SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 1046 (Ting) - Air Quality Improvement Program: Clean Vehicle Rebate Project

Bill Summary:

This bill would require the California Air Resources Board (ARB) to develop a plan to provide for the funding of the Clean Vehicle Rebate Project in order to meet a goal of the deployment of 5 million electric vehicles by December 2030.

Fiscal Impact:

• ARB estimates costs of $730,000 in 2019-20, $579,000 in 2020-21, and $179,000 ongoing (Greenhouse Gas Reduction Fund) to implement this bill.
• Unknown but very significant cost pressure, likely over $10 billion over 10 years (Greenhouse Gas Reduction Fund or other special fund), to provide rebates in order to meet the goal of 5 million electric vehicles by December 2030 (see staff comments).

Background:

Structured after the California Solar Initiative (CSI). The program established by this bill resembles the structure of the CSI. This program was created in 2006 to provide long term, declining subsidies for the installation of solar energy systems with a goal of making solar energy competitive without further government subsidy. This program has been largely successful as the explicit state subsidy for solar energy systems has lapsed and those systems are now fairly competitive, the credit must be shared with a similar federal subsidy program and a global effort to produce and deploy solar panels. The CSI was funded from electricity rates and cost about $3 billion.

Many programs aim to reduce transportation GHG emissions. Over the years, California has established a number of policies, goals, and programs to improve air quality and reduce GHG emissions. Most notably, AB 32 established the goal of reducing GHG emissions to 1990 levels by the year 2020 and, more recently, SB 32 established the more aggressive goal of reducing emissions 40 percent below 1990 levels by 2030. Below are the most important of the many transportation programs established to accomplish these goals:

• CVRP — The CVRP provides rebates to consumers in order to promote the production and use of ZEVs and NZEVs, specifically for new plug-in hybrid electric vehicles (PHEV), battery electric vehicles (BEV), or fuel-cell electric vehicles (FCEV). The CVRP is the largest of the transportation related programs, having spent over $850 million cumulatively through fiscal year 2018-19, and $238 million in the 2019-20 budget, to promote the production and use of ZEVs and NZEVs.
• Federal EV and ZEV rebates —The federal government provides a substantial tax credit for new battery electric and plug-in hybrid EVs which are much higher than the CVRP rebates, ranging from $2,500 - $7,500, depending on the capacity of the EV’s battery. This rebate phases out when a manufacturer has reached certain sales thresholds, which has happened to several leading EV sellers.
• Low Carbon Fuel Standard (LCFS) — The ARB has established the LCFS which is designed to encourage the use of cleaner low-carbon fuels in California, encourage the production of those fuels, and therefore, reduce greenhouse gas emissions. Through revenue derived from the LCFS, electric and natural gas utilities fund a rebate program for EVs which currently provides up to $800 for PG&E customers and up to $1000 for Southern California Edison customers.
• Alternative and Renewable Fuel and Advanced Vehicle Technology Program (ARVTP) — this $100 million per year program mostly funds fuel research and infrastructure, but a portion of the funding has gone to ZEV and NZEV vehicle deployment.
• Enhanced Fleet Modernization Program (EFMP) and the EFMP Plus-Up — At about $30 million annually, the EFMP programs are much smaller than the CVRP. These programs encourage low-income drivers to retire their older, high emitting vehicles and replace them with newer, cleaner, more fuel efficient vehicles.
• ZEV Regulation — The ZEV regulation requires large volume and intermediate volume vehicle manufacturers that sell cars in California to produce ZEVs and NZEVs. In general, the ZEV regulation requires that 15 perfect of new car sales be ZEVs by 2025. This target is intended to achieve 1.5 million ZEVs on the road by 2025 as directed under Governor Brown’s Executive Order B-16-2012. This regulation has been threatened by the U.S. Environmental Protection Agency.
• Carpool Stickers — the most effective non-cash incentive for purchasing EVs and ZEVs is their eligibility for a carpool sticker.

Uncertain funding has undermined CVRP in past. Supporters note that the CVRP has run out of funding mid-year, creating uncertainty among potential buyers and lessening the effectiveness of the program. The state budget often provides insufficient funds for the program. For example, the ARB estimates that it will need $400 - $500 million to meet the CVRP needs through September 2020, well exceeding the $238 million in the recently enacted budget.

Proposed Law:

This bill would:

• Require ARB to develop a plan to provide for the funding of the Clean Vehicle Rebate Project, as specified.
• Require ARB to provide to the Director of Finance a rebate structure designed to support the deployment of 5,000,000 zero-emission vehicles in the state by December 2030; a starting rebate level for all battery electric vehicles and hydrogen fuel cell vehicles in a specified amount; rebate levels, if any, for plug-in hybrid electric vehicles, as specified; and an estimate of the total amount of money to be paid as rebates between July 1, 2020, and the date at which 5,000,000 zero-emission vehicles are expected to be deployed.
• Require the Department of Finance to specify a funding plan to maintain funding levels for any program impacted by that rebate structure and levels.
• Require ARB to submit to the Legislature the proposed funding plan and rebate structure and levels.

Related Legislation:

SB 350 (De Leon; Chapter 547 of 2015) — Requires the CPUC to direct investor-owned utilities to propose investments to accelerate widespread transportation electrification in order to reduce greenhouse gas emission to 40% below 1990 levels by 2030.

SB 1275 (De Leon; Chapter 530 of 2014) — Establishes a goal of 1 million ZEVs and near-ZEVs by January 1, 2023, requires the CVRP to reduce rebates annually based on cumulative sales, establishes programs to increase access to ZEVs for disadvantaged communities.

Staff Comments:

Cost pressures. While the 5 million ZEVs goal by 2030 in this bill is just a goal and not a mandate, the bill does require ARB to develop a plan to provide for the funding necessary to facilitate reaching the goal. This could create significant cost pressures for the Legislature to fund this level of rebate investment needed to reach the goal.

California has roughly 600,000 ZEVs on the road today, the vast majority of which are electric. Therefore, an additional 4,400,000 ZEVs would need to be sold in order to reach the goal of five million. Assuming the rebate starts at $7,500 per vehicle and declines on a straight-line basis to zero, the total amount needed for rebates would be $16.5 billion. The actual necessary rebate will depend heavily on the size and availability of a federal rebate, if any, as well as the impact of the many other programs mentioned above. The availability, price and attractiveness of new ZEV models will also have a primary influence on rebate levels.

The funding needed to reach the 5 million ZEV goal, coupled with the requirement for ARB to develop a plan to provide funding, raises serious questions as to where the funding will come from. It appears unlikely there are sufficient existing sources of revenue to provide the level of funding required to reach the goals in this bill without having significant deleterious impacts and trade-offs to other programs.

The budget funds a related study. The 2019-20 budget provides $1.5 million to the Secretary of the Environmental Protection Agency to “identify strategies that significantly reduce emissions from vehicles and to achieve carbon neutrality in the sector, including the transition to zero-emission light-duty vehicles, in particular passenger vehicles, the transition to zero-emission heavy vehicles, and the adoption of other technology to significantly reduce the emissions from heavy vehicles, the role of alternative fuels, and the impact of land use policies.” The results of this broader study should inform ARB’s CVRP analysis.

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SENATE COMMITTEE ON TRANSPORTATION

Senator Jim Beall, Chair

2019 - 2020 Regular

Bill No: AB 1046 Hearing Date: 7/9/2019

SUBJECT: Air Quality Improvement Program: California Electric Vehicle Initiative

DIGEST: This bill requires the California Air Resources Board (ARB) to develop a plan to provide for the continuous funding of a program with a goal of supporting deployment of 5 million electric vehicles by December 2030 and authorizes the Treasurer to securitize the revenues the identified revenue streams.

ANALYSIS:

Existing law:

1. Establishes the Global Warming Solutions Act of 2006, (AB 32 Núñez, Chapter 244, Statutes of 2006) that requires ARB to establish programs to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020.
2. Requires, pursuant to SB 32 (Pavley, Chapter 249, Statutes of 2016), that ARB ensure that statewide GHG emissions are reduced to at least 40 percent below 1990 levels by 2030.
3. Establishes the Air Quality Improvement Program (AQIP), administered by ARB, to fund programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts. One primary program adopted by ARB pursuant to the AQIP is the Clean Vehicle Rebate Project (CVRP).
4. Establishes the Charge Ahead California Initiative pursuant to SB 1275 (de León, Chapter 530, Statutes of 2014), that, among other things, includes the goal of placing at least one million zero-emission vehicles (ZEVs) and near-zero-emission vehicles (NZEVs) into service by January 1, 2023, and increasing access to these vehicles for disadvantaged, low-and- moderate-income communities and consumers.

This bill:

Requires the California Air Resources Board (ARB) to develop a plan to provide for the continuous funding of a program to provide financial incentives for electric vehicle (EV) purchases with a goal of supporting deployment of 5 million electric vehicles by December 2030.

1. Prohibits funds recovered from ratepayers of electric or gas utilities to be part of the funding.
2. Authorizes the Treasurer, upon request by ARB and approval by the Director of the Department of Finance, to securitize the revenues identified in the funding plan. If the revenues are securitized, the rebate structure shall begin at not more than $7,500 per vehicle declining to zero, and be designed to support the deployment of 5 million ZEVs by December 2030.
3. Does not provide the ARB with new authority to establish new revenue sources.

COMMENTS:

1. Author’s Statement. This bill requires ARB to conduct annual market forecasting for the State’s progress toward ZEV deployment goals, and consider modifications to the CVRP to meet those goals. The basic flat rebate structure of the CVRP has not been revised for more than five years, while the ZEV market has dramatically changed. This bill would attempt to focus the CVRP on pushing ZEV deployment in the State closer to a sustainable consumer market.
2. Like the California Solar Initiative (CSI). The program established by this bill resembles the structure of the CSI. This program was created in 2006 to provide long term, declining subsidies for the installation of solar energy systems with a goal of making solar energy competitive without further government subsidy. This program has been largely successful as the explicit state subsidy for solar energy systems has lapsed and those systems are now fairly competitive, the credit must be shared with a similar federal subsidy program and a global effort to produce and deploy solar panels. The CSI was funded from electricity rates and cost about $3 billion.
3. Many Programs Aim to Reduce Transportation GHG Emissions. Over the years, California has established a number of policies, goals, and programs to improve air quality and reduce GHG emissions. Most notably, AB 32 established the goal of reducing GHG emissions to 1990 levels by the year 2020 and, more recently, SB 32 established the more aggressive goal of reducing emissions 40% below 1990 levels by 2030. Below are the most important of the many transportation programs established to accomplish these goals:
4. CVRP — The CVRP provides rebates to consumers in order to promote the production and use of ZEVs and NZEVs, specifically for new plug-in hybrid electric vehicles (PHEV), battery electric vehicles (BEV), or fuel-cell electric vehicles (FCEV). CVRP provides higher rebate levels for lower-income consumers according to the following table:

Source: California Air Resources Board

The CVRP is the largest of the transportation related programs, having spent over $850 million cumulatively through fiscal year 2018-19, and $238 million in the 2019-20 budget, to promote the production and use of ZEVs and NZEVs.

1. Federal EV and ZEV rebates —The federal government provides a substantial tax credit for new battery electric and plug-in hybrid EVs which are much higher than the CVRP rebates, ranging from $2,500 - $7,500, depending on the capacity of the EV’s battery. This rebate phases out when a manufacturer has reached certain sales thresholds, which has happened to several leading EV sellers.
2. Low Carbon Fuel Standard (LCFS) — The ARB has established the LCFS which is designed to encourage the use of cleaner low-carbon fuels in California, encourage the production of those fuels, and therefore, reduce greenhouse gas emissions. Through revenue derived from the LCFS, electric and natural gas utilities fund a rebate program for EVs which currently provides up to $800 for PG&E customers and up to $1000 for Southern California Edison customers.
3. Alternative and Renewable Fuel and Advanced Vehicle Technology Program (ARVTP) — this $100 million per year program mostly funds fuel research and infrastructure, but a portion of the funding has gone to ZEV and NZEV vehicle deployment.
4. Enhanced Fleet Modernization Program (EFMP) and the EFMP Plus-Up — At about $30 million annually, the EFMP programs are much smaller than the CVRP. These programs encourage low-income drivers to retire their older, high emitting vehicles and replace them with newer, cleaner, more fuel efficient vehicles.
5. ZEV Regulation — The ZEV regulation requires large volume and intermediate volume vehicle manufacturers that sell cars in California to produce ZEVs and NZEVs. In general, the ZEV regulation requires that 15 perfect of new car sales be ZEVs by 2025. This target is intended to achieve 1.5 million ZEVs on the road by 2025 as directed under Governor Brown’s Executive Order B-16-2012. This regulation has been threatened by the U.S. Environmental Protection Agency.
6. Carpool Stickers — the most effective non-cash incentive for purchasing EVs and ZEVs is their eligibility for a carpool sticker.
   
7. A Potentially Enormous Price Tag. Making ZEVs competitive without government subsidies is appealing, but the cost could be high. California has roughly 600,000 ZEVs on the road today, the vast majority of which are electric. Therefore, an additional 4,400,000 ZEVs need to be sold to get to 5 million. Assuming the rebate starts at $7500 per vehicle and declines on a straight line basis to zero, the total rebate needed is $16.5 billion. The actual necessary rebate will depend heavily on the size and availability of a federal rebate, if any, as well as the impact of the many other programs mentioned above. The availability, price and attractiveness of new ZEV models will also have a primary influence on rebate levels.
8. Continuous Appropriation/Legislative Review? The bill provide ARB with no new authority to establish new revenue sources. So where will the additional funding come from? It has to come from ARB’s existing authority: For example, ARB could increase the minimum price for cap and trade allowances, raising new GGRF funds. By requiring establishment of a continuous funding plan, this bill directs the ARB to implement a potentially multi-billion dollar program without legislative review and approval. It also allows ARB to make CVRP funding a permanent priority for GGRF funding crowding out other potentially worthy investments. While this may be the best use of GGRF funding, the legislature may want to first review the proposal in the context of other potential uses. The legislature may also want to consider the merits of the taxpayer-neutral financing option described in the bill. Alternatively, the ARB could be required to hold public hearings and report to the legislature before implementing their program.
9. I’ll Gladly Pay You Tuesday …. The bill contemplates financing a stream of ARB-derived revenues to provide up-front funding for the CVRP rebate program. Creating the legal framework to assure lenders of repayment, which is necessary for securitization, requires detailed legislation guided by bond counsel. (See, for example, SB 6 (Burton; Chapter 10 of the First Extraordinary Session of 2001) or SB 31 (Burton; Chapter 9 of the First Extraordinary Session of 2001), which authorized revenue bonds to help California get through the electricity crisis.) This bill does not provide the necessary assurance.
10. Leaving Out an Option. The bill prohibits the use of any funds from electric or gas customers. This is inconsistent with existing law which establishes state policy to encourage transportation electrification, and instructs the California Public Utilities Commission (CPUC) to direct electric utilities to create programs to accelerate widespread transportation electrification (see SB 350; DeLeon – Chapter 547 of 2015). This has so far resulted in substantial investment in EV charging infrastructure by the utilities. Given the enormous funding required to meet the goals of this bill, it seems unwise to rule out a potentially substantial funding source. The author may wish to consider deleting this prohibition, instead leaving it available as an option for the ARB to consider.
11. Look at All the Moving Parts. As noted above, the CVRP is only one of several programs which supports ZEVs. Meeting our ambitious ZEV goals will require a focused and coordinated effort among all programs and agencies. A reasonable determination of the necessary funding level for the CVRP program must also consider the impact of the many other programs designed to help achieve the same goal. If, for example, the federal rebate went away, the CVRP would need to increase. If the utility rebate from the LCFS increases the CVRP could be lower. The author may wish to ensure that the ARBs effort considers the effect of these other programs.
12. No Charging, No Cars. The California Energy Commission (CEC) has determined that California will need 250,000 EV charging stations to service 1.5 million ZEVs. (There is no estimate for the number needed to service 5 million ZEVs.) Currently California has about 18,000 charging stations installed, many of which have been heavily subsidized. Meeting the ZEV targets will not be possible without adequate numbers of charging stations. It is conceivable that most of the remaining 232,000 charging stations will require a significant public subsidy, especially given California’s commitment to provide ZEV access to disadvantaged communities. While the CEC will be determining the gap in available EV charging stations, no entity in state government has the responsibility for developing plans and implementing a program for closing that gap. This bill leaves this crucial element unaddressed, though it should be covered in the study required in the 2019-20 budget (see comment 11).
13. Uncertain Funding. Supporters note that the CVRP has run out of funding mid-year, creating uncertainty among potential buyers and lessening the effectiveness of the program. This is a self-inflicted wound as the state budget often provides insufficient funds for the program. For example, the ARB estimates that it will need $400 - $500 million to meet the CVRP needs through September 2020, well exceeding the $238 million in the recently enacted budget. There are several ways to deal with this shortage in the near-term short of providing continuous funding, such as appropriating sufficient funding in the budget, directing supplemental funds from other programs (such as the ARFVTP) or providing for a contingency fund in the GGRF.
14. The Budget Funds a Similar Study. The 2019-20 budget provides $1.5 million to the Secretary of the Environmental Protection Agency to “identify strategies that significantly reduce emissions from vehicles and to achieve carbon neutrality in the sector, including the transition to zero-emission light-duty vehicles, in particular passenger vehicles, the transition to zero-emission heavy vehicles, and the adoption of other technology to significantly reduce the emissions from heavy vehicles, the role of alternative fuels, and the impact of land use policies.” The results of this broader study should inform ARB’s CVRP analysis.
15. Almost Exclusively Electric. For passenger vehicles, the major auto manufacturers are focusing on electric vehicle technology, rather than hydrogen, which is the other ZEV technology. Volkswagen has announced a goal of producing 3 million EVs annually by 2025, GM plans 20 new EV models by 2023 and Toyota expects half of the vehicles it sells will be electrified by 2025. The consumer preference for electric vehicles is evident: California has about 100 times more light duty EVs on the road than light duty hydrogen vehicles. This raises the question of whether California should focus its efforts exclusively on EVs in the light duty vehicle sector.
16. Senate Environmental Quality Committee Hearing and Resulting Amendment. This bill was approved by the Senate Environmental Quality Committee on July 3, 2019. In that hearing opponents raised concerns that the bill authorized the use of “feebates”, which are a sliding scale of charges which are higher to discourage the purchase of disfavored vehicles and lower, or even negative, to encourage the purchase of favored vehicles. In the aggregate no additional revenue would be raised. The author has agreed to amend the bill to prohibit the use of feebates for purposes of the CVRP. The author and committee may wish to amend the bill in this committee to reflect this.

Related Legislation:

SB 350 (De Leon; Chapter 547 of 2015) — Requires the CPUC to direct investor-owned utilities to propose investments to accelerate widespread transportation electrification in order to reduce greenhouse gas emission to 40% below 1990 levels by 2030.

SB 1275 (De Leon; Chapter 530 of 2014) — Establishes a goal of 1 million ZEVs and near-ZEVs by January 1, 2023, requires the CVRP to reduce rebates annually based on cumulative sales, establishes programs to increase access to ZEVs for disadvantaged communities.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

July 3, 2019.)

SUPPORT:

Advanced Energy Economy

California Interfaith Power and Light

Community Action to Fight Asthma

Electric Vehicle Charging Association

Indivisible Marin

NextGen California

Orinda Progressive Action Alliance

Silicon Valley Leadership Group

Tesla

350 Bay Area Action

OPPOSITION:

Auto Alliance

Bioenergy Association of California

California Advanced Biofuels Alliance

California Business Roundtable

California Chamber of Commerce

California Fuels & Convenience Alliance

California Independent Petroleum Association

California Natural Gas Vehicle Coalition

Californians for Affordable and Reliable Energy

Clean Energy

Global Automakers

Industrial Environmental Association

National Propane Gas Association

San Gabriel Valley Economic Partnership

Trillium

TruStar Energy

Western Propane Gas Association

Western States Petroleum Association

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: AB 1046

SUBJECT: Air Quality Improvement Program: California Electric Vehicle Initiative.

DIGEST: This bill would establish the California Electric Vehicle Initiative (CEVI) to be administered by the California Air Resources Board (ARB) to provide financial incentives to the market to achieve a statewide deployment of 5 million electric vehicles by December 2030. The bill would require ARB to develop a plan to provide for the continuous funding of CEVI. The bill would authorize the Treasurer to securitize revenues for which ARB has existing authority to establish a continuous funding source for CEVI.

ANALYSIS:

Existing law:

1. Establishes the Global Warming Solutions Act of 2006, (AB 32 Núñez, Chapter 244, Statutes of 2006) that requires ARB to establish programs to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020.
2. Requires, pursuant to SB 32 (Pavley, Chapter 249, Statutes of 2016), that ARB ensure that statewide GHG emissions are reduced to at least 40 percent below 1990 levels by 2030.
3. Establishes the Air Quality Improvement Program (AQIP), administered by ARB, to fund programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts. One primary program adopted by ARB pursuant to the AQIP is the Clean Vehicle Rebate Project (CVRP).
4. Establishes the Charge Ahead California Initiative pursuant to SB 1275 (de León, Chapter 530, Statutes of 2014), that, among other things, includes the goal of placing at least one million zero-emission vehicles (ZEVs) and near-zero-emission vehicles (NZEVs) into service by January 1, 2023, and increasing access to these vehicles for disadvantaged, low-and- moderate-income communities and consumers.
   

This bill:

1. Establishes CEVI as part of AQIP to be administered by ARB to provide financial incentives to the market to achieve a statewide deployment of 5 million electric vehicles by December 2030.
2. Requires ARB to develop a plan to provide for the continuous funding of CEVI.
3. Prohibits the continuous funding plan to include electrical or gas ratepayer funds.
4. Authorizes the Treasurer, upon request by ARB and following approval from the Director of Finance, to securitize revenues for which ARB has existing authority to establish a continuous funding source for CEVI. Prior to approval, ARB is required to provide the Director of Finance all of the following:
   1. A rebate structure, which shall include a plan that gradually reduces the rebate dollar levels, designed to achieve the deployment of 5 million ZEVs in the state by December 2030.
   2. A starting rebate level for all battery electric vehicles and hydrogen fuel cell vehicles, designated as the benchmark rebate level, in an amount that does not exceed seven thousand five hundred dollars ($7,500) per vehicle.
   3. Rebate levels, if any, for plug-in hybrid electric vehicles that reflect, relative to the benchmark rebate level, those vehicles’ contribution to achieving the state’s GHG and air pollution emissions reduction goals.
   4. An estimate of the total amount of money to be paid as rebates between July 1, 2020, and the date at which 5 million ZEVs have been deployed.
5. Requires the Department of Finance to specify a funding plan to maintain funding levels for any program impacted by CEVI.
6. Declares this bill does not provide ARB new authority to establish new revenue sources.
   

Background

1. CVRP. Over the years, California has established a number of policies, goals, and programs to improve air quality and reduce GHG emissions. Most notably, AB 32 established the goal of reducing GHG emissions to 1990 levels by the year 2020 and, more recently, SB 32 established the more aggressive goal of reducing emissions 40% below 1990 levels by 2030. One of the plethora of programs established to try and accomplish these goals is the AQIP, which funds programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts.

CVRP is part of AQIP and provides rebates to consumers in order to promote the production and use of ZEVs and NZEVs, specifically for new plug-in hybrid electric vehicles (PHEV), battery electric vehicles (BEV), or fuel-cell electric vehicles (FCEV). CVRP provides higher rebate levels for lower-income consumers according to the following table:

Source: California Air Resources Board

There is no cap on the number of rebates that may be issued, but rebates are subject to funding availability and the program has more than once been forced to stop issuing rebates and create a waiting list due to funds running out. CVRP has invested over $850 million cumulatively through fiscal year 2018-19 to promote the production and use of ZEVs and NZEVs.

1. Enhanced Fleet Modernization Program (EFMP) and EFMP Plus-Up. EFMP is an incentive program funded through a $1 surcharge on vehicle registration, totaling approximately $30 million annually. EFMP is designed to encourage low-income drivers to retire their older, high emitting vehicles and replace them with newer, cleaner, more fuel efficient vehicles. EFMP was established by AB 118 (Núñez, Chapter 750, Statutes of 2007) and comprises two components: retirement-only and retirement and replacement. These are sometimes referred to as the EFMP base program. Under the retirement only component, eligible applicants can receive $1,000 to $1,500, depending on income, for retiring an eligible vehicle through the EFMP portion of the car scrap program administered by the Bureau of Automotive Repair’s Consumer Assistance Program. This element of the program is offered statewide.

The second component of the EFMP base program, the retire and replacement component, is offered only in the South Coast and San Joaquin Valley air districts, and only to low-income drivers of eligible vehicles. EFMP retirement and replacement provides up to $4,500 to low-income drivers who purchase a vehicle eight years old or newer. The exact incentive amount varies, depending on household income, and can be used toward the purchase of a new or used clean replacement vehicle or an alternate mode of transportation, such as a transit pass.

The Plus-Up pilot project is a complementary incentive program and augments the EFMP base program by adding up to an additional $5,000 in incentives for the subset of participants living in or near a disadvantaged community census tract and who choose an advanced technology replacement vehicle (e.g. PHEVs and BEVs). The actual amount of the additional Plus Up incentive depends on income and choice of replacement vehicle.

1. ZEV Regulation. The ZEV Regulation requires large volume and intermediate volume vehicle manufacturers that sell cars in California to produce ZEVs and NZEVs. In general, the ZEV regulation requires that 15 perfect of new car sales be ZEVs by 2025. This target is intended to achieve 1.5 million ZEVs on the road by 2025 as directed under Governor Brown’s Executive Order B-16-2012.
   
2. ZEV Action Plan. In 2012, the Governor signed Executive Order B-16-2012 that established the goal of 1.5 million ZEVs on the road by 2025. To implement this order, the Governor created an interagency working group on ZEVs to develop an action plan to meet these goals. The working group was spearheaded by the Governor’s Office of Business and Economic Development (GO-Biz), and in 2013, the first ZEV Action Plan was released. It laid out progress to-date, challenges, and four high-level goals with a series of actions for state agencies to take that could accelerate ZEV adoption.

In 2016, the ZEV Action Plan was updated, detailing more than 200 actions across six key target areas to provide a pathway in order to meet the 2025 ZEVs goal. The target areas include consumer awareness, affordability, infrastructure, economics and jobs, market growth outside of California, and leading by example by integrating ZEVs into state government.

In January 2018, Governor Brown signed Executive Order B-48-18, setting ambitious targets of 200 hydrogen fueling stations and 250,000 electric vehicle chargers to support 1.5 million ZEVs on California roads by 2025, on the path to 5 million ZEVs by 2030. To support and complement the targets in the Executive Order, the Governor directed the ZEV working group to “update the 2016 ZEV Action Plan to help expand private investment in ZEV infrastructure, particularly in low income and disadvantaged communities.” In 2018, the ZEV working group published a “Priorities Update” to the 2016 ZEV Action Plan. Key action items detailed in the priorities update are related to achieving consumer awareness, making ZEVs affordable and attractive, and ensuring convenient charging and fueling infrastructure, among others.

1. ZEV Market Growth. According to the September 2018 update to the 2016 ZEV Action Plan, as of July 2018 over 410,000 ZEVs have been sold in California, 150,000 of which were sold since 2016. In 2017, ZEVs constituted 5 percent of new car sales in California, up from 3.8 percent in 2016.

Comments

1. Purpose of Bill. According to the author, “California must accelerate the deployment of zero-emission vehicles (ZEV) to meet its clean air and emissions reduction goals. As of early 2019, there are an estimated 550,000 ZEVs on the state’s roadways, but the state has a long way to go before reaching Governor Brown-era Executive Orders that call for 1.5 million ZEVs by 2025 and 5 million ZEVs by 2030. In order to facilitate a self-sustaining market for ZEVs, the California’s ZEV incentive program needs to be responsive to market changes and provide meaningful rebates to consumers. This bill tasks the Air Resources Board and the Department of Finance with identifying a sustainable funding solution for ZEV rebates to achieve the 5 million ZEV goal by 2030.”
   
2. Continuous appropriation. By authorizing the Treasurer to securitize revenues to establish a continuous funding source for CEVI, this bill could potentially create a continuous appropriation. However, continuous appropriations surrender the Legislature’s Constitutional authority and responsibility to oversee state spending and limits the Legislature’s ability to provide oversight and ensure that the Legislature’s priorities are fully funded.
3. Cost pressures. While the 5 million ZEVs goal by 2030 in this bill is just a goal and not a mandate, the bill does require ARB to develop a plan to provide for the continuous funding necessary to facilitate reaching the goal. In addition, the bill authorizes the Treasurer to securitize revenues for which ARB has existing authority to establish a continuous funding source for CEVI. These aspects of the bill will create significant cost pressures for the Legislature to fund this level of rebate investment to reach the goal, and raises serious questions as to where the funding will come from. It appears unlikely there are sufficient existing sources of revenue to provide the level of funding required to reach the goals in this bill without having significant deleterious impacts and trade-offs to other programs.
4. Comprehensive strategies needed to achieve the 5 million ZEV goal. There are numerous challenges in reaching the goal of placing 5 million ZEVs and NZEVs in service by 2030 as proposed in this bill. Some of these challenges include costs, battery range, consumer preferences, and charging convenience, among others. According to the September 2018 update to the 2016 ZEV Action Plan, reaching the 5 million ZEVs goal means about 40 percent of all new car purchases need to be ZEVs by 2030, up from approximately 5 percent as of 2017. This bill places the entire burden of achieving the goal on rebates provided by ARB.

If reaching 5 million ZEVs by 2030 becomes a Legislative goal rather than an administrative one, the Legislature might want to take a more proactive role in supporting a comprehensive and cost-effective pathway to reach the goal. The Legislature can accomplish this in an administratively feasible manner by building on the work already done by the Governor’s interagency ZEV working group, but also by assessing, clarifying, and expanding that work to ensure the priorities of the Legislature are met. A more comprehensive approach to supporting an efficient and cost-effective pathway for reaching the goal of CEVI might entail the following:

• 1. Conduct a progress assessment. Billions of dollars of public funds have already been invested to achieve greater ZEV market penetration through vehicle rebates and infrastructure support. Numerous state agencies are currently administering numerous incentive programs for these purposes. This has led to concerns regarding inefficiencies through program overlap. According to The Legislative Analyst’s Office’s (LAO) December 2018 report “Assessing California's Climate Policies—Transportation” program duplication and overlap can lead to inefficiencies such as difficulty in evaluating programs, lack of coordination, reduced effectiveness from grant recipient confusion, and increased administrative costs. The LAO report specifically identified electric vehicle infrastructure programs as an area with potentially significant overlap.
  2. Optimizing investment strategies. Looking forward, the Legislature may want to think more holistically about public investments to support the CEVI goal in this bill. Some investment areas the Legislature may require more analysis and information on include:
     1. Consumer awareness. Consumer awareness of ZEV options was identified as the highest priority in the 2016 ZEV Action Plan. However, research shows that most consumers have not considered ZEVs for purchase or lease. Strategies to address this issue might require public investments in ZEV education and marketing.
     2. ZEV infrastructure. According to the 2016 ZEV Action Plan, the consumer confidence needed to adopt ZEVs relies in large part on

adequate charging and fueling infrastructure. Therefore, investment in a massive scale up of charging and fueling stations is likely needed.

• • 1. Rebate levels. As this bill identifies, rebates for new ZEV purchases is a critical part of stimulating the ZEV market by making them an affordable and attractive option for California drivers. In theory, as the ZEV market grows enough to be self-sustaining, rebate levels should gradually decrease. This bill intends to provide information on how and when this will happen.
    2. Technology development. In order to overcome fundamental ZEV challenges presented by limited battery ranges and associated costs, technology development investments might be necessary to facilitate innovative breakthroughs. A recent review by the Senate Office of Research (SOR) titled “State Investments in Clean Energy and Transportation Technology” found that investment in early technology for clean transportation is minimal and much less than that for clean energy. The report states that “overinvestment in massive commercial deployment of inefficient technologies could lead to very expensive pathways to achieving environmental and climate change goals.”

1. Narrowing and focusing scope of the bill. In lieu of developing a comprehensive strategy to meet the goal of CEVI, this bill might need to be narrowed and focused by making it specific to an individual program, removing the Legislative goal of achieving 5 million ZEVs by 2030, and clarifying the implication that ARB and rebates are the sole responsibility for achieving the goal.

The Committee may wish to amend the bill to do the following:

• 1. Apply the continuous funding plan requirements in this bill for CVRP only.
  2. Remove CEVI and instead make the 5 million ZEVs by 2030 only a planning goal for CVRP.
  3. Clarify that funding levels for CVRP shall be considered in conjunction with other ZEV-related state investments and programs and is not solely responsible for reaching 5 million ZEVs.

Related/Prior Legislation

AB 1184 (Ting, 2017). This bill would have established the CEVI, which would be administered by ARB to provide market incentives to achieve a statewide deployment of 1.5 million electric vehicles by 2025. The bill would have required ARB to establish a portfolio of funding resources and to develop a funding plan for the expenditure of up to $3 billion in existing revenues over 12 years for the continuous funding of point-of-sale rebates and other incentives that would decline over time as market penetration targets are met. The contents of this bill were stricken and amended into a different subject matter.

SB 32 (Pavley, Chapter 249, Statutes of 2016), required ARB to ensure that statewide GHG emissions are reduced at least 40% below 1990 levels by 2030.

SB 1275 (de León, Chapter 530, Statutes of 2014), established the Charge Ahead California Initiative, to place in service at least 1 million ZEVs and NZEVs by January 1, 2023, with a focus on disadvantaged and low-and-moderate-income communities.

AB 118 (Núñez, Chapter 750, Statutes of 2007), established EFMP and AQIP.

AB 32 (Núñez, Chapter 488, Statutes of 2006), required ARB to develop a plan of how to reduce emissions to 1990 levels by the year 2020.

DOUBLE REFERRAL:

If this measure is approved by the Senate Environmental Quality Committee, the do pass as amended motion must include the action to re-refer the bill to the Senate Transportation Committee.

SOURCE:

Author

SUPPORT:

350 Bay Area Action

Advanced Energy Economy

Breathe California

California Electric Transportation Coalition

California Municipal Utilities Association

Community Action to Fight Asthma

Electric Vehicle Charging Association

Environment California

Indivisible Marin

NextGen California

Orinda Progressive Action Alliance

Tesla

OPPOSITION:

Alliance of Automobile Manufacturers

California Chamber of Commerce

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1046

Author:(Ting)

As Amended Ver:April 30, 2019

Majority vote

SUMMARY:

Clarifies what the California Air Resources Board (ARB) must include in a statutorily-required annual forecast of estimated funding needs for the Clean Vehicle Rebate Project (CVRP).

Major Provisions

1. Clarifies that ARB's annual forecast of estimated funding needs for the CVRP must include all of the following elements:
   1. The total state rebate investment necessary to facilitate reaching the goal of placing in service 5 million zero-emission vehicles (ZEVs) and near-zero-emission vehicles (NZEVs) by 2030, including an estimate of the funding needed and the projected percentage of new vehicles purchased that would receive the rebate in each fiscal year;
   2. Models of the impacts of various rebate scenarios' ability to maximize the effectiveness of the rebates provided based on relevant data;
   3. Annual recommendations for changes to the CVRP structure and various rebate levels based on market demand to reach the 2030 goal, including the project's income eligibility requirements to target moderate and low-income customers;
   4. Projected sales figures of electric vehicles; Impacts of federal policy changes on adoption of electric vehicles; Sales price differences between electric vehicles and nonelectric vehicles; Assessment of marketing efforts of electric vehicles by automobile manufacturers; and
   5. Survey results of consumer awareness and acceptance of electric vehicles and awareness of the benefits associated with ZEVs and NZEVs. The survey questions and methodology must be substantially similar for each report to allow for long-term trend analysis.
2. Requires ARB to update the forecast beginning November 1, 2020, and on or before November 1 of each year thereafter until January 1, 2030.
3. Adds to the goals of the Charge Ahead California Initiative placing 5 million ZEVs in service by January 1, 2030.

COMMENTS:

Over the years, California has established a number of policies, goals, and programs to improve air quality and reduce greenhouse gas (GHG) emissions. Most notably, AB 32 (Nuñez), Chapter 488, Statutes of 2006 established the goal of reducing GHG emissions to 1990 levels by the year 2020 and, more recently, SB 32 (Pavley), Chapter 249, Statutes of 2016, established the more aggressive goal of reducing emissions 40% below 1990 levels by 2030. One of the plethora of programs established to try and accomplish these goals is the Air Quality Improvement Program (AQIP), which funds programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts. The CVRP is part of the AQIP and provides rebates to consumers in order to promote the production and use of ZEVs and NZEVs.

In 2014, the Legislature passed and Governor Brown signed SB 1275 (de León), Chapter 530, which established the Charge Ahead California Initiative. Among other things, SB 1275 attempted to provide some balance in ARB's vehicle rebate programs by directing ARB to adopt revisions to the CVRP criteria to reduce vehicle rebates over time, based on the rate of sales. The logic was that phasing down rebates will allow the program to reflect market penetration and ensure that as the number of vehicles purchased increases, the number of rebates decreases.  In time, the savings could then be used for other incentive programs that benefit low- and moderate-income individuals.

In order to effectively administer the new criteria and plan for the most efficient way to reduce rebates over time, SB 1275 required ARB to do a forecast of estimated funding needs. With this forecast, ARB should be able to modify the number and size of the CVRP rebates in the future to reflect factors like the impacts of federal policy changes and projected sales of ZEVs.

According to the Author:

This bill requires ARB to conduct annual market forecasting for the state's progress toward ZEV deployment goals, and consider modifications to the CVRP to meet those goals. The basic flat rebate structure of the CVRP has not been revised for more than five years, while the ZEV market has dramatically changed. This bill would attempt to focus the CVRP on pushing ZEV deployment in the state closer to a sustainable consumer market.

Arguments in Support:

Supporters of the bill argue that cost is the most limiting factor to the number of ZEVs purchased, and therefore "it is essential that we develop a better understanding of what kind of financial incentives will be needed to reach the goal of 5 million ZEVs in California on the road by 2030."

Arguments in Opposition:

The Alliance of Automobile Manufacturers write, in opposition to the bill, "Historically, the Alliance has opposed legislation that restricts consumer choice and enshrines in statute mandatory goals with respect to ZEV vehicle delivery. The Alliance believes incentives are a better mechanism than mandates to positively influence customer choices. This is why we have actively pursued continued the funding of consumer purchase rebates and "stickers" that permit ZEV drivers to occupy HOV lanes."

FISCAL COMMENTS:

1. ARB annual costs of approximately $180,000 (1 PY) to develop the CVRP forecast through 2030 (Greenhouse Gas Reduction Fund (GGRF)). ARB notes the Legislature added this requirements as part of the Supplemental Report of the 2018-19 Budget Act. However, ARB did not receive additional resources and is using overtime for these new tasks as well as delaying other work.
2. One-time ARB costs of $180,000 per year for three years to adopt criteria to ensure rebate levels can be phased down in increments based on cumulative sales through rulemaking. (GGRF). ARB is required to adopt this criteria in its funding plan, however, if this bill is interpreted to require a regulation, additional resources would be necessary.

VOTES:

ASM TRANSPORTATION: 10-4-1

YES: Frazier, Aguiar-Curry, Berman, Chu, Daly, Friedman, Gipson, Medina, Nazarian, O'Donnell

NO: Fong, Bigelow, Cunningham, Diep

ABS, ABST OR NV: Grayson

ASM APPROPRIATIONS: 13-5-0

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

UPDATED:

VERSION: April 30, 2019

CONSULTANT: Eric Thronson / TRANS. / (916) 319-2093 FN: 0000719

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1046

Author:(Ting) – As Amended Ver:April 30, 2019

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

SUMMARY:

Charge Ahead California Initiative

SUMMARY: This bill specifies what the California Air Resources Board (ARB) must include in the statutorily-required annual forecast of estimated funding needs for the Clean Vehicle Rebate Project (CVRP) and requires ARB to update the forecast beginning November 1, 2020, and each year thereafter until January 1, 2030. Additionally, this bill:

1. Reiterates existing law that requires ARB to adopt criteria and other requirements to ensure rebate levels in the CVRP are phased down in increments based on cumulative sales levels.
2. Adds placing 5 million zero-emission vehicles (ZEVs) in service by January 1, 2030, to the goals of the Charge Ahead California Initiative.

FISCAL EFFECT:

1. ARB annual costs of approximately $180,000 (1 PY) to develop the CVRP forecast through 2030 (GGRF).

ARB notes the Legislature added this requirements as part of the Supplemental Report of the 2018-19 Budget Act. However, ARB did not receive additional resources and is using overtime for these new tasks as well as delaying other work.

1. One-time ARB costs of $180,000 per year for three years to adopt criteria to ensure rebate levels can be phased down in increments based on cumulative sales through rulemaking. (GGRF).

ARB is required to adopt this criteria in its funding plan, however, if this bill is interpreted to require a regulation, additional resources would be necessary.

COMMENTS:

1. Purpose. According to the author,

This bill requires ARB to conduct annual market forecasting for the state’s progress toward ZEV deployment goals, and consider modifications to the CVRP to meet those goals. The basic flat rebate structure of the CVRP has not been revised for more than five years, while the ZEV market has dramatically changed. This bill would attempt to focus the CVRP on pushing ZEV deployment in the state closer to a sustainable consumer market.

1. Background. AB 118 (Núñez), Chapter 750, Statutes of 2007, established the Alternative and Renewable Fuels and Vehicle Technology (ARFVT) program, the Enhanced Fleet Modernization Program (EFMP), and the Air Quality Improvement Program (AQIP) to promote vehicle and fuel technology to reduce air pollution and GHG emissions.

Pursuant to its authority under AQIP, the Air Resources Board (ARB) developed CVRP. CVRP, which is administered by ARB’s contractor, the California Center for Sustainable Energy (CSE), is intended to encourage and accelerate the purchase and use of ZEVs and near zero emission vehicles (NZEVs) to help improve air quality and reduce GHG emissions.

SB 1275 (de León), Chapter 530, Statutes of 2014, established the Charge Ahead California Initiative. SB 1275 directed ARB to adopt revisions to CVRP criteria to reduce vehicle rebates over time, based on the rate of sales.

In order to administer the new criteria and plan for the most efficient way to reduce rebates over time, SB 1275 required ARB to forecast estimated funding needs in order to modify the number and size of future CVRP rebates to reflect factors such as federal policy changes and projected sales of ZEVs.

In 2016, the Legislature approved AB 859 (Committee on Budget) to establish income limits and plug-in hybrid eligibility, increase rebates for lower-income individuals and increase outreach to low income communities. The provisions of AB 859 were only applicable from November 1, 2016, to July 1, 2017.

AB 615 (Cooper), Chapter 631, Statutes of 2017, among other things, extended the sunset on the income restrictions for CVRP from July 1, 2017 to January 1, 2019. The specific income caps expired at the beginning of this year, however, ARB has maintained them.

Since CVRP was launched in 2010, 300,000 rebates have been issued at a cost of $854 million. The program is oversubscribed with demand outpacing funding nearly every year. When the funding is exhausted, applicants are "waitlisted" and are issued rebates in the order they applied when monies are allocated in the next funding cycle. The funding source for CVRP has been $708 million from the GGRF; $67 from AQIP; $49 million from ARFVTP; and, $30 million from the vehicle inspection and repair fund.

1. Related Legislation. AB 126 (Cooper) re-establishes and modifies the Clean Vehicle Rebate Project (CVRP) under the Air Quality Improvement Program at the California Air Resources Board (ARB) by lowering the income cap for electric and plug-in hybrid electric vehicles and instituting new income caps for fuel cell electric vehicles. The bill is pending in this committee.

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

Date of Hearing: April 22, 2019

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 1046 (

Author:Ting) – As Amended Ver:April 8, 2019

SUBJECT: Charge Ahead California Initiative

SUMMARY: Clarifies what the California Air Resources Board (ARB) must include in a statutorily-required annual forecast of estimated funding needs for the Clean Vehicle Rebate Project (CVRP). Specifically, this bill:

1. Clarifies that ARB’s annual forecast of estimated funding needs for the CVRP must include all of the following elements:
   1. The total state rebate investment necessary to facilitate reaching the goal of placing in service 5 million zero-emission vehicles (ZEVs) by 2030, including an estimate of the funding needed and the projected percentage of new vehicles purchased that would receive the rebate in each fiscal year;
   2. Models of the impacts of various rebate scenarios’ ability to maximize the effectiveness of the rebates provided based on relevant data;
   3. Annual recommendations for changes to the CVRP structure and various rebate levels based on market demand to reach the 2030 goal, including the project’s income eligibility requirements to target moderate and low-income customers;
   4. Projected sales figures of electric vehicles;
   5. Impacts of federal policy changes on adoption of electric vehicles;
   6. Sales price differences between electric vehicles and nonelectric vehicles;
   7. Assessment of marketing efforts of electric vehicles by automobile manufacturers; and
   8. Survey results of consumer awareness and acceptance of electric vehicles and awareness of the benefits associated with ZEVs. The survey questions and methodology must be substantially similar for each report to allow for long-term trend analysis.
2. Requires ARB to update the forecast beginning November 1, 2020, and on or before November 1 of each year thereafter until January 1, 2030.
3. Reiterates existing law that requires ARB to adopt criteria and other requirements to ensure that rebate levels in the CVRP can be phased down in increments based on cumulative sales levels.
4. Adds to the goals of the Charge Ahead California Initiative placing 5 million ZEVs in service by January 1, 2030.

EXISTING LAW:

1. Establishes the Global Warming Solutions Act of 2006, [AB 32 (Núñez), Chapter 244, Statutes of 2006] that requires ARB to establish programs to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020 including the use of market-based mechanisms (cap-and-trade) to comply with these regulations.
2. Requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by 2030.
3. Establishes the Air Quality Improvement Program (AQIP), administered by ARB, to fund programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts. The two primary programs adopted by ARB pursuant to the AQIP are the CVRP and the Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program (HVIP).
4. Establishes the Charge Ahead California Initiative to provide incentives that increase the availability of ZEVs and near-zero-emission vehicles (NZEVs), particularly in disadvantaged and low-and-moderate-income communities.

FISCAL EFFECT: Unknown.

COMMENTS: Over the years, California has established a number of policies, goals, and programs to improve air quality and reduce GHG emissions. Most notably, AB 32 established the goal of reducing GHG emissions to 1990 levels by the year 2020 and, more recently, SB 32 (Pavley), Chapter 248, Statutes of 2016, established the more aggressive goal of reducing emissions 40% below 1990 levels by 2030. One of the plethora of programs established to try and accomplish these goals is the AQIP, which funds programs that support the production, distribution, and sale of alternative fuels and vehicle technologies, as well as air emissions reduction efforts. The CVRP is part of the AQIP and provides rebates to consumers in order to promote the production and use of ZEVs and NZEVs.

In 2014, the Legislature passed and Governor Brown signed SB 1275 (de León), Chapter 530, which established the Charge Ahead California Initiative. Among other things, SB 1275 attempted to provide some balance in ARB's vehicle rebate programs by directing ARB to adopt revisions to the CVRP criteria to reduce vehicle rebates over time, based on the rate of sales. The logic was that phasing down rebates will allow the program to reflect market penetration and ensure that as the number of vehicles purchased increases, the number of rebates decreases.  In time, the savings could then be used for other incentive programs that benefit low- and moderate-income individuals.

In order to effectively administer the new criteria and plan for the most efficient way to reduce rebates over time, SB 1275 required ARB to do a forecast of estimated funding needs. With this forecast, ARB should be able to modify the number and size of the CVRP rebates in the future to reflect factors like the impacts of federal policy changes and projected sales of ZEVs.

According to the author, “This bill requires ARB to conduct annual market forecasting for the state’s progress toward ZEV deployment goals, and consider modifications to the CVRP to meet those goals. The basic flat rebate structure of the CVRP has not been revised for more than five years, while the ZEV market has dramatically changed. This bill would attempt to focus the CVRP on pushing ZEV deployment in the state closer to a sustainable consumer market.”

Supporters of the bill argue that cost is the most limiting factor to the number of ZEVs purchased, and therefore “it is essential that we develop a better of understanding of what kind of financial incentives will be needed to reach the goal of 5 million ZEVs in California on the road by 2030.”

The Alliance of Automobile Manufacturers write, in opposition to the bill, “Historically, the Alliance has opposed legislation that restricts consumer choice and enshrines in statute mandatory goals with respect to ZEV vehicle delivery. The Alliance believes incentives are a better mechanism than mandates to positively influence customer choices. This is why we have actively pursued continued the funding of consumer purchase rebates and “stickers” that permit ZEV drivers to occupy HOV lanes.”

Committee comment. While the Legislature continues to give direction to ARB related to the programs it is statutorily authorized to administer, there appears to be a reluctance to do anything ARB doesn’t believe is necessary to accomplish its goals. Five years ago, the Legislature directed ARB to develop a plan, through a forecast of future market development, to phase out an existing incentive program. To date, ARB has not made any changes to that incentive program. In order to be crystal clear of the Legislature’s intent, this bill clearly specifies what the forecast should consider and what the goal of the forecast should be: namely that ARB phase down rebate levels in the CVRP in increments based on cumulative sales levels. It seems reasonable to expect ARB to comply with existing law; clarifications outlined in this bill hopefully assist ARB to understand the Legislature’s expectations.

Previous legislation: SB 32 (Pavley), Chapter 249, Statutes of 2016, required ARB to ensure that statewide GHG emissions are reduced at least 40% below 1990 levels by 2030.

SB 1275 (de León), Chapter 530, Statutes of 2014, established the Charge Ahead California Initiative, to provide incentives to increase the availability of zero-emission vehicles and near-zero-emission vehicles, particularly to low-income and moderate-income consumers and disadvantaged communities.

AB 118 (Núñez), Chapter 750, Statutes of 2007, established the AQIP.

AB 32 (Núñez), Chapter 488, Statutes of 2006, required ARB to develop a plan of how to reduce emissions to 1990 levels by the year 2020.

REGISTERED SUPPORT / OPPOSITION:

Support

350 Bay Area Action

Opposition

Alliance of Automobile Manufacturers

Analysis Prepared by: Eric Thronson / TRANS. / (916) 319-2093