BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 706 (Pavley) - Greenhouse Gas Reduction Fund:  alternative  
          fuels
          
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          |Version: April 6, 2015          |Policy Vote: E.Q. 7 - 0         |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date:  May 11, 2015     |Consultant: Marie Liu           |
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          This bill meets the criteria for referral to the Suspense File. 


          Bill  
          Summary:  SB 706 would explicitly include funding to encourage  
          the in-state production of alternative fuels with low-carbon  
          intensity using sustainable feedstock as an eligible use of  
          Greenhouse Gas Reduction Fund (GGRF).


          Fiscal  
          Impact:  Cost pressures in the millions to tens of millions of  
          dollars to the Greenhouse Gas Reduction Fund (special) for  
          funding the in-state production of alternative fuels with low  
          carbon intensity.


          Background:  Under 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  







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          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. 




          Proposed Law:  
            This bill would require that funds to encourage the in-state  
          production of alternative fuels with low-carbon intensity using  
          sustainable feedstock be available from the GGRF.


          Staff  
          Comments:  Existing law generally allows the GGRF to be used for  
          investments that reduce GHGs in the state. Section 39712(c)  
          contains a non-exclusive list of eligible investments such as  
          goods and freight movement technology, advanced biofuels,  
          strategic planning and development of sustainable  
          infrastructure, and diversion of municipal solid waste from  
          disposal. This bill would add the promotion of in-state  
          production of low-carbon alternative fuels using sustainable  
          feedstock as an explicit eligible recipient of GGRF monies.
          So long as production of low-carbon alternative fuels would  
          reduce GHG emissions in the state, that activity is already  
          eligible to receive funding from the GGRF under the existing  
          law. As such, this bill does not expand the universe for which  








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          the GGRF can be used. However, this bill also states that  
          funding "shall" be available for this purpose, creating cost  
          pressures.


          Staff notes that this bill is drafted unclearly in that it is  
          adding a required investment, in-state production of low-carbon  
          alternative fuels, within a  list of eligible, but not required  
          investments. 




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