BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 400
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: corbett
VERSION: 2/26/09
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: April 21, 2009
SUBJECT:
Green vehicles
DESCRIPTION:
This bill makes the manufacture of "green vehicles," which the
bill defines, eligible for subsidies under the California Energy
Commission's Alternative and Renewable Fuel and Vehicle
Technology Program and the California Alternative Energy and
Advanced Transportation Financing Authority's programs.
ANALYSIS:
In 2006, the Legislature passed and the Governor signed AB 32
(N??ez and Pavley), Chapter 488, to establish a statewide
greenhouse gas (GHG) emissions limit such that by 2020
California reduces its GHG emissions to the level they were in
1990.
Alternative and Renewable Fuel and Vehicle Technology Program
AB 118 (N??ez), Chapter 750, Statutes of 2007, created the
Alternative and Renewable Fuel and Vehicle Technology Program,
which the California Energy Commission (CEC) administers to
provide, upon appropriation by the Legislature, grants,
revolving loans, loan guarantees, loans, or other appropriate
funding measures to public agencies, vehicle consortia,
businesses, consumers, recreational boaters, and academic
institutions to develop and deploy innovative technologies that
transform California fuel and vehicle types to help attain the
state's climate change policies.
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Funding of approximately $120 million annually for this program
comes from additional fees on vehicle registrations, special
identification plates for various vehicles, and vessel
registrations, plus $10 million annually from the Public
Interest Research, Development, and Demonstration Fund, which is
derived from a portion of electric utility rates.
The CEC, through a competitive process, will allocate these
funds to alternative fuel and vehicle technology projects. To
set priorities for the allocation of funds, the CEC must develop
an investment plan in consultation with a wide array of
stakeholders. The CEC expects to adopt its investment plan at
its April 22, 2009 meeting.
Existing law makes the following projects eligible for funding
under the Alternative and Renewable Fuel and Vehicle Technology
Program:
Projects to develop and improve vehicle technology that
provide for better fuel efficiency and lower greenhouse gas
emissions, including technology related to advanced internal
combustions engines with a 40 percent or better efficiency
level over the current market standard.
Alternative and renewable fuel projects to develop,
improve, demonstrate, deploy, produce, and commercialize
alternative and renewable fuels.
Alternative and renewable fuel infrastructure, fueling
stations, and equipment.
Vehicle retrofit projects to create higher fuel
efficiencies.
Infrastructure projects that promote alternative and
renewable fuel infrastructure development for existing
fleets, public transit, and existing transportation
corridors.
Workforce training programs related to alternative fuels
and vehicle technology.
Block grants administered by not-for-profit technology
consortia for specified purposes.
This bill adds to the projects that are eligible for funding
under the alternative fuel and vehicle technology program the
manufacture of vehicle technologies, including advanced internal
combustion engines with a 30 percent or better efficiency level
over the current market standard.
California Alternative Energy and Advanced Transportation
SB 400 (CORBETT) Page 3
Financing Authority
Existing law creates the California Alternative Energy and
Advanced Transportation Financing Authority (CAEATFA) within the
State Treasurer's Office to provide financing, through taxable
bonds, and to promote the establishment of:
Facilities using alternative methods and sources of
energy.
Facilities needed for the development and
commercialization of advanced transportation technologies.
The board governing the authority consists of the State
Treasurer, who serves as chair, the Director of Finance, the
State Controller, the chair of the CEC, and the chair of the
Public Utilities Commission.
For the purpose of receiving assistance from CAEATFA, existing
law defines advanced transportation technologies as "emerging
commercially competitive transportation-related technologies
identified by the authority as capable of creating long-term,
high value-added jobs for Californians while enhancing the
state's commitment to energy conservation, pollution reduction,
and transportation efficiency." These technologies include, but
are not limited to, intelligent vehicle highway systems,
advanced telecommunications for transportation, elecrtric
vehicles and ultralow emission vehicles, and fuel cells.
This bill deletes "electric vehicles and ultra low emission
vehicles" from the list of specifically included technologies in
the definition of advanced transportation technologies. Instead,
the bill includes "California green vehicles," which it defines
as vehicles that meet one of the following criteria:
1.Meets or exceeds California's standards for criteria pollutant
emissions and has a combined fuel economy rating of 30 miles
per gallon (mpg) or greater (e.g., the Toyota Corolla).
2.Meets or exceeds the California advanced technology partial
zero-emission vehicle standard and has a fuel economy rating
of 45 mpg or greater.
3.Is a gas-electric hybrid that has a combined fuel economy
rating of 45 mpg or greater and meets California's ultralow
emission vehicle standard for exhaust emissions (e.g., the
Toyota Prius).
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4.Meets or exceeds California super ultralow emission vehicle
standard and the federal low-emission vehicle evaporative
emission standard (e.g., the Toyota Highlander Hybrid).
5.Is a plug-in hybrid motor vehicle propelled by an internal
combustion or heat engine using a combustible fuel, a battery,
and a means of using off-board electricity.
COMMENTS:
1.Purpose . The author introduced this bill to provide incentives
to companies to manufacture "green vehicles" in California.
The author's district includes Fremont where New United Motor
Manufacturing, Inc. (NUMMI), a vehicle manufacturing plant, is
located. NUMMI is a private company that is a joint venture of
General Motors (GM) and the Toyota Motor Corporation that they
established in the 1980s at the site of an existing GM plant.
NUMMI manufactures both GM and Toyota vehicles.
The author notes that while Detroit is reeling, California's
own car manufacturing sector is in jeopardy. She states that
NUMMI, California's only car manufacturer, missed out on the
opportunity to be Toyota's first U.S. manufacturer of the
Prius. Tesla Motors, an electric car manufacturer, had
considered locating its manufacturing plant in San Jose, but
now plans are on hold. She states that these two examples
represent thousands of high paying green jobs.
The author further points out that while there are federal tax
incentives for customers to buy green cars and California has
issued 85,000 permits to allow green cars to drive in the
state's carpool lanes, the state offers little incentive for
companies to manufacture these cars here. This bill creates
such incentives to create jobs during difficult economic
times.
2.NUMMI-produced vehicles and fuel efficiency . NUMMI currently
manufactures three vehicles: the Toyota Tacoma pick-up truck,
the Pontiac Vibe, and the Toyota Corolla. The Corolla has a
combined U.S. Environmental Protection Agency (EPA) fuel
economy rating of 30 mpg; the Tacoma has a combined rating of
23 mpg; and most models of the Vibe have a combined rating of
24 mpg. Current corporate average fuel economy (CAF?)
standards for the U.S. auto fleet are 27.5 mpg and will
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increase to 35 mpg by 2020 under a federal law passed last
year.
Of NUMMI's current products, only the manufacture of the
Corolla could possibly qualify for the subsidies provided in
this bill with its 30 mpg fuel economy rating. According to
the U.S. EPA's website, the Corolla is not among the top ten
vehicles of 2009 for fuel economy. That list includes no GM
products, but does includes several Toyota vehicles, including
the Prius (#1), the Camry Hybrid (#6), and the Yaris (#10).
3.Subsidizing production of the Toyota Corolla ? The Toyota
Corolla is the best selling car of all time, with more than 30
million having been sold worldwide in over 40 years of
production. In 2004, NUMMI itself reported that it built over
168,000 Toyota Corollas in Fremont. It is unclear, therefore,
why the State of California would use public resources, as
authorized in this bill, to subsidize the manufacture of such
a successful product.
4.Concerns about the use of AB 118 funds . The intent of AB 118
is to use fees on vehicles and utility ratepayers to fund the
development and deployment of technologies to help the state
achieve its greenhouse gas reduction goals under AB 32 and
various executive orders. The CEC's most recent draft
investment plan for its fuel and vehicle technology program
calls for spending $176 million on electric drive, hydrogen,
ethanol, renewable diesel and biodiesel, natural gas, and
propane fuel technologies. Thus, nowhere in the current
program's legislative intent nor its implementation by the CEC
is it considered a source to fund conventional
gasoline-powered automobiles. In addition, AB 118 explicitly
precludes using its programs to fund compliance with federal
law, which presumably makes it illegal as a source of funding
for a vehicle manufacturer when making a vehicle that helps
that manufacturer achieve U.S. CAF? standards. The author or
the committee may wish to consider an amendment to delete
section 1 of the bill, which allows AB 118 funds to be used to
subsidize the manufacture of current generation internal
combustion engines.
5.The California Alternative Energy Source Financing Authority .
The Legislature originally created this authority in 1980 as
the California Alternative Energy Source Financing Agency and
provided it with an authorization of $200 million in revenue
bonds to finance projects that utilize alternative sources of
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energy. SB 1952 (Rosenthal), Chapter 1218, Statutes of 1994,
renamed it the California Alternative Energy and Advanced
Transportation Financing Authority and expanded its charge to
include the financing of "advanced transportation"
technologies.
According to its website, the CAEATFA Board has directed
CAEATFA staff to explore proposals that may provide sales and
use tax exemptions for the purchase of zero-emission vehicle
(ZEV) manufacturing equipment. The goal of this new ZEV
program is to create a strong new ZEV industry within
California to support the reducition of greenhouse gas
emissions and create new long-term, high value-added jobs.
This bill attempts to change this policy. It instead seeks to
provide assistance for the manufacture of vehicles with
various levels of emissions. In one instance, the bill makes
eligible for CAEATFA assistance gasoline-powered vehicles that
get 30 mpg, contradicting the definition of "advanced
transportation technologies" in CAEATFA's governing statute,
lowering the standard for projects assisted by CAEATFA, and
moving the state in the wrong direction for achieving its
policy objectives. The author or the committee may wish to
strike these vehicles from eligibility for CAEATFA assistance
(delete lines 38-39 on page 7 and lines 1-2 on page 8), while
preserving the other four vehicle types that the bill defines
as California green vehicles (listed on pages 2-3 of this
analysis and page 7 of the bill).
6.Double-referral . The Rules Committee referred this bill to
both the Transportation and Housing Committee and to the
Environmental Quality Committee. Therefore, if this bill
passes this committee, it will be referred to the Committee on
Environmental Quality.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 15, 2009)
SUPPORT: Breathe California
NUMMI
OPPOSED: None received.
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