BILL ANALYSIS Ó SENATE COMMITTEE ON TRANSPORTATION AND HOUSING Senator Jim Beall, Chair 2015 - 2016 Regular Bill No: SB 1405 Hearing Date: 4/19/16 ----------------------------------------------------------------- |Author: |Pavley | |----------+------------------------------------------------------| |Version: |4/13/2016 Amended | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Erin Riches | |: | | ----------------------------------------------------------------- SUBJECT: Zero-emission vehicles: transportation systems DIGEST: This bill requires the state Air Resources Board (ARB) to revise the Zero Emission Vehicle (ZEV) regulation to expand the definition of transportation systems eligible for ZEV credits, and to conduct a study relating to transit-subsidized rides on ZEV-credit-qualified transportation systems serving disadvantaged communities. ANALYSIS: AB 32 and disadvantaged communities AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) requires ARB to develop a plan to reduce emissions to 1990 levels by 2020. It also requires ARB to ensure that programs to reduce greenhouse gas (GHG) emissions are targeted, to the extent feasible, to the most disadvantaged communities (DACs) in the state. AB 32 authorizes ARB to deposit any fees paid by GHG emission sources into the Greenhouse Gas Reduction Fund (GGRF). SB 535 (De León, Chapter 830, Statutes of 2012) requires 25% of GGRF funds to be allocated to projects that provide benefits to DACs, and at least 10% to projects located within DACs. DACs have been identified by the California Environmental Protection Agency using census tract data based on geographic, socioeconomic, public health, and environmental hazard criteria. SB 1405 (Pavley) Page 2 of ? Charge Ahead Initiative In March 2012, Governor Brown issued an Executive Order setting a goal of 1.5 million zero-emission vehicles (ZEVs) on California roads by 2025. The order also set a GHG emissions reduction target of 80% below 1990 levels by 2050. SB 1275 (De León, Chapter 530, Statutes of 2014) builds on this goal by establishing the Charge Ahead California Initiative at ARB, which outlines a vision of placing 1 million electric cars, trucks, and buses on California's roads by 2023. SB 1275 directs ARB to provide incentives to increase the availability of ZEVs and near-ZEVs, particularly in DACs. Pursuant to SB 1275, ARB's FY 2015-16 Funding Plan includes, among other provisions, a new pilot project to create vanpooling for Central Valley agricultural workers, and the expansion of four pilot projects: increased incentives for public fleets to purchase vehicles eligible for Clean Vehicle Rebate Program rebates; advanced technology car-sharing and mobility options; increased incentives for vehicle replacement under the Enhanced Fleet Modernization Program; and financing assistance. These pilot projects are currently being implemented. ZEV regulation The ZEV regulation includes near-zero-emission vehicles in addition to pure ZEVs. The regulation, which aims to encourage the commercialization of battery electric and fuel-cell vehicles, has a goal for ZEVs to comprise 15% of new cars sold in California by 2025. The ZEV regulation requires a certain percentage of a vehicle manufacturer's passenger car and light-duty truck fleet each year to be battery electric and fuel-cell vehicles, clean plug-in hybrids, clean hybrids, and/or clean gasoline vehicles with near-zero tailpipe emissions. Different types of vehicles generate varying credits; a minimum percentage of pure ZEVs are required. In complying with the ZEV regulation, manufacturers can transfer credits among each other and from third parties. Manufacturers can over-comply with the ZEV regulation, then use their credit balance to provide flexibility in the timing and production of bringing new clean cars to the market to meet more stringent ZEV requirements in the coming years. If a manufacturer fails to meet its ZEV requirement in a given year, it has two years to make up the deficit; if it still fails to comply, it is subject to financial penalties. SB 1405 (Pavley) Page 3 of ? According to ARB, compliance with the ZEV regulation through model year 2014 represents a total of nearly 4 million ZEVs and near-ZEVs, including more than 500 fuel-cell vehicles; 60,000 battery electric vehicles; 29,400 neighborhood electric vehicles; 60,000 clean plug-in hybrids; and more than 3 million clean gasoline vehicles. ZEV regulation: transportation system credits The ZEV regulation provides credits to manufacturers for vehicles placed in an "innovative transportation system." To be eligible, a project must at minimum demonstrate shared use of ZEVs and the application of "intelligent new technologies" such as reservation management, card systems, depot management, location management, charge billing, and real-time wireless information systems. If a project additionally features linkage to transit, such as dedicated parking and charging facilities at transit stations, it may receive additional credits. A project that features linkage to transit but does not demonstrate shared use or application of intelligent new technologies may also receive credits. A manufacturer can apply for the credits and directly use them or may obtain credits from a third party (such as a car-sharing company) that has applied for credits and then sold them on the credit market. Transportation system credits may be used to meet a portion, but not the entirety, of a manufacturer's obligation. ARB determines the credits earned per vehicle. ZEV Action Plan Following the Governor's 2012 Executive Order, the ZEV Action Plan was established to identify specific strategies and actions that state government would take to meet the milestones identified in the order. The plan was a product of an interagency working group led by the Governor's office, with input from industry and other stakeholders. Since 2013, new priorities have emerged. The draft 2015 ZEV Action Plan identifies seven broad goals for state government to advance ZEVs: building consumer awareness and demand; enabling necessary infrastructure; promoting broad access; transforming SB 1405 (Pavley) Page 4 of ? vehicle fleets; expanding the use of zero-emission rail, freight, and other medium- and heavy-duty technologies; capturing economic development opportunities; and supporting national and international ZEV deployment. This bill requires ARB to: 1)Revise the ZEV regulations by March 1, 2017, to expand the definition of "transportation systems eligible for zero-emission vehicle credits." Specifically, the ARB shall include in this definition additional entities utilizing fleets of ZEVs, including rental car companies, transportation network companies (TNCs), taxicab companies, and car-sharing companies, to the extent that operations of these entities reduce per-passenger emissions. 2)Conduct a study to determine the feasibility and efficacy of providing grants to transit operators to subsidize cost-effective rides serving DACs through the use of ZEVs utilized by ZEV-credit-eligible transportation systems, in a manner that complements the transit service. COMMENTS: 1)Purpose. The author states that California's ZEV program has driven a critical set of innovations in transportation technology. But in order to meet the Governor's goal of 1.5 million ZEVs by 2025, and to provide broad access to these vehicles in all communities, the state will need to significantly augment its efforts to build consumer awareness and deploy vehicles in DACs. The author states that the current regulatory framework is far behind today's trend toward a multimodal and mobility-driven model. This bill brings the ZEV regulation into alignment with modern transportation trends and seeks to encourage locally driven pilot programs that benefit DACs. 2)How many ZEVs are on California's roads? According to ARB, as of December 2015 there were 180,000 ZEVS on California's roads, representing about 3.5% of new car sales. About 1.4 million ZEVs were sold between 2010 and 2015. The Draft 2015 ZEV Action Plan notes that as of January 2015, Californians drive 40% of all ZEVs on the road in the U.S., while the U.S. comprises about half of the world market. ARB's 2013 Climate SB 1405 (Pavley) Page 5 of ? Change Scoping Plan and current draft Mobile Source Strategy both point to the need for the light-duty vehicle fleet to be largely electrified by 2050, with ZEV sales of nearly 100% by that point. 3)Where are the ZEVs? According to the Draft 2015 ZEV Action Plan, the metropolitan areas of Los Angeles, San Diego, and the San Francisco Bay Area lead the state in plug-in electric vehicle sales. ZEV adoption has been greatest in Los Angeles and Santa Clara counties. Many regions with low ZEV adoption have longer average driving distances, lack charging infrastructure, and have high populations of disadvantaged, low-income, and moderate-income communities. One strategy included in the draft plan is to increase access to ZEVs for low- and moderate-income consumers and to build awareness in DACs. Another strategy is to expand the use of zero-emission buses; specifically, to fund public transit and infrastructure benefiting DACs and low- and moderate-income communities, and to develop a program to build ZEV buses in local public transit fleets. 4)Updating the "transportation systems" definition. The author states that this bill is needed to modernize the ZEV regulation to incorporate today's technology: The current regulation focuses on car-sharing, while ride-sharing has now become quite popular. The ZEV regulation currently defines "innovative transportation system" as shared use of ZEVs and the application of technologies such as reservation management, card systems, depot management, location management, charge billing, and real-time wireless information systems, with additional credits awarded for linkage to transit. While it does not appear that the current regulation excludes fleets such as rental car companies, TNCs, and taxicab companies, the author states that updating the regulation to specifically include these entities will help foster consumer awareness and help the state reach its ZEV goals. 5)Double-referral. This bill has also been referred to the Senate Environmental Quality Committee. Related Legislation: AB 1710 (Calderon) - requires ARB to develop and implement a program comprised of a portfolio of incentives to promote ZEV SB 1405 (Pavley) Page 6 of ? and near-ZEV deployment. AB 1710 also provides tax incentives for purchasing new or used ZEVs or near-ZEVs. This bill will be heard by the Assembly Revenue and Taxation Committee on April 18. AB 2426 (Low) - requires ARB to establish and implement a Workplace Charging Stations Grant Program to provide funds for installation of electric vehicle charging stations in commercial parking facilities. This bill is pending in the Assembly Transportation Committee. AB 2564 (Cooper) - requires ARB to adopt regulations for the Clean Vehicle Rebate Program, which provides rebates for the purchase of new ZEVs, to establish specified income limits, increase rebate payments for applicants with household incomes less than or equal to 300% of the federal poverty level, include outreach to DACs to increase consumer awareness, and prioritize rebate payments for low-income applicants. This bill will be heard in the Assembly Natural Resources Committee on April 18. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No POSITIONS: (Communicated to the committee before noon on Wednesday, April 13, 2016.) SUPPORT: TechNet OPPOSITION: None received -- END --