BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Bob Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 471 Hearing Date: 4/29/15
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|Author: |Pavley |
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|Version: |4/13/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Rebecca Newhouse |
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Subject: Water, energy, and reduction of greenhouse gas
emissions: planning
ANALYSIS:
Existing law:
1. Existing law under the California Global Warming Solutions
Act of 2006 (also known as AB 32) (Health and Safety Code
§38500 et seq.):
A. 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.
B. Requires ARB to adopt, before January 1, 2008,
regulations to require the reporting and verification of
statewide greenhouse gas emissions.
C. Requires ARB to adopt GHG emissions reductions
measures by regulation, and sets certain requirements in
adopting the regulations.
D. Authorizes ARB to adopt a regulation that establishes
a system of market-based declining annual aggregate
emission limits for sources or categories of sources that
emit GHGs, applicable from January 1, 2012, to December
31, 2020, inclusive.
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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 AB
32, and authorizes the use of GGRF monies for, among other
things, funding to reduce greenhouse gas emissions associated
with water use and supply, land and natural resource
conservation and management, forestry, and sustainable
agriculture. (HSC §39712)
This bill:
1. Includes intent language pertaining to the nexus between
water and energy and GHG emissions reductions.
2. Requires ARB, in cooperation with the State Energy Resources
Conservation and Development Commission (CEC), the state
Water Resources Control Board, and the Department of Water
Resources, to develop an emissions inventory of GHG emissions
from the water system in the state using the best available
data.
3. Specifies that water recycling, wastewater treatment, water
end-use efficiency, water technology improvements, best
management practices, and other programs that reduce water
system GHG emissions, are eligible for funding from the GGRF.
Background
1.Water and Energy Use.
According to an April 2015 report from the Union of Concerned
Scientists titled, Clean Energy Opportunities in California's
Water Sector:
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"California's water sector consumes nearly 20 percent of the
state's electricity,
and its needs are growing. The water sector uses electricity to
pump, treat, transport, deliver, and heat water (CEC 2006). And
expected increases in groundwater pumping, water treatment, and
water recycling mean the energy intensity of water will grow.
While there is growing recognition that increased water
efficiency is one of the fastest and cheapest ways to conserve
electricity, less attention has been paid to the sources of
electricity powering the water sector."
Additionally, according to the report, "Water and wastewater
utilities access electricity by purchasing it from an electric
utility or the wholesale market, by signing a contract with an
independent generator, or by generating it themselves.
Although the electricity purchased from electric utilities is
governed by California's Renewables Portfolio Standard (RPS)
and must become cleaner over time, the electricity that water
and wastewater utilities directly purchase or generate is not
typically addressed by California's climate and renewable
energy policies."
State law requires electric utilities to disclose the sources of
the electricity they sell; this requirement does not extend to
water utilities that are not retail electricity providers. And
although some water and wastewater utilities independently
report the sources of their electricity, the information is not
compiled in a standardized format or updated on a regular
schedule across the water sector. Even in cases in which water
utilities are required to submit power source disclosure forms,
these forms combine electricity that they consume with
electricity that is sold to other electricity providers. The
report finds that it is difficult to get a clear picture of the
amount and type of electricity California's water and wastewater
utilities rely on and that this information gap makes it
difficult to understand how their electricity choices impact
global warming emissions and the state's efforts to decarbonize
the electricity sector.
The report proposes that improved information collection from
water and wastewater utilities regarding their electricity use
and sourcing practices could help illuminate the water sector's
role in generating clean electricity and providing grid services
that will help bring more clean energy onto the grid.
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2.Use of Cap and Trade Auction Revenue.
ARB has conducted ten cap-and-trade auctions, generating almost
$1.6 billion in proceeds to the state.
Several bills in 2012, and one in 2014, provide 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, 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. AB 1532 requires monies
from the fund facilitate the achievement of GHG emissions
reductions.
SB 1018 (Budget Committee), Chapter 39, Statutes of 2012,
created the GGRF, into which all auction revenue is to be
deposited. The legislation requires that before departments can
spend moneys 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 (Núñez, 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.
Legal consideration of cap-and-trade auction revenues: The
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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 is more akin to a regulatory fee.
Budget allocations: Emergency drought relief legislation, SB 103
(Budget Committee), Chapter 2, Statutes of 2014, appropriated
$10 million to the California Department of Food and Agriculture
for water and energy efficiency projects in the agricultural
sector, and $30 million to the Department of Water Resources to
implement a grant program to support local water-use efficiency
projects and energy efficiency projects at State Water Project
facilities.
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 cap-and-trade expenditures are
largely the same as the 2014-15 plan, albeit with larger amounts
proposed allocations for programs with continuous
appropriations.
Comments
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1. Purpose of Bill.
According to the author, "SB 471 focuses on quantifying the
Water-Energy-Climate Nexus - the connection between the
greenhouse gas emissions generated from the energy required
by our water system, to simultaneously advance solutions to
climate change and drought.
"While some water-energy related climate pollution is already
covered in the state's cap-and-trade program by the
electricity generation sector, water suppliers, treaters,
distributors and end users currently lack the information and
opportunity to do their part in advancing our climate and
water conservation goals.
"As a result, a variety of projects that might reduce climate
pollution from the water system do not currently qualify for
project funding from the Greenhouse Gas Reduction Fund
(GGRF).
"SB 471 will ensure that project types that reduce emissions
in furtherance of our state climate goals qualify for funding
from the GGRF. Project types could include, but are not
limited to precision agriculture, local water solutions that
reduce energy-intensive water imports, clean energy
generation at wastewater treatment facilities, leak
detection, and water appliance efficiency."
2. Recycling Water and GHGs.
The State Water Resources Control Board (SWRCB) has a goal of
increasing the use of recycled water by at least 1 million
acre-feet per year by 2020 and by at least 2 million
acre-feet per year by 2030 over 2002 levels.
Especially in light of the state's severe drought conditions,
water recycling will undoubtedly become an increasingly
important part of California's future water supply.
However, recycling water often requires more energy than
treating water taken from surface or underground sources.
For examples, the WateReuse
Foundation estimates that it would require an additional
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1,215 GWh per year to
recycle about 1 million acre-feet of water to potable
standards. And to reach the SWRCB's 2030 goal, the water
sector's energy requirements would grow by around 2,430 GWh
per year.
SB 471 authorizes water recycling, as well as wastewater
treatment, water end-use efficiency, water technology
improvements, and best management practices, and other
programs that reduce water system greenhouse gas emissions,
as eligible for funding from cap-and-trade auction revenue.
The bill is drafted in a way that presupposes that water
recycling reduces GHG emissions; however, there is data to
show that it may increase emissions in some cases as compared
to treating surface or groundwater to potable standards.
Additionally, the bill specifies some projects as eligible
for funding that may already be captured under existing law.
Instead of specifying various projects that may not reduce
GHG emissions, and specifying other projects that are already
captured under current statute, the committee may wish to
amend SB 471 to strike subdivision (b) from the bill, and,
instead amend existing law (Health and Safety Code §39712) to
broadly authorize the reduction of GHG emissions from the
water sector, including, but not limited to, supply, use, and
treatment, as eligible investments from the fund.
SOURCE: Author
SUPPORT:
California Association of Sanitation Agencies
California League of Conservation Voters
Clean Water Action
Coastal Environment Rights Foundation
Environmental Entrepreneurs
LA River Revitalization Corporation
Las Virgenes Municipal Water District
Mono Lake Committee
Nexus eWater
Sonoma County Water Agency
The Climate Registry
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The Energy Coalition
The River Project
TreePeople
Union of Concerned Scientists
US Green Buildings Council
Water and Power Department, City of Pasadena
OPPOSITION:
None on file
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