: The CWIB is charged with
developing a unified, strategic planning process to coordinate
various education, training, and employment programs into an
integrated workforce development system that supports economic
development. As such, the CWIB has adopted "sector strategies"
as the statewide framework for workforce development and works
with partners, including other state agencies, to support the
emergence of effective statewide and regionally driven sector
initiatives.
Green Collar Jobs Council: AB 3018 (Núñez, Chapter 312,
Statutes of 2008) created the California Green Collar Jobs
Council (GCJC) to perform specified tasks related to addressing
the workforce needs that accompany California's growing green
economy under the purview of the CWIB. The GCJC makes
recommendations and creates strategies for comprehensive and
effective workforce training opportunities to help prepare
California's current and future workforce to meet the skills
demand from businesses supporting the energy efficiency and
clean energy sectors. The GCJC is also tasked with developing,
collecting, analyzing, and distributing statewide and regional
labor market data on California's new and emerging green
industries workforce needs, trends, and job growth and
identifying funding resources and making recommendations on how
to expand and leverage these funds. CWIB is required to report
annually to the Legislature on the status of GCJC activities,
grants awarded, and its development and implementation of a
green workforce strategic initiative.
The GCJC issued a Proposed Jobs and Workforce Development
Program Elements for Carbon Reduction Investments in California
in January 2014 which proposed "a common approach to workforce
development and job creation for California's multiple public
investments in carbon reduction initiatives under the umbrella
of AB 32." According to the proposal:
"California's energy efficiency, clean energy, and clean
transportation programs currently invest several billion dollars
each year in incentive programs, public works projects, and a
variety of other contracts and subsidies?While the primary
purpose of these programs is to meet our energy and carbon
reduction targets, these investments create and transform jobs
and businesses in a variety of industries in California,
particularly the energy, building and construction, and
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transportation industries. State agencies, utilities, and others
responsible for these programs are therefore drivers of economic
development and job creation, in addition to their primary role
in implementing energy and environmental policy." The GCJC
states "specific program elements for California's carbon
reduction public investment programs?can support a skilled
workforce that performs the quality work necessary to accomplish
the state's ambitious energy and environmental goals, while
providing career-track jobs for California residents, including
those from historically disadvantaged communities."
1.Clean Energy and Low-Carbon Funds.
A. Energy Efficiency and Alternative Energy Programs.
According to the Legislative Analyst's Office's report from
December 2012, "Energy Efficiency and Alternative Energy
Programs," excluding cap-and-trade auction revenue as well as
revenue from Proposition 39 (described below), "California
currently maintains over a dozen major programs that are intended
to support the development of energy efficiency and alternative
energy in the state. Over the past 10 to 15 years, the state has
spent a combined total of roughly $15 billion on such efforts, the
vast majority of which has been funded by utility ratepayers. The
state's incentive programs generally fall into one of the four
following categories: (1) energy efficiency programs, (2)
renewable energy programs, (3) alternative transportation and
low-carbon fuels programs, and (4) energy research programs."
A few examples include:
IOU Energy Efficiency Programs: The PUC
oversees the development and implementation of rebate
and incentive programs by Investment Owned Utilities
(IOU) for energy users in order to encourage the
purchase of energy-efficient appliances and equipment.
IOUs have also implemented programs to achieve long-term
market transformations in the development of "zero net
energy" buildings. These programs are funded through
ratepayer utility bills.
Public Interest Renewable Energy Program: This
program is implemented by CEC to support the operation
of existing renewable facilities as well as the
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development of new and emerging renewable technologies,
and is funded through a surcharge on IOU electricity
bills.
Alternative and Renewable Fuel and Vehicle
Technology Program: This program is implemented by the
CEC and funded through vehicle-related surcharges for
administering financial assistance in the form of loans
and grants to help transform vehicles and fuels to meet
the state's climate change goals.
Additional revenue for greenhouse gas emission reduction as well
as energy efficiency programs has been generated from the
cap-and-trade program and from the passage of Proposition 39.
A. Cap and Trade Auction Revenue Funds.
ARB conducted nine cap-and-trade auctions between November 2012
and November 2014, generating a total of $970 million in proceeds
to the state. A tenth auction was held jointly with Quebec in
February of this year, but the proceeds have not yet been
published.
Several bills in 2012, and one in 2014, provided legislative
direction for the expenditure of auction proceeds including SB 535
(de León) Chapter 830, Statutes of 2012, AB 1532 (J. Pérez)
Chapter 807, Statutes of 2012, SB 1018 (Budget Committee) Chapter
39, Statutes 2012, and SB 862 (Budget Committee) Chapter 36,
Statutes of 2014.
SB 535 (de León) Chapter 830, Statutes of 2012, requires that 25%
of auction revenue be used to benefit disadvantaged communities
and requires that 10% of auction revenue be invested in
disadvantaged communities.
AB 1532 (J. Pérez) Chapter 807, Statutes of 2012, requires that
GGRF monies be used to facilitate the reduction of GHG emissions
and further the regulatory purposes of AB 32. The bill also
directs the Department of Finance to develop and periodically
update a three-year investment plan that identifies feasible and
cost-effective GHG emission reduction investments to be funded
with cap-and-trade auction revenues.
SB 1018 (Budget Committee) Chapter 39, Statutes of 2012, created
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the GGRF, into which all auction revenue is to be deposited. The
legislation requires that before departments can spend monies from
the GGRF, they must prepare a record specifying: (1) how the
expenditures will be used, (2) how the expenditures will further
the purposes of AB 32 (Nuñez, Pavley) Chapter 488, Statutes of
2006, (3) how the expenditures will achieve GHG emission
reductions, (4) how the department considered other
non-GHG-related objectives, and (5) how the department will
document the results of the expenditures.
SB 862 (Budget Committee) Chapter 36, Statutes of 2014, requires
the ARB to develop guidelines on maximizing benefits for
disadvantaged communities by agencies administering GGRF funds,
and guidance for administering agencies on GHG emission reduction
reporting and quantification methods.
B. Legal Consideration of Cap-and-Trade Auction Revenues.
The 2012-13 budget analysis of cap-and-trade auction revenue by
the Legislative Analyst's Office noted that, based on an opinion
from the Office of Legislative Counsel, the auction revenues
should be considered mitigation fee revenues, and their use
requires that a clear nexus exist between an activity for which a
mitigation fee is used and the adverse effects related to the
activity on which that fee is levied. Therefore, in order for
their use to be valid as mitigation fees, revenues from the
cap-and-trade auction must be used to mitigate GHG emissions or
the harms caused by GHG emissions.
In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction revenues
constitute illegal tax revenue. In November 2013, the superior
court ruling declined to hold the auction a tax, concluding that
it's more akin to a regulatory fee.
C. AB 32 Auction Revenue Investment Plan.
The first three-year investment plan for cap-and-trade auction
proceeds, submitted by Department of Finance, in consultation with
ARB and other state agencies in May of 2013, identified
sustainable communities and clean transportation as one of the key
sectors that provide the best opportunities for achieving the
legislative goals and supporting the purposes of AB 32. The plan
recommended the aforementioned sector receive the largest
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allocation of funds from the GGRF, but did not specify a monetary
amount.
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D. Budget Allocations.
The 2014-15 budget allocates $832 million in GGRF revenues to a
variety of transportation, energy, and resources programs aimed at
reducing GHG emissions. Various agencies are in the process of
implementing this funding. The budget agreement specifies how the
state will allocate most cap-and-trade auction revenues in 2015-16
and beyond. For all future revenues, the legislation appropriates
25% for the state's high-speed rail project, 20% for affordable
housing and sustainable communities grants, 10% to intercity
capital rail projects, and 5% for low-carbon transit operations.
The remaining 40% is available for annual appropriation by the
Legislature.
The Governor's proposed 2015-16 budget assumes the receipt of $650
million in cap-and-trade auction revenues in 2014-15 and $1
billion in 2015-16. The Governor's proposed 2015-16 cap-and-trade
expenditures are largely the same as the 2014-15 plan, albeit with
larger amounts allocated for affordable housing and sustainable
communities grants, the transit and intercity rail capital
program, and the low-carbon transit operations.
1.Prop 39 Revenue.
The California Clean Energy Jobs Act was created with the
approval of Proposition 39 in the November 6, 2012, statewide
general election. Under the initiative, up to $550 million
annually is available to be appropriated by the Legislature for
eligible projects to improve energy efficiency and expand clean
energy generation. The 2014-15 California Budget Act
appropriated $354 million of Proposition 39 revenue primarily
for school and community college energy efficiency projects.
Comments
1. Purpose of Bill.
According to the author, "As the Legislature and the Governor
articulate next steps for our clean energy and climate
policies, it is important to have a permanent and formal
committee that can advise agencies implementing such policies
on the best ways to maximize expenditure of public funds to
ensure the state achieves the greatest economic growth and job
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creation. SB 189 would establish a high-level expert Blue
Ribbon Committee to serve that role of advising state clean
energy and climate actions to ensure maximum job creation and
economic benefits to California."
The author notes that the bill was created through
collaboration with the Office of the Senate President
Pro-Tempore, and is part of the California Climate Leadership
Package.
2. Legislative Intent.
The bill's findings and declarations state that ARB, PUC and
CEC have all created advisory committees to help better
understand the implications of their clean energy and climate
policies and that the purpose of the bill is to create a single
independent blue ribbon committee to provide advice to agencies
on the most effective ways to maximize the state's economic
benefits and jobs growth via investments in a cleaner economy.
It is unclear whether the bill intends the Blue Ribbon
Committee to take the place of, or supersede, existing advisory
committees for these investments.
3. Where is the Committee Housed?
The bill does not specify in which agency the Committee will be
located. Should the bill be amended to specify which agency
the Blue Ribbon Committee will be affiliated with in order to
have access to administrative and physical resources necessary
to fulfill the requirements of SB 189? Which agency will post
information regarding the Blue Ribbon Committee membership and
contact information for the Blue Ribbon Committee to ensure
transparency?
Additionally, the bill doesn't provide any guidance on how
often or when the Blue Ribbon Committee should meet. Should
the bill specify how frequently the Blue Ribbon Committee is
required to conduct meetings?
4. Which Funds are Included and Which Agencies will be Advised?
SB 189 requires that the Blue Ribbon Committee advise state
agencies on the most effective ways to expend clean energy and
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greenhouse gas-related funds and to implement policies in order
to maximize California's economic and employment benefits.
However, the bill does not specify which funds and investments
are included. The state has numerous agencies that implement
programs on energy efficiency, renewable and alternative
energy, and GHG emissions reductions. The author may wish to
provide clarity on this issue as the bill moves forward.
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5. Who's Paying?
Although the bill specifies that the members of the Blue Ribbon
Committee shall not receive per diem, SB 189 requires that the
members be reimbursed for their actual expenses incurred in
connection with the performance of their duties. As the Blue
Ribbon Committee's work will advise various agencies on
multiple funds, which fund will be used to cover expenses?
Which fund will cover the costs associated with producing the
guidance documents and annual reports required in the bill?
As cap-and-trade auction revenues are considered mitigation
fees, these monies must be used to mitigate GHG emissions or
the harms caused by GHG emissions. Therefore, because there is
not a clear nexus to GHG emissions reductions activities and
the activities of the Blue Ribbon Committee, the Blue Ribbon
Committee should not be funded with cap-and-trade auction
revenue, but with another fund that allows expenditures for job
growth and economic development advisory committees.
6. So Many Reports.
SB 189 requires CEC, PUC, ARB, and any other agency responsible
for implementing clean energy and low-carbon policies, to
submit an annual report to the Governor and the Legislature
describing how it implemented or responded to the advice,
guidance, and recommendations from the Blue Ribbon Committee.
Although it is important to report whether recommendations from
advisory committees are later incorporated into policies and
programs, agencies may have valid reasons for not incorporating
this advice or guidance, especially if the recommendations
conflict with other policy goals of the program. Should there
be language in the bill that acknowledges this consideration?
Additionally, the cap-and-trade auction revenue is administered
by almost a dozen agencies. Combined with reports from CEC,
PUC, and ARB, and agencies administering other clean energy and
low-carbon policies and programs (which are not defined in the
bill), this bill could require more than 15 new reports per
year until 2020.
7. Do we need another economic and green jobs
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council/committee/panel/commission?
As noted in the background section, there are several entities
in the state that already exist in order to advise on economic
activity and job growth. For example, the CWIB is charged with
strategic planning process to coordinate various education,
training, and employment programs into an integrated workforce
development system that supports economic development.
The Commission for Economic Development was established to
provide support and guidance for advancing the overall economic
development of the state.
Additionally, the Green Jobs Council makes recommendations and
creates strategies for workforce training opportunities, as
well as develops, collects, analyzes, and distributes statewide
and regional labor market data on green industries workforce
needs and trends. They also identify funding resources and
make recommendations on how to expand and leverage these funds.
Does the state need another body to advise on economic growth
and job creation for clean energy and low-carbon investments,
or can an existing entity that currently performs a similar
function be tasked with the requirements of the bill?
Related/Prior Legislation
Double Referral to Senate Business, Professions and Economic
Development. This measure was heard in Senate Business,
Professions and Economic Development Committee on April 6, 2015,
and passed out of committee with a vote of 7-1.
SOURCE: Author
SUPPORT:
None on file
OPPOSITION:
None on file
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