BILL ANALYSIS �
SB 64
Page 1
Date of Hearing: June 26, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 64 (Corbett) - As Amended: June 14, 2013
SENATE VOTE : not relevant
SUBJECT : Clean Technology Innovation Account
SUMMARY : Requires the Governor's Office of Business and
Economic Development (GO-Biz) to expend greenhouse gas (GHG)
allowance auction revenues appropriated from the Greenhouse Gas
Reduction Fund (GHGRF) for various expenses associated with the
development of technologies that have the potential to reduce
GHG emissions.
EXISTING LAW :
1)Requires ARB, pursuant to California Global Warming Solutions
Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], to
adopt a statewide GHG emissions limit equivalent to 1990
levels by 2020 and adopt regulations to achieve maximum
technologically feasible and cost-effective GHG emission
reductions. AB 32 authorizes ARB to permit the use of
market-based compliance mechanisms to comply with GHG
reduction regulations, once specified conditions are met.
2)Establishes the GHGRF and requires all moneys, except for
fines and penalties, collected by ARB from the auction or sale
of allowances pursuant to a market-based compliance mechanism
(i.e., the cap-and-trade program adopted by ARB under AB 32)
to be deposited in the GHGRF and available for appropriation
by the Legislature.
3)Establishes the GHGRF Investment Plan and Communities
Revitalization Act [AB 1532 (John A. P�rez), Chapter 807,
Statutes of 2012] to set procedures for the investment of GHG
allowance auction revenues. AB 1532 authorizes a range of GHG
reduction investments, including funding in research,
development, and deployment of innovative technologies,
measures, and practices related to GHG reduction programs, and
establishes several additional policy objectives.
4)Requires the investment plan to allocate (1) a minimum of 25
SB 64
Page 2
percent of the available moneys in the GHGRF to projects that
provide benefits to identified disadvantaged communities and
(2) a minimum of 10 percent of the available moneys in the
GHGRF to projects located within identified disadvantaged
communities [SB 535 (De Leon), Chapter 830, Statutes of 2012].
5)Establishes the Economic Revitalization Act, which created
GO-Biz as the lead entity for economic strategy and the
marketing of California on issues relating to business
development, private sector investment, and economic growth.
SB 64
Page 3
THIS BILL :
1)Establishes the Clean Technology Innovation Account (Account)
within the GHGRF and requires the Legislature to appropriate
moneys to the Account from the GHGRF or other funds.
2)Requires that funds in the Account be expended by GO-Biz, upon
appropriation, for the following purposes:
a) To evaluate the efficacy of a new technology or
product to potentially reduce GHG emissions reduction "on
a per unit basis," as specified.
b) To provide grants for technologies or products that
have been evaluated and confirmed to have the potential
to reduce GHG emissions and that require financial
assistance for commercialization.
c) To provide grants on a competitive basis to entities
that operate programs that specifically target
technologies or products that have the potential to
reduce GHG emissions, as specified. Funds may be used
for activities that include, but aren't limited to:
i. Entrepreneurial training, emphasizing
skills and abilities needed to successfully create
and run small businesses;
ii. Providing access to capital and strategic
partners by assisting early-stage companies to
identify potential investors and strategic partners,
facilitating connections, and securing capital;
iii. Providing demonstration or prototyping
capabilities and equipment;
iv. Providing long-term structured programs
to support startup businesses; and,
v. Providing a physical site to operate the
business.
3)Requires that priority be given to entities that are nonprofit
501(c)(3) organizations; have a board of advisors with
specified expertise; demonstrate strong evidence of investors
and corporate relationships; and, have data collection on
start-ups and ventures served, as well as services provided,
with performance and service metrics being collected for a
minimum of three years.
SB 64
Page 4
4)Requires GO-Biz to establish a Science and Business Review
Committee (Committee) to provide programmatic and technical
expertise and specifies the membership of the Committee.
5)Requires the Committee to develop criteria for GHG emissions
evaluation and efficacy programs, funding priorities and
policy guidelines, and evaluate and score funding requests.
6) Requires the Committee to develop guidelines for the grant
programs authorized by the bill and do the following:
a) Consult with interested parties;
b) Establish policies regarding intellectual property
rights arising from research and projects funded by the
grants;
c) Establish policies to recapture grants to new and
existing companies that fail to maintain a substantial
business presence within California for a reasonable
amount of time; and,
d) Establish reporting requirements and other
conditions necessary to manage the program.
7)Specifies that not more than five percent of the funds
appropriated from the Account be used for administration of
the program.
8)Requires GO-Biz to conduct a public meeting to consider public
comments before finalizing the guidelines for the grant
programs and requires the draft solicitation and evaluation
guidelines be posted on its website at least 30 days before
the meeting.
9)Exempts the criteria and guidelines adopted by GO-Biz under
this bill from the Administrative Procedure Act.
FISCAL EFFECT : Unknown
COMMENTS :
1)Author's statement :
To further capitalize on California's great financial
SB 64
Page 5
investments in developing transformative technologies, the
state must also focus on effectively transferring
technology from the innovators, along the technology
development track, through to the end user?SB 64 would
establish a Clean Technology Innovation Account with a
portion of cap-and-trade revenues for grants and other
forms of assistance to technology "accelerators," the
organizations that guide successful technology transfer
activities. These "accelerators" can play an important
role, much like small business incubators and regional
technology alliances in communities throughout the state,
in ensuring that California continues to be a major force
in fostering cutting-edge technologies in the future,
creating jobs, and enhancing a healthy economic and
environmental future for the state of California.
2)Background . According to ARB, a total reduction of 80 million
metric tons (MMT), or 16 percent compared to business as
usual, is necessary to achieve the 2020 limit. Approximately
78 percent of the reductions will be achieved through
identified direct regulations. ARB proposes to achieve the
balance of reductions necessary to meet the 2020 limit
(approximately 18 MMT) through a cap-and-trade program that
covers an estimated 600 entities.
The 2012-13 Budget Act authorized Department of Finance (DOF)
to allocate at least $500 million from cap-and-trade revenue,
and make commensurate reductions to General Fund (GF)
expenditure authority, to support the regulatory purposes of
AB 32. AB 1532 established a long-term spending strategy for
moneys in the Fund, including procedures for deposit and
expenditure of cap-and-trade auction revenues pursuant to an
investment plan.
While DOF and ARB developed a three-year investment plan for
the auction proceeds pursuant to AB 1532, the 2013-14 Budget
Act provided that the first $500 million in auction revenue be
loaned to the GF and did not appropriate any funds pursuant to
the investment plan.
As part of the recently passed 2014-15 Budget, SB 862 (Budget
and Fiscal Review) allocates cap-and-trade revenues for the
2014-15 fiscal year and establishes a long-term plan for the
allocation of cap-and-trade revenues beginning in fiscal year
2015-16. SB 862 continuously appropriates 35 percent of
SB 64
Page 6
cap-and-trade funds for investments in transit, affordable
housing, and sustainable communities. Twenty-five percent of
the revenues are continuously appropriated to continue the
construction of high-speed rail. The remaining 40 percent
will be appropriated annually by the Legislature for
investments in programs that include low-carbon
transportation, energy efficiency and renewable energy, and
natural resources and waste diversion. The total amount
appropriated under SB 862 is $872 million. Funding for this
bill could be appropriated from the 40 percent of
cap-and-trade revenues that will be annually appropriated by
the Legislature in subsequent budgets.
3)GO-Biz . Speaker Emeritus Per�z established GO-Biz in 2011 (AB
29, Chapter 475) for the purpose of serving as the lead state
entity for economic strategy and marketing of California on
issues relating to business development, private sector
investment, and economic growth. GO-Biz includes the Office
of the Small Business Advocate and the Office of Business
Assistance. Currently GO-Biz includes units relating to
business investment services; permit streamlining; small
business assistance; and, encouraging innovation and
entrepreneurship, and international affairs and business
development. This bill would expand GO-Biz's duties and
authority to include providing grants and other financial
assistance from the Account to evaluate new technologies and
products that have the potential to reduce GHG emissions and
provide grants for these technologies and products. It's not
clear that GO-Biz has the expertise or is the appropriate
entity to evaluate grant applications based on GHG emission
reduction value.
4)Straining the nexus ? It's not clear what many of the items
listed in this bill have to do with actually reducing GHG
emissions. Is it enough that a technology may have the
potential to reduce GHG emissions? Should GO-Biz use GHGRF
funds to support the operation of organizations that support
technology development, including training people to run a
business and paying the cost of office space? The bill also
requires GO-Biz to give priority to funding entities with
specified characteristics which don't appear to have anything
to do with the merits of GHG emissions reductions, but do
appear to match the profile of the bill's sponsor, Cleantech
Open.
SB 64
Page 7
5)Too late for this year, or just early for next year ? The
Legislature approved a cap-and-trade expenditure plan on June
15 in the form of SB 862. If this bill is enacted this year,
it's unlikely the Account would be funded prior next year's
2015-16 Budget Act, which raises the question: If there's a
will to establish this program and fund it, why not do it in
the budget like the rest of the cap-and-trade expenditures?
REGISTERED SUPPORT / OPPOSITION :
Support
Biosynthetic Technologies
Can Manufacturers Institute
CEPA Operations
Cleantech Open
High Desert Water District
Solano County Water Agency
Opposition
California Chamber of Commerce
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092