BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 1213 (Wieckowski) - Renewable energy: biosolids: matching grants ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 4, 2016 |Policy Vote: E., U., & C. 9 - | | | 0, E.Q. 6 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 2, 2016 |Consultant: Narisha Bonakdar | | | | ----------------------------------------------------------------- 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 SB 1213 (Wieckowski) Page 1 of ? 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 SB 1213 (Wieckowski) Page 2 of ? 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. -- END --