Amended in Assembly July 1, 2014

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

An act to add Chapter 5 (commencing with Section 26100) to Division 16 of the Public Resources Code, relating to greenhouse gases.

LEGISLATIVE COUNSEL’S DIGEST

SB 1121, as amended, De León. California Climate Technology and Infrastructure Financing Act.

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.

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 begin delete Financing end delete begin insert Finance end insert Fund and would, upon appropriation by the Legislature, require the authority to expend moneys in the fund for the purposes of the program.

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

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

SECTION 1.  

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

 

Chapter  5. California Climate Technology and
Infrastructure Financing Act

 

Article 1.  General Provisions and begin delete Definition end delete begin insert Definitions end insert

 

26100.  

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 begin insert emissions end insert 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,
begin delete insurance, portfolio insurance, end delete 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.

26101.  

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) Car sharing, 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 begin delete changes end delete begin insert results in reductions
in greenhouse gas emissions by reducing end insert 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 begin delete Financing end delete begin insert Finance end insert 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, begin delete 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. end delete begin insert or alteration of an eligible
renewable energy resource, as defined in Section 399.12 of the
Public Utilities Code, that avoids or reduces greenhouse gas
emissions. end insert

(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 begin delete system. end delete begin insert system that results in the reductions of greenhouse gas
emissions. end insert

 

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

 

26110.  

(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)  begin delete Demonstrate the end delete begin insert The end insert 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.

26111.  

(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)  begin delete Addresses end delete begin insert Address end insert 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)  begin delete Ability to increase end delete begin insert Increase end insert 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)  begin delete Ability to increase end delete begin insert Increase end insert private investment in greenhouse
gas emissions reduction projects located in disadvantaged
communities identified pursuant to Section 39711 of the Health
and Safety Code.

(3)  begin delete Ability to maximize end delete begin insert Maximize end insert economic, environmental,
and public health benefits to the state.

26112.  

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
begin delete emission end delete begin insert emissions end insert 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 begin delete emission end delete begin insert emissions end insert reduction project pursuant to
this chapter.

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

26113.  

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 begin insert emissions end insert reducing
technologies and projects, and relevant studies.

 

Article 3.  Oversight and Coordination

 

26120.  

(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 begin insert Governor’s end insert Office of Business and
Economic Development or his or her designee.

(6) The Director of begin delete the Department of end delete 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).

26121.  

(a) No later than July 30, 2016, and annually thereafter,
the begin delete commission end delete begin insert authority end insert 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 4.  Financial Provision

 

26130.  

(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.