BILL ANALYSIS �
SB 771
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Date of Hearing: June 27, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 771 (Kehoe) - As Amended: June 20, 2011
SENATE VOTE : 38-0
SUBJECT : California Alternative Energy and Advanced
Transportation Financing Authority
SUMMARY : Specifies that natural gas engines, landfill gas
engines, digester gas engines, landfill gas turbines, digester
gas turbines, and microturbines are ultralow-emission equipment
for energy generation based on thermal energy systems and thus
eligible for financial assistance under the California
Alternative Energy and Advanced Transportation Financing
Authority (CAEATFA) Act.
EXISTING LAW:
1)Creates CAEATFA for the purpose of promoting the development
and utilization of alternative energy sources and the
development and commercialization of advanced transportation
technologies. CAEATFA consists of five members: the Director
of Finance, the chairperson on the California Energy
Commission, the president of the Public Utilities Commission,
the Controller, and the Treasurer, who serves as the
chairperson of CAEATFA.
2)Permits CAEATFA to provide bond financing to lend assistance
to a participating party to enter into loan agreements to
finance projects that use an alternative energy source or
advanced transportation technologies.
3)Permits CAEATFA to approve a sales and use tax exemption on
tangible personal property utilized for the design,
manufacture, production, or assembly of advanced
transportation technologies or alternative energy source
products, components or system. This sales and use tax
exemption will sunset on January 1, 2021.
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4)Requires CAEATFA to establish a renewable energy program to
provide financial assistance to public power entities,
independent generators, utilities, or businesses manufacturing
components or systems, or both, to generate new and renewable
energy sources, develop clean and efficient distributed
generation, and demonstrate the economic feasibility of new
technologies, such as solar, photovoltaic, wind, and
ultralow-emission equipment.
5)Defines "renewable energy" as either of the following:
a) A device or technology that conserves or produces heat,
processes heat, space heating, water heating, steam, space
cooling, refrigeration, mechanical energy, electricity, or
energy in any form convertible to these uses, that does not
expend or use conventional energy fuels (e.g. oil,
gasoline, natural gas), and that uses biomass, solar
thermal, photovoltaic, wind, or geothermal electrical
generation technologies.
b) Ultralow-emission equipment for energy generation based
on thermal energy systems such as natural gas turbines and
fuel cells.
THIS BILL adds natural gas engines, landfill gas engines,
digester gas engines, landfill gas turbines, digester gas
turbines, and microturbines to the list of energy generation
equipment that CAEATFA must consider "renewable energy" eligible
for financial assistance.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)CAEATFA. CAEATFA was created in 1980 with an authorization of
$200 million in revenue bonds to finance projects utilizing
alternative sources of energy, such as cogeneration, wind and
geothermal power. It was renamed in 1994 as currently titled
and its charge expanded to include the financing of "advanced
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transportation" technologies.
During the energy crisis of 2001, its authority was again
expanded, this time to provide financial assistance to public
power entities, independent generators, and others for new and
renewable energy sources, and to develop clean distributed
generation.
CAEATFA's authority is broad but in practice it has not been
utilized until recently. The State Treasurer has tried to
reinvigorate the authority and has launched a sales and use
tax exemption program to stimulate green manufacturing as
authorized by SB 71 (Padilla, 2010).
2)Landfill gas and anaerobic digestion. Landfilling is the main
method for disposal of municipal and household solid wastes or
refuses in the United States. Although maintained in an
oxygen-free environment and relatively dry conditions,
landfill waste produces significant amounts of landfill gas
(mostly methane). With Californians dumping more than 42
million tons of waste per year, the total amount of landfill
gases produced in California is tremendous.
Landfill gas is generated by the natural degradation of
municipal solid waste by anaerobic (without oxygen)
micro-organisms. Once the gas is produced, the gas can be
collected by a collection system, which typically consists of
a series of wells drilled into the landfill and connected by a
plastic piping system.
Anaerobic digestion is a biological process that produces a
gas principally composed of methane (CH4) and carbon dioxide
(CO2) otherwise known as biogas. These gases are produced
from organic wastes such as livestock manure, food processing
waste, etc.
Anaerobic processes could either occur naturally or in a
controlled environment such as a biogas plant. Organic waste
such as livestock manure and various types of bacteria are put
in an airtight container called digester so the process could
occur. Depending on the waste feedstock and the system
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design, biogas is typically 55 to 75% pure methane.
State-of-the-art systems report producing biogas that is more
than 95 percent pure methane.
3)Square peg, round hole? Landfill gas and digester gas are
considered renewable energy sources for purposes of the
Renewables Portfolio Standard and other state programs. They
are not included in the definition of "renewable energy" for
CAEATFA's purposes, but it appears appropriate and consistent
with other statutes to add them.
Conventional natural gas is not considered a renewable energy
source in any other context. It is unclear that it would be
necessary or consistent with CAEATFA's purpose to provide
financial assistance to natural gas technologies. However, if
the author's intent is to make engines fueled by conventional
natural gas specifically eligible for financial assistance
from CAEATFA, the author and the committee may wish to
consider amending the bill to make them eligible, without
calling them renewable.
4)Double referral. This bill has been double-referred to the
Utilities and Commerce Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Clean Power Campaign
Marin Sanitary Service
Opposition
None on file
Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092
SB 771
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