BILL ANALYSIS Ó
SB 1464
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Date of Hearing: June 27, 2016
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Das Williams, Chair
SB
1464 (De León) - As Amended April 11, 2016
SENATE VOTE: 26-5
SUBJECT: California Global Warming Solutions Act of 2006:
greenhouse gas emissions reduction
SUMMARY: Requires that the Greenhouse Gas Reduction Fund (GGRF)
Investment Plan include additional assessments and recommended
metrics for proposed investments.
EXISTING LAW:
1)Requires the Air Resources Board (ARB), pursuant to California
Global Warming Solutions Act of 2006 [AB 32 (Nunez), Chapter
488, Statutes of 2006], to adopt a statewide greenhouse gas
(GHG) emissions limit equivalent to 1990 levels by 2020 and
adopt regulations to achieve maximum technologically feasible
and cost-effective GHG emission reductions. AB 32 authorizes
ARB to permit the use of market-based compliance mechanisms to
comply with GHG reduction regulations, once specified
conditions are met.
2)Establishes the GGRF and requires all moneys, except for fines
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and penalties, collected by ARB from the auction or sale of
allowances pursuant to a market-based compliance mechanism
(i.e., the cap-and-trade program adopted by ARB under AB 32)
to be deposited in the GGRF and available for appropriation by
the Legislature.
3)Requires the Department of Finance (DOF), in consultation with
the ARB and any other relevant state agency, to develop a
three-year GGRF Investment Plan to set procedures for the
investment of GHG allowance auction revenues. Authorizes a
range of GHG reduction investments, establishes policy
objectives, and requires that the Investment Plan:
a) Identify the state's near-term and long-term GHG
emissions reduction goals and targets by sector;
b) Analyze gaps, where applicable, in state strategies to
meeting the state's GHG emissions reduction goals and
targets; and,
c) Identify priority programmatic investments of moneys
that will facilitate the achievement of feasible and
cost-effective GHG emissions reductions toward achievement
of the GHG reduction goals and targets.
4)Requires the Investment Plan to allocate a minimum of 25% of
the available moneys in the GGRF to projects that provide
benefits to identified disadvantaged communities and a minimum
of 10% of the available moneys in the GGRF to projects located
within identified disadvantaged communities.
THIS BILL:
1)Requires that when identifying priority programmatic
investments that facilitate the achievement of feasible and
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cost-effective GHG emissions reductions toward achievement of
GHG reduction goals and targets, the Investment Plan do both
of the following:
a) Asses how the proposed investments interact with current
state regulations, policies, and programs; and,
b) Evaluate if and how those proposed investments could be
incorporated into existing programs.
2)Requires that the Investment Plan recommend metrics that would
measure progress and benefits from the proposed programmatic
investments.
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill has costs of approximately $145,000 (GGRF)
annually for two years for ARB for limited-term staffing costs
and approximately $150,000 (GGRF) annually for contracts for
modeling GGRF investments interactions with existing state
policies and analyzing emissions impacts from investment
concepts.
COMMENTS:
1)Cap-and-trade auction revenue. To date, cap-and-trade auction
revenues have generated over $4 billion. However, the most
recent auction, held last month, generated just over $10
million, much less than expected. The previous auction
(February, 2016) generated over $500 million. Current law
requires that auction revenues be used to facilitate GHG
emissions reductions and outlines various categories of
allowable expenditures. Statute further requires the DOF, in
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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.
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 appropriated over $3
billion to a variety of programs and projects in the
transportation, energy, natural resources, and waste diversion
sectors; however, the Assembly Budget Committee states, "due
to lower-than-expected auction revenues, decisions on cap and
trade programmatic funding have been deferred until after June
15, 2016. This extra time should allow for more analysis of
the revenue available for appropriation in the budget year."
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 sustainable communities and clean
transportation, energy efficiency and clean energy, and
natural resources and waste diversion as the three broad
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.
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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 Investment Plan was released in January 2016, and
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.
4)Author's statement:
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.
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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 co-benefits from
the GGRF, especially in those communities
disproportionately burdened by pollution.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
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None on file
Analysis Prepared by:Elizabeth MacMillan / NAT. RES. / (916)
319-2092