Amended in Senate March 29, 2016

Senate Bill No. 1153

Introduced by Senator Cannella

February 18, 2016

begin delete An act to add Section 784.5 to the Public Utilities Code, relating to biomethane. end delete begin insert An act to add Section 38561.5 to the Health and Safety Code, relating to greenhouse gases. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 1153, as amended, Cannella. begin delete Energy: gas: biomethane: California Renewable Natural Gas Act. end delete begin insert Greenhouse gases: scoping plan: biomethane. end insert

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The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act requires the state board to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions and to update the scoping plan at least once every 5 years.

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This bill would require the state board, as a part of the update to the scoping plan, to provide a comprehensive overview of state efforts to encourage the development of instate biomethane and renewable natural gas.

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Under existing law, the Public Utilities Commission has regulatory authority over public utilities, including gas corporations. Existing law authorizes the commission to fix the rates and charges for every public utility and requires that those rates and charges be just and reasonable. The California Renewables Portfolio Standard Program requires the commission to adopt policies and programs that promote the in-state production and distribution of biomethane.

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This bill would additionally require the commission to consider and adopt policies to increase the production and availability of in-state pipeline biomethane significantly. The bill would require the commission to adopt a biomethane feed-in tariff program and to open a proceeding to consider making recoverable as part of the rate base gas corporation capital investments that facilitate pipeline biomethane development and injection at in-state projects.

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Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

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Because the provisions of this bill would be a part of the act and a violation of an order or decision of the commission implementing its requirements would be a crime, this bill would impose a state-mandated local program by creating a new crime.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that no reimbursement is required by this act for a specified reason.

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Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program:  begin delete yes end delete begin insert no end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert The Legislature finds and declares all of the
following: end insert

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(a) California has enacted numerous policies to reduce the
emissions of greenhouse gases and increase the use of renewable
energy resources and renewable fuels.

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(b) California has numerous programs to incentivize and
encourage the development of biogas, biomethane, and renewable
natural gas projects.

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(c) Despite a regulatory environment encouraging renewable
energy production and greenhouse gases emissions reductions,
the development of biomethane and other renewable natural gas
projects continues to lag in the state.

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(d) Obstacles to increased biomethane and renewable natural
gas projects should be identified and addressed.

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(e) Investments in dairy waste digesters, landfill diversion
programs, and anaerobic digesting at wastewater treatment
facilities provide significant reductions in the emissions of
greenhouse gases, including methane, for the state.

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(f) A coordinated effort by state agencies should be undertaken
to address remaining obstacles and identify additional incentive
programs, if needed, to encourage the increased development of
instate biomethane and renewable natural gas projects.

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begin insert SEC. 2. end insert   

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begin insert Section 38561.5 is added to the end insert begin insert Health and Safety
Code end insert begin insert , to read: end insert

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begin insert 38561.5. end insert   

As a part of the update of the scoping plan required
pursuant to subdivision (h) of Section 38561, the state board shall
provide a comprehensive overview of state efforts to encourage
the development of instate biomethane and renewable natural gas.
The overview shall include, but not be limited to, all of the
following:

(a) The role of biomethane and renewable natural gas in the
state’s efforts to reduce the emissions of greenhouse gases.

(b) The estimated amount of renewable natural gas that can
cost-effectively be developed from the state’s organic waste
streams, including the waste, agricultural, dairy, and forestry
sectors.

(c) Estimated cost-effectiveness of the various waste streams.

(d) Analysis of current market conditions for renewable natural
gas in California.

(e) Overview of current programs to encourage development
of biomethane and renewable natural gas.

(f) Identification of obstacles to increased development of instate
biomethane and renewable natural gas.

(g) Identification of solutions for legislative consideration to
address obstacles identified in subdivision (f) and encourage
increased instate biomethane and renewable natural gas
development, including, but not limited to, incentive programs and
grants, preferential loan programs to enhance project financing,
and market stabilization programs, such as contracts for
differences, tax credits, and biomethane purchase programs.

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SECTION 1.  

This act shall be known and may be cited as the
California Renewable Natural Gas Act.

SEC. 2.  

Section 784.5 is added to the Public Utilities Code, to
read:

784.5.  

In order to meet the state’s climate change, low-carbon
fuel, and renewable energy goals, the commission shall consider
and adopt policies to increase the production and availability of
in-state pipeline biomethane significantly, and shall do both of the
following:

(a) Adopt a biomethane feed-in tariff program requiring the
state’s gas corporations to procure, through long-term contracts,
a specified amount of biomethane that is produced by in-state
projects. In determining this amount, the commission shall
consider, among other issues, all of the following:

(1) The availability of cost-effective in-state biomethane
production opportunities.

(2) The economic impacts on ratepayers.

(3) Existing market conditions, including demand in the
distributed, renewable energy, and low-carbon transportation fuel
sectors.

(b) Open a proceeding to consider making recoverable as part
of the rate base gas corporation capital investments that facilitate
pipeline biomethane development and injection at in-state projects.
The proceeding shall identify and consider all of the following:

(1) Obstacles to pipeline biomethane injection projects.

(2) Costs and benefits to gas corporation ratepayers.

(3) Benefits of meeting the state’s renewable energy, greenhouse
gas reduction, and petroleum use reduction goals.

SEC. 3.  

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of
the Government Code, or changes the definition of a crime within
the meaning of Section 6 of Article XIII B of the California
Constitution.

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