BILL ANALYSIS �
AB 642
Page 1
Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 642 (Calderon) - As Amended: April 27, 2011
SUBJECT : Renewable energy: biomass: algae.
SUMMARY : Specifies (1) that the State Lands Commission (SLC)
may enter into a lease for the development of algae-producing
energy and agricultural products and (2) that biomass includes
algae for the purpose of receiving funding from the Renewable
Resources Trust Fund (Fund) or the California Alternative Energy
and Advanced Transportation Financing Authority (Authority).
Specifically, this bill :
1)Specifies that biomass includes algae for the purpose of
receiving funding from the Fund Authority.
2)Specifies that SLC may enter into a lease for the development
of algae-producing energy and agricultural products when such
a lease appears to be in the public interest.
EXISTING LAW :
1) Provides that SLC has exclusive jurisdiction and leasing
authority over all public trust lands owned by the state. Public
trust lands generally consist of tide and submerged lands and
beds of navigable channels, streams, rivers, creeks, lakes,
bays, and inlets.
2) Protects the public's right to use California's public
trustlands for commerce, navigation, fishing, boating,
natural habitat protection, and other water oriented activities.
3) Requires the California Energy Commission (CEC) to optimize
public investment and ensure that the most cost-effective and
efficient investments in renewable energy resources are
vigorously pursued.
4) Establishes the Fund, which is administered by CEC and
funded by a charge paid by customers of energy corporations. A
portion of the Fund is to be used for programs that are designed
to achieve fully competitive and self-sustaining existing
in-state renewable electricity generation facilities, such as
AB 642
Page 2
facilities that use biomass energy.
5) Establishes the Authority, which provides bond financing for
facilities that use alternative energy sources, such as biomass
energy.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, the purpose of the bill is
to ensure that if there is an application for algae-producing
energy and agricultural products that they can obtain the lease
by being explicit that algae is considered biomass energy to
qualify for the Fund. The bill may help encourage more
businesses to invest in the development of algae fuel.
1) Background: Algae are attracting attention as a renewable
energy source because the strains can potentially produce 10 or
more times more fuel per acre than the corn used to make ethanol
or the soybeans used to make biodiesel. Unlike row crops, algae
growth is not dependent on a particular season. Moreover, algae
can grow in seawater, but can also thrive in desert ponds, using
high-saline water from aquifers that cannot otherwise be used.
Many species of algae can even grow in wastewater from treatment
plants and water that contains nitrates, phosphates, and other
contaminants. Algae are also a consumer of carbon dioxide.
Particular focus has been placed on the use of algae for jet
fuel. At least one major airplane has stated that commercial
airlines may derive one percent of their fuel by 2015 from
biofuels made of plants including algae. There are currently
efforts in Mexico to produce one percent of the nation's jet
fuel from algae in less than five years.
In California, the University of California, San Diego
established the San Diego Center for Algae Biotechnology
(SD-CAB) which was established in 2008 as a consortium of
researchers from The Scripps Research Institute (TSRI), the
University of California, San Diego (UCSD), and Scripps
Institution of Oceanography (SIO), in partnership with private
industry. SD-CAB selected the San Diego-Imperial Valley region
for algae production and research. This area boasts a strong
array of scientific, geographic, and environmental resources
suited for the research and development of advanced biofuels
from algae. They mention that this project "combined with an
abundance of sunshine, thousands of acres of desert land perfect
AB 642
Page 3
for algae-growing ponds, and a world-class biotech and
engineering sector, the San Diego-Imperial Valley region can
provide green-collar jobs that will boost the economy of our
state and nation." Currently, the SD-CAB has a test facility,
operated by Biolight and Carbon Capture Corporation, located on
40 acres in California's Imperial Valley. The facility
includes, offices, laboratories, and a warehouse, including 11
ponds, called "raceways," each containing more than 200,000
gallons of water, and 30 smaller-scale raceways, with 100 to
60,000 gallons each.
2) How much water ? According to SD-CAB, the United States
consumes 140 billion gallons per year of liquid fuel. Algae can
produce 3,000 gallons of liquid fuel per acre in a year, so it
would take 45 million acres of algae to provide 100% of our
liquid fuel requirements. For comparison, in 2008 the United
States had 90 million acres of corn and 67 million acres of
soybeans in production. So growing 45 million acres of algae,
while challenging, is certainly possible. Analyzing 30 years of
meteorological data, the team determined the sunlight needed for
the algae to grow and how warm the ponds would become, enabling
the team to calculate hourly algae production at each site. They
concluded that 21 billion gallons of algal oil could be produced
by 2022 in the U.S. To achieve this production level, algae
would have to be grown on land the size of South Carolina. The
amount equals 17% of the unrefined oil imported by the U.S. in
2008. In 2009, slightly more than half the petroleum consumed by
the U.S. was from foreign oil.
Despite the amount of water needed for biofuel production, algae
sources offer several advantages over other biofuels. Algae can
produce more than 80 times more oil per hectare per year than,
for example, corn. What's more, algae are not a widely used food
source and are CO2-consuming organisms, making them a
carbon-neutral energy source. Additionally, algae can feed off
the CO2 emission from power plants and digest common water
pollutants such as nitrogen and phosphorous. Environmental
concerns and rising oil prices are boosting research and
investment in algal oil. Many observers consider algae the best
feedstock for producing biofuels. Over 100 companies have
announced plans to use algae as a fuel source; some have already
completed small manufacturing and refining centers.
3) SLC Leasing Land Policies: SLC has jurisdiction and
management control over those public lands of the State received
AB 642
Page 4
by the State upon its admission to the United States in 1850
("sovereign lands"). Generally these sovereign lands include
all ungranted tidelands and submerged lands, beds of navigable
rivers, streams, lakes, bays, estuaries, inlets, and straits.
The SLC manages these sovereign lands for the benefit of all the
people of the State, subject to the Public Trust for water
related commerce, navigation, fisheries, recreation, open space
and other recognized Public Trust uses. In addition the State
manages lands received after Statehood including swamp and
overflowed lands and school lands. The SLC's Land Management
Division in Sacramento administers the surface leasing of these
lands, sand and gravel extraction from these lands, and dredging
or disposal of dredged material on these lands.
The lands managed by the SLC vary widely in character and
utility. The SLC maintains a multiple use management policy to
assure the greatest possible public benefit is derived from
these lands. The SLC will consider numerous factors in
determining whether a proposed use of the State's land is
appropriate, including, but not limited to, consistency with the
Public Trust under which the SLC holds the State's sovereign
lands, protection of natural resources and other environmental
values, and preservation or enhancement of the public's access
to State lands.
Article 2 of the SLC's regulation code for leasing public land
states that leases or permits may be issued to qualified
applicants and the SLC shall have broad discretion in all
aspects of leasing including category of lease or permit and
which use, method or amount of rental is most appropriate,
whether competitive bidding should be used in awarding a lease,
what term should apply, how rental should be adjusted during the
term, whether bonding and insurance should be required and in
what amounts, whether an applicant is qualified based on what it
deems to be in the best interest of the State. More
importantly, leases or permits for tide or submerged lands shall
generally only be issued to riparian or littoral upland owners
or use right holders, provided however that such leases or
permits may be granted to the best qualified applicant
irrespective of riparian or littoral status. When the lease
agreement is negotiated between the applicant and the land
manager from the SLC it has to be approved by the Lieutenant
Governor, the State Controller, and Department of Finance who
ensure that this lease agreement complies with the Public Trust
Doctrine. Furthermore, all applications need to be California
AB 642
Page 5
Environmental Quality Act (CEQA) compliant and there is a public
hearing to listen and address any concerns anyone might have
with regards to the lease agreements.
Applicants are advised that the SLC is under no obligation to
approve any application submitted to it. The SLC may approve,
condition, or deny any application, based upon the above
referenced factors or other issues raised during the application
review process.
4) Does Algae Fuel Qualify for Funding? Under SLC's general
leasing authority, it may enter into a lease for algae-producing
energy and agricultural products as long the lease does not
conflict with the public's right to use California's public
trust lands (i.e. the Public Trust Doctrine), the constitution,
or state laws. The state is also authorized to utilize the Fund
and the Authority for qualifying projects involving algae-algae
fuel is considered biomass energy. The bill's intent is to
explicitly reference algae in the relevant SLC, Fund, and
Authority governing statues.
As mentioned above the SLC general leasing authority does
include a lease for algae-producing energy as long as the lease
does not conflict with the public's right to use California's
public trust lands. Something else to consider is that SLC has
mentioned that until now there has been no applications for a
lease for algae-producing energy. There is currently nothing in
law that prohibits a lease for algae-producing energy,
therefore, it is unclear what the author intends to accomplish
since there are no examples of algae project applications being
denied by SLC and algae is already considered a biomass energy
to qualify for funding.
This bill passed out of Assembly Natural Resources Committee
(8-0) on April 26, 2011. Technical amendments in that committee
uncodified the specification that biomass energy includes algae
and instead of placing this language within the Public Resources
Code this bill if enacted, will be placed as an annotation at
the bottom of the Public Resources Code.
REGISTERED SUPPORT / OPPOSITION :
Support:
AB 642
Page 6
None on file.
Oppose:
None on file.
Analysis Prepared by : Crystal Quezada / U&C / (916) 319-2051