Amended in Assembly June 10, 2014

Amended in Senate April 29, 2014

Amended in Senate April 10, 2014

Senate Bill No. 1121

Introduced by Senator De León

February 19, 2014

begin delete An act to add Part 11.5 (commencing with Section 15880) to Division 3 of Title 2 of the Government Code, relating to state government. end delete begin insert An act to add Chapter 5 (commencing with Section 26100) to Division 16 of the Public Resources Code, relating to greenhouse gases. end insert

LEGISLATIVE COUNSEL’S DIGEST

SB 1121, as amended, De León. begin delete The California Green Bank Board. end delete begin insert California Climate Technology and Infrastructure Financing Act. end insert

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Existing law establishes the California Alternative Energy and Advanced Transportation Financing Authority consisting of specified members and authorizes the authority to provide financial assistance to projects related to the utilization of alternative energy sources or advanced transportation technologies.

end insert begin insert

This bill would enact the California Climate Technology and Infrastructure Financing Act and would require the authority, in consultation with the State Air Resources Board, to develop the California Climate Technology and Infrastructure Financing Program to provide financial assistance to eligible greenhouse gas emissions reduction projects, as defined. The bill would establish the Climate Technology and Infrastructure Financing Fund and would, upon appropriation by the Legislature, require the authority to expend moneys in the fund for the purposes of the program.

end insert begin delete

The Bergeson-Peace Infrastructure and Economic Development Bank Act authorizes the California Infrastructure and Economic Development Bank, governed by a board of directors, to make loans, issue bonds, and provide other assistance for various types of economic development projects, among other things. The activities of the bank under these provisions are funded from the California Infrastructure and Economic Development Bank Fund, which is continuously appropriated for these purposes.

end delete begin delete

This bill would establish the California Green Bank Board composed of 7 members including various heads of executive branch entities, as specified, one member appointed by the Senate Committee on Rules, and one member appointed by the Speaker of the Assembly. The bill would specify the duties and responsibilities of the board, including the duty to evaluate current state financial support for commercially viable clean energy projects and innovative energy technology projects. The bill would also require the board to make specific recommendations relating to its duties in a report to the Legislature, on or before January 1, 2016.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Chapter 5 (commencing with Section 26100) is
added to Division 16 of the end insert begin insert Public Resources Code end insert begin insert , to read: end insert

begin insert

 

Chapter   begin insert 5. end insert California Climate Technology and
Infrastructure Financing Act

 

Article begin insert 1. end insert   General Provisions and Definition

 

begin insert 26100. end insert   

The Legislature finds and declares all of the following:

(a) The California Global Warming Solutions Act of 2006
(Division 25.5 (commencing with Section 38500) of the Health
and Safety Code) requires the reduction of statewide greenhouse
gas emissions to 1990 levels by 2020.

(b) As a result of the act and complimentary policies, California
has established itself as a leader in the development of clean
technologies, helping to drive innovation and deployment of a
variety of greenhouse gas reducing technologies.

(c) However, there exist barriers to the widespread adoption
and commercial scale deployment of these technologies and, as a
result, cleaner, lower-carbon, cheaper, and more reliable energy
remains unavailable to many California consumers and businesses.

(d) Among the most critical barriers is the availability of
financing options for consumers and businesses, and the lack of
familiarity and perceived risk for investors due to limited data,
and, often, small and expensive financial transactions.

(e) To achieve the state’s climate goals, the state should better
optimize our limited public dollars to attract more private
investment, so that each dollar of public funds provides multiple
dollars of private capital.

(f) A statewide financing entity focused on fostering private
investments in low-carbon projects can provide significant
leveraging of private dollars to make public funds go further.

(g) A statewide financing entity in California could accelerate
the transition to a low-carbon economy, achieve the state’s climate
goals, and improve access for all Californians to cleaner energy.
A financing entity could help achieve all of the following goals:

(1) Evaluate, coordinate, and increase private investment in
greenhouse gas emissions reduction projects that are not currently
able to obtain financing in the capital markets at a reasonable
cost and with a reasonable rate of return to project developers at
scale and with significant private sector participation.

(2) Lower rates and decrease costs for utility ratepayers within
the state, expand the accessibility and affordability of clean energy
for end users, ensure the reliability and safety of the state’s energy
and water supplies, increase the climate resilience of the state’s
infrastructure, increase the use of clean energy, promote energy
efficiency, and advance the state’s energy- and
infrastructure-related economy.

(3) Foster increasingly efficient, low-cost capital financing at
scale and with maximum private sector participation for eligible
projects through the creation, where appropriate, of financial
performance data, standardized contracts, underwriting standards,
and measurement and verification protocols.

(4) Coordinate with, and enhance, existing clean energy
financing programs to fill financing gaps not currently filled by
existing programs or markets and further enhance the scale and
scope of existing programs or markets to enabling financing at
scale and with maximum private sector participation.

(5) Implement a variety of financing tools, including, but not
limited to, loans, loan guarantees, securitization, warehousing,
insurance, portfolio insurance, and other forms of financing
support and risk management, to support greenhouse gas emissions
reduction projects necessary to advance the state’s policy
objectives, including the reduction of greenhouse gas emissions
within the state.

begin insert 26101. end insert   

For the purposes of this chapter, the following terms
mean the following:

(a) “Clean agriculture project” means a project, product,
service, function, or measure, or an aggregation of projects,
products, services, functions, or measures, having the primary
purpose of deploying a product or service that avoids or reduces
emissions of greenhouse gases directly or indirectly caused by the
production or processing of crops or livestock.

(b) “Clean energy infrastructure project” means the
construction, alteration, or repair of types of infrastructure
necessary for the deployment of technologies, products, or services,
that will avoid or reduce emissions of greenhouse gases, including,
but not limited to, the following:

(1) Electric transmission and distribution facilities
interconnected to renewable energy projects or system efficiency
projects.

(2) Hydrogen transportation and distribution systems.

(3) Carsharing, ridesharing, and bicycle sharing facilities.

(4) Improvements to infrastructure used for the transportation
of passengers, goods, or freight.

(c) “Demand response project” means a project, product,
service, function, or measure, or an aggregation of projects,
products, services, functions, or measures, that changes electric
usage by end-use customers in the state from their normal
consumption pattern in response to any of the following:

(1) Changes in the price of electricity over time.

(2) Incentive payments designed to induce lower electricity use
at times of high market prices or when system reliability is
jeopardized.

(d) “Energy efficiency project” means a project, product,
service, function, or measure, or an aggregation of projects,
products, services, functions, or measures, that results in the
reduction of energy usage required to achieve the same level of
service or output prior to the application of the project, product,
service, function, or measure, and reduces emissions of greenhouse
gas relative to emissions that would have occurred prior to the
application of the project, product, service, function, or measure,
including, but not limited to, either of the following:

(1) Water capture, conveyance, distribution, use, reuse, and
recycling.

(2) Wastewater collection, treatment, and disposal.

(e) “Fund” means the California Climate Technology and
Infrastructure Financing Fund established pursuant to Section
26130.

(f) “Greenhouse gas emissions reduction project” means a
project, product, service, function, or measure, or an aggregation
of projects, products, services, functions, or measures, that avoids
or reduces emissions of greenhouse gases, including, but not
limited to, any of the following:

(1) Energy efficiency projects.

(2) Clean energy infrastructure projects.

(3) Innovation energy technology projects.

(4) Renewable energy projects.

(5) System efficiency projects.

(6) Clean agriculture projects.

(7) Low-carbon transportation projects.

(8) Demand response projects.

(9) Land-based greenhouse gas sequestration projects.

(10) A combination of the projects specified in paragraphs (1)
to (9), inclusive.

(g) “Innovation energy technology project” means a project
having either of the following primary purposes:

(1) Deployment of a technology, infrastructure, practice,
product, or service that avoids or reduces emissions of greenhouse
gases and that employs new or significantly improved technologies
or practices, as compared to technologies or practices that are in
general use in the commercial marketplace in the United States
at the time the project is approved by the authority pursuant to
this chapter.

(2) Manufacturing of a commercially ready energy technology
or product that avoids or reduces emissions of air pollutants and
greenhouse gases and that incorporates an innovative
manufacturing process or processes not in general use in the
commercial marketplace in the United States at the time the project
is approved by the authority pursuant to this chapter.

(h) “Land-based greenhouse gas sequestration project” means
a project, product, service, function, or measure, or an aggregation
of projects, products, services, functions, or measures, having a
primary purpose of developing, constructing, or deploying a project
in forests, grasslands, wetlands, or other habitat types in California
for which a carbon credit or offset protocol has been adopted by
the state board.

(i) “Low-carbon transportation project” means a project,
product, service, function, or measure, or an aggregation of
projects, products, services, functions, or measures, that results
in reductions in greenhouse gas emissions from the transportation
of people, goods, freight, or off-road equipment.

(j) “Program” means the California Climate Technology and
Infrastructure Financing Program developed pursuant to Section
26110.

(k) “Renewable energy project” means the development,
construction, deployment, alteration, or repair of a solar, wind,
geothermal, appropriately sourced biomass, anaerobic digestion
of organic waste streams, small hydropower, ocean or tidal, fuel
cell using renewable fuels, or advanced biofuel or other renewable
fuel, energy generation facility.

(l) “State board” means the State Air Resources Board.

(m) “System efficiency project” means the development,
construction, deployment, alteration, or repair of a distributed
generation, energy storage, smart grid, advanced battery,
microgrid, fuel cell, water pumping, or combined heat and power,
technology or system.

 

Article begin insert 2. end insert   Climate Change Technology and Infrastructure
Financing Program

 

begin insert 26110. end insert   

(a) The authority, in consultation with the state board,
shall develop and administer the California Climate Technology
and Infrastructure Financing Program to provide financial
assistance for greenhouse gas emissions reduction projects
consistent with this chapter, the guiding document developed
pursuant to Section 26120, and both of the following:

(1) Earning a net positive return on the financial assistance
made pursuant to this chapter.

(2) Maximizing net greenhouse gas emissions reductions for
each dollar provided by focusing financial support on filling
demonstrated financing gaps that are the key barriers to greater
investment or market transformation.

(b) Greenhouse gas emissions reduction projects eligible for
financial assistance pursuant to this chapter shall demonstrate all
of the following:

(1) Reduction in net emissions of greenhouse gases.

(2) Partnership with a private financial institution or lender.

(3) Ability for the project to meet applicable permitting
requirements.

(4) Ability to create jobs in the state.

(5) Technological viability.

(6) Ability to, over time, pay back the financial assistance
provided pursuant to this chapter.

(7) Demonstrate the existence of a financing gap that is a barrier
to project implementation or market growth.

(8) Other requirements deemed necessary by the authority.

(c) The authority shall establish a portfolio approach to the
provision of financial assistance to address different industry needs
and different development and commercialization stages of
technology.

(d) The authority may accept applications for financial
assistance pursuant to the program on an ongoing and open
solicitation basis.

begin insert 26111. end insert   

(a) The authority, in consultation with the state board,
shall establish guidelines for the program and project eligibility
that are consistent with the requirements of the California Global
Warming Solutions Act of 2006 (Division 25.5 (commencing with
Section 38500) of the Health and Safety Code) and the Greenhouse
Gas Reduction Fund Investment Plan and Communities
Revitalization Act (Chapter 4.1 (commencing with Section 39710)
of the Health and Safety Code). The guidelines shall include
consideration of whether providing financial assistance for a
greenhouse gas emissions reduction project will do the following:

(1) Increase private investment in greenhouse gas emissions
reduction projects that are not currently able to obtain financing
at attractive terms or through an existing state program.

(2) Enable the implementation and scaling of greenhouse gas
emissions reduction projects to increase deployment of innovative
financing by leveraging limited public dollars to attract private
capital.

(3) Facilitate the deployment of greenhouse gas emissions
reduction projects at an accelerated rate.

(4) Enhance the competitiveness of California-based companies
and reduce leakage of greenhouse gas emissions to other
jurisdictions.

(5) Achieve cobenefits, such as enhanced water supply, improved
water quality, improved air quality, enhanced urban environments,
and improved public health and wildlife habitat.

(6) Addresses barriers that have prevented adequate commercial
financing of greenhouse gas emissions reduction projects.

(b) Priority shall be given to projects that demonstrate the ability
to meet the following criteria:

(1) Ability to increase private investment in otherwise
commercially viable greenhouse gas emissions reduction projects
not currently able to obtain financing in the capital markets at a
reasonable cost with a reasonable rate of return.

(2) Ability to increase private investment in greenhouse gas
emissions reduction projects located in disadvantaged communities
identified pursuant to Section 39711 of the Health and Safety Code.

(3) Ability to maximize economic, environmental, and public
health benefits to the state.

begin insert 26112. end insert   

The authority shall appoint an executive officer to
oversee and implement the program, who meets all of the following
requirements:

(a) Demonstrates significant experience and knowledge of
private sector financing of low-carbon technologies and projects.

(b) Does not have any financial interest in any greenhouse gas
emission reduction project under consideration or any financial
interest in an investment institution or its affiliates or any other
entity seeking or likely to seek financial assistance for any
greenhouse gas emission reduction project pursuant to this chapter.

(c) Has the ability to hire staff with experience and knowledge
of private sector financing structures and tools.

begin insert 26113. end insert   

The authority shall convene, at least twice each year,
in a public process, an advisory stakeholder group consisting of
clean energy stakeholders with experience in clean energy
financing or technological expertise. The advisory group shall
provide to the authority information on topics, including, but not
limited to, current market needs, financial feasibility of financial
tools, commercial feasibility of greenhouse gas reducing
technologies and projects, and relevant studies.

 

Article begin insert 3. end insert   Oversight and Coordination

 

begin insert 26120. end insert   

(a) The authority shall prepare a three-year guiding
document, consistent with the three-year investment plan developed
pursuant to Section 39716 of the Health and Safety Code, outlining
planned financial assistance categories and how financial
assistance furthers the reductions of greenhouse gas emissions.
The guiding document shall establish priorities for investment of
funds to achieve the goals of this chapter and describe how funding
will complement existing public and private investments, including
existing state programs that further the goals of this chapter. The
guiding document shall identify gaps in existing programs or
private financing markets that can be filled by financial assistance
made pursuant to this chapter to achieve the goals of this chapter.

(b) In developing the guiding document, the authority shall
convene and consult with a climate and energy incentive
coordination advisory body consisting of the following:

(1) The chair of the state board or his or her designee.

(2) The chair of the State Energy Resources Conservation and
Development Commission or his or her designee.

(3) The President of the Public Utilities Commission or his or
her designee.

(4) The Treasurer or his or her designee.

(5) The Director of the Office of Business and Economic
Development or his or her designee.

(6) The Director of the Department of Water Resources or his
or her designee.

(7) Two members appointed by the Speaker of the Assembly.

(8) Two members appointed by the Senate Committee on Rules.

(c) The advisory body is subject to the requirements of the
Bagley-Keene Open Meeting Act (Article 9 (commencing with
Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of
the Government Code).

begin insert 26121. end insert   

(a) No later than July 30, 2016, and annually
thereafter, the commission shall report to the Legislature on the
progress of the financial assistance provided pursuant to this
chapter, the performance of the program, how the financial
assistance provided has supported the goals of this chapter, and
how the financial assistance has been coordinated with other state
incentive programs.

(b) The report required pursuant to subdivision (a) shall be
submitted in accordance with Section 9795 of the Government
Code.

 

Article begin insert 4. end insert   Financial Provision

 

begin insert 26130. end insert   

(a) The Climate Technology and Infrastructure Finance
Fund is hereby established in the State Treasury. Moneys in the
fund, upon appropriation of the Legislature, shall be expended by
the authority for the purpose of this chapter.

(b) The fund is a repository of both of the following:

(1) Moneys transferred by the Legislature from the Greenhouse
Gas Reduction Fund established pursuant to Section 16428.8 of
the Government Code for the purposes of carrying out this chapter.

(2) Other moneys, including, but not limited to, revenues from
bonds and other securities issued by the authority and fees
collected pursuant to this division, and gifts and grants to the
authority, if issued, collected, granted, or gifted for the purposes
of this chapter.

end insert

begin delete

SECTION 1.  

Part 11.5 (commencing with Section 15880) is
added to Division 3 of Title 2 of the Government Code, to read:

 

PART 11.5.  The California Green Bank Act

 

15880.  

(a) There is in state government the California Green
Bank Board. The board shall be composed of the following
members:

(1) The Treasurer.

(2) The Director of Finance.

(3) The President of the California Public Utilities Commission.

(4) The Chair of the California Energy Commission.

(5) The Chair of the State Air Resources Board.

(6) One person appointed by the Senate Committee on Rules.

(7) One person appointed by the Speaker of the Assembly.

(b) The members listed in paragraphs (1) to (5), inclusive, of
subdivision (a) may each designate a deputy or clerk from within
his or her agency to act for and represent him or her at all meetings
of the board.

(c) All members of the board shall serve thereon without
compensation, but shall be reimbursed for all necessary expenses
actually incurred in the performance of their duties.

15880.5.  

The board shall have all of the following duties and
responsibilities:

(a) Evaluate current state financial support for commercially
viable clean energy projects not currently able to obtain financing
in the capital markets at a reasonable cost with a reasonable rate
of return to a clean energy project developer, and for innovative
energy technology projects not currently able to obtain financing.

(b) Identify the firms and projects for which new forms of
financial assistance will advance the state’s policy objectives,
including, but not limited to, reduction in greenhouse gases.

(c) Recommend specific forms of financial assistance that will
assist these projects and firms with an acceptable amount of risk
for the state.

15880.10.  

(a) The board shall make specific recommendations
relating to the duties listed in Section 15880.5 in a report to the
Legislature, on or before January 1, 2016.

(b) (1) The report described in subdivision (a) shall be submitted
in compliance with Section 9795.

(2) Pursuant to Section 10231.5, this section is repealed on
December 1, 2020.

15880.15.  

In carrying out its duties and responsibilities, the
board shall have all of the following powers:

(a) To meet at any time and place it deems proper.

(b) To employ staff, pursuant to laws and regulations governing
state civil service.

(c) To contract with experts in clean technology development
and finance.

(d) To cooperate with every department, agency, or
instrumentality in the state government.

(e) To receive any data, the access to which is not restricted by
any state or federal law, that is necessary to prepare the report
described in subdivision (a) of Section 15880.10.

end delete