BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          SB 1213 (Wieckowski) - Renewable energy:  biosolids:  matching  
          grants
          
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          |Version: April 4, 2016          |Policy Vote: E., U., & C. 9 -   |
          |                                |          0, E.Q. 6 - 0         |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 2, 2016       |Consultant: Narisha Bonakdar    |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  SB 1213 continuously appropriates $20 million from the  
          Greenhouse Gas Reduction Fund (GGRF) to the California Energy  
          Commission (CEC) to fund competitive grants for capital projects  
          that use biosolids to generate useful heat energy or  
          electricity, liquid or gaseous fuels, or useful byproducts.  


          Fiscal  
          Impact:  Per the CEC, this bill would result in annual costs of  
          approximately $355,000 to $444,364 (GGRF).

          The Air Resources Board (ARB) may also have additional costs to  
          collaborate with the agency and to incorporate the program into  
          its annual reporting on GGRF results. It is unclear whether this  
          program in itself would necessitate an additional position for  
          these duties. However, to the extent that the Legislature  
          creates multiple new programs to be funded by the GGRF, the ARB  
          may require additional positions to collectively be involved in  







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          the new programs.


          Background:  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 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. Under this authority, the ARB  
          initiated the cap-and-trade program. All monies, except for  
          fines and penalties, collected pursuant to the cap-and-trade  
          program deposited in the 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 California Environmental Protection Agency  
          (Cal EPA), 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.

          Recently, the LAO noted that spending auction revenue on GHG  
          reductions is likely not necessary to meet the state's GHG  
          reduction goals and likely increases the overall costs of  
          emission reduction activities.  According to the LAO, "this is  
          because, in certain cases, spending on GHG reductions interacts  
          with the regulation in a way that changes the types of emission  
          reduction activities, but not the overall level of emission  
          reductions."  More specifically, entities covered by the AB 32  
          cap -such as some larger wastewater treatment plants - must  
          limit their GHGs to meet the cap.  This is true regardless of  
          any GGRF funding received by the covered entity.  The likely  
          effect of receipt of GGRF monies by a covered entity, therefore,  
          is reduced compliance costs for the covered entity, but not  
          increased GHG reduction, either by that covered entity or  








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          overall.  However, funding GHG-reducing projects undertaken by  
          entities not covered by the AB 32 cap may lead to additional GHG  
          reductions that would not have otherwise occurred.


          Proposed Law:   This bill:


          1)Defines a "biosolids to clean energy capital project" as one  
            that uses biosolids to generate useful heat energy or  
            electricity, liquid or gaseous fuels, or useful byproducts  
            using nonincineration technology in a manner or location that  
            also reduces GHGs compared with other biosolids management  
            practices in use at the time of enactment of this bill.


          2)Directs the CEC to establish the "Biosolids Clean Energy Grant  
            Program" of competitive grants available to local wastewater  
            agencies to provide 50 percent matching funds for "biosolid to  
            clean energy capital projects," based on cost-effectiveness  
            and any other factors deemed appropriate by the CEC.


          3)Continuously appropriates $20 million from the GGRF to the CEC  
            for the competitive grant program.


          4)Specifies that the CEC cannot award grants to local wastewater  
            agencies that are subject to obligation pursuant to a  
            compliance obligation pursuant to regulations implementing a  
            market-based compliance mechanism.




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