The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature.

The California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program, upon appropriation from the Greenhouse Gas Reduction Fund, funds zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies and related projects, as specified, with priority given to certain projects, including projects that benefit disadvantaged communities, as defined. The program, until January 1, 2018, requires no less than 20% of the funding made available for the purposes of technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology support early commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology. The program requires the state board to ensure that the results of emissions reductions or benefits can be measured or quantified.

This bill, between January 2, 2018, and January 1, 2023, would require no less than 50% of the moneys allocated each year for technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck and bus technology be allocated and spent to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck and heavy-duty bus technology that meets or exceeds a specified emission standard, with at least ²/₃ of these funds to be allocated to heavy-duty truck projects. The bill would authorize the state board to increase those emission standards based on specified findings. The bill would require the state board to limit the incentives that may be allocated to any one vehicle or engine manufacturer in each year under these provisions to 49% of the moneys available for allocation in that year. The bill would require allocations under these provisions to be made for projects that are shown to achieve the greatest greenhouse gas emissions reductions, as specified. The bill also would require the state board to post on its Internet Web site the results of emissions reductions or benefits.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature.

The California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program, upon appropriation from the Greenhouse Gas Reduction Fund, funds zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies and related projects, as specified, with priority given to certain projects, including projects that benefit disadvantaged communities, as defined. The program, until January 1, 2018, requires no less than 20% of the funding made available for the purposes of technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology support early commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology. The program requires the state board to ensure that the results of emissions reductions or benefits can be measured or quantified.

This bill, between January 2, 2018, and January 1, 2023, would require no less than 50% or $100,000,000, whichever is greater, of the moneys allocated each year for technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck and bus technology be allocated and spent to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck and heavy-duty bus technology that meets or exceeds a specified emission standard. standard, with at least ²/₃ of these funds to be allocated to heavy-duty truck projects. The bill would authorize the state board to increase those emission standards based on specified findings. The bill would require the state board to limit the incentives that may be allocated to any one vehicle or engine manufacturer in each year under these provisions to 49% of the moneys available for allocation in that year. The bill would require allocations under these provisions to be made for projects that are shown to achieve the greatest greenhouse gas emissions reductions, as specified. The bill also would require the state board to post on its Internet Web site the results of emissions reductions or benefits.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature.

The California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program, upon appropriation from the Greenhouse Gas Reduction Fund, funds zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies and related projects, as specified, with priority given to certain projects, including projects that benefit disadvantaged communities. communities, as defined. The program, until January 1, 2018, requires no less than 20% of the funding made available for the purposes of technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology support early commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology. The program requires the state board to ensure that the results of emissions reductions or benefits can be measured or quantified.

This bill, between January 2, 2018, and January 1, 2023, would require no less than 50% or $100,000,000, whichever is greater, of the moneys allocated each year for technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology be allocated and spent to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology that meets or exceeds a specified emission standard. The bill also would require the state board to post on its Internet Web site the results of emissions reductions or benefits.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature.

The California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program, upon appropriation from the Greenhouse Gas Reduction Fund, funds zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies and related projects, as specified, with priority given to certain projects, including projects that benefit disadvantaged communities. The program, until January 1, 2018, requires no less than 20% of the funding made available for the purposes of technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology support early commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology.

This bill, between January 2, 2018, and January 1, 2023, would require no less than 50% or $100,000,000, whichever is greater, of the moneys allocated each year for technology development, demonstration, precommercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology be allocated and spent to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology that meets or exceeds a specified emission standard.

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2415

Author:(Eduardo Garcia) – As Amended Ver:May 3, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill revises the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (Clean Truck Program) to require no less than 50% of program funds to support the commercial deployment of certain heavy-duty trucks that meet specified emissions standards.

Specifically, this bill requires no less than 50% of Greenhouse Gas Reduction Fund (GGRF) funds appropriated to the Clean Truck Program (or $100 million, whichever is greater), during the period between January 2, 2018, and January 1, 2023, to be allocated to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology [trucks with a gross vehicle weight rating (GVWR) of 26,001 lbs. or more] that meet or exceed low NOx standards (0.02 grams per brake horsepower-hour oxides of nitrogen). ARB may reallocate any unused funds to other Clean Truck Programs.

Additionally, this bill:

1. Requires a heavy-duty truck with an internal combustion engine receiving incentives to use the following percentages of renewable fuel:
   1. Not less than 30% between January 2, 2018, and January 1, 2020.
   2. Not less than 50% beginning January 2, 2020.
2. Allows ARB to increase the renewable fuel percentages under specified conditions.
3. Provides that these provisions do not alter or affect, in any way, the amount of credit or grants for which a low-carbon-fuel provider or truck operator is eligible pursuant to law.
4. Limits the amount of incentives that may be awarded for any one vehicle or engine manufacturer.

FISCAL EFFECT:

1. Unknown, ongoing cost of at least 50% of annual funds appropriated for the Clean Truck Program (GGRF), likely in the tens of millions, for five years to support zero- and near-zero-emission heavy duty trucks.
2. Cost Pressures to provide funds for other types of projects under the Clean Truck Program.
3. Increased first year costs of $693,000, ongoing annual costs of $833,000 for staffing, and $1 million in contracts to perform the following duties:
4. Develop guidelines and procedures to implement the program.
5. Develop grant solicitations for new projects.
6. Conduct fleet audits and data analysis.
7. Conduct on-site inspections.
8. Update GGRF and fiscal procedures to manage cash flow and changes resulting from the program.
9. Review grant solicitations, process and track funding disbursements.

COMMENTS:

1. Background and Purpose. SB 1204 (Lara), Chapter 524, Statutes of 2013, established the Clean Truck Program administered by ARB. The intent of SB 1204 was to create a single, overarching program to develop and deploy heavy-duty vehicles primarily because heavy-duty vehicles were not addressed in other programs to the degree this bill's author and supporters thought was appropriate.

The Clean Truck program specifically, provides no less than 20% of GGRF funds for projects that develop technology, demonstrate and pilot commercial and early-commercial deployment of zero and near-zero emission medium- and heavy-duty truck technology, and facilitate clean goods movement.

When the Governor signed SB 1204, he included a signing message stating:

To maximize reductions of these harmful emissions, the focus of this funding must be on transformative, advanced technology trucks and buses that can meet the objectives of AB 32 by reducing emissions of both harmful criteria pollutants and greenhouse gases. Only vehicles that are certified to the cleanest standards and run on renewable fuels merit funding through this program.

According to the author, Over 80% of our polluting emissions come from mobile sources, and trucks operating in the goods movement sector are among the largest contributors. This bill allows the trucking industry to continue while becoming cleaner. By sending market signals that all cost-effective solutions will be considered, California can accelerate the development of even cleaner, affordable technologies that help drive down the cost of new heavy duty engines.

1. Prior legislation. This bill is similar to AB 857 (Perea), which passed this Committee on but was later amended to a gun bill in the Senate.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 18, 2016

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

ABPCA Bill Id:AB 2415 (

Author:Eduardo Garcia) – As Amended Ver:April 6, 2016

SUBJECT: California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program

SUMMARY: Revises the Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (Clean Truck Program) to require the greater of 50% or $100 million, of the funds allocated each year from 2018 to 2023 for development of a broad range of medium- and heavy-duty truck technology, to be allocated instead to support commercial deployment of existing heavy-duty truck [>26,000 pounds gross vehicle weight rating(GVWR)] technology that meets specified low oxides of nitrogen (low NOx) emission standards.

EXISTING LAW:

1. Establishes the Air Quality Improvement Program (AQIP), administered by the Air Resources Board (ARB), which funds projects that reduce criteria air pollutants, improve air quality, and provide research for alternative fuels and vehicles, vessels, and equipment technologies. The two primary programs adopted by ARB pursuant to AQIP are the Clean Vehicle Rebate Project (CVRP) and the Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program (HVIP). AQIP is funded primarily by smog abatement fees paid by vehicle owners to the Department of Motor Vehicles, with smaller contributions from boat registration fees and special identification plate fees.
2. Establishes the Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP), administered by the California Energy Commission, which 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 vehicle registration fees and receives approximately $100 million per year.
3. Establishes the Carl Moyer Memorial Air Quality Standards Attainment Program (Moyer Program), administered by ARB and local air districts, to fund the incremental cost of cleaner-than-required vehicles, engines, and equipment. The primary objective of the program is to achieve air quality emission reductions that would not otherwise occur through regulations or other legal mandates. The Moyer Program is funded by vehicle registration surcharges adopted by local air districts in nonattainment areas.
4. Requires ARB, pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], to adopt a statewide greenhouse gas (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.
   
5. Establishes the Greenhouse Gas Reduction Fund (GGRF) 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 GGRF and available for appropriation by the Legislature.
6. Establishes the GGRF Investment Plan and Communities Revitalization Act [AB 1532 (John A. Pérez), 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 and establishes several additional policy objectives.
7. Requires the investment plan to allocate: (1) a minimum of 25% of the available moneys in the GGRF to projects that provide benefits to identified disadvantaged communities; and, (2) a minimum of 10% of the available moneys in the GHGRF to projects located within identified disadvantaged communities [SB 535 (De León), Chapter 830, Statutes of 2012].
8. Establishes the Clean Truck Program pursuant to SB 1204 (Lara), Chapter 524, Statutes of 2014, to use GGRF funds for development, demonstration, pre-commercial pilot, and early commercial deployment of zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies including, but not necessarily limited to, medium- and heavy-duty trucks, vocational trucks, short-haul and long-haul trucks, buses, and off-road vehicles and equipment, port equipment, agricultural equipment, marine equipment, and rail equipment.
9. Requires, until January 1, 2018, that no less than 20% of funding for the Clean Truck Program support commercial deployment of existing zero- and near-zero-emission heavy-duty trucks.
10. Defines “heavy-duty” as having a manufacturer’s maximum GVWR of 6,001 or more pounds, though ARB regulations define "heavy-duty truck" as vehicles 14,000 pounds or more.

THIS BILL:

1. Revises the Clean Truck Program to require the greater of 50% or $100 million of the funds allocated each year from 2018 to 2023 for development of a broad range of medium- and heavy-duty truck technology be allocated instead to support commercial deployment of existing heavy-duty (>26,000 lbs GVWR) truck technology that meets specified low NOx emission standards (thereby limiting funds to Class 7 and 8 trucks and excluding buses and lower weight class trucks that are currently eligible under SB 1204).
2. Requires a heavy-duty truck with an internal combustion engine receiving incentives to "use" the following percentages of renewable fuel:
   1. Not less than 30% between January 2, 2018 and January 1, 2020.
   2. Not less than 50% beginning January 2, 2020.
3. Specifies that the renewable fuel percentage in effect at the time incentives are awarded shall not change that award.
4. Provides that these provisions do not alter or affect, in any way, the amount of credit or grants for which a low-carbon-fuel provider or truck operator is eligible pursuant to law.
5. Defines “heavy-duty truck” as having a manufacturer’s maximum GVWR of 26,001 or more pounds, for purposes of the Clean Truck Program, effective January 2, 2018.

FISCAL EFFECT: According to the Senate Appropriations Committee analysis of similar legislation [AB 857 (Perea) of 2015]:

1. Ongoing cost of at least $100 million annually to the GGRF to provide $100 million for zero- and near-zero-emission Class 7 and 8 trucks plus pressures to provide funds for other types of eligible projects under the SB 1204 program.
2. Initial costs of $844,000 for fiscal year 2016-17 followed by annual ongoing costs of $2 million to the GGRF for the ARB to update guidelines and procedures for the new program, review grant solicitations, conduct fleet audits, conduct on-site inspections, and verify fueling requirement compliance.

COMMENTS:

1. Existing GGRF funding and programs. The 2014-15 Budget Act allocated GGRF revenues for the 2014-15 fiscal year and established a long-term plan for the allocation of GGRF revenues beginning in fiscal year 2015-16. Thirty-five percent of GGRF is continuously appropriated for investments in transit, affordable housing, and sustainable communities. Twenty-five percent is continuously appropriated to continue the construction of the high-speed rail project. The remaining 40% is subject to annual appropriation by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion.

An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues, are available for appropriation this year.

ARB's low-carbon transportation program is among the largest GGRF program areas, with $325 million appropriated to date. The Governor's 2016-17 Budget proposes to appropriate approximately $3.1 billion from the GGRF, with $500 million to ARB for low-carbon transportation and fuels.

GGRF revenues peaked in 2015 and are projected to decline over the course of the cap-and-trade program. GGRF is structured as a regulatory fee. By law, GGRF revenues must be used to further the regulatory purposes of AB 32 and facilitate the achievement of GHG emission reductions.

1. SB 1204. In 2014, SB 1204 established the Clean Truck Program, which is administered by ARB. The intent of SB 1204 was to create a single, overarching program to develop and deploy heavy-duty vehicles primarily because the author felt that heavy-duty vehicles were not being adequately addressed in HVIP and AQIP. Specifically, the Program, until January 1, 2018, provides GGRF funds for projects that develop technology, demonstrate and pilot commercial and early-commercial deployment of zero and near-zero emission medium- and heavy-duty truck technology, and facilitate clean goods movement. The Program works to develop zero-and near-zero emission technologies for specified vehicles and equipment not only for trucks, but also for buses, off-road vehicles and equipment at the ports as well as in agricultural, marine, and rail sectors. Within the Program, funding priority is generally given to projects that demonstrate benefits to disadvantaged communities, the ability to leverage additional public and private funding, and provide the potential for co-benefits.

When the Governor signed SB 1204, he included a signing message stating:

To maximize reductions of these harmful emissions, the focus of this funding must be on transformative, advanced technology trucks and buses that can meet the objectives of AB 32 by reducing emissions of both harmful criteria pollutants and greenhouse gases. Only vehicles that are certified to the cleanest standards and run on renewable fuels merit funding through this program.

In its proposed funding plan for low-carbon transportation, ARB proposes to allocate $175 million for SB 1204 purposes, including $23 million for purposes similar to this bill (low NOx engine incentives with low carbon fuel).

1. Author's statement:

Over 80% of our polluting emissions come from mobile sources, and trucks operating in the goods movement sector are among the largest contributors. Trucking is vital to California’s economy – the world’s 7th largest – but is also the single largest source of pollution for the San Joaquin and South Coast Air Basins. Poor air quality creates a cost to everyone, and all too frequently, it is the most vulnerable who are at risk, cutting along economic, ethnic and racial divides. This disparity adversely affects those living in communities situated near pollution-affected corridors including freeways, ports, and rail depots. This bill allows the trucking industry to continue work uninterrupted yet become cleaner, offering the greatest opportunity to improve air quality. By sending market signals that all cost-effective solutions will be considered, California can accelerate the development of even cleaner, affordable technologies that help drive down the cost of new heavy duty engines.

The Federal Clean Air Act requires extreme non-attainment areas to meet health-based air quality standards by 2023. The South Coast Air Basin (which includes all of Orange County and the non-desert regions of Los Angeles County, Riverside County, and San Bernardino County) and the San Joaquin Valley are both extreme non-attainment areas. Not achieving these standards on time threatens federal transportation dollars for California. ARB's draft Mobile Source Strategy shows that these standards can be met by 2023. This can only be done if significant emission reductions from heavy-duty trucks are achieved. The draft strategy states that significant financial incentives are needed to accelerate emission reductions from the trucking sector.

1. A big slice of a shrinking pie. This bill seeks to allocate $500 million of GGRF funds to support existing very heavy-duty trucks based on meeting a low NOx emission standard for which only one engine has been certified to date. Under current law, these funds are broadly aimed at technology development, demonstration, pre-commercial pilots, and early commercial deployment of medium- and heavy-duty trucks (presumably including electric, hybrid-electric and fuel cell trucks in a broad range of weight classes) based first, like other uses of the GGRF, on the value of those investments in achieving GHG emission reductions.

This bill requires, each year from 2018-2023, that 50% of SB 1204 truck funds, or $100 million, whichever is greater, be used for the deployment of certain heavy-duty vehicles – Class 7 and 8 trucks over 26,000 pounds that meet a low NOx standard (i.e., meet or exceed an emission standard of 0.02 grams NOx per brake horsepower-hour). The bill commits $100 million annually for this purpose, regardless of available revenues, need, or competing uses. The amount is likely to exceed 50% of total SB 1204 funds each year, and may exceed the total amount available by the end of the program, given the likelihood that total available GGRF revenues will decline.

The five-year, $500 million commitment for long-haul trucks will come at the expense of the various other SB 1204-eligible vehicles and equipment, including zero- and near-zero-emission buses, off-road vehicles, medium- and heavy-duty trucks, vocational trucks, short-haul trucks, and equipment in the port, agricultural, marine, and rail sectors. In fact, this bill's funding commitment is so large that it may sacrifice other, broader GGRF funding priorities. The author and the committee may wish to consider eliminating the $100 million guarantee and instead rely on an appropriate percentage of funds allocated for SB 1204.

1. Is the GHG benefit commensurate with the cost? If these low NOx engines rely on conventional natural gas (or diesel) fuel, they will achieve marginal, if any, GHG emission reductions. According to ARB:

Preliminary ARB staff estimates indicate natural gas heavy-duty vehicles provide little to no GHG improvement over conventional diesel vehicles. Natural gas powered trucks are expected to have higher well-to-wheel GHG emissions than electric and fuel cell vehicles, which are intrinsically more efficient than traditionally powered vehicles and which have no tailpipe emissions. However, in the future, the increased use of renewable natural gas derived from sources such as landfills, dairies, and wastewater treatment plants could allow natural gas vehicles to provide significant well-to-wheel GHG emission benefits.

(September 2015 Draft Technology Assessment: Low Emission Natural Gas and Other Alternative Fuel Heavy-Duty Engines, page VI-3)

This raises a question about the appropriateness of using GGRF funds, which the Governor seemed to address preemptively in his signing message for SB 1204 by stating "only vehicles that…run on renewable fuels merit funding."

1. Does the renewable fuel requirement deliver an additional GHG benefit? Like AB 857 as amended by this Committee last year, this bill seeks to justify the use of GGRF in part by requiring truck to use some renewable fuel. However, this bill adds one provision and omits another which raise questions about whether the renewable fuel requirement will result in an additional GHG benefit.

The new provision says the bill does not "alter or affect, in any way, the amount of credit or grants for which a low-carbon-fuel provider or truck operator is eligible pursuant to law." The intent of this provision is to reserve the ability of a fuel provider, for example, to claim credit under the Low Carbon Fuel Standard (LCFS) for renewable natural gas, and sell that credit separately from the fuel sold to a truck owner for purposes of qualifying for funding under this bill. Because the LCFS credit represents the reduction in carbon intensity (i.e., GHG benefit) of the renewable fuel, and will be claimed by an entity with an LCFS compliance obligation (e.g., oil company), it's not clear there is any additional GHG benefit attributable to the renewable fuel requirement. In fact, the bill may allow the same benefit to be claimed twice, or double-counted – once for LCFS compliance and again for the truck incentive.

Aside from accounting for GHG benefits associated with individual volumes of fuel, there is a question of whether the 30% and 50% renewable fuel requirements will drive production and sale of additional renewable fuel on a gross basis. According to ARB, in 2015, 52% of natural gas used as a transportation fuel was renewable.  Last year, AB 857 included the following provision to address this issue:

The state board may increase the minimum percentage of renewable fuel required for the appropriation of moneys pursuant to this subparagraph in subsequent years if the state board makes a finding that a higher percentage is commercially feasible and the State Energy Resources Conservation and Development Commission makes a finding that there is a sufficient supply of renewable energy fuel available. An increase adopted pursuant to this subclause shall apply prospectively to moneys awarded after the increase is adopted by the state board.

To assure the renewable fuel requirement actually results in additional renewable fuel and associated GHG benefits, the author and the committee may wish to consider restoring the provision above and clarifying that incentives must achieve GHG emission reductions not otherwise required by statute or regulation, similar to Moyer, Proposition 1B, and other incentive programs.

1. Truck weight argument. The bill excludes buses and redefines "heavy-duty" for its purposes so that funds are limited to trucks over 26,000 pounds GVWR. The current statutory definition of "heavy-duty" applicable to SB 1204 is over 6,000 pounds GVWR (Health and Safety Code Section 39033), although ARB regulations specify over 14,000 pounds GVWR. This provision may have the effect of steering funds away from investments that have the greatest GHG emission reduction potential. According to ARB, initial deployments often start with medium heavy-duty trucks (14,001-26,000 pounds GVWR). For example, approximately 68% of all HVIP vouchers have gone to trucks that are 26,000 pounds GVWR or less.  Medium heavy-duty trucks are ubiquitous and contribute significantly to statewide GHG, NOx, and PM emissions. The author and the committee may wish to consider eliminating the redefinition of "heavy-duty" so that a broader range of trucks can qualify based on GHG emission reduction value, rather than an arbitrary weight limit.
2. A windfall for one manufacturer? Among this bill's unusually specific eligibility criteria is a requirement that trucks must meet ARB's optional low NOx (0.02 grams per brake horsepower-hour) emission standards. According to ARB, only one engine has been certified to meet the low NOx standard to date – an 8.9 liter natural gas engine manufactured by Cummins Westport in North Carolina. To preserve the principle that SB 1204 funds will be allocated on a competitive basis for a broad range of purposes, the author and the committee may wish to consider limiting the amount of funds that can be awarded for engines or vehicles from any one manufacturer to 25%.
3. Prior legislation. This bill is similar to AB 857 (Perea), which passed this Committee on April 27, 2015 and was later held in the Senate Appropriations Committee.
4. Double referral. This bill passed the Assembly Transportation Committee by a vote of 15-0 on April 4, 2016.
5. Suggested amendments:
   1. Eliminate the "one hundred million dollars ($100,000,000)" annual funding commitment, leaving 50% of available SB 1204 funds, and authorize ARB to reallocate any unused funds to other SB 1204 programs.
   2. Require ARB to ensure incentives are allocated on a competitive basis for projects that are shown to achieve the greatest GHG emissions reductions not otherwise required by statute or regulation.
   3. Authorize incentives for "buses" as well as trucks and eliminate the redefinition of heavy-duty so that the full range of heavy-duty vehicles may qualify for incentives.
   4. Limit the amount of incentives that may be awarded for any one vehicle or engine manufacturer to 25% of total program funds each year.
   5. Restore provisions from AB 857 authorizing ARB to increase the renewable fuel requirement based on an assessment of available supplies.

REGISTERED SUPPORT / OPPOSITION:

Support

Agility Fuel Systems

Antelope Valley Boys and Girls Club

Bioenergy Association of California

Brotherhood Crusade

California Natural Gas Vehicle Coalition

Charter Oak Unified School

City of Buena Park

City of Los Alamitos

City of Monterey Park

City of Murrieta

City of Tulare

City of South Gate

Clean Energy

Congress of California Seniors

County of Kings

County of Tulare

Cummins Westport Inc.

Dignity Health

Duarte Chamber of Commerce

El Concilio

Foothill Workforce Development Board

Industry Manufacturers Council

Kern Economic Development Foundation

Kheir Clinics

Los Angeles County Business Federation

Los Angeles County Chamber of Commerce

Los Angeles County Economic Development Corporation

Mojave Desert Air Quality Management District

Mothers of East Los Angeles

Orange County Business Council

Southern California Association of Governments

Southern California Gas Company

The East Los Angeles Community Union

The Valley Economic Alliance

United Chambers of Commerce

UPS

Valley Family Center

Ventura Hillsides Conservancy

VNG.co, LLC

One Individual

Opposition

Alameda-Contra Costa Transit District

American Lung Association in California

Center for Transportation and the Environment

Environment California

First Priority Global GreenFleet

Motiv Power Systems

Natural Resources Defense Council

Physicians for Social Responsibility – Los Angeles

Proterra

Regional Asthma Management & Prevention

Sierra Club California

Union of Concerned Scientists

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. / (916) 319-2092

Date of Hearing: April 4, 2016

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 2415 (

Author:Eduardo Garcia) – As Introduced Ver:February 19, 2016

SUBJECT: California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program

SUMMARY: Reserves 50% or $100 million annually, whichever is greater, of Greenhouse Gas Reduction Fund (GGRF) monies that are allocated to the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (SB 1204 Program) to support the commercial deployment of existing zero- and near-zero emission heavy duty truck technology that meets or exceeds the Air Resources Board's (ARB's) low oxides of nitrogen (NOx) standard between 2018 and 2023. Specifically, this bill:

1. Requires for five years, between January 2, 2018 and January 1, 2023, that 50% or $100 million, whichever is greater, of monies allocated annually for technology development, demonstration, pre-commercial pilots, and early commercial deployments of zero- and near-zero-emission medium- and heavy-duty truck technology be allocated and spent to support the commercial deployment of existing zero- and near-zero-emission heavy-duty truck technology that meets or exceeds the ARB's Low NOx Standard of 0.02 grams per brake horsepower-hour oxides of nitrogen.
2. Requires that between January 2, 2018, and January 1, 2020, that a heavy-duty truck with an internal combustion engine (ICE) receiving SB 1204 Program monies, not use at least 30% renewable fuel.
3. Requires, beginning on January 2, 2020, that a heavy-duty truck with an ICE receiving
   SB 1204 Program funds not use less than 50% renewable fuel.
4. Provides that the required percentage of renewable fuel in effect at the time the moneys are awarded to a heavy-duty truck pursuant to the SB 1204 program shall not change over time.
5. Provides that awards provided pursuant to the SB 1204 program shall not affect the eligibility of low-carbon-fuel providers to qualify for or receive other credits or grants for which they are eligible.
6. For the purposes of the SB 1204 Program, defines a "heavy-duty truck" as a vehicle with a gross vehicle weight rating (GVWR) of 26,001 pounds or more.
7. Makes related, clarifying amendments.

EXISTING LAW:

1. Requires the ARB, pursuant to AB 32 (Núñez), Chapter 488, Statutes of 2006, to develop a plan of how to reduce statewide greenhouse gas (GHG) emissions to 1990 levels by 2020. Under AB 32, ARB is authorized to include the use of market-based mechanisms to comply with these regulations (such as cap and trade mechanism).
2. Establishes the GGRF in the State Treasury and requires all money collected pursuant to cap and trade, with limited exceptions, be deposited into the fund.
3. Creates the SB 1204 Program pursuant to SB 1204 (Lara), Chapter 524, Statutes of 2013, to fund development, demonstration, pre-commercial pilot, and early commercial deployment of zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies including, but not necessarily limited to, medium- and heavy-duty trucks, vocational trucks, short-haul and long-haul trucks, buses, and off-road vehicles and equipment, port equipment, agricultural equipment, marine equipment, and rail equipment.
4. Requires that the SB 1204 Program be funded from the GGRF and prioritized for projects in disadvantaged communities.
5. Requires, until January 1, 2018, that no less than 20% of funding for the SB 1204 Program support commercial deployment of existing zero- and near-zero-emission heavy duty trucks, which is broadly defined.
6. Under the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007, created by AB 118 (Núñez), Chapter 750, Statutes of 2007, requires California Energy Commission (Commission) to implement the Alternative and Renewable Fuels and Vehicle Technology Program (ARFVTP) to fund specified entities to develop and deploy technologies and alternative and renewable fuels in the marketplace to help meet the state’s climate change policies.
7. Creates the Air Quality Improvement Program (AQIP), administered by ARB and the Commission, in consultation with local air districts, to fund specified air quality improvement projects.
8. Requires ARB, in consultation with the Commission, to develop guidance through the existing AQIP funding plan process to implement the SB 1204 Program.
9. Defines a "heavy-duty truck" as vehicles weighing 14,000-19,500 pounds GVWR. 
   

FISCAL EFFECT: Unknown

COMMENTS: According to the author, air pollution effects human health disproportionately in disadvantaged communities that border transportation corridors. This unhealthy air increases the risk of asthma, cancer and premature death. He notes that in the South Coast and San Joaquin Valley Air Districts, nearly 80% of smog-forming pollutants, such as NOx come from mobile sources and that heavy-duty vehicles are the primary producer of these pollutants. To address these issues, the author has introduced AB 2415 which would incentivize the use of renewable fuels in heavy-duty vehicles involved in goods movement and in doing so, provide immediate and cost-effective solutions to reducing emissions and improving air quality and public health.

AB 32 required ARB to develop a plan to reduce GHG emissions to 1990 levels, by 2020.
AB 32 also required ARB to ensure that GHG emissions reduction requirements and programs, to the extent feasible, directed public and private investment toward the most disadvantaged communities in the state. In addition, AB 32 authorized ARB to adopt a schedule of fees to be paid by GHG emission sources and to deposit those monies into the GGRF, which would then be available upon appropriation by the Legislature, to carry out AB 32 requirements.

Subsequent legislation, AB 118, established the AQIP administered by ARB in consultation with local air districts. The AQIP is funded through various fees and surcharges on vehicles and provides competitive grants to fund projects that improve air quality. The AQIP encompasses several programs, including the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program (HVIP), which is administered by ARB and provides vouchers to California fleet owners to help purchase hybrid and zero-emission trucks and buses.

AB 118 also established the ARFVTP, which is administered by the Commission, and provides funding for development and deployment of alternative and renewable fuels and advanced transportation technologies to help attain the state’s climate change goals. Eligible projects include, for example, development, improvement, and production of alternative and renewable low-carbon fuels; improvement of light-, medium-, and heavy-duty vehicle technologies; and expansion of infrastructure connected with existing fleets, public transit, and transportation corridors.

In 2014, the SB 1204 Program was established, to be administered by ARB in conjunction with the Commission, with the intent to create a single, overarching program to develop and deploy zero- and near-zero-emission heavy-duty vehicles. In introducing AB 2415, the primary intent of the author was to better address heavy-duty vehicles in HVIP and AQIP. Specifically, the
SB 1204 Program, until January 1, 2018, provided GGRF funds for projects that develop technology, demonstrate and pilot commercial and early-commercial deployment of zero and near-zero emission medium- and heavy-duty truck technology, and facilitate clean goods movement. The SB 1204 Program worked to develop zero-and near-zero emission technologies for specified vehicles and equipment not only for trucks, but also for off-road vehicles and equipment at the ports as well as in agricultural, marine, and rail sectors. Within the SB 1204 Program, funding priority is generally given to projects that demonstrate benefit to disadvantaged communities, that have the ability to leverage additional public and private funding, and that provide the potential for co-benefits.

To help incentivize the adoption of these new technologies, the author has introduced AB 2415 which is essentially a reintroduction of a bill carried by Assemblymember Perea last year
(AB 857). Specifically, AB 2415 would re-establish the priorities of the SB 1204 Program for five years beginning on January 2, 2018, and ending on January 1, 2023, and, during that five-year period, require that 50% of SB 1204 Program funds (or $100 million, whichever is greater) be used for the deployment of heavy-duty vehicles weighing 26,001 pounds. GVWR or greater that meet a low NOx standard (i.e., meet or exceed an emission standard of 0.02 grams per brake horsepower-hour NOx). AB 2415 accounts for improved technology over time by "ratcheting down" program requirements so that between January 2, 2018, and January 1, 2020, that a heavy-duty truck with an ICE receiving SB 1204 Program monies must use at least 30% renewable fuel and beginning on January 2, 2020, qualifying heavy-duty trucks receiving
SB 1204 Program funds 50% or more renewable fuel.

AB 2415 has a broad spectrum of support including local jurisdictions, business, and environmental and community groups. These groups note that AB 2415 will provide the opportunity to deploy cleaner trucks in the near-term so that Californians, particularly those in disadvantaged communities who experience some of the worst air quality in the state, can begin to see improved air quality and increased health benefits sooner rather than later.

The Southern California Association of Governments (SCAG), writing in support of AB 2415 point out that emissions from the heavy-duty truck sector represent some of the most polluting mobile source emitters and that if enacted, this bill will create additional incentives for zero- and near-zero-emission heavy-duty truck purchases that will help purchasers afford the initial costs of these cleaner trucks, which will in turn help accelerate the retirement of older, dirtier trucks. SCAG contends that stimulating investments in the next-generation of clean truck technology will help grow the market and help California reach its clean air goals.

Suggested amendments: The SB 1204 Program requires ARB to ensure that emissions reductions benefits can be measured or quantified but there is no requirement that the results of these measurements be made public. AB 2415 should be amended to require that ARB periodically post (at least every two years) the GHG and air pollutant reduction benefits achieved by the by the program on its Internet Web site

Double referral: This bill will be referred to the Assembly Natural Resources Committee should it pass out of this committee.

Previous legislation: AB 857 (Perea) of 2015, would have reserved 50% or $100 million annually, whichever is greater, of GGRF monies that are allocated to the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program (SB 1204 Program) to support the commercial deployment of existing zero- and near-zero emission heavy-duty truck technology that meets or exceeds the ARB’s optional low NOx standard between 2018 and 2023. AB 857 was held on the Senate Appropriations Committee suspense file.

SB 1204 (Lara), Chapter 524, Statutes of 2014, created the SB 1204 Program to fund development, demonstration, pre-commercial pilot, and early commercial deployment of zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies.

AB 8 (Perea), Chapter 401, Statutes of 2013, extended until January 1, 2024, extra fees on vehicle registrations, boat registrations, and tire sales in order to fund the programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts.

AB 118 (Núñez), Chapter 750, Statutes of 2007, created the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 that required the Commission to implement the ARFVTP and provide funding measures to specified entities to develop and deploy technologies and alternative and renewable fuels in the marketplace to help attain the state’s climate change policies.

AB 32 (Núñez), Chapter 488, Statutes of 2006, required the ARB to develop a plan of how to reduce emissions to 1990 levels by the year 2020 and also required ARB to ensure that, to the extent feasible, GHGs reduction requirement and programs direct public and private investment toward the most disadvantaged communities.

REGISTERED SUPPORT / OPPOSITION:

Support

Antelope Valley Boys and Girls Club

Best Yet Express Inc.

Bienvenidos Community Health Center

Bioenergy Association of California

Brotherhood Crusade

Charter Oak Unified School

City of Los Alamitos

City of McFarland

Clean Energy

Congress of California Seniors

Cummins Westport Inc.

Duarte Chamber of Commerce

El Concilio Family Services

Foothill Workforce Development Board

Honorable Mike Ennis, Tulare County Board of Supervisors, District Five

Industry Manufacturers Council

Kheir

Leon Trucking Inc.

Los Angeles Area Chamber of Commerce

MLI Leasing, LLC

Mojave Desert Air Quality Management District

Mothers of East Los Angeles

North American Repower

Orange County Business Council

Proteus, Inc.

Santa Clarita Valley Economic Development Corporation

Southern California Association of Governments

Southern California Gas Company

The Valley Economic Alliance

Tulare County Economic Development Corporation

United Chambers of Commerce

United Way of Ventura County

Valley Family Center

VNG.co, LLC

1 private citizen

Opposition

Alameda-Contra Costa Transit District

American Lung Association

Center for Transportation and the Environment

Environment California

Natural Resources Defense Council

Physicians for Social Responsibility, Los Angeles

Regional Asthma Management and Prevention

Sierra Club California

Union of Concerned Scientists

Analysis Prepared by: Victoria Alvarez / TRANS. / (916) 319-2093