BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1464|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 1464
Author: De León (D)
Amended: 4/11/16
Vote: 21
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 4/20/16
AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley
SENATE APPROPRIATIONS COMMITTEE: 5-0, 5/27/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NO VOTES RECORDED: Bates, Nielsen
SUBJECT: California Global Warming Solutions Act of 2006:
greenhouse gas emissions reduction
SOURCE: Author
DIGEST: This bill requires the investment plan for the
greenhouse gas reduction fund (GGRF) expenditures include
additional assessments and recommended metrics for proposed
investments, as specified.
ANALYSIS:
Existing law:
1)Requires, under the California Global Warming Solutions Act of
2006 (also known as AB 32), 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. ARB
is authorized to include the use of market-based mechanisms to
comply with these regulations. (Health and Safety Code §38500
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et seq.)
2)Establishes the GGRF in the State Treasury, requires all
moneys, except for fines and penalties, collected pursuant to
a market-based mechanism be deposited in the fund.
(Government Code §16428.8)
3)Requires the Department of Finance (DOF), in consultation with
ARB and any other relevant state agency, to develop a
three-year investment plan for the moneys deposited in the
GGRF that does all of the following (HSC §39716):
a) Identifies the state's near-term and long-term GHG
emissions reduction goals and targets by sector.
b) Analyzes gaps in state strategies to meeting the state's
GHG emissions reduction goals and targets by sector.
c) Identifies priority programmatic investments of moneys
that facilitate the achievement of feasible and
cost-effective GHG emissions reductions toward achievement
of GHG emission reduction goals and targets by sector.
This bill requires the Investment Plan recommend metrics that
measures progress and benefits from the proposed programmatic
investments, and, in identifying priority programmatic
investments, requires the Investment Plan to do both of the
following:
1)Assess how proposed investments interact with current state
regulations, policies, and programs.
2)Evaluate if and how proposed investments could be incorporated
into existing programs.
Background
1)Cap-and-trade auction revenue. Since November 2012, ARB has
conducted 15 cap-and-trade auctions, generating over $4
billion in proceeds to the state.
State law specifies that the auction revenues must be used to
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facilitate the achievement of GHG emissions reductions and
outlines various categories of allowable expenditures.
Statute further requires the DOF, in consultation with ARB and
any other relevant state agency, to develop a three-year
investment plan for the auction proceeds, which are deposited
in the GGRF. ARB is also required to develop funding
guidelines for agencies to ensure GGRF requirements are met,
and provide guidance on maximizing benefits to disadvantaged
communities and reporting and quantifying GHG emissions
reductions and benefits.
Disadvantaged communities. SB 535 (de León, Chapter 830,
Statutes of 2012) required the Department of Finance, in the
investment plan, to allocate at least 25% of available moneys
in the GGRF to projects that provide benefits to disadvantaged
communities, and at least 10% to projects located within
disadvantaged communities.
Budget allocations. SB 862 (Committee on Budget and Fiscal
Review, Chapter 36, Statutes of 2014) established a long-term
cap-and-trade expenditure plan by continuously appropriating
portions of the funds for designated programs or purposes.
The legislation appropriated 25% for the state's high-speed
rail project, 20% for affordable housing and sustainable
communities grants, 10% to the Transit and Intercity Rail
Capital Program, and 5% for low-carbon transit operations.
The remaining 40% is available for annual appropriation by the
Legislature.
The Governor's 2016-17 proposed budget appropriates over $3
billion to a variety of programs and projects in the
transportation, energy, natural resources, and waste diversion
sectors.
2)Investment plan. Pursuant to AB 1532 (Pérez, Chapter 807,
Statutes of 2012), the first three-year Investment Plan for
cap-and-trade auction proceeds, developed by DOF in
consultation with ARB and other state agencies and covering
2013-2015, was submitted to the Legislature in May 2013. The
plan identified 1) sustainable communities and clean
transportation, 2) energy efficiency and clean energy, and 3)
natural resources and waste diversion as the three broad
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categories that provide the best opportunities, in that order,
for achieving the legislative goals of AB 32 via auction
proceeds. In addition, SB 535 directed that threshold levels
of investment be made to benefit disadvantaged communities.
Within those categories, the plan identified a range of
programs and measures to reduce GHG emissions, benefit
disadvantaged communities, and provide other cobenefits, such
as reduced air pollution, diversification of energy and fuels,
and spurring relevant technological innovation.
The Second Plan was released in January 2016, and like the
First Investment Plan, proposes diverse strategies under the
same three major investment categories, identifies gaps in the
current investment portfolio, and suggests approaches that
would help address these gaps.
3)LAO findings. According to the Legislative Analyst's Office
February 2016 report on the Governor's proposed resources and
environmental protection budget expenditures, the Investment
Plan lacks the necessary analysis needed to develop a
framework for spending. They also state that the Investment
Plan does not explicitly address how new programs might
interact with existing regulations or programs, and that
proposals from the administration lack reliable estimates of
benefits, which make it difficult to evaluate which set of
programs are likely to best achieve state priorities and
provide the greatest overall benefits, compared to alternative
strategies.
Comments
Purpose of Bill. According to the author, "Cap-and-trade
auction revenue, with proceeds to the state of over $4 billion
since the initial auction, has been appropriated to more than 12
different agencies to administer over 20 different programs to
reduce GHG emissions and provide cobenefits, including benefits
to disadvantaged communities. In 2012, the Legislature directed
the Department of Finance to prepare an investment plan every
three years to help guide Legislative appropriation of the
proceeds. The Investment Plan is required to assess gaps in the
state's strategies to meet climate goals, and identify priority
investments. However, as the Legislative Analyst's Office has
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noted in their recent budget report, the Investment Plan does
not provide a robust analysis with which to evaluate proposals
for GGRF spending, including how proposed investments interact
with the current state programs. Additionally, the LAO reports
the lack of specificity of benefits assigned to administration
budget proposals, and the difficulty this poses in evaluating
these proposals for funding.
"SB 1464 requires the Investment Plan to consider how proposed
investments interact with current state programs, and if those
investments and programs can be incorporated into current state
programs. SB 1464 also requires the investment plan recommend
metrics that would measure progress and benefits from the
proposed programmatic investments. In this way, the Investment
Plan will better serve its original statutory intent-to guide
the Legislature in funding an optimized strategy of
complementary investments to maximize GHG emissions reductions
and cobenefits from the GGRF, especially in those communities
disproportionately burdened by pollution."
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Approximately $145,000 (GGRF) annually for two years to
ARB for limited-term staffing costs.
Approximately $150,000 (GGRF) annually for contracts for
modeling GGRF investments interactions with existing state
policies and analyzing emissions impacts from investment
concepts.
SUPPORT: (Verified5/27/16)
None received
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OPPOSITION: (Verified5/27/16)
None received
Prepared by:Rebecca Newhouse / E.Q. / (916) 651-4108
5/28/16 17:15:05
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