BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 1153
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|Author: |Cannella |
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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: Greenhouse gases: scoping plan: biomethane
ANALYSIS:
Existing law, under the California Global Warming Solutions Act
of 2006 (also known as AB 32):
1) 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, and
sets certain requirements in adopting the regulations. ARB
may include the use of market-based mechanisms to comply with
these regulations. (Health and Safety Code §38500 et seq.)
2) Requires ARB to prepare and approve a scoping plan by January
1, 2009, for achieving the maximum technologically feasible
and cost-effective reductions in GHG emissions from sources
or categories of sources of GHGs by 2020. ARB must evaluate
the total potential costs and total potential economic and
noneconomic benefits of the plan for reducing GHGs to the
state's economy and public health, using the best economic
models, emissions estimation techniques, and other scientific
methods. The Plan must be updated at least once every five
years. (HSC §38561)
This bill requires ARB, in consultation with specified state
entities, to provide a comprehensive overview of state efforts
to encourage the development of in-state biomethane and
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renewable natural gas as part of the update to the Scoping Plan,
and requires the overview to include, but not be limited to, all
of the following:
1) The role of biomethane and renewable natural gas as part of
the state's efforts to reduce emissions of GHGs.
2) The estimated amount of renewable natural gas that can
cost-effectively be developed from the state's organic waste
streams.
3) Estimated cost-effectiveness of the different waste streams.
4) Analysis of current market conditions for renewable natural
gas in California.
5) Overview of current programs to encourage development of
biomethane and renewable natural gas.
6) Identification of obstacles to increased development of
in-state biomethane and renewable natural gas.
7) Identification of solutions for legislative consideration to
address in-state 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.
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,
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
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atmosphere (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 significantly 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 United States Environmental Protection Agency (US
EPA). 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
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
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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 is
generated from digestion processes at wastewater treatment
plants. Biomethane is also termed renewable natural gas, or
RNG.
3) 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 one funded
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
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
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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 California
Public Utilities Commission (CPUC) to adopt health and safety
standards for biomethane pipeline injection based on
recommendations from the Office of Environmental Health
Hazard Assessment 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 the California Energy Resources
Conservation and Development Commission (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).
According to the CEC's 2013 IEPR, "One of the key challenges
of developing biogas has been the cost. Upgrading biogas to
pipeline quality can be expensive, and access to pipelines
for distribution of biomethane can pose a challenge. For
locations that do not have feasible natural gas pipeline
access, the biogas must be used for onsite generation or for
transportation biofuels. Pipeline interconnection costs have
been identified by utility and project developers as major
challenges contributing to the cost of producing biomethane
in California. The pipeline interconnection costs can exceed
$3 million, but the cost depends on specifications unique to
each project. Lengthy interconnection processes for
biomethane facilities further increase costs for project
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developers. In addition, the feasibility of locating a
biomethane facility near a natural gas pipeline depends on
the availability of feedstock within a reasonable distance."
In 2006, 2011 and 2012, the CEC released editions of its
bioenergy action plan, which it describes as strategies,
goals, objectives, and actions that California state agencies
will take to increase bioenergy development in California.
The 2012 Bioenergy Action Plan made the following
recommendations relative to biogas:
Increase research and development of diverse
bioenergy technologies and applications, as well as
their costs, benefits, and impacts.
Continue to develop and make accessible
information about the availability of organic wastes and
opportunities for bioenergy development.
Streamline and consolidate permitting of bioenergy
facilities and reconcile conflicting regulatory
requirements to the extent possible.
Assess and monetize the economic, energy, safety,
environmental, and other benefits of biomass.
Facilitate access to transmission, pipelines, and
other distribution networks.
Comments
1) Purpose of Bill. According to the author, "SB 1153 is
designed to help the state meet its climate change,
low-carbon fuel, and renewable energy goals by directing the
California Air Resources Board to update its GHG scoping plan
with information regarding the production and availability of
in-state pipeline biomethane. According to CARB, California
must immediately reduce emissions of Short-Lived Climate
Pollutants, including methane. Methane from biological
processes, such as farms, food processing and urban waste,
can also be a significant source of clean energy if captured
and upgraded to renewable natural gas. RNG can be utilized
to supplement conventional natural gas in existing pipelines
and can be utilized as a low- or negative carbon
transportation fuel in heavy duty freight trucks. To date,
capturing and converting methane from landfills, wastewater
treatment plants, dairies and other sources has proved
elusive in California in large part due to obstacles and cost
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barriers related to pipeline interconnection and injection
and lack of long-term contracts for RNG."
2) Cost-effectiveness. SB 1153 requires that the overview
specified in the bill estimate the amount of renewable
natural gas that can "cost-effectively be developed from the
state's organic waste streams." The bill also requires ARB
to estimate cost-effectiveness of the various waste streams.
Suggested amendment. It may instead be more informative, and
less redundant, to amend the bill to require ARB to estimate
the amount of renewable natural gas and biomethane that can
feasibly be developed from the state's organic waste streams,
in addition to requiring ARB perform an evaluation of the
cost-effectiveness of producing biomethane from the various
waste streams.
3) Another evaluation. As noted in the background, current law
requires CEC to hold public hearings to identify impediments
that limit procurement of biomethane in California and offer
solutions in the IEPR. The CPUC is also required to adopt
policies and programs that promote the in-state production
and distribution of biomethane.
SB 1153 would require ARB to perform an additional overview
of biomethane in the AB 32 Scoping Plan, which is required to
be updated every five years under AB 32.
4) Clarifying amendment. SB 1153 requires ARB to estimate
cost-effectiveness of the various waste streams. A
clarifying amendment is needed to require ARB estimate the
cost-effectiveness for the production of biomethane and
renewable natural gas from the various waste streams.
5) Some overlap and potential timing issues with SB 1043
(Allen). SB 1043 (Allen), also being considered by the
Committee at today's hearing, requires ARB to consider, and
adopt as appropriate, policies to significantly increase the
sustainable production and use of renewable gas (also known
as renewable natural gas, or biomethane). If the bill is
passed by the Legislature and signed by the Governor, SB
1043's provisions will go into effect January 1, 2017.
As noted in this analysis, SB 1153 requires ARB, as a part of
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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 and
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.
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 this bill and
the activities required under SB 1043 (Allen).
Related/Prior Legislation
SB 1043 (Allen) requires ARB to consider and adopt policies to
significantly increase the sustainable production and use of
"renewable gas." The bill is pending consideration by this
committee.
SB 687 (Allen, 2015) would have established the renewable gas
standard (RGS), requiring all sellers of natural gas to provide
to retail end-use customers in California 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.
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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 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 1900 (Gatto, Chapter 602, Statutes of 2012) directed the CPUC
to identify landfill gas constituents, develop testing protocols
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 the Senate Energy, Utilities and
Communications Committee on April 5, 2016, and passed out of
committee with a vote of 9-0.
SOURCE: Author
SUPPORT:
Agricultural Energy Consumers Association (Source)
Agricultural Council of California
Association of California Egg Farmers
California Dairies Inc.
California Grain & Feed Association
California Poultry Federation
Dairy Farmers of America
Dairy Institute of California
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Milk Producers Council
Western United Dairymen
OPPOSITION:
None received
ARGUMENTS IN
SUPPORT: Supporters state that development
of biomethane projects in California has lagged. They state
that SB 1153 is
designed to provide a comprehensive overview of biomethane
projects,
opportunities, obstacles, and incentives to inform coordinated
legislative efforts in
the future to encourage biomethane efforts and ensure those
efforts are consistent with overall state energy, climate, and
environmental goals and policies.
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