BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 1043
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|Author: |Allen |
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|Version: |4/7/2016 |Hearing |4/20/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Rebecca Newhouse |
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SUBJECT: Renewable gas: biogas and biomethane
ANALYSIS:
Existing law:
1)Under the California Global Warming Solutions Act of 2006, also
known as
AB 32, 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, 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.)
2)Under the Renewable Portfolio Standard (RPS) requires
investor-owned utilities (IOUs), publicly owned utilities
(POUs) and certain other retail sellers of electricity to
achieve 50% of their energy sales from an eligible renewable
electrical generation facility by December 31, 2030, and
establishes portfolio requirements and a timeline for
procurement quantities of three product categories. (Public
Utilities Code §399.11 et seq.)
3)Provides that electricity produced by certain renewable energy
resources, including natural gas produced from biomass,
digester gas or landfill gas, as potentially eligible for
credit under the RPS (PUC §399.12, Public Resources Code
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§25741)
4)Requires the Office of Environmental Health Hazard Assessment
(OEHHA), in consultation with ARB, and other specified
agencies, to compile a list of constituents of concern that
could pose risks to human health and that are found in biogas
at concentrations that significantly exceed the concentrations
of those constituents in natural gas and requires OEHHA to
determine the health protective levels for that list, and
requires ARB to identify realistic exposure scenarios and the
health risks associated with those scenarios to determine
acceptable threshold concentrations of those constituents.
(HSC §25421)
5)Requires the California Public Utilities Commission (CPUC) to
adopt standards for biomethane to be injected into a common
carrier pipeline that specify constituent concentrations that
are reasonably necessary to ensure the protection of human
health, giving due deference to the findings by OEHHA, ARB,
and other specified agencies. (HSC §25421)
6)Requires California Energy Resources Development and
Conservation Commission (CEC) to hold public hearings to
identify impediments that limit procurement of biomethane in
California, including, but not limited to, impediments to
interconnection, and requires CEC to offer solutions to those
impediments as part of the integrated energy policy report.
(PRC §25326)
7)Defines "biogas" as gas that is produced from the anaerobic
decomposition of organic material and "biomethane" as biogas
that meets the standards adopted by CPUC for injection into a
common carrier pipeline. (HSC §25420)
8)Requires PUC to adopt policies and programs that promote the
in-state production and distribution of biomethane. (PUC
§399.24 )
9)Defines "biomass conversion" as the production of heat, fuels,
or electricity by the controlled combustion or use of
non-combustion thermal conversion technologies on specified
organic materials, including specified agricultural crop
residues, bark, wood chips, and other green wastes.
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10)Specifies that "biomass conversion" does not include
controlled combustion of sewage sludge, among other materials.
This bill:
1) Directs ARB to consider and adopt policies, as appropriate,
to significantly increase the sustainable production and use
of "renewable gas," and requires ARB to do the following:
a) Ensure any policy is coordinated and consistent with
state policies to promote renewable fuels and renewable
resources, reduce life-cycle GHG and short-lived climate
pollutant emissions, increase carbon sequestration, divert
organic waste from landfills, reduce air and water
pollution, reduce wildfires, promote resilient and
sustainable forests, and protect the environmental quality
of natural and working lands.
b) Ensure in consultation with the Department of Resources
Recovery and Recycling (CalRecycle) that any adopted
policy recognizes declining landfill gas in future years.
c) Ensure that the production and use of renewable gas
provides direct benefits through helping the state meet
landfill diversion goals, or avoiding or reducing criteria
pollutants, short-lived climate pollutant and GHG
emissions in the state, emissions that adversely affect
the waters of the state, and nuisances associated with the
emission of odors.
d) Identify barriers to the rapid development and use of
renewable gas and make specific recommendations to remove
those barriers and identify potential sources of funding
to provide incentives for renewable gas production and
use.
e) Coordinate with CPUC, CEC, POUs, CalRecycle and the
Department of Forestry and Fire Protection.
2) Requires ARB to develop and adopt a life cycle GHG and
short-lived climate pollutant accounting method associated
with biogas produced from forest biomass, as specified.
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3) Modifies the definition of "biogas" and "biomethane" as
currently used in statute concerning biogas injection into
common carrier pipelines by defining "biogas" as a gas
produced from organic waste through anaerobic digestion, or
conversion technologies, as specified, and "biomethane" as
methane derived from biogas.
4) Defines "biogas," for purposes of the work required of ARB by
this bill, to have the same meaning as above, except that it
does not include gas produced from forest biomass unless it
is produced from forest waste remaining after all other
reasonable forest products have been produced and it meets at
least one of several specified conditions.
5) Defines "renewable gas" to mean biogas or synthetic gas
generated by an eligible renewable energy resource meeting
the requirements of the California Renewables Portfolio
Standard Program, but not including organic waste.
6) Amends the definition of "biomass conversion" to include
byproducts or residue from composting as eligible organic
feedstocks for combustion or non-combustion conversion
technologies.
7) Strikes "sewage sludge" from the materials prohibited from
being feedstocks under the definition of biomass conversion.
8) Specifies that the requirements for ARB to consider and adopt
policies, as appropriate, to increase the production and use
of renewable gas is not intended to affect health and safety
standards adopted by CPUC prior to January 1, 2016 for
biomethane that is to be injected into the pipeline.
Background
1) Short-lived Climate Pollutants. Greenhouse gases or climate
pollutants, such as CO2, work to warm the earth by trapping
solar radiation in the earth's atmosphere. Depending on the
molecule, these pollutants can vary greatly in their ability
to trap heat and the length of time they remain in the
atmosphere. CO2 remains in the atmosphere for centuries,
which makes it the most critical greenhouse gas to reduce in
order to limit long-term climate change. However, climate
pollutants including methane, tropospheric ozone,
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hydrofluorocarbons (HFCs), and soot (black carbon), are
relatively short-lived (anywhere from a few days to a few
decades), but when measured in terms of how they heat the
atmosphere (known as global warming potential or GWP), can be
tens, hundreds, or even thousands of times greater than that
of CO2. These climate forcers are termed short-lived climate
pollutants (SLCPs).
Because SLCPs remain in the atmosphere for a relatively short
period of time, but have a much higher global warming
potential than CO2, efforts aimed at reducing their emissions
in the near term would result in more immediate climate, air
quality, and public health benefits, than a strategy focused
solely on CO2. According to ARB's SLCP draft strategy, "while
the climate impacts of CO2 reductions take decades or more to
materialize, cutting emissions of SLCPs can immediately slow
global warming and reduce the impacts of climate change."
Recent research estimates that SCLPs are responsible for
about 40% of global warming to date and that actions to
reduce SLCP emissions could cut the amount of warming that
would occur over the next few decades by half.
According to ARB's 2015 updated Scoping Plan, methane is one
of the three short-lived climate pollutants with the greatest
implications for California.
Methane (CH4) is the principal component of natural gas and
is also produced biologically under anaerobic conditions in
ruminants, landfills, and waste handling. Atmospheric
methane concentrations have been increasing as a result of
human activities related to agriculture, fossil fuel
extraction and distribution, and waste generation and
processing. A 2014 Stanford University study found that
methane emissions may be 50% higher than official estimates
from the US EPA. In 2010, ARB approved a regulatory measure
as an AB 32 (Nuñez, Pavley, Chapter 488, Statutes of 2006)
discrete early action measure that requires installation of
landfill gas collection and control systems. ARB has also
released draft regulations to reduce fugitive methane from
the oil and gas sector. Methane is 84 times more powerful as
a global warming pollutant than CO2 on a 20-year time scale.
2) Biogas, methane, and biomethane. Through a series of steps
involving the bacterial breakdown of organics, carbon-based
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material can be converted to methane in oxygen-deprived
conditions. This process occurs naturally, and is often
uncontrolled in landfills and dairies, contributing to
significant GHG emissions. However, capturing and utilizing
the gas is facilitated through the use of anaerobic
digesters, which operate with various temperatures, pH and
bacteria types. The digestion process dramatically speeds up
the natural decomposition process for organic wastes to
produce primarily methane, significant quantities of carbon
dioxide, and trace amounts of other gasses including
hydrogen, carbon monoxide, nitrogen, oxygen, and hydrogen
sulfide, which, all together, is termed "biogas." The biogas
can be processed further to produce high purity, or
"pipeline" quality methane, and is termed biomethane to
differentiate it from fossil fuel natural gas. In addition
to production at landfills and dairies, biomethane can be
generated from digestion processes at wastewater treatment
plants. Biomethane is also termed renewable natural gas, or
RNG.
3) Biomethane fuel supply, markets, and barriers to use.
Because of the potential climate, waste reduction, and energy
benefits of biomethane, a number of bills and programs have
worked to increase the supply, expand the biomethane market,
and overcome barriers for its use. Various incentive
programs, funded through cap-and-trade auction revenue, and
by vehicle registration surcharges, provide grants and loans
for the production of renewable and alternative fuels,
including biomethane.
The state has also implemented several programs to create
markets for low-carbon fuels, in furtherance of meeting GHG
emission reduction goals. The Low-Carbon Fuel Standard
(LCFS), established pursuant to authority under AB 32,
requires a 10% reduction in the carbon intensity for
transportation fuels used in the state by 2020. The state
also has procurement requirements for "very-low carbon
fuels," established through AB 692 (Quirk, Chapter 588,
Statutes of 2015). Biomethane is also considered a renewable
resource under the Renewable Portfolio Standard, which was
recently amended by SB 350 (de León and Leno, Chapter 547,
Statutes of 2015) to require 50% of total retail electricity
sales to be from renewable energy resources by 2030.
Additionally, the cap-and-trade regulation allows covered
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entities to purchase up to 8% of their compliance obligation
as offsets. To date, ARB has adopted offset protocols for
four project types including dairy digesters to capture
fugitive methane emissions.
Overcoming barriers. Due to concern over toxic constituents
in landfill biogas, California adopted strict requirements in
1988 regarding the allowable levels of vinyl chloride and the
required testing protocols for the legal sale, supply or
transport of landfill gas to a gas corporation in the state.
In an effort to encourage the production and use of
biomethane in California, including methane produced from
landfill biogas, the Legislature passed AB 1900 (Gatto,
Chapter 602, Statutes of 2012), which required the CPUC to
adopt health and safety standards for biomethane pipeline
injection based on recommendations from OEHHA and ARB. AB
1900 also requires CPUC to "adopt policies and programs that
promote the in-state production and distribution of
biomethane." On January 16, 2014, CPUC adopted health and
safety standards for pipeline injected biomethane.
In 2015, CPUC found that gas producers should bear all costs
relating to the processing and pipeline injection of
biomethane. As part of that decision, the CPUC adopted a $40
million ratepayer-funded program to offset a portion of the
costs to gas producers of connecting to utility pipelines.
Program funding will pay up to 50% of a biomethane project's
interconnection cost, up to $1.5 million per project.
AB 1900 also required CEC to hold public hearings to identify
impediments that limit procurement of biomethane in
California and offer solutions as part of the Integrated
Energy Policy Report (IEPR).
Comments
1) Purpose of Bill. According to the author, "California is a
leader in efforts to combat climate change - one of the most
daunting challenges facing humanity. Currently, California's
gas sector causes one-quarter of the state's greenhouse gas
emissions, and is a major contributor to global warming.
"California uses more than 2 trillion cubic feet of natural
gas per year and that amount is going up. Natural gas is
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used to generate more than half of the state's electricity,
the majority of its home heating and hot water, and a growing
share of transportation fuels. Although cleaner and cheaper
than other fossil fuels, natural gas is a major source of
greenhouse gas emissions and air and water pollution. In
addition, California imports 91% of its gas, making the state
vulnerable to supply and price fluctuations and costing more
than $9 billion per year in lost revenues and jobs as those
jobs are outsourced to other states and to Canada.
"Renewable gas made from organic waste can significantly cut
greenhouse gas emissions and landfilling. Increasing the use
of renewable gas will create jobs and economic productivity,
and strengthen California's energy security."
2) Confusing definitions.
a) Definition of biogas and biomethane for CPUC standards.
Under AB 1900 (Gatto, Chesbro and Hernández, Chapter 602,
Statutes of 2012), CPUC was required to develop health and
safety standards for biomethane for injection into the
pipeline. AB 1900 defined biogas as gas produced from the
anaerobic decomposition of organic material and defined
"biomethane" as biogas that meets the health and safety
standards developed by the CPUC for injection into the
pipeline.
SB 1043 amends both of these definitions. This bill
defines biogas as gas that is produced from organic waste
through anaerobic digestion or eligible conversion
technologies, consistent with Section 40106 of the Public
Resources Code. Section 40106 of the Public Resources
Code specifies that "biomass conversion" is the production
of energy through the combustion, or thermal
non-combustion conversion, of green waste.
The current statutory definition of biogas is very
broad-gas produced when organic matter decomposes without
oxygen. AB 1043 narrows the definition to specify
technologies necessary for the production of biogas,
namely anaerobic digestion, and conversion technologies.
The new definition in the bill references a section of
code that includes combustion as an eligible "conversion"
technology. However, the gas produced when organic
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material is burned is simply steam and CO2, and is not of
any use as a fuel.
An amendment is needed to specify that biogas means gas
produced from organic waste through anaerobic digestion,
or eligible noncombustion thermal conversion technologies,
consistent with Section 40106 of the Public Resources
Code.
SB 1043 also strikes the current definition of biomethane
as a biogas meeting CPUC health and safety standards for
pipeline injection, and instead defines biomethane as
methane derived from biogas.
As noted in the Senate Energy, Utilities and
Communications Committee's staff analysis for the bill,
the effect of this change is unclear. The staff analysis
states, "Recently, the CPUC, in keeping with statute,
adopted standards for injection of biomethane into a
pipeline. The CPUC expresses concern that the changes
made by this bill to the definition of "biomethane" could
render pipeline injection standards adopted by the CPUC in
R.13-02-008 inapplicable or subject to a high degree of
uncertainty."
As a result, that Committee amended the bill to state that
nothing with regard to ARB adopting policies for renewable
gas is intended to affect the health and safety standards
adopted by the CPUC prior to January 1, 2016 for
biomethane injection into a common carrier pipeline.
b) Definition of biogas and renewable gas for ARB's
program. SB 1043 requires ARB to consider and adopt, as
appropriate, policies to increase production and use of
"renewable gas."
The bill defines renewable gas as either a) biogas or b)
synthetic gas generated by an eligible renewable energy
resource eligible for credit under the RPS.
Author amendment. The author would like to amend the bill
to strike the reference to synthetic gas in the bill to
address concerns from several organizations representing
various agricultural interests that argue synthetic gas
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creates additional methane in the environment and, for
this reason, should not be given status equal to biogas.
If the author's amendment is taken, "renewable gas" will
be defined as simply "biogas." For clarity, an additional
amendment is needed with the author's amendment to strike
all references to renewable gas in the bill and replace
those references with "biogas."
3) Protecting health and safety for end users of biogas. Any
policy adopted by ARB under SB 1043 is required to accomplish
a number of goals, namely that the policy promote renewable
fuels, reduce GHG emissions, divert organics from landfills,
reduce pollution, promote forest health, and protect
environmental quality of natural and working lands.
An amendment is needed to require ARB also ensure the health
and safety of any adopted biogas policy.
4) Biomass conversion, sewage sludge, and compost residue?
Biomass conversion in state law means the production of
energy (e.g., fuels, electricity, heat) by combustion, or the
use of noncombustion thermal conversion technologies of
specified biomass, including, agricultural crop residues,
bark, lawn, yard, garden clippings, leaves, silvicultural
residue, tree and brush pruning, wood, wood chips, and wood
waste and nonrecyclable pulp or nonrecyclable paper
materials, when those materials are separated from other
solid waste.
Current law requires jurisdictions to divert 50% of solid
waste from landfill disposal or transformation (combustion of
municipal solid waste) through source reduction, recycling,
and composting activities. CalRecycle calculates whether
this requirement is met by tracking disposal at
transformation facilities and landfills.
Biomass conversion is excluded from the definition of
transformation, and therefore, biomass that is combusted or
"converted" at a biomass conversion facility is not counted
as disposal.
SB 1043 strikes the prohibition for sewage sludge as an
eligible biomass conversion feedstock. This change may allow
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jurisdictions to receive diversion credit for burning sewage
sludge.
An amendment is needed to add back in to the bill sewage
sludge as a material not eligible as a feedstock under the
definition of "biomass conversion."
SB 1043 also includes byproducts or residue from composting
as an eligible biomass conversion feedstock.
It is not clear what types of materials constitute byproducts
or residue from composting. These materials could consist of
anything left over after the composting process, and may
include plastics, glass, and other residual wastes.
Combustion of these wastes would not be "biomass" conversion,
but instead would be combustion of materials typically
designated as municipal solid waste.
An amendment is needed to strike "byproducts and residue from
composting" from the definition of biomass conversion.
5) Some overlap and potential timing issues with SB 1153
(Cannella). SB 1153 (Cannella), also being considered by the
Committee at today's hearing, requires ARB, as a part of the
update to the AB 32 Scoping Plan, to provide a comprehensive
overview of state efforts to encourage the development of
instate biomethane and renewable natural gas and evaluate
policy options to overcoming barriers or challenges for its
use. The Scoping Plan is currently being updated by ARB to
incorporate the Governor's 2030 midterm target for GHG
emissions in Executive Order (EO) B-30-15. However, it is
not clear that the provisions of SB 1153, if approved, will
be incorporated into the Scoping Plan before ARB finishes the
update pursuant to the Governor's EO. In that case, the
study outlined in SB 1153 may not be included in the Scoping
Plan until the next update five years from now.
SB 1043 requires ARB to consider, and adopt as appropriate,
policies to significantly increase the sustainable production
and use of renewable gas. If the bill is passed by the
Legislature and signed by the Governor, SB 1043's provisions
will go into effect January 1, 2017.
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Should the Committee deem both bills necessary, the authors
should work to address potential issues associated with the
timing of the evaluation in the Scoping Plan in SB 1153
(Cannella) and the activities required under this bill.
Related/Prior Legislation
SB 1153 (Cannella) would require ARB, in consultation with other
state entities, as part of the AB 32 Scoping Plan update, to
perform an overview of state efforts to encourage the
development of instate biomethane and renewable natural gas. The
bill is pending consideration by this committee.
SB 687 (Allen, 2015) would have established the renewable gas
standard requiring all natural gas sellers to provide to
California retail end-use customers increasing amounts of
"renewable gas," so that, by January 1, 2030, at least 10% of
the natural gas supplied is "renewable gas." The bill passed
this committee on a vote of 7 to 3 and was held on suspense by
the Senate Committee on Appropriations.
AB 2206 (Williams) requests that the California Council on
Science and Technology study the heating value and siloxane
specifications for biomethane to be injected into common carrier
gas pipelines. The bill is pending consideration by the
Assembly Natural Resources Committee on April 18, 2016.
AB 2773 (Quirk) requires CPUC to modify its technical standards
for biomethane injected into a common carrier pipeline. The
bill is pending consideration by the Assembly Committee on
Utilities and Commerce on April 13, 2016.
AB 2313 (Williams) requires the CPUC to modify its monetary
incentive program for biomethane projects. The bill is pending
consideration by the Assembly Committee on Natural Resources.
AB 577 (Bonilla, 2015) would have required the CEC to develop
and implement a grant program for projects related to biomethane
production. The bill was held on suspense by the Senate
Committee on Appropriations.
AB 1900 (Gatto, Chapter 602, Statutes of 2012) directed the CPUC
to identify landfill gas constituents, develop testing protocols
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for landfill gas injected into common carrier pipelines, adopt
standards for biomethane to ensure pipeline safety and
integrity, and adopt rules to ensure open access to the gas
pipeline system.
AB 2196 (Chesbro, Chapter 605, Statutes of 2012) ensures that
biogas qualifies for RPS credit, provided its production,
delivery and use meet certain conditions.
SB 1122 (Rubio, Chapter 612, Statutes of 2012) required IOUs to
collectively procure at least 250 MW of generation eligible for
the RPS from bioenergy generation project, including biogas
projects.
DOUBLE REFERRAL:
This measure was heard in Senate Energy, Utilities and
Communications Committee on April 5, 2015, and passed out of
committee with a vote of 7-0.
SOURCE: Bioenergy Association of California
SUPPORT:
American Biogas Council
Atlas ReFuel
Bioenergy Association of California
City of Fresno
Clean Energy
Climate Resolve
Coalition for Clean Air
CR&R
Environmental Defense Fund
Inland Empire Disposal Association
Kern Refuse Disposal, Inc.
Los Angeles County Waste Management Association
Pacific Forest Trust
Sanitation Districts of Los Angeles County
Solid Waste Association of Orange County
TSS Consultants
Victor Valley Wastewater Reclamation Authority
West Biofuels
OPPOSITION:
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Agricultural Energy Consumers Association
Agricultural Council of California
Association of California Egg Farmers
California Dairies Inc.
California Farm Bureau Federation
California Forestry Association
California Grain & Feed Association
California Poultry Federation
Center for Biological Diversity
Dairy Farmers of America
Dairy Institute of California
Milk Producers Council
Western United Dairymen
ARGUMENTS IN
SUPPORT: Supporters state that the biogas industry offers
cost-effective technologies and projects that convert resources
to renewable
electricity and renewable fuels to lessen dependence on foreign
energy, increase
renewable energy's contribution to meeting our nation's energy
needs, and to build
a home-grown bioenergy industry that creates jobs and wealth.
They note that SB
1043 will fill an important gap in California' clean energy and
climate policies by
requiring the state to begin to diversify and decarbonize the
gas sector.
ARGUMENTS IN
OPPOSITION: A coalition of agricultural interests oppose this
bill, contending it better policy to encourage biogas production
and use through financial incentives, as opposed to new
mandates. The coalition notes that conventional natural gas
costs significantly less than renewable gas, and that the bill
could cost users considerable amounts of money. The coalition
also states it is inappropriate to put biogas and synthetic gas
on equal footing since, the coalition contends, the latter
releases methane into the atmosphere. The California Forestry
Association also writes in opposition, arguing this bill's
provisions regarding biomass should allow use of forest material
that meets all requirements of the law.
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