BILL ANALYSIS �
AB 2242
Page 1
Date of Hearing: April 28, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 2242 (Perea) - As Amended: March 28, 2014
SUBJECT : Air Quality Improvement Program
SUMMARY : Requires the Air Resources Board's (ARB) Air Quality
Improvement Program (AQIP), which funds air quality improvement
projects relating to fuel and vehicle technologies, to be
focused where the greatest air quality impacts can be
identified.
EXISTING LAW establishes the California Alternative and
Renewable Fuel, Vehicle Technology, Clean Air, and Carbon
Reduction Act of 2007 [AB 118 (Nunez), Chapter 750, Statutes of
2007]. AB 118 is funded through temporary increases in vehicle
registration fees ($3), smog abatement fees ($8), boat
registration fees ($10/20), and special identification plate
fees ($5). Collection of these fees is authorized until 2024
pursuant to AB 8 (Perea), Chapter 401, Statutes of 2013. The
fees support three major programs:
1)The Alternative and Renewable Fuel and Vehicle Technology
Program (ARFVTP), administered by California Energy
Commission, provides grants and other financial incentives to
accelerate the development and deployment of clean, efficient,
low carbon alternative fuels and technologies. ARFVTP is
funded by $2 of the vehicle registration fee and receives
approximately $100 million per year total.
2)AQIP, administered by ARB in consultation with local air
districts, funds projects that reduce criteria air pollutants,
improve air quality, and provide research for alternative
fuels and vehicles, vessels, and equipment technologies. AQIP
is funded by smog abatement fees, boat registration fees, and
special identification plate fees and receives between $30-36
million per year.
3)The Enhanced Fleet Modernization Program (EFMP), under which
ARB, in consultation with the Bureau of Automotive Repair,
pays to permanently remove cars and small trucks from
operation through voluntary retirement by their owners. EFMP
is funded by $1 of the vehicle registration fee and receives
AB 2242
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approximately $30 million per year.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background . In 2007, AB 118 established AQIP as one of three
new programs intended to promote vehicle and fuel technology
that reduces air pollution and greenhouse gas (GHG) emissions
statewide. AQIP provides financial incentives for public and
private groups and individuals to adopt smog and diesel
particulate pollution reducing technology that concurrently
reduces GHG emissions. Two of AQIP's flagship projects, the
Clean Vehicle Rebate Project (CVRP) and the Hybrid and Zero
Emissions Truck and Bus Voucher Incentive Program (HVIP),
represent the program's largest funding commitments. AQIP has
also provided incentives for biofuels research, hybrid truck
testing, lawn and garden equipment replacement, zero-emission
all-terrain agricultural work vehicle rebates, advanced
technology demonstration and hybrid off-road equipment pilot
projects.
Until last year, the Legislature appropriated about $30-40
million annually to AQIP from AB 118 fee revenues. Last year,
an additional $30 million was loaned to AQIP from the Vehicle
Inspection and Repair Fund, $20 million of which was allocated
to CVRP and $10 million for HVIP. Since 2009, ARB has spent
approximately $205 million on AQIP programs, with $120 million
going to CVRP and $50 million to HVIP. The Governor's
proposed budget for 2014-15 proposes an additional $200
million appropriation to AQIP from the Greenhouse Gas
Reduction Fund (cap-and-trade auction revenues).
2)Author's statement :
California is home to some of the worst air quality in the
nation, which negatively impacts residents. Air quality in
the San Joaquin Valley and South Coast air districts
routinely violates United States Environmental Protection
Agency (EPA) standards. Poor air quality not only impacts
quality of life, but has also been linked to premature
death. In 2012, the San Joaquin Valley Air Pollution
Control District used EPA tools to estimate that improving
the Valley's poor air quality would save over 600 lives and
$5 billion annually.
AB 2242
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The CVRP offers incentives up to $2500 for purchasers of
low- or zero-emission vehicles. Each year, CVRP
distributes millions of dollars to car buyers in
California. Although AQIP funding is intended to improve
air quality, most CVRP rebates are claimed by drivers that
live in areas with good air quality. To date, nearly
20,000 rebates have been issued to residents of the Bay
Area Air Quality Management District, whereas fewer than
1,000 have gone to San Joaquin Valley residents. In order
to direct State funds where they can do the most good, AB
2242 would clarify that AQIP should be focused on areas of
the state where it can have the greatest positive impact on
air quality.
3)From the many to the few . The author points to a geographic
inequity in distribution of CVRP rebates, but there is also a
significant socio-economic inequity in the program. The vast
majority (over 90%) of funds for both the ARFVTP ($93 million
in FY 2011-12) and AQIP ($31 million in FY 2011-12) have come
from annual registration fees paid through DMV by vehicle
owners. AB 118 applies a registration fee increase of $3 for
all vehicles, plus an $8 increase in the smog abatement fee
that applies to newer vehicles that are exempt from smog
check. $2 of the registration fee goes to ARFVTP and $1 to
EFMP. The $8 is split between ARFVTP and AQIP. The
registration fee increase is flat - that is it is collected
without regard to a vehicle's value. So a car valued at $500
pays the same as a car valued at $100,000.
According to ARB, $104 million worth of CVRP rebates have been
awarded as of March 31, 2014. Nearly 99 percent of these
funds have gone to electric (EV) and plug-in hybrid vehicles,
as detailed below. For example, 6,707 $2500 rebates (a total
of nearly $17 million) have gone to purchase new Tesla Model S
vehicles, with base prices ranging from $70,000 to over
$100,000. Survey data indicates that the typical CVRP
recipient earns over $150,000/year, drives 15-30 miles/day and
owns at least one other non-electric vehicle.
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|Vehicle Type by Model |Number of |Total |Percentage of |
| |rebates |Dollars |Total Dollars |
| | |Expended |Expended |
AB 2242
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|--------------------------+----------+----------+---------------|
|Light-Duty Zero-Emission | |$68,105,97| 65.51%|
|Vehicles |25,676 | 3| |
|--------------------------+----------+----------+---------------|
| BMW 1 Series Active E | | $52,500| 0.05%|
| |?? | | |
| |70 | | |
|--------------------------+----------+----------+---------------|
| Chevrolet Spark EV | |$1,257,500| 1.21%|
| |?? 503 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| CODA | | $122,500| 0.12%|
| |?? | | |
| |49 | | |
|--------------------------+----------+----------+---------------|
| FIAT 500e | |$4,190,208| 4.03%|
| | 1,677 | | |
|--------------------------+----------+----------+---------------|
| Ford Focus Electric | |$2,294,723| 2.21%|
| |?? 920 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Honda FCX Clarity | | $55,000| 0.05%|
| |?? | | |
| |14 | | |
|--------------------------+----------+----------+---------------|
| Honda Fit EV | | $672,500| 0.65%|
| |?? 269 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Mercedes-Benz F-CELL | | $57,500| 0.06%|
| |?? | | |
| |23 | | |
|--------------------------+----------+----------+---------------|
| Mitsubishi i-MiEV | | $328,561| 0.32%|
| |?? 162 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Nissan Leaf | |$37,360,94| 35.94%|
| |13,330 | 4| |
|--------------------------+----------+----------+---------------|
| Smart Electric Fortwo | | $83,000| 0.08%|
|Cabriolet |?? | | |
| |33 | | |
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|--------------------------+----------+----------+---------------|
| Smart Electric Fortwo | |$1,793,500| 1.73%|
|Coupe |?? 792 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Tesla Model S | |$16,760,50| 16.12%|
| | 6,707 | 0| |
|--------------------------+----------+----------+---------------|
| Tesla Roadster | | $672,500| 0.65%|
| |?? 161 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Th!nk City | | $126,037| 0.12%|
| |?? | | |
| |53 | | |
|--------------------------+----------+----------+---------------|
| Toyota RAV4 EV | |$2,274,000| 2.19%|
| |?? 911 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Wheego LiFe | | $4,500| 0.00%|
| |?? | | |
| |2 | | |
|--------------------------+----------+----------+---------------|
|Plug-In Hybrid Electric | |$34,519,61| 33.21%|
|Vehicles |23,032 | 8| |
|--------------------------+----------+----------+---------------|
| Cadillac ELR | | $10,500| 0.01%|
| |?? | | |
| |7 | | |
|--------------------------+----------+----------+---------------|
| Chevy Volt Low Emission | |$18,183,72| 17.49%|
|Package |12,126 | 6| |
|--------------------------+----------+----------+---------------|
| Ford CMAX Energi | |$2,395,950| 2.30%|
| | 1,598 | | |
|--------------------------+----------+----------+---------------|
| Ford Fusion Energi | |$2,154,000| 2.07%|
| | 1,436 | | |
|--------------------------+----------+----------+---------------|
| Honda Accord Plug-In | | $259,500| 0.25%|
| |?? 173 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Toyota Prius Plug-in | |$11,515,94|11.08% |
AB 2242
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|Hybrid | 7,692 | 2| |
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4)Is the Valley not getting its fair share of clean air funds ?
CVRP rebates are allocated based on consumer demand and, as
the author notes, most rebates have gone to urban areas near
the coast. While there is no definitive answer as to why EVs
are not selling as well in the Valley compared to the Bay Area
for example, one can speculate that relatively lower income
levels, longer commute distances and driver preferences may be
deciding factors. However, consumers in the San Joaquin
Valley may take advantage of the additional incentives offered
by the San Joaquin Valley Air Pollution Control District's
Drive Clean Rebate Program, which offers rebates up to $3000
for electric, plug-in hybrid and natural gas vehicles. For an
EV such as the Nissan Leaf or Tesla Model S, a buyer in the
Valley is eligible for a combined incentive of $5500 from CVRP
and Drive Clean. According to ARB, as of November 2013, 652
rebates have been issued in the San Joaquin Valley and the
number of rebates issued per month is steadily increasing
after the launch of the Drive Clean Rebate Program.
While the Valley and many other areas of the state are not
receiving a large share of CVRP rebates, when the totality of
clean air funds, including other AB 118 programs and the Carl
Moyer Program, are considered, it appears the Valley does
receive funds commensurate to its air quality problems and
significantly more than Valley residents contribute through
fees.
By making the entire focus of AQIP "where the greatest air
quality impacts can be identified," the bill could be
interpreted to require all funds to go to districts (e.g., San
Joaquin and South Coast) or even communities (e.g., Fresno)
with the most severe air pollution. However, this approach
may not be feasible, may not deliver the greatest air quality
benefit, may not meet other objectives of AQIP/AB 118, and may
be unfair to drivers in other areas of the state who still
must pay for the program through the AB 118 fee structure, yet
would have no chance to get incentives. The author and the
committee may wish to consider amending the bill to make
targeting regions with severe air pollution a consideration,
rather than the sole focus. Alternatively, the bill could be
amended to address CVRP's inequities by placing eligibility
restrictions on luxury cars and very high-income recipients,
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and devoting the resulting excess funds to programs targeted
to regions with severe air pollution.
REGISTERED SUPPORT / OPPOSITION :
Support
San Joaquin Valley Air Pollution Control District
Opposition
Bay Area Air Quality Management District
Santa Barbara County Air Pollution Control District
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092