BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 350|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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THIRD READING
Bill No: SB 350
Author: De León (D) and Leno (D), et al.
Introduced:2/24/15
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 8-3, 4/7/15
AYES: Hueso, Hertzberg, Hill, Lara, Leyva, McGuire, Pavley,
Wolk
NOES: Fuller, Cannella, Morrell
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 4/29/15
AYES: Wieckowski, Hill, Jackson, Leno, Pavley
NOES: Gaines, Bates
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Clean Energy and Pollution Reduction Act of 2015
SOURCE: Author
DIGEST: This bill enacts the Clean Energy and Pollution
Reduction Act of 2015, which creates or expands three related
clean-energy goals to be achieved by 2030: (1) a 50 percent
reduction in petroleum used in motor vehicles; (2) a doubling of
the energy efficiency of existing buildings; and (3) generating
50 percent of total retail sales of electricity from renewable
resources.
ANALYSIS:
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Existing law:
1)Provides the California Air Resources Board (ARB) with primary
responsibility for control of mobile source air pollution,
including adoption of rules for reducing vehicle emissions and
the specification of vehicular fuel composition. (Health and
Safety Code §39000 et seq. and §39500 et seq.)
2)Directs ARB to implement motor vehicle emission standards,
in-use performance standards, and motor vehicle fuel
specifications for the control of air contaminants and sources
of air pollution that ARB finds to be necessary, cost
effective, and technologically feasible, unless preempted by
federal law. (Health and Safety Code §43013 et seq.)
3)Requires ARB, under the California Global Warming Solutions
Act of 2006, 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 emissions reductions measures by
regulation. ARB is authorized to include the use of
market-based mechanisms to comply with these regulations.
(Health and Safety Code §38500 et seq.)
4)Directs the California Energy Commission (CEC) to continually
assess energy consumption trends and to analyze the social,
economic, and environmental consequences of these trends;
carry out energy conservation measures; and recommend to the
Governor and the Legislature new and expanded energy
conservation measures. (Public Resources Code §25200 et seq.)
5)Requires the CEC to develop and implement a comprehensive
program to achieve greater energy savings in California's
existing residential and nonresidential building stock.
(Public Resources Code §25943 et seq.)
6)Requires retail sellers of electricity - investor-owned
utilities (IOUs), community choice aggregators, and energy
service providers - and publicly-owned utilities (POUs) to
increase purchases of renewable energy such that at least 33
percent of retail sales are procured from renewable energy
resources by December 31, 2020. This is known as the Renewable
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Portfolio Standard (RPS). (Public Utilities Code §399.11 et
seq.)
This bill:
1)Enacts the Clean Energy and Pollution Reduction Act of 2015,
which creates or expands three related clean-energy goals to
be achieved by 2030: (1) a 50 percent reduction in petroleum
used in motor vehicles; (2) a doubling of the energy
efficiency of existing buildings; and (3) generating 50
percent of total retail sales of electricity from renewable
resources. Specific to the petroleum reduction goal, this
bill directs the ARB to adopt and implement motor vehicle
emissions standards, in-use performance standards, and motor
vehicle fuel specifications in furtherance of achieving the 50
percent reduction in petroleum use in motor vehicles.
Specific to the energy efficiency goal, this bill directs the
CEC, by January 1, 2017, and at least once every three years
thereafter, to adopt and update its comprehensive program to
achieve greater energy savings in California's existing
residential and nonresidential building stock - known as the
California Existing Buildings Energy Efficiency Action Plan -
in order to achieve the doubling of the energy efficiency of
existing buildings.
2)Specific to the renewable energy goal:
Directs the California Public Utilities Commission
(CPUC) and the CEC to implement the RPS to obtain the
target of generating 50 percent of total retail electricity
sales from renewable energy resources by December 31, 2030.
Requires retail sellers and POUs to ensure that, for
each compliance period after 2020, at least 75 percent of
the incremental renewable energy procurement is from
generation either (1) directly connected to a California
balancing authority (CBA), or, (2) connected to another
balancing authority and providing power to a CBA via
dynamic transfers or by scheduling power from the facility
into a CBA on an hourly basis.
Limits to 10 percent, for each compliance period after
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2020, the incremental renewable power a retail seller or a
POU may receive from unbundled renewable energy credits
from generators not directly connected to a CBA.
Directs the CPUC to establish limitations for each IOU
on procurement expenditures for RPS compliance at a level
that prevents disproportionate rate impacts.
Authorizes the CPUC to assess penalties against a retail
seller, and the CEC to assess penalties against a POU, for
noncompliance with an RPS interim goal and, in the case of
an IOU, prohibits the IOU from collecting the cost of the
penalties in rates.
Directs penalties collected from a retail seller or a
POU to the Electric Program Investment Charge Fund, to be
used for renewable energy programs and research,
development, and demonstration programs.
Directs the CPUC and the CEC to consider the benefits of
distributed generation; allow for consideration of costs
and benefits of grid integration in RPS proceedings;
minimize system power and fossil fuel purchases; recommend
how to better align state incentive programs with the
state's clean energy and pollution reduction goals and
provide benefits to disadvantaged communities; and give
preference to the manufacture and deployment of clean
energy and pollution reduction technologies that create
jobs and investment in the state.
Background
State efforts to address environmental effects of energy use.
In California, the energy sector, broadly defined, accounts for
more than 85 percent of GHG emissions. The two largest sources
of California's GHGs are transportation, at 39 percent, and
electricity production, at 21 percent [2013 Integrated Energy
Policy Report
(http://www.energy.ca.gov/2013publications/CEC-100-2013-001/CEC-1
00-2013-001-CMF.pdf]. Accordingly, the state's existing clean
energy and climate change programs focus on the energy sector in
general and the transportation and electricity sectors
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specifically.
Principal among those programs are the California Global Warming
Solutions Act of 2006 (more commonly known as "AB 32" (Nunez and
Pavley, Chapter 488, Statutes of 2006)), which requires a
reduction of the state's GHG emissions to 1990 levels by 2020,
and the RPS, which requires the 33 percent of the state's
electricity come from renewable resources by 2020. AB 32 tasks
the ARB with developing a plan of measures that reduce GHG
emission levels, to be updated every five years. To that end,
ARB, in 2008, adopted a scoping plan that includes regulatory
and market-based measures applicable to the state's major
economic sectors. Among the regulatory measures included in the
initial scoping plan were numerous energy efficiency measures,
measures to encourage the development and adoption of
alternative fuels, and a 33 percent RPS. The state has reduced
its overall emissions of GHGs since passage of AB 32, from 482
million metric tons of carbon dioxide equivalent (MMT CO?E) in
2006 to 459 MMT CO2E in 2012.
The Legislature approved the statutory RPS program in 2011 with
the passage of SBX1-2 (Simitian, Chapter 1, Statutes of 2011).
The state's electric utilities report they are on track to meet,
or exceed, the RPS goals.
Regarding transportation, the state regulates vehicle emissions
and encourages the development of less carbon-intensive
alternative fuels. For example, the ARB regulates the GHG
tailpipe emissions of new passenger vehicles, as well as
smog-forming emissions. Acting under the authority provided by
AB 32, the ARB regulates the carbon content of transportation
fuels, via the Low Carbon Fuel Standard. In addition, ARB
provides rebates for the purchase of alternative-fueled vehicles
and funds the retirement of older, higher-polluting vehicles, as
well as funding alternative fuel research, demonstration and
workforce training. In a related effort, the CEC provides
nearly $100 million annually to fund measures to develop and
deploy innovative technologies that transform California fuel
and vehicle types to help attain the state's climate change
policies.
Other state programs directly address energy efficiency. The
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state's loading order, established by the energy agencies in
2003, calls for meeting new electricity needs first with
efficiency and demand response, followed by renewable energy and
distributed generation, and then with fossil generation [2003
Energy Action Plan
(http://www.energy.ca.gov/energy_action_plan/2003-05-08_ACTION_PL
AN.
PDF)]. Under statutory guidelines, the CPUC authorizes IOU
spending for all available energy efficiency that is cost
effective, reliable and feasible. Since 1977, the CEC, acting
under the broad authority provided to it under the
Warren-Alquist Act, has set energy efficiency standards for
appliances and new buildings. Further, CEC, acting according to
statutory mandate, recently released a draft plan to achieve
cost-effective energy savings in California's existing
residential and nonresidential buildings, which, generally, are
not subject to CEC's building efficiency standards [Existing
Buildings Energy Efficiency Action Plan - Draft
(http://www.energy.ca.gov/ab758/].
Prior Legislation
AB 758 (Skinner, Chapter 470, Statutes of 2009) required the CEC
to develop and implement a comprehensive program to achieve
greater energy savings in California's existing residential and
nonresidential building stock.
SBX1-2 (Simitian, Chapter 1, Statutes of 2011) required retail
sellers of electricity and POUs to procure at least 33 percent
of their electricity from renewable resources by 2020.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
First year costs of $440,000 and $400,000 ongoing from various
special funds to ARB to create a petroleum use baseline and to
implement necessary measures to reduce use.
Unknown cost pressures to current programs from various
special funds to achieve a 50 percent petroleum reduction.
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Annual costs of $7.24 million from the General Fund for the
CEC for ongoing updates of its energy efficiency plans for
existing buildings and to implement the plans.
Annual costs of $900,000 from the Energy Resources Program
Account (General Fund) for the CEC for new responsibilities
ensuring compliance with RPS standards by the POUs.
Annual costs of $2.3 million for five years to the Public
Utilities Reimbursement Account (special) for CPUC contract
needs
Annual costs of $471,000 for two years and $157,000 in the
third year. The Public Utilities Reimbursement Account
(special) for CPUC proceedings to adjust existing RPS and Long
Term Procurement Plan programs.
Ongoing staffing needs of $350,000 annually to the Public
Utilities Reimbursement Account (special) for CPUC staffing
needs for ongoing enforcement of the higher RPS standards.
Unknown ratepayer costs to the General Fund and various
special funds to the state as a ratepayer of electricity to
the extent that electricity prices may be affected by
increasing the RPS standard.
Unknown cost pressures to the Public Utilities Reimbursement
Account (special) and the Energy Resources Program Account
(General Fund) to the CPUC and the CEC to review renewable
integration needs and to consider grid integration in
proceedings implementing RPS requirements.
SUPPORT: (Verified5/29/15)
Advanced Energy Economy
American Academy of Pediatrics - California
American Lung Association - California
Asthma Coalition of Los Angeles County
Azul
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Baz Allergy, Asthma and Sinus Center
Berkshire Hathaway Energy
Blattner Energy
Bonnie J. Adario Lung Cancer Foundation
Breathe California
BYD Motors, Inc.
California Black Health Network
California Conference of Directors of Environmental Health
California Energy Efficiency Industry Council
California Hydropower Reform Coalition
California League of Conservation Voters
California Pan-Ethnic Health Network
California Public Health Association - North
California Thoracic Society
Californians Against Waste
Center for Climate Change and Health
Central California Asthma Collaborative
Circulate San Diego
Clean Power Campaign
Clean Water Action
Cleveland National Forest Foundation
Climate Resolve
Coastal Environmental Rights Foundation
Doctors for Climate Health (8 doctors)
Endangered Habitats League
Environment California
Environmental Defense Fund
EtaGen
First Solar
Friends Committee on Legislation of California
Friends of the River
Health Care Without Harm
Independent Energy Producers Association
Large-Scale Solar Association
League of Women Voters of California
Lutheran Office of Public Policy
McCarthy Building Companies, Inc.
Medical Advocates for Healthy Air
Moms Clean Air Force
National Parks Conservation Association
Natural Resources Defense Council
NextGen Climate
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NextTracker, Inc.
Office of Ratepayer Advocates
Physicians for Social Responsibility - Los Angeles
Physicians for Social Responsibility - San Francisco Bay Area
Chapter
Public Health Institute
Recurrent Energy
Regional Asthma Management and Prevention
Sequoia Riverlands Trust
Sierra Business Council
Sierra Club California
Signal Energy, LLC
Solar Energy Industries Association
Southwest Wetlands Interpretive Association
State Building and Construction Trades Council, AFL-CIO
SunEdison
SunPower Corporation
The Utility Reform Network
TransForm
Trust for Public Lands
Union of Concerned Scientists
Wireless Advanced Vehicle Electrification
OPPOSITION: (Verified5/29/15)
Associated General Contractors
Association Builders and Contractors of California
BizFed (Los Angeles County Business Federation)
Building Owners and Managers Association
California Chamber of Commerce
California Construction Trucking Association
California Farm Bureau Federation
California Independent Oil Marketers Association
California Independent Petroleum Association
California Manufacturers & Technology Association
California Metals Coalition
California Retailers Association
California Small Business Alliance
California Small Business Association
California Trucking Association
Coalition of Energy Users
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Foster Farms
Fullerton Association of Concerned Taxpayers
Howard Jarvis Taxpayers Association
Independent Oil Producers Agency
International Council of Shopping Centers
International Warehouse Logistics Association
Kern Citizens of Energy
Kern Citizens for Sustainable Government
Kern County Taxpayers Association
Long Beach Area Chamber of Commerce
National Association of Royalty Owners - California
National Federation of Independent Business/California
National Tank Truck Carriers
Placer County Taxpayers Association
Regional Hispanic Chamber of Commerce
San Diego Tax Fighters
San Joaquin County Hispanic Chamber of Commerce
Santa Barbara County Taxpayers Association
Santa Barbara Technology and Industry Association
Simi Valley Chamber of Commerce
Small Business Action Committee
South Bay Association of Chamber of Commerce
Torrance Area Chamber of Commerce
United Airlines
Valley Industry & Commerce Association
West Coast Lumber and Building Material Association
Western Plant Health Association
Western States Petroleum Association
Wilmington Chamber of Commerce
ARGUMENTS IN SUPPORT: Supporters note the need to build upon
the success of the state's existing clean energy policies and
note many co-benefits, such as cleaner air, innovation forcing,
and energy supply diversity, provided by RPS.
ARGUMENTS IN OPPOSITION:The Western States Petroleum Association
(WSPA), in explaining its opposition to this bill's petroleum
reduction goal, decries this approach, expressing concern over
how ARB would implement such a broad mandate. WSPA recommends
this bill, instead, spell out the regulatory mechanisms ARB is
to use to achieve the petroleum reduction goal. Other opponents
protest what they see as the excessive cost of complying with
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this bill and the lack of flexibility.
Prepared by:Jay Dickenson / E., U., & C. / (916) 651-4107
5/31/15 13:15:25
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