BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 970  

                                                                    Page  1

          Date of Hearing:  August 10, 2016


                               Lorena Gonzalez, Chair

          SB 970  
          (Leyva) - As Amended June 29, 2016

          |Policy       |Natural Resources              |Vote:|8 - 0        |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |

          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          This bill requires CalRecycle to consider various factors when  
          awarding grants for organic waste projects funded with AB 32  
          cap-and-trade revenues (Greenhouse Gas Reduction Fund) and  
          authorizes CalRecycle to provide larger grant awards for  
          large-scale regional projects.  Specifically, this bill:

          1)Requires CalReycle to consider the following factors when  
            awarding grants for organic composting or anaerobic digestion  
            projects to reduce greenhouse gas (GHG) emissions using  
            Greenhouse Gas Reduction Funds (GGRF): 


                                                                     SB 970  

                                                                    Page  2

             a)   The potential amount of GHG emissions.

             b)   The potential amount of organic material that may be  
               diverted from landfills.

             c)   If, and how, the project may benefit disadvantaged  
               communities and leverage existing wastewater treatment  

             d)   If, and how, (for anaerobic digestion projects) the  
               project maximizes resource recovery, including the  
               production of clean energy or low-carbon or carbon negative  
               transportation fuels. 

             e)   Project readiness and potential permitting requirements.  

             f)   Potential air and water quality benefits. 

          1)Authorizes CalRecyle, to the degree funds are available, to  
            provide larger grant awards for large-scale regional  
            integrated projects that provide cost-effective organic waste  
            diversion and maximize environmental benefits.

          FISCAL EFFECT:

          No additional state costs.  According to CalRecycle, this bill  
          codifies criteria that are already part of grant award  
          consideration for anaerobic digestion and composting projects.  
          Further, CalRecycle contends they have the ability to award  


                                                                     SB 970  

                                                                    Page  3

          larger grants for large-scale projects under current law.



          1)Purpose.  According to the author, this bill will help the  
            state meet multiple environmental goals as organics are  
            diverted from landfills and methane is recovered and  
            repurposed as clean energy and fuels.  
          2)Background.  CalRecycle is tasked with diverting at least 75%  
            of solid waste statewide by 2020.  Organic materials make up  
            one-third of the waste stream and food continues to be the  
            greatest single item disposed, making up over 15% of materials  
            in landfills.  

            CalRecycle is also charged with implementing its Strategic  
            Directive 6.1, which calls for reducing organic waste disposal  
            by 50% by 2020.  According to CalRecycle, significant gains in  
            organic waste diversion are necessary to meet the 75% goal and  
            to implement Strategic Directive 6.1.  Recycling technologies  
            for organic waste include composting, anaerobic digestion, and  
            other types of processing that generate renewable fuels,  
            energy, soil amendments (organic matter added to soil to  
            improve composition), and mulch.  

            Recycling provides significant GHG emissions reductions over  
            landfilling.  Composting and other organics processing  
            technologies, including anaerobic digestion, reduce GHGs by  
            avoiding the emissions that would be generated by  


                                                                     SB 970  

                                                                    Page  4

            decomposition. Landfill gas is generated by the decomposition  
            of organic materials such as food, paper, wood, and yard  
            waste.  Fifty percent of landfill gas is methane.  While most  
            landfills have systems to capture methane, significant amounts  
            continue to escape into the atmosphere.  Methane does not  
            linger in the atmosphere as long as CO2, but is over 80 times  
            more potent over the first 20 years.  

          2)GGRF.  The California Global Warming Solutions Act of  2006  
            (AB 32, Chapter 488, Statutes of 2006) required ARB to adopt a  
            statewide greenhouse gas (GHG) emissions limit equivalent to  
            1990 levels by 2020 and adopt regulations to achieve maximum  
            technologically feasible and cost-effective GHG emission  
            reductions.  As part of its AB 32 implementation, ARB adopted  
            a cap-and-trade program for which the proceeds from the  
            auction or sale of GHG allowances are deposited in the GGRF  
            and available for appropriation by the Legislature.

            To date, cap-and-trade auction revenues have generated over $4  
            billion.  However, the most recent auction, held last month,  
            generated just over $10 million, much less than expected.  The  
            previous auction (February, 2016) generated over $500 million.  

            The Governor proposed spending over $3 billion GGRF for a  
            variety of programs and projects in the transportation,  
            energy, natural resources, and waste diversion sectors in the  
            2016-17 budget. This included $100 million for CalRecycle's  
            California Climate Investments (CCI) program to implement the  
            goals of AB 32 through the increased in-state diversion of  
            municipal solid waste through waste reduction, diversion, and  
            reuse.  However, the Legislature did not act upon these items.  


                                                                     SB 970  

                                                                    Page  5

            According to the Assembly Budget Committee, due to  
            lower-than-expected auction revenues, decisions on  
            cap-and-trade funding were deferred until after June 15, 2016.  
             Although CalRecycle does not currently have CCI funding  
            available for grants, previously approved funding for the CCI  
            loan program is available and CalRecycle is currently  
            accepting 2015-16 loan applications.

          Analysis Prepared by:Jennifer Galehouse / APPR. / (916)