BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 687 (Allen) - Renewable gas standard.
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: May 5, 2015 |Policy Vote: E., U., & C. 7 - |
| | 3, E.Q. 5 - 2 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 18, 2015 |Consultant: Marie Liu |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 687 would require the California Air Resources
Board (ARB) to develop a carbon-based renewable gas standard
(RGS) that requires each gas seller to provide specified
percentages of renewable gas to retail end-use customers.
Fiscal
Impact:
First year costs of $1.5 million and ongoing costs of $2.0
million from the Cost of Implementation Account (special) to
the Air Resources Board to develop and implement the RGS.
Annual ongoing costs of $270,000 from the Energy Resources
Program Account (General Fund) to the California Energy
Commission (CEC) to develop and implement the RGS and to
assist in the development of the lifecycle biogas emissions
analysis.
One-time contract of $100,000 from the Energy Resources
Program Account (General Fund) to the CEC to provide technical
SB 687 (Allen) Page 1 of
?
assistance with the renewable gas study.
Ongoing costs of $350,000 annually to the Public Utilities
Reimbursement Account (special) to the California Public
Utilities Commission (CPUC) for implementation of the RGS.
On-time costs of $160,000 to the Public Utilities
Reimbursement Account (special) in FY 2015-16 to the
California Public Utilities Commission (CPUC) to develop the
information necessary for the ARB to develop the RGS.
Unknown impacts to the General Fund and various special funds
to the state as a natural gas customer.
Background: The California Global Warming Solutions Act of 2006 (referred
to as AB 32, HSC §38500 et seq.) requires the California Air
Resources Board (ARB) to determine the 1990 statewide greenhouse
gas (GHG) emissions level, to approve a statewide GHG emissions
limit equivalent to that level that will 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 the regulations. All monies, except for fines
and penalties, collected pursuant to a market-based mechanism
are deposited in the Greenhouse Gas Reduction Fund (GGRF)
(Government Code §16428.8).
Existing law requires that the GGRF only be used to facilitate
the achievement of reductions of GHG emissions consistent with
AB 32 (HSC §39710 et seq.). To this end, the Department of
Finance, in consultation with the ARB and any other relevant
state agencies, is required to develop, as specified, a
three-year investment plan for the moneys deposited in the GGRF.
The investment plan must allocate a minimum of 25% of the funds
to projects that benefit disadvantaged communities and to
allocate 10% of the funds to projects located within
disadvantaged communities. Additionally, the ARB, in
consultation with CalEPA, is required to develop funding
guidelines for administering agencies receiving allocations of
GGRF funds that include a component for how agencies should
maximize benefits to disadvantaged communities.
Existing law requires all retail sellers of electricity -
investor-owned utilities (IOU), community choice aggregators
(CCAs), and energy service providers (ESPs) - and publicly-owned
utilities (POU) to increase purchases of renewable energy such
that at least 33 percent of retail sales are procured from
SB 687 (Allen) Page 2 of
?
renewable energy resources by December 31, 2020. This is known
as the Renewable Portfolio Standard (RPS). The California
Public Utilities Commission (CPUC) is explicitly authorized to
require retail sellers of electricity to procure renewable
energy resources in excess of the 33-percent RPS requirement.
(Public Utilities Code §399.11 et seq.). The CPUC oversees RPS
compliance with IOUs while the California Energy Commission
(CEC) oversees POUs.
Existing law sets specific eligibility requirements for
biomethane contracted after March 29, 2012 in order to qualify
as an RPS-eligible source.
Proposed Law:
This bill would require gas sellers to provide an increasing
percentage of renewable gas by a specified schedule.
Specifically, this bill would:
1. Define "renewable gas" as gas generated from organic waste or
other renewable sources, including electricity generated by
an eligible renewable energy resource meeting RPS
requirements.
2. Require the ARB, on or before June 30, 2017, and in
consultation with CEC and CPUC, to adopt a carbon-based
renewable gas standard (RGS) that requires each gas seller to
provide certain percentages of renewable gas to retail
end-use customers.
3. Requires ARB to require gas sellers to make reasonable
progress sufficient to ensure that by the end of the
compliance period, the following percentages of renewable gas
supplied to retail end-use customers are met:
A. 1% by 2019;
B. 3% by 2022;
C. 5% by 2024;
D. 10% by 2029;
SB 687 (Allen) Page 3 of
?
4. Requires that renewable gas, to be eligible to count towards
the procurement requirements in the bill, must meet at least
one of the following conditions:
A. the renewable gas is used onsite by an end-use customer
in the state;
B. the renewable gas is used by an end-use customer in the
state and delivered through a dedicated pipeline;
C. the renewable gas is delivered to end-use customers in
the state through a common carrier pipeline and meets
specified requirements.
5. Requires ARB to notify all gas sellers in California of how
to comply with the renewable gas standard procurement
requirements, and authorizes the State Board of Equalization
to supply ARB with specified information to assist in the
identification of gas sellers that are not gas corporations.
6. Requires PUC to notify ARB of each gas corporation that
provides gas service to end-use customers in the state.
7. Requires ARB to maintain and publicize a list of eligible
renewable gas providers.
8. Requires ARB, in consultation with CEC, to adopt a flexible
compliance mechanism, such as tradable renewable gas credits,
and specifies that if ARB adopts tradable credits, those
credits are to be based on the carbon intensity of the
renewable gas, give equal value to renewable gas used onsite
and renewable gas injected into a common carrier pipeline,
and allow for credit banking and borrowing.
9. Requires ARB to consult with CPUC in development of
regulations, as they affect gas corporations subject to
regulations by CPUC, to implement the RGS, in order to
minimize duplicative reporting and regulatory requirements.
10.Require ARB, in consultation with CPUC and CEC, to develop a
coordinated investment plan to ensure that moneys made
SB 687 (Allen) Page 4 of
?
available through the Greenhouse Gas Reduction Fund, or from
the Alternative and Renewable Fuel and Vehicle Technology
Program, or the Air Quality Improvement Program, are used to
reduce the costs to implement the RGS.
11.Requires ARB waive the enforcement of the RGS if it finds
that a gas seller has demonstrated specified conditions
beyond the control of the gas seller and that prevent
compliance.
12.Requires ARB to issue a lifecycle GHG emissions analysis for
various biogas types and end uses, and that also includes an
assessment of other public health and environmental benefits.
13.Requires CEC to provide an assessment to ARB and the
Legislature, on or before January 1, 2018, on the following:
A. Opportunities to colocate renewable gas production with
existing vehicle fleets and other transportation fueling
opportunities;
B. Renewable energy production sites that can use
renewable gas onsite to reduce fossil fuel gas consumption
for electricity generation, heating or cooling, or other
purposes;
C. Recommendations to reduce the costs of pipeline
interconnection for renewable gas projects in the state.
Staff
Comments: This bill would require significant ARB activity
including identifying market and regulatory barriers to
implementation, evaluating technical feasibility of biomethane
availability, developing life-cycle analysis, and to develop and
SB 687 (Allen) Page 5 of
?
implement regulations. In all, the ARB anticipates first year
costs of $1.5 million followed by on-going costs of $2.0
million. As these activities further the reduction of GHG
emissions, ARB anticipates paying for these costs from the Cost
of Implementation account which receives revenues from a fee on
industries subject to AB 32.
The CEC anticipates needing two positions to consult with the
ARB in developing the RGS and to assist in the development of
lifecycle biogas emissions analysis. The CEC would also have
one-time contract costs for technical assistance.
Staff notes that the CEC is likely to have additional costs to
provide the assessment required by the bill regarding colocation
opportunities, certain renewable energy production sites,
renewable energy production sites, and recommendations to reduce
the cost of pipeline interconnection for renewable gas. Some of
this information is addressed in existing CEC reports, but other
elements may require additional workload.
This bill would require the CPUC to coordinate with the ARB on
several fronts and specifically would be required to develop
information necessary to assist the ARB in adopting a RGS. The
CPUC anticipates needing a new proceeding for this process at a
one-time cost of approximately $160,000 in FY 2015-16. Once the
information is developed, the CPUC would anticipate ongoing
costs to coordinate with the ARB and CEC in implementing the
standard. As this bill would intersect with the CPUC's RPS
program, it's regulation of natural gas utility service, and
CPUC's oversight of AB 32 compliance by electric and natural gas
utilities, the CPUC anticipates ongoing costs to be $350,000
annually.
The state, as a customer of natural gas and electricity produced
from natural gas, may experience additional fiscal impacts
depending on how this bill ultimately impacts gas rates, which
is unknown and speculative at this time.
-- END --
SB 687 (Allen) Page 6 of
?