BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1527
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: lieu
VERSION: 6/1/09
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: June 30, 2009
SUBJECT:
Motor vehicle emission reduction projects
DESCRIPTION:
This bill makes it easier to use funds from multiple state
programs to fund an emission reduction project.
ANALYSIS:
Existing law establishes several programs designed to reduce
emissions associated with motor vehicles. Some programs are
intended to reduce emissions of criteria pollutants, which are
six common pollutants that harm human health and the
environment. Criteria pollutants include particle pollution
(often referred to as particulate matter or PM), ground-level
ozone, carbon monoxide, sulfur oxides, nitrogen oxides, and
lead. The United States Environmental Protection Agency has
established National Ambient Air Quality Standards for each of
these pollutants that regions throughout the U.S. must attain.
Other motor vehicle emission reduction programs focus on the
problem of climate change and seek to reduce greenhouse gas
emissions. The emission reduction programs pertinent to this
bill are described below.
Goods Movement Emission Reduction Program (GMERP)
In November 2006, voters approved the Highway Safety, Traffic
Reduction, Air Quality and Port Security Bond Act of 2006, also
known as Proposition 1B, that, among other things, provided one
billion dollars to reduce emissions associated with the movement
of freight along California's trade corridors. SB 88
(Committee on Budget and Fiscal Review), Chapter 181, Statutes
of 2007, provided guidance to ARB to implement the program,
referred to as the Goods Movement Emission Reduction Program
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(GMERP).
The GMERP provides incentive grants for projects that reduce
goods movement-related emissions. SB 88 defined "emissions" as
including, but not limited to, diesel particulate matter, oxides
of nitrogen, oxides of sulfur, and reactive organic gases, which
are criteria pollutants or precursors to them. Projects
eligible for funding include the replacement, repower, or
retrofit of heavy-duty diesel trucks, locomotives, harbor craft,
and cargo handling equipment, and the provision of on-shore
electrical power (i.e., cold-ironing) for cargo ships, portable
shore-side power generation projects, or electrification
infrastructure to reduce engine idling and the use of internal
combustion auxiliary power systems. Projects are awarded on a
competitive basis and ranked according to a combination of two
factors: the total amount of emissions reduced by the project
and the project's cost-effectiveness, which is defined as the
total pollutant-weighted emission reduction measured over the
life of the project, per state dollar invested.
Carl Moyer Memorial Air Quality Standards Attainment Program
(Carl Moyer)
The Carl Moyer program provides incentive grants for engines,
equipment, and other sources of pollution that exceed the
standards established by law or regulation, thereby providing
early or extra emission reductions. The program is designed to
reduce emissions of oxides of nitrogen (NOx), particulate matter
(PM), and reactive organic gas (ROG), which are necessary for
the state to attain the National Ambient Air Quality Standards.
Eligible projects include on-road, off-road, marine, locomotive,
and stationary agricultural pump engines. ARB approves projects
on the basis of their cost-effectiveness. The
cost-effectiveness for the Carl Moyer program is established in
statute, which prohibits grants for projects with a
cost-effectiveness that exceeds $13,600 per ton of NOx reduced.
For projects that obtain ROG and PM emission reductions, ARB
weights those reductions to produce an adjusted
cost-effectiveness standard consistent with statute.
AB 118 (N??ez), Chapter 750, Statutes of 2007
AB 118 provides approximately $200 million annually through 2015
for three new programs to fund air quality improvement projects
and develop and deploy technology and alternative and renewable
fuels. The three new programs are: the Air Quality Improvement
Program administered by ARB, the Alternative and Renewable Fuel
and Vehicle Technology Program administered by the Energy
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Commission, and the Enhanced Fleet Modernization Program
administered by the Bureau of Automotive Repair (BAR). The AQIP
and the Alternative and Renewable Fuel and Vehicle Technology
Program, which are subject to this bill, are described below.
Air Quality Improvement Program (AQIP). AQIP will provide about
$50 million per year for grants to fund clean vehicle and
equipment projects that reduce criteria and toxic air
pollutants, as well as research on the air quality impacts of
alternative fuels and advanced technology vehicles. AB 118
established eight broad project types that are eligible for AQIP
funding:
On- and off-road equipment projects;
Projects to mitigate off-road gasoline exhaust and evaporative
emissions;
Research on the air quality impact of alternative fuels;
University of California research to increase sustainable
biofuels production and improve collection of biomass
feedstock;
Lawn and garden equipment replacement;
Medium- and heavy-duty vehicle/equipment projects including
lower emission school buses, electric or hybrid
vehicles/equipment, and regional air quality programs in the
most impacted parts of California;
Workforce training related to advanced technology to reduce
air pollution; and
Projects to identify and reduce emissions from high-emitting
light-duty vehicles.
Projects will be awarded in the form of competitive grants,
revolving loans, or loan guarantees, and will be evaluated on
the basis of the potential to reduce criteria or toxic air
pollutants, cost-effectiveness, contribution to regional air
quality improvement, and the ability to promote the use of clean
alternative fuels and vehicle technologies.
Alternative and Renewable Fuel and Vehicle Technology Program.
This program is administered by the Energy Commission and
provides competitive grants and other financial incentives to
help the state achieve its climate change goal, primarily by
reducing greenhouse gas emissions. AB 118 establishes 11
criteria by which to evaluate projects and provides a broad list
of eligible projects, including:
Alternative and renewable fuel projects to develop and improve
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alternative and renewable low-carbon fuels;
Demonstration and deployment projects that optimize
alternative and renewable fuels for existing and developing
engine technologies;
Projects to produce alternative and renewable low-carbon
fuels;
Projects to decrease the overall impact of an alternative and
renewable fuel's life cycle carbon footprint and increase
sustainability;
Alternative and renewable fuel infrastructure, fueling
stations, and equipment;
Projects to develop and improve light-, medium-, and
heavy-duty vehicle technologies that provide for better fuel
efficiency and lower greenhouse gas emissions, alternative
fuel usage and storage, or emission reductions;
Programs and projects that accelerate the commercialization of
vehicles and alternative and renewable fuels;
Programs and projects to retrofit medium- and heavy-duty
on-road and nonroad vehicle fleets with technologies that
create higher fuel efficiencies;
Infrastructure projects that promote alternative and renewable
fuel infrastructure development connected with existing
fleets, public transit, and existing transportation corridors,
including physical measurement or metering equipment and truck
stop electrification;
Workforce training programs related to alternative and
renewable fuel;
Block grants administered by not-for-profit technology
entities for education and program promotion, and the
development of alternative and renewable fuel and vehicle
technology centers;
Analyses performed by a state agency to determine the impacts
of increasing the use of low-carbon transportation fuels and
technologies and to assist in program implementation.
This bill :
Requires ARB and the Energy Commission to revise their project
guidelines by January 1, 2011 to allow funding from federal
sources, the AQIP, and the Alternative and Renewable Fuel and
Vehicle Technology Program to be used for a project also
funded by the GMERP or the Carl Moyer program without those
other funds being factored into the cost-effectiveness
calculations for criteria pollutants under the GMERP or Carl
Moyer program.
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Provides that GMERP and Carl Moyer projects that receive
funding from those other sources must still meet all
requirements provided under existing law.
COMMENTS:
1.Purpose . According to the sponsor, CalStart, this bill is
designed to promote better coordination between state funding
programs for clean transportation. The bill allows federal and
AB 118 funds to be paired with Carl Moyer or Proposition 1B
funds to "upgrade" projects to achieve even greater air
quality benefits and greenhouse gas emission reductions.
Current program guidelines require that funds from all public
funding sources are summed when calculating
cost-effectiveness. The higher the state subsidy, the less
cost-effective a project is. Because of this, using state
funds from multiple programs makes it difficult or impossible
to demonstrate the cost-effectiveness of the project and thus
be awarded a grant.
According to the sponsor, ARB is in the process of amending
its guidelines for the GMERP in order to allow for limited
co-funding. These new guidelines have not yet been adopted,
however, and they do not apply to the Carl Moyer program.
Furthermore, the sponsor notes that the draft guidelines do
not include natural gas vehicles. The sponsor explains that
the emissions of criteria pollutants are the same for both a
2010 diesel truck and a 2010 compressed natural gas (CNG)
truck, but that the CNG truck provides a more significant
reduction in greenhouse gas emissions. CNG trucks, however,
are more expensive than diesel trucks and thus require greater
subsidy in order to incentivize their purchase. Clarifying
the state's preference for projects that achieve multiple
policy goals would provide clear direction to ARB and could
set a precedent for future coordination.
The need for these changes is particularly acute given today's
economic climate. In better times, fleets may have chosen to
pay a bit more for cleaner alternative fuel or hybrid
vehicles. Today, however, the economics of fleet purchase
decisions are likely to steer fleets toward diesel vehicles.
Every diesel vehicle purchased is a missed opportunity for
greenhouse gas and petroleum reductions, and possibly even
additional criteria pollutant reductions.
2.Undermining efforts to reduce emissions of criteria
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pollutants . Because some federal funds, AQIP, GMERP, and the
Carl Moyer program all focus on the reduction of criteria
pollutants, and in particular the reduction of oxides of
nitrogen and diesel PM, allowing AQIP funds, as well as some
federal funds, to be excluded in cost-effectiveness
calculations for projects funded by the GMERP and Carl Moyer
could result in less money being available to fund other
projects intended to reduce criteria pollutants. Furthermore,
to achieve the goals of reducing both criteria pollutant
emissions and greenhouse gas emissions, funds permitted to be
co-mingled for purposes of calculating cost-effectiveness
should be derived from programs designed to serve these
different purposes. For these reasons, the author or
committee may wish to consider the following amendments:
Delete AQIP funds from the list of funds to be excluded
from cost-effectiveness calculations for GMERP and Carl
Moyer projects.
Specify that federal funds used in conjunction with, but
excluded in cost-effectiveness calculations for, GMERP and
Carl Moyer projects, should be derived from programs
focused on climate change and designed to reduce greenhouse
gas emissions.
3.Fear of the unknown . The concept of achieving multiple policy
objectives with a single emission reduction project enjoys
broad support. Because this approach is somewhat new, there
is concern that it would be implemented in a manner that
compromised the effectiveness of individual programs. How
exactly will this idea be implemented? To help address these
concerns, the author or committee may wish to consider
amending the bill to state clearly that allowing funds from
one program to be excluded from the cost-effectiveness
calculation for a project from another program shall not
reduce the emission reduction benefits expected to be achieved
from those programs individually.
4.Consistent with other efforts to coordinate funding . As
noted, ARB is in the process of revising its guidelines to
make it easier to use funding from multiple state programs for
a project that aims to achieve multiple policy goals.
Additionally, in its funding plan for the AQIP, ARB
acknowledges that there may be some overlap between vehicle
projects that can be funded in both the AQIP and the
Alternative and Renewal Fuel and Vehicle Technology Program
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because some technologies achieve both greenhouse gas and
criteria pollutant reductions. According to the AQIP Funding
Plan, ARB and the Energy Commission are coordinating on source
categories where potential overlap exists and have discussed
the possibility of joint funding projects in future years in
cases where demand exceeds each agency's available funding.
By requiring ARB and the Energy Commission to revise its
guidelines for the GMERP and the Carl Moyer program, this bill
is consistent with efforts currently underway by ARB and the
Energy Commission to provide opportunities to support projects
that achieve multiple policy objectives.
5.Double-referral . This bill is double-referred to this
committee and the Committee on Environmental Quality. If this
bill passes this committee, it will be re-referred to the
Environmental Quality Committee.
Assembly Votes:
Floor: 77-0
Appr: 17-0
Trans: 11-0
POSITIONS: (Communicated to the Committee before noon on
Wednesday, June 24,
2009)
SUPPORT: CALSTART (sponsor)
California Dump Truck Owners Association
California Natural Gas Vehicle Coalition
OPPOSED: None received.