BILL ANALYSIS �
AB 2409
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ASSEMBLY THIRD READING
AB 2409 (Allen)
As Amended May 2, 2012
Majority Vote
ECONOMIC DEVELOPMENT 4-2 NATURAL RESOURCES 7-0
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|Ayes:|V. Manuel P�rez, Beall, |Ayes:|Chesbro, Knight, |
| |Block, Hueso | |Dickinson, Grove, |
| | | |Huffman, Monning, Skinner |
|-----+--------------------------+-----+--------------------------|
|Nays:|Grove, Morrell | | |
| | | | |
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APPROPRIATIONS 17-0
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|Ayes:|Fuentes, Harkey, | | |
| |Blumenfield, Bradford, | | |
| |Charles Calderon, Campos, | | |
| |Davis, Donnelly, Gatto, | | |
| |Ammiano, Hill, Lara, | | |
| |Mitchell, Nielsen, Norby, | | |
| |Solorio, Wagner | | |
| | | | |
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SUMMARY : Requires the California Energy Commission (CEC) to
review and develop emerging technology financing models for
purposes of helping California review and make recommendations
based on emerging technology financing models used in other
states to finance energy efficiency technology deployments and
services with the goal of maximizing private sector investment
in California. The bill requires the CEC to undertake these
activities in collaboration with the Public Utilities Commission
(CPUC), the Treasurer's Office, the State Air Resources Board,
the California Infrastructure and Economic Development Bank, and
other stakeholder groups including investor-owned utilities.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs associated with this bill include one-time
costs to the CEC and the other participating entities totaling
in the tens of thousands of dollars (various special funds).
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COMMENTS : While energy efficiency measures are considered the
most cost effective means to reduce energy consumption and
pollution, financing these improvements remains a challenge. A
2009 study by the CPUC, found that achieving California's
efficiency objectives would require an annual investment of $4
billion. The state, however, expends only about one-half of
that amount.
Given the current budget situation, California does not have the
public resources to double its energy efficiency expenditures,
making it necessary for the state to proactively lure investment
capital from around the world.
Emerging public finance models for energy efficiency :
California leads the nation in securing cleantech targeted
venture capital financing. In 2011, the state secured $4.9
billion in cleantech targeted financing, over 5 times the amount
secured by the number two ranked state for cleantech targeted
financing, Massachusetts, at $460 million. Finding ways to
leverage the state comparative advantage in private finance will
be key to the state reaching its energy efficiency objectives.
A few examples of the types of financing models that AB 2409
envisions being explored are:
1)The Clean Energy Development Administration (CEDA) or the
Green Bank: The concept of the Green Bank is to establish an
independent, government-sponsored bank to support clean
technology financing through loan guarantees, credit
enhancements, debt instruments, and equity. In practice, the
bank would partner with private financial institutions that
would not expose themselves to the clean technology sector
because of perceived risk. Using guarantees, letters of
credit and other credit enhancement tools, the Green Bank
would provide private investors with the security they need to
make clean technology investments.
2)Clean Energy Victory Bonds or Green Bonds: The Victory Bond
concept was used during World War II when the federal
government sold bonds to the public to finance the war effort.
Green Bonds use a similar model in that they use public bonds
to raise capital for purposes of financing clean energy
projects. In 2008, The World Bank (Bank), in partnership with
Scandinavia, issued $350 million in Green Bonds denominated in
AB 2409
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Swedish Kronor to fund carbon emission reduction projects in
the third world. In 2009, the Bank issued its first U.S.
dollar denominated bond which was subsequently purchased by
the California State Treasury. Similarly, the European
Investment Bank issued ?1 billion euros worth of "Climate
Awareness Bonds" in 2007 to finance renewable energy and
energy efficiency project lending.
3)General Federal Bonds: The federal government offers several
flavors of bonds that award bondholders tax credits partially
or fully in lieu of interest payments. Two classes of these
bonds, Clean Renewable Energy Bonds (CREBs) and Qualified
Energy Conservation Bonds (QECBs), have been used with
considerable success to drive clean technology investments.
CREBs were created by the Energy Policy Act of 2005 to finance
certain renewable energy and clean coal facilities. To date,
over 900 clean-energy projects have been financed with $1.2
billion in CREB proceeds. QECBs were launched in 2008 and are
extremely versatile instruments that can be used to fund
projects ranging from green-building technologies and
mass-transit improvements, to conversion of agricultural
wastes and even marketing campaigns to promote energy
efficiency.
4)Federal Loan Guarantees: Established in 2005, the U.S.
Department of Energy's Loan Guarantee Program guarantees loans
for a range of clean-energy related projects. The program has
come under considerable criticism given its decision to fund
Solyndra, a California-based developer of thin-film solar
products that has since declared bankruptcy.
5)City Funds: A relatively new model, U.S. city-administered
loan funds, has been emerging across the country, including
Berkeley, Portland, Cambridge, and Boulder. Under this model,
a city raises capital through municipal bond issuances and
then uses the capital to offer moderate-sized loans (between
$5000 and $25,000) to homeowners for purposes of financing
home energy improvement upgrades.
Analysis Prepared by : Toni Symonds and Oracio Gonzalez / J.,
E.D. & E. / (916) 319-2090
AB 2409
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FN:
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