BILL ANALYSIS Ó
SB 1121
Page 1
SENATE THIRD READING
SB 1121 (De León)
As Amended
August 19, 2014
Majority vote
SENATE VOTE :Vote not relevant
NATURAL RESOURCES 6-3 APPROPRIATIONS 12-5
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|Ayes:|Chesbro, Garcia, |Ayes:|Gatto, Bocanegra, |
| |Muratsuchi, Skinner, | |Bradford, |
| |Stone, Williams | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Holden, |
| | | |Pan, Quirk, |
| | | |Ridley-Thomas, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Dahle, Bigelow, Patterson |Nays:|Bigelow, Donnelly, Jones, |
| | | |Linder, Wagner |
| | | | |
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SUMMARY : Establishes the California Climate Technology and
Infrastructure Financing Act (Act) to create a financing program
for eligible greenhouse gas (GHG) emissions reduction projects.
Specifically, this bill :
1)Defines terms used in the bill, including "greenhouse gas
emissions reduction projects" (projects) as a project,
product, service, function, or measure, or an aggregation of
these, that avoids or reduces GHG emissions, including, but
not limited to:
a) Clean agriculture projects;
b) Clean energy infrastructure projects;
c) Demand response projects;
d) Energy efficiency projects;
e) Innovation energy technology projects;
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f) Land-based GHG sequestration projects;
g) Low-carbon transportation projects;
h) Renewable and small scale distributed energy projects;
and,
i) System efficiency projects.
2)Establishes the California Climate Solutions Accelerator
Account (Account) within the California Infrastructure and
Economic Development Bank (I-Bank) Fund.
3)Requires the I-Bank, in consultation with the Air Resource
Board (ARB), to develop and administer the Account to provide
financial assistance for projects.
4)Requires that the Account earn a net positive return and
maximize net GHG emissions reductions for each dollar provided
by "focusing financial support on filling demonstrated
financial gaps that are the key barriers to greater investment
or market transformation."
5)Requires the projects eligible for funding to demonstrate:
a) Reduction in net GHG emission reductions;
b) Partnership with a private financial institution or
lender;
c) Ability for the project to meet applicable permitting
requirements;
d) Ability to create jobs in the state;
e) Technological viability;
f) Ability to pay back the financial assistance provided
over time;
g) The existence of a financial gap that is a barrier to
project implementation or market growth; and,
h) Other requirements deemed necessary by the I-Bank.
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6)Requires the I-Bank to establish guidelines for the program
and project eligibility that are consistent with the
requirements of AB 32 (Núñez), Chapter 488, Statutes of 2006,
and the GHG Reduction Fund Investment Plan and Communities
Revitalization Act, as specified.
7)Requires that priority be given to projects that demonstrate
the ability to increase private investment in otherwise
commercially viable projects not currently able to obtain
financing in the capital markets at a reasonable cost with a
reasonable rate of return; increase private investment in
projects located in disadvantaged communities; and, maximize
economic, environmental, and public health benefits to the
state.
8)Requires the I-Bank board to appoint an executive officer to
oversee and implement the program, as specified.
9)At least twice each year, requires the I-Bank to convene an
advisory stakeholder group consisting of clean energy
stakeholders with expertise in clean energy financing,
financing assistance for low-income communities, or
technological expertise and requires the stakeholder group to
provide specified information.
10)On or before December 30, 2015, requires the I-Bank to
prepare a three-year guiding document outlining planned
financial assistance categories and how the financial
assistance will reduce GHG emissions. The guiding document
shall establish priorities for investments and describe how
funding will complement existing public and private
investments and identify gaps in existing programs.
11)Requires the I-Bank to convene and consult with a climate and
energy incentive coordination advisory body consisting of:
a) The chair of the ARB;
b) The chair of the California Energy Commission (CEC);
c) The president of the California Public Utilities
Commission;
d) The State Treasurer;
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e) The director of the Department of Water Resources;
f) Two members appointed by the Speaker of the Assembly;
and,
g) Two members appointed by the Senate Committee on Rules.
12)Requires the I-Bank to submit an annual report to the
Legislature, beginning July 30, 2016, on the progress of the
financial assistance provided under the Account, how the
financial assistance has supported the goals of the Account,
and how the financial assistance has been coordinated with
other state incentive programs.
13)Specifies that any moneys appropriated by the Legislature to
the Account from the Greenhouse Gas Reduction Fund shall be
expended consistent with the appropriation process and
criteria established by the Greenhouse Gas Reduction Fund
Investment Plan and Communities Revitalization Act. Specifies
that the Account is a repository for moneys transferred from
the Greenhouse Gas Reduction Fund and other moneys including,
but not limited to, revenues from bonds and other securities
issued by the I-Bank, fees collected pursuant to the bill, and
gifts and grants to the I-Bank for the purposes of the bill.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Increased annual costs for the I-Bank of up to $5 million per
year (special fund) to administer the program.
2)Increased costs to ARB of up to $2 million (Greenhouse Gas
Reduction Fund) for consultation with the I-Bank, supporting
the Chair of the ARB's participation in the advisory body, and
the expansion of existing administrative responsibilities.
3)Increased reporting and staffing costs for the CEC of up to
$200,000 (Greenhouse Gas Reduction Fund).
COMMENTS : According to the author:
Although the market for clean, low-carbon technologies
has continued to expand, cleaner, cheaper, and more
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reliable energy remains unavailable to many California
consumers and businesses. A state financing
institution, sometimes called a Green Bank, would use
a portion of cap-and-trade revenue proceeds to promote
widespread deployment of low-carbon technologies by
leveraging private investment, so that each public
dollar goes further. The entity, which would be
housed at the Treasurer's office, would coordinate
with and enhance existing energy programs to achieve
the state's greenhouse gas reduction goals set forth
in AB 32 and beyond.
The 2014-15 Budget 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. Thirty-five percent of cap-and-trade funds were
continuously appropriated 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% 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 by the Budget is $872
million.
The financial assistance program proposed by this bill is
generally referred to as a green bank. Green banks are publicly
funded financing institutions that leverage limited public
sector funds through the use of various financial mechanisms to
attract private investment in low-carbon clean energy projects.
This bill would establish this type of financial institution in
California.
In 2011, Connecticut established its Clean Energy Finance and
Investment Authority (CEFIA) with the intent of moving the state
away from grants, rebates, and other subsidies toward low-cost
financing of energy efficiency and renewable energy projects.
Among other actions, CEFIA has provided credit enhancements,
including loan loss reserves, interest rate buy-downs, and
third-party insurance to attract private capital investment.
CEFIA offers a variety of funding mechanisms for business owners
and institutions interested in clean energy sources, technology
innovators and entrepreneurs working to develop and
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commercialize new clean energy technologies, and real estate
developers who want to incorporate clean energy sources. The
program provides specific information for commercial property
assessed clean energy, anaerobic digestion, combined heat and
power, and renewable energy and energy efficiency projects.
CEFIA also offers financial assistance for residential projects
and community projects.
The I-Bank is the state's general purpose financing authority,
which provides financing for public infrastructure and private
development that "promote a healthy climate for jobs, contribute
to a strong economy, and improve the quality of life in
California communities." The I-Bank has broad authority to
issue revenue bonds, make loans, and provide credit enhancements
for a wide variety of infrastructure and economic development
projects and other government purposes.
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
319-2092
FN: 0004960