BILL ANALYSIS Ó SB 189 Page 1 Date of Hearing: July 13, 2015 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair SB 189 (Hueso) - As Amended June 1, 2015 SENATE VOTE: 26-14 SUBJECT: Clean Energy and Low-Carbon Economic and Jobs Growth Blue Ribbon Committee. SUMMARY: Establishes the Clean Energy and Low-Carbon Economic and Jobs Growth Blue Ribbon Committee (Committee) within the California Environmental Protection Agency (CalEPA) to advise state agencies on economic benefits and job growth related to a cleaner, low-carbon economy. EXISTING LAW: 1)Under the California Global Warming Solutions Act of 2006 (AB 32): a) Requires the California Air Resources Board (ARB) to adopt GHG emissions reduction measures to achieve a reduction in statewide GHG emsisions to the 1990 level. b) Requires ARB to appoint an Economic and Technology Advancement Advisory Committee (ETAAC) to advise on SB 189 Page 2 technological research and development opportunities. c) Requires ARB to prepare and approve a Scoping Plan, on or before January 1, 2009 and once every five years thereafter, for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions from sources of emissions by 2020. Establishes the Environmental Justice Advisory Committee (EJAC) to advise ARB on the development of the Scoping Plan and other pertinent matters. d) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all funds, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the GGRF, and requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop a three-year investment plan for the moneys deposited in the GGRF. e) Requires that the GGRF be used to facilitate GHG emissions reductions in this state consistent with AB 32. Requires that annual budget appropriations from the GGRF be consistent with the investment plan. f) Requires the GGRF investment plan to allocate, at a minimum, 25% of the funds to benefit disadvantaged communities, and to allocate 10% of the funds for projects within disadvantaged communities. SB 189 Page 3 2)Under the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007, funded through various vehicle and vessel related surcharges, requires the California Energy 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. CEC is required to develop an investment plan for the program in consultation with an advisory committee. 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. 3)Under the California Clean Energy Jobs Act (Proposition 39), requires that $550 million be transferred to the Clean Energy Jobs Fund for five fiscal years, beginning in 2013, for appropriation by the Legislature for eligible projects to improve energy efficiency and expand clean energy generation in schools. Proposition 39 also creates a Citizen's Oversight Board to review and assess effectiveness of expenditures from the fund. 4)Under the Electric Utility Industry Restructuring Act, authorizes the Public Interest Renewable Energy Program administered by CEC, to support the operation of existing renewable facilities as well as the development of new and emerging renewable technologies. 5)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 SB 189 Page 4 business development, private sector investment and economic growth. 6)Under the California Green Collar Jobs Act of 2008, establishes the Green Collar Jobs Council (CGJC) within the California Workforce Investment Board (CWIB) 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. 7)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. THIS BILL: 1)States legislative findings relating to clean energy, GHG emission reductions, and job creation. 2)States that the purpose of this bill is to create a single independent blue ribbon committee to provide advice to state agencies on the most effective ways to maximize California's economic benefits and jobs growth via investments in a cleaner, low-carbon economy. 3)Establishes the Committee within CalEPA. Specifies that the Committee be comprised of the following members: SB 189 Page 5 a) Five members appointed by the Governor and subject to confirmation by the Senate; and, b) One member each appointed by the Speaker of the Assembly and the Senate Committee on Rules. 4)Specifies that each member serve for a four-year term; members shall not receive per diem or other compensation, but may be reimbursed for travel expenses. Any member who fails to attend three Committee meetings in one year shall be removed from the Committee. 5)Requires the Committee to hold its first meeting on or before December 1, 2016, and requires that meetings be held quarterly or at a frequency determined by the Committee. 6)Requires that Committee members have expertise in economic, financial or policy aspects of clean energy economic growth, job creation, workforce standards, and employment opportunities for disadvantaged workers. Specifies that at least two members appointed by the Governor have experience working on economic projects in disadvantaged communities. 7)Requires the Committee to "advise state agencies on the most effective ways to expend clean energy and GHG-related funds and to implement policies in order to maximize California's economic and employment benefits," and: a) Develop guidance for tracking and reporting jobs outcomes for state clean energy and low-carbon investments to evaluate jobs outcomes; SB 189 Page 6 b) Develop guidance to measure the quantity and quality of jobs created by state investments in clean energy and low-carbon investments; c) Advise state agencies on the most effective ways to require responsible contractor standards, as applicable, and minimum training and skill certifications for workers 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; 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 an annual update to the Governor and the appropriate policy and fiscal committees of the Legislature on its activities; and, f) Consult with the Labor and Workforce Development Agency and the California Workforce Investment Board (CWIB) when appropriate. 8)Requires CEC, the Public Utilities Commission (PUC), ARB, and any other state agency that has received advice from the Committee to submit an annual progress report to the Governor and the appropriate policy and fiscal committees of the Legislature describing how it implemented or responded to the advice, guidance, and any recommendations provided by the Committee. Specifies that this report may be combined with any other annual report submitted by the agency. SB 189 Page 7 9)Sunsets the reporting requirements on January 1, 2021. FISCAL EFFECT: According to the Senate Appropriations Committee, this bill has the following costs: 1)Increased costs to CalEPA, potentially in the hundreds of thousands of dollars annually, to house, staff and provide administrative support to the Committee (General and/or special funds). 2)The bill would require CEC, PUC, ARB, and potentially other state agencies implementing clean energy and low-carbon policies and programs to issue reports annually through 2020, as specified. To the extent that they cannot be integrated with those already statutorily required, these reports are likely to cost in the tens of thousands of dollars per agency, per year. (General Fund and/or special funds). COMMENTS: 1)This bill. According to the author: Under existing law, there is no state agency responsible for oversight of job creation or maximizing economic growth as we set new standards for reducing GHG emissions. AB 32 created the EJAC and the ETAAC to advise ARB? Although ETAAC may advise ARB on state, regional, national, and international economic and technological developments related to GHG emissions reductions, its sole purpose is not to focus on economic developments. SB 189 Page 8 This bill would create a blue ribbon committee housed within CalEPA that is solely focused on the most effective way to implement clean energy and GHG emissions reduction policies in order to create more jobs and encourage economic innovation. The creation of this committee does not affect existing committees. 1)AB 32. As part of AB 32's direction that ARB adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions, AB 32 requires ARB to prepare and approve a Scoping Plan at five-year intervals. The first Scoping Plan, adopted by ARB in 2008, described the specific actions ARB and others must take to reduce statewide GHG emissions to 1990 levels by 2020. Pursuant to AB 32, the reduction measures identified in the Scoping Plan had to be proposed, reviewed, and adopted as individual regulations by January 1, 2011, to become operative beginning on January 1, 2012. According to ARB, a total reduction of 80 million metric tons (MMT), or 16% compared to business as usual, is necessary to achieve the 2020 limit. Approximately 78% of the reductions will be achieved through identified direct regulations. ARB intends to achieve the balance of reductions necessary to meet the 2020 limit (approximately 18 MMT) through a cap-and-trade program that covers an estimated 600 entities. In May 2014, ARB adopted a Scoping Plan update. The Scoping SB 189 Page 9 Plan update discusses the objective of achieving an 80% reduction by 2050 and the need for a midterm target, but does not propose or adopt a specific target. According to ARB, the update defines ARB's climate change priorities for the next five years and sets the groundwork to reach California's long-term climate goals. The 2014-15 Budget Act allocates cap-and-trade revenues for the 2014-15 Fiscal Year and establishes 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% will 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. In addition to reducing GHG emissions, 25% of the proceeds from the GGRF must also go to projects that provide a benefit to disadvantaged communities, as identified by the California Environmental Protection Agency (CalEPA). A minimum of 10% of the funds must be for projects located within those communities. In October 2014, CalEPA released its list of disadvantaged communities based on the California Communities Environmental SB 189 Page 10 Health Screening Tool (CalEnviroScreen), a tool that assesses all census tracts in California to identify the areas disproportionately burdened by and vulnerable to multiple sources of pollution. Areas identified as disadvantaged by CalEnviroScreen 2.0 include the majority of the San Joaquin Valley; much of Los Angeles and the Inland Empire; pockets of other communities near ports, freeways, and major industrial facilities such as refineries and power plants; and large swaths of the Coachella Valley, Imperial Valley and Mojave Desert. In his January 5, 2015 Inaugural Address, Governor Brown announced the following objectives: 1) Increase the amount of renewable energy used in California from 33% to 50%; 2) Reduce petroleum use in cars and trucks by up to 50%; and, 3) Double the efficiency of existing buildings and make heating fuels cleaner. 1)Jobs and Economic Development Efforts. There are a number of entities throughout state government designed to increase workforce and economic development efforts, with a particular emphasis on emerging technology, green jobs, and the green economy. a) GO-Biz: 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 the state. The iHub Program within GO-Biz designates 'iHubs' (i.e., areas in 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 SB 189 Page 11 venture capitalists. These assets include research parks, technology incubators, universities, and federal laboratories. b) Commission for Economic Development: The commission, consisting of the Lieutenant Governor as Chairperson, three members appointed by each the Senate Committee on Rules and the 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. c) California Workforce Investment Board: 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. 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. d) Green Collar Jobs Council: GCJC was created to address the workforce needs that accompany California's growing green economy under the purview of CWIB. 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. 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 SB 189 Page 12 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." 2)Suggested amendment. This bill requires the Committee to advise state agencies on the most effective ways to connect "disadvantaged communities and other target populations" with green jobs; however, the bill is not clear what the other target populations would be. This may create confusion when the Committee is implementing the bill and could inadvertently authorize the Committee to focus on groups other than disadvantaged communities. The committee may wish to amend the bill to strike out "and other target populations" to ensure that the Committee's focus remain on disadvantaged communities. 3)Double referral. This bill was double referred to the Assembly Committee on Jobs, Economic Development; it passed out of that committee on June 23 on a vote of 6-2. REGISTERED SUPPORT / OPPOSITION: SB 189 Page 13 Support Alliance for Solar Choice American Lung Association, California Audubon California Azul Bloom Energy California League of Conservation Voters California State Association of Electrical Workers California State Pipe Trades Council CalSTART Environment California Environmental Defense Fund Natural Resources Defense Council SB 189 Page 14 Sierra Club California Solar City Solar Energy Industries Association Sunrun Union of Concerned Scientists Western States Council of Sheet Metal Workers Opposition None on file Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916) 319-2092