Existing law requires the State Energy Resources Conservation and Development Commission, in partnership with the State Air Resources Board, Board and in consultation with specified state agencies, to develop and adopt a state plan to increase the use of alternative fuels, as defined.

The California Global Warming Solutions Act of 2006 establishes the state board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. Pursuant to the act, the state board has adopted the Low-Carbon Fuel Standard regulations.

This bill would require the State Energy Resources Conservation and Development Commission commission to develop a pilot program for 3 a pilot projects, project, as specified, for the development of innovative low-carbon fuel, as defined.

This bill would require the state board, the State Energy Resources Conservation and Development Commission, the Department of Resources Recycling and Recovery, and the Department of Food and Agriculture to allocate Commission to develop a pilot program for 3 pilot projects, as specified, for the development of innovative low-carbon fuel projects, fuel, as defined, no less than 25% of the moneys appropriated by the Legislature to those agencies to provide incentives for the development and deployment of alternative and renewable low-carbon fuels, the reduction of methane emissions from livestock manure management operations or dairy manure management operations, the reduction of alternative daily cover sent to landfills from in-state sources, and the reduction of methane emissions from existing or closed landfills, as specified. defined.

Existing law requires the State Air Resources Board to approve and implement a comprehensive strategy to reduce emissions of short-lived climate pollutants to achieve a reduction in methane by 40% below 2013 levels by 2030. Existing law requires the state board, in consultation with the Department of Food and Agriculture, to adopt regulations to reduce methane emissions from livestock manure management operations and dairy manure management operations, as specified. Existing law requires the state board, the Public Utilities Commission, and the State Energy Resources Conservation and Development Commission to undertake various actions related to reducing short-lived climate pollutants in the state. Existing law requires the Department of Resources Recycling and Recovery, in consultation with the state board, to achieve specified targets for reducing organic waste in landfills.

This bill would require the state board, the State Energy Resources Conservation and Development Commission, the Department of Resources Recycling and Recovery, and the Department of Food and Agriculture to allocate an unspecified percentage of moneys for fuels and methane mitigation appropriated by the Legislature to those agencies for the development of innovative low-carbon fuels. for the development of innovative low-carbon fuel projects, as defined, no less than 25% of the moneys appropriated by the Legislature to those agencies to provide incentives for the development and deployment of alternative and renewable low-carbon fuels, the reduction of methane emissions from livestock manure management operations or dairy manure management operations, the reduction of alternative daily cover sent to landfills from in-state sources, and the reduction of methane emissions from existing or closed landfills, as specified.

Existing law, the California Toll Bridge Authority Act, abolished the California Toll Bridge Authority and vested the California Transportation Commission with the authoritys duties, powers, purposes, responsibilities, and jurisdiction. The act provides that the California Transportation Commission has the possession and control of all licenses, permits, leases, agreements, contracts, orders, claims, judgments, records, papers, equipment, supplies, bonds, moneys, funds, appropriations, buildings, land, and other property held for the benefit, use, or obligation of the California Toll Bridge Authority.

This bill would make a nonsubstantive change to these provisions.

ASSEMBLY THIRD READING

ATR Bill Id:AB 1970

Author:(Eduardo Garcia)

As Amended Ver:May 25, 2018

Majority vote

SUMMARY: Requires the California Energy Commission (CEC) to develop three pilot projects relating to vehicle GHG emissions reductions. Specifically, this bill:

1. Defines "innovative low carbon fuel" as a renewable fuel that is generated from renewable energy resources or feedstocks that meets all of the following:
   1. The quantity of consumption per calendar year of the renewable fuel is not expected to exceed the energy equivalent of 30 million gallons of petroleum-based fuel;
   2. The carbon intensity of the renewable fuel complies with the LCFS and is capable of meeting a carbon intensity value at least 60% lower than the petroleum-based fuel baseline carbon intensity value pursuant to the Low-Carbon Fuel Standard regulations;
   3. The renewable fuel production technology is at technology-readiness level 6, or greater, as defined in the federal Department of Energy's Technology Readiness Assessment Guide; and.
   4. The renewable fuel produces lower levels of emissions of criteria air pollutants than petroleum-based fuels when being used.
2. Requires CEC to develop one pilot project for the development of innovative low-carbon fuel. Specifies that priority be given for a project that:
   1. Utilizes feedstocks derived from in-state sourced waste streams;
   2. Maximizes local workforce and economic benefits;
   3. Provides multiple environmental and public health cobenefits, including reducing significance emissions of methane, criteria air pollutants, and toxic air contaminants; and,
   4. Leverages additional public or private financing.
3. Requires CEC to develop one pilot program to reduce GHG emissions and improve air quality through the purchase of electric yard trucks and charging stations at a marine terminal located in a disadvantaged community, as specified, in San Diego.
4. Require CEC to develop one pilot program in Riverside County to purchase zero-emission vans to be used by the Corona Regional Hospital to transport low-income and disabled patients and for the City of Eastvale to provide transportation for low-income senior citizens.

EXISTING LAW:

1. Pursuant to the California Global Warming Solutions Act (AB 32 (Núñez), Chapter 488, Statues of 2006), requires the Air Resources Board (ARB) to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
2. Pursuant to Executive Order S-01-07, sets a statewide goal to reduce the carbon intensity (CI) of California's transportation fuels by at least 10% by 2020. Pursuant to AB 32, ARB adopted a Low Carbon Fuel Standard (LCFS) regulation in 2009 to implement this goal. The LCFS attributes CI values to a variety of fuels based on direct and indirect GHG emissions, including land use changes caused by production of biofuels. The LCFS permits producers of certain low-CI fuels to opt in to LCFS regulation for the purpose of generating credits, which can be banked and used for compliance, sold to regulated parties, and purchased and retired by regulated parties. In addition, LCFS credits can be exported to other GHG emission reduction programs.
3. Requires each state agency that is a buyer of transportation fuels to buy at least 3% of "very low carbon transportation fuels," as defined, beginning January 1, 2017, increasing by 1% per year thereafter until 2024.

FISCAL EFFECT: According to the Assembly Appropriations Committee,

1. Cost pressures, likely in the millions of dollars, to fund the pilot projects (Greenhous Gas Reduction Fund or Alternative Renewable Fuel and Vehicle Technology Fund).
2. If the projects are funded, CEC costs are minor and absorbable.

COMMENTS: LCFS is designed to encourage the use of cleaner low-carbon fuels in California, encourage the production of those fuels, and therefore, reduce GHG emissions. The LCFS standards are expressed in terms of the "carbon intensity" (CI) of gasoline and diesel fuel and their respective substitutes. The LCFS is performance-based and fuel-neutral, allowing the market to determine how the carbon intensity of California's transportation fuels will be reduced. This program is based on the principle that each fuel has "lifecycle" GHG emissions that include carbon dioxide (CO2), nitrous oxide (N2O), and other GHG contributors. This lifecycle assessment examines the GHG emissions associated with the production, transportation, and use of a given fuel. The lifecycle assessment includes direct emissions associated with producing, transporting, and using the fuels, as well as significant indirect effects on GHG emissions, such as changes in land use for some biofuels. Subjecting this lifecycle GHG rating to a declining standard for the transportation fuel pool in California would result in a decrease in the total lifecycle GHG emissions from fuels used in California.

In 2007, Governor Schwarzenegger issued Executive Order S-1-07, calling for a reduction of at least 10% in the CI of California's transportation fuels by 2020. The order instructed the California Environmental Protection Agency to coordinate activities between the University of California, the CEC, and other state agencies to develop and propose a draft compliance schedule to meet the 2020 target.

The Order further directed ARB to consider initiating regulatory proceedings to establish and implement the LCFS. In response, ARB adopted the LCFS regulation in 2009, to be implemented beginning in 2010. The first CI reduction requirement of 0.25% began in 2011. The target increased to 0.5% in 2012 and 1% in 2013. To date, fuel suppliers have over-complied, predominantly by blending ethanol with gasoline, which is preferred in the near term because ethanol blending is required by the federal Renewable Fuel Standard and does not require significant changes in fueling and vehicle infrastructure. However, natural gas, biodiesel and electricity have also been used in significant amounts to comply with the LCFS.

Other low-carbon fuels include dimethyl ether (DME), renewable hydrogen, and renewable propane. DME is a synthetically produced alternative to diesel for use in specifically designed compressed ignition diesel engines. DME can be produced from biomass, methanol, and fossil fuels. According to the Department of Energy (DOE), DME has several properties that make it attractive for use in diesel engines. The energy efficiency and power ratings of DME and diesel engines are virtually the same. Because of its lack of carbon-to-carbon bonds, using DME as an alternative to diesel can nearly eliminate particulate emissions; however, DME has half the energy density of diesel.

Renewable hydrogen can be produced from diverse domestic resources with the potential for near-zero GHG emissions. Once produced, hydrogen generates electrical power in a fuel cell, emitting only water vapor and warm air. It can be used in both the stationary and transportation energy sectors. Hydrogen's energy content by volume is low. This makes storing hydrogen a challenge, because it requires high pressures, low temperatures, or chemical processes to be stored compactly.

Propane is a cleaner-burning alternative fuel that's been used for decades to power light-, medium- and heavy-duty propane vehicles and in homes for heating, water heating, and cooking. Propane is generally sourced from petrochemicals that come from conventional oil reserves, so in its traditional form it isn’t renewable. There is interest in using biomass or waste feedstocks to produce renewable propane.

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0003277

Date of Hearing: May 16, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1970

Author:(Eduardo Garcia) – As Amended Ver:May 1, 2018

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

SUMMARY:

This bill requires the California Energy Commission (CEC) to develop three pilot projects for the development of innovative low-carbon fuel. This bill requires priority to be given to projects that demonstrate a minimum of four of the following:

1. Utilize feedstocks derived from in-state-sourced waste streams.
2. Maximize local workforce and economic benefits.
3. Provide multiple environmental and public health cobenefits, including reducing significant emissions of methane, criteria air pollutants, and toxic air contaminants.
4. Leverage additional public or private funding.
5. Produce innovative renewable fuel capable of achieving cost-effective reductions in emissions of greenhouse gases and criteria air pollutants on a dollar-per-metric-ton basis when considering fuel production, vehicle acquisition, and fueling infrastructure costs.

FISCAL EFFECT:

1. Cost pressures, likely in the millions of dollars, to fund the pilot projects (Greenhous Gas Reduction Fund or Alternative Renewable Fuel and Vehicle Technology Fund).
2. If the projects are funded, CEC costs are minor and absorbable.

COMMENTS:

1. Purpose. The author argues state investments have historically focused on first-generation alternative fuels and that limited focus has unintentionally created a funding barrier for novel, innovative fuel development and production.

This bill seeks to overcome that barrier by requiring three pilot projects, specifically designed to produce innovative fuel resources.

1. Types of fuels. This bill targets low-carbon fuels that have not achieved commercial viability. Dimethyl ether (DME) is a synthetically produced alternative to diesel for use in specifically designed compressed ignition diesel engines. DME can be produced from biomass, methanol, and fossil fuels. According to the Department of Energy (DOE), DME has several properties that make it attractive for use in diesel engines. The energy efficiency and power ratings of DME and diesel engines are virtually the same. Because of its lack of carbon-to-carbon bonds, using DME as an alternative to diesel can nearly eliminate particulate emissions; however, DME has half the energy density of diesel.

Renewable hydrogen can be produced from diverse domestic resources with the potential for near-zero GHG emissions. Once produced, hydrogen generates electrical power in a fuel cell, emitting only water vapor and warm air. It can be used in both the stationary and transportation energy sectors. Hydrogen's energy content by volume is low. This makes storing hydrogen a challenge, because it requires high pressures, low temperatures, or chemical processes to be stored compactly.

Propane is a cleaner-burning alternative fuel that's been used for decades to power light-, medium- and heavy-duty propane vehicles and in homes for heating, water heating, and cooking. Propane is generally sourced from petrochemicals that come from conventional oil reserves, so in its traditional form it isn’t renewable. There is interest in using biomass or waste feedstocks to produce renewable propane.

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

Date of Hearing: April 23, 2018

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Al Muratsuchi, Acting Chair

ABPCA Bill Id:AB 1970 (

Author:Eduardo Garcia) – As Amended Ver:April 12, 2018

SUBJECT: Low-carbon fuels

SUMMARY: Requires the Air Resources Board (ARB), the California Energy Commission (CEC), the Department of Resources Recycling and Recovery (CalRecycle), and the Department of Food and Agriculture (CDFA) to allocate no less than 25% of moneys appropriated by the Legislature to those agencies to provide incentives for specified purposes for the development of innovative low-carbon fuel projects, as specified.

EXISTING LAW:

1. Pursuant to the California Global Warming Solutions Act (AB 32), requires ARB to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and to adopt rules and regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions.
2. Pursuant to Executive Order S-01-07, sets a statewide goal to reduce the carbon intensity (CI) of California's transportation fuels by at least 10% by 2020. Pursuant to AB 32, ARB adopted a Low Carbon Fuel Standard (LCFS) regulation in 2009 to implement this goal. The LCFS attributes CI values to a variety of fuels based on direct and indirect GHG emissions, including land use changes caused by production of biofuels. The LCFS permits producers of certain low-CI fuels to opt in to LCFS regulation for the purpose of generating credits, which can be banked and used for compliance, sold to regulated parties, and purchased and retired by regulated parties. In addition, LCFS credits can be exported to other GHG emission reduction programs.
   
3. Requires each state agency that is a buyer of transportation fuels to buy at least 3% of "very low carbon transportation fuels," as defined, beginning January 1, 2017, increasing by 1% per year thereafter until 2024.
   

THIS BILL:

1. Requires ARB, CEC, CalRecycle, and CDFA to allocate no less than 25% of moneys appropriated by the Legislature to those agencies for the following purposes for the development of innovative low-carbon fuel projects:
   1. The development and deployment of alternative and renewable low-carbon fuels;
   2. The reduction of methane emissions from livestock manure management operations or dairy manure management operations;
   3. The reduction of alternative daily cover sent to landfills from in-state sources; and,
   4. The reduction of methane emissions from existing or closed landfills.
2. Requires that priority be given to projects that demonstrate a minimum of four of the following:
   1. Utilize feedstocks derived from in-state-sourced waste streams;
   2. Maximize local workforce and economic benefits;
   3. Provide multiple environmental and public health benefits cobenefits;
   4. Leverage additional public or private funding; and,
   5. Produce innovative renewable fuel capable of achieving cost-effective reductions in GHG emissions and criteria air pollutants on a dollar-per-metric-ton basis when considering fuel production, vehicle acquisition, and fueling infrastructure costs.
3. If the departments listed determine that there are insufficient qualified applications for the moneys allocated under this bill, directs the funds for incentives to other qualifying projects that are consistent with the purposes of the bill, including:
   1. The development and deployment of alternative and renewable low-carbon fuels;
   2. The reduction of methane emissions from livestock manure management operations or dairy manure management operations;
   3. The reduction of alternative daily cover sent to landfills from in-state sources; and,
   4. The reduction of methane emissions from existing or closed landfills.
4. Defines "innovative low carbon fuel" as a renewable fuel that is generated from renewable energy resources or feedstocks that meets all of the following:
   1. The quantity of consumption per calendar year of the renewable fuel is not expected to exceed the energy equivalent of 30 million gallons of petroleum-based fuel;
   2. The carbon intensity of the renewable fuel complies with the LCFS and is capable of meeting a carbon intensity value at least 60% lower than the petroleum-based fuel baseline carbon intensity value;
   3. The renewable fuel production technology is at technology-readiness level 6, or greater, as defined in the federal Department of Energy's Technology Readiness Assessment Guide; and.
   4. The renewable fuel produces lower levels of emissions of criteria air pollutants than petroleum-based fuels when being used.
5. Specifies that "renewable fuel" includes, but is not limited to, renewable dimethyl ether (DME), renewable hydrogen, and renewable propane.
6. States legislative findings and declarations relating to low-carbon fuels.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author's statement:

Methane is a powerful climate pollutant. California has addressed several strategies to mitigate methane, many of which also help reduce emissions in the transportation and energy sectors. Unfortunately, the state programs utilizing the Greenhouse Gas Reduction Fund (including under AB 1383) and Alternative and Renewable Fuels and Vehicle Technology Program (ARFVTP) dollars have historically focused on first-generation alternative fuels. This limited focus has unintentionally created a funding barrier for novel, innovative fuel development and production. The industry stakeholders involved in crafting this bill have been working with the state agencies for several years and feel this legislative approach is best suited to meet their continued needs.

1. Background on the LCFS. LCFS is designed to encourage the use of cleaner low-carbon fuels in California, encourage the production of those fuels, and therefore, reduce GHG emissions. The LCFS standards are expressed in terms of the "carbon intensity" (CI) of gasoline and diesel fuel and their respective substitutes. The LCFS is performance-based and fuel-neutral, allowing the market to determine how the carbon intensity of California's transportation fuels will be reduced. This program is based on the principle that each fuel has "lifecycle" GHG emissions that include CO₂, N₂O, and other GHG contributors. This lifecycle assessment examines the GHG emissions associated with the production, transportation, and use of a given fuel. The lifecycle assessment includes direct emissions associated with producing, transporting, and using the fuels, as well as significant indirect effects on GHG emissions, such as changes in land use for some biofuels. Subjecting this lifecycle GHG rating to a declining standard for the transportation fuel pool in California would result in a decrease in the total lifecycle GHG emissions from fuels used in California.

In 2007, Governor Schwarzenegger issued Executive Order S-1-07, calling for a reduction of at least 10% in the CI of California's transportation fuels by 2020. The order instructed the California Environmental Protection Agency to coordinate activities between the University of California, the CEC, and other state agencies to develop and propose a draft compliance schedule to meet the 2020 target.

The Order further directed ARB to consider initiating regulatory proceedings to establish and implement the LCFS. In response, ARB adopted the LCFS regulation in 2009, to be implemented beginning in 2010. The first CI reduction requirement of 0.25% began in 2011. The target increased to 0.5% in 2012 and 1% in 2013. To date, fuel suppliers have over-complied, predominantly by blending ethanol with gasoline, which is preferred in the near term because ethanol blending is required by the federal Renewable Fuel Standard and does not require significant changes in fueling and vehicle infrastructure. However, natural gas, biodiesel and electricity have also been used in significant amounts to comply with the LCFS.

1. Types of fuels. This bill is targeting low-carbon fuels that have not achieved commercial viability. While the bill is intended to apply to any innovative low-carbon fuels, a few currently meet the definition in the bill. DME is a synthetically produced alternative to diesel for use in specifically designed compressed ignition diesel engines. DME can be produced from biomass, methanol, and fossil fuels. According to the Department of Energy (DOE), DME has several properties that make it attractive for use in diesel engines. The energy efficiency and power ratings of DME and diesel engines are virtually the same. Because of its lack of carbon-to-carbon bonds, using DME as an alternative to diesel can nearly eliminate particulate emissions; however, DME has half the energy density of diesel.

Renewable hydrogen can be produced from diverse domestic resources with the potential for near-zero GHG emissions. Once produced, hydrogen generates electrical power in a fuel cell, emitting only water vapor and warm air. It can be used in both the stationary and transportation energy sectors. Hydrogen's energy content by volume is low. This makes storing hydrogen a challenge, because it requires high pressures, low temperatures, or chemical processes to be stored compactly.

Propane is a cleaner-burning alternative fuel that's been used for decades to power light-, medium- and heavy-duty propane vehicles and in homes for heating, water heating, and cooking. Propane is generally sourced from petrochemicals that come from conventional oil reserves, so in its traditional form it isn’t renewable. There is interest in using biomass or waste feedstocks to produce renewable propane.

1. Department of Energy Readiness Level Scale. Under this bill, only those renewable fuel production technologies that are at a technology-readiness level 6 or greater are eligible for funding under the bill. That scale ranges from 1 (lowest - Basic Research) to 9 (highest - system operational). A TRL of 6 equates to an engineering/pilot scale project to validate the system in a relevant environment, such as testing a prototype with real waste. TRL 7 and 8 includes full-scale system demonstrations and actual system completion. TRL 9 is full-scale system operation of the technology in its final form.
2. Suggested amendments. Because this bill is focused on new and emerging technologies, the committee may wish to amend the bill to direct CEC to approve three pilot projects for innovative low-carbon fuels that meet the requirements of the bill.

REGISTERED SUPPORT / OPPOSITION:

Support

Advanced Biofuels Association
International DME Association

Opposition

None on file

Analysis Prepared by: Elizabeth MacMillan / NAT. RES. /