THIRD READING  

Bill No: AB 3163

Author: Salas (D), et al.

Amended: 5/5/20 in Assembly

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 11-1, 8/3/20

AYES: Hueso, Moorlach, Bradford, Chang, Dahle, Dodd, Hertzberg, Hill, McGuire, Rubio, Skinner

NOES: Wiener

NO VOTE RECORDED: Stern

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/20/20

AYES: Portantino, Bates, Bradford, Hill, Jones, Leyva, Wieckowski

ASSEMBLY FLOOR: 52-11, 6/8/20 - See last page for vote

SUBJECT: Energy: biomethane: procurement

SOURCE: Bioenergy Association of California

DIGEST:

This bill expands the definition of “biomethane” to include methane that is produced from the non-combustion thermal conversion of eligible biomass feedstock, for purposes of the California Public Utilities Commission’s (CPUC) consideration of adopting biomethane procurement targets.

ANALYSIS:

Existing law:

1. Establishes the CPUC has regulatory authority over public utilities, including gas corporations. (California Constitution Article XII, §§3 and 4)
2. Requires the CPUC, in consultation with the California State Air Resources Board (ARB), to consider adopting specific biomethane procurement targets or goals for each gas corporation so that each gas corporation procures a proportionate share, as determined by the CPUC, of biomethane annually, as specified. (Public Utilities Code §651)
3. Defines “biomethane” for that purpose as biogas that meets specified standards adopted by the CPUC for injection into a common carrier pipeline. (Public Utilities Code §650)

This bill expands the definition of “biomethane,” for the purposes of the CPUC’s consideration of adopting biomethane procurement targets as required by statute, methane produced from the non-combustion thermal conversion of the following materials: agricultural crop residues, lawn and garden clippings, tree prunings, livestock waste, municipal sewage, and other organic material.

Background

About biomethane. Biomethane is renewable energy produced from organic materials such as forest and other wood waste, livestock waste, agricultural waste, and other organic wastes sources. Currently, these organic materials are disposed of in landfills, which can emit methane as they are piled and left to decay, or this waste is burned, which ultimately releases black carbon, an even more damaging climate pollutant. Although this process occurs naturally, resulting in significant greenhouse gas (GHG) emissions, the gas can be captured and utilized through anaerobic digesters that speed up the process. In addition, the natural decomposition of organic materials in municipal solid waste landfills provides an opportunity to capture landfill gas. This captured gas, or “biogas”, contains methane and carbon dioxide (CO₂), along with other gasses. Biogas can then be used directly to generate electricity or it can be processed further to remove CO₂ and other impurities and be converted to “pipeline” quality methane or “biomethane”. Biomass conversion consists of biogas that has been cleansed and processed to remove impurities. According to the ARB, biomass conversion cuts methane and black carbon emissions by 98 percent compared to open burning or wildfire.

Biomethane considered renewable energy. Biomethane is biogas that has been cleaned and processed to remove impurities. Although the combustion of biogas releases CO₂, it also destroys methane, which is a more potent GHG than CO₂ because of its global warming potential. Biomethane is considered carbon neutral because CO₂ that would be released into the atmosphere is utilized and thereby removed from the atmosphere. The use of biomethane can also displace energy consumption from fossil fuels, thereby decreasing the overall carbon intensity of the fuel.

SB 1440 (Hueso, Chapter 739, Statutes of 2018). SB 1440 required the CPUC, in consultation with the ARB, to consider adopting biomethane procurement targets or goals divided proportionately among the gas investor-owned utilities (IOUs) if the CPUC makes specified findings, including that the targets or goals are a cost-effective means of achieving reductions in short-live climate pollutants and other GHG emissions reductions. SB 1440 also required the targets and goals to be consistent with state and federal law, including with organic waste disposal reduction targets developed by ARB and the Department of Resources and Recycling and Recovery, as well as, meeting specified delivery environmental requirements.

SB 1383 (Lara, Chapter 395, Statutes of 2019). SB 1383 required ARB to approve and implement the comprehensive short-lived climate pollutant strategy to achieve, from 2013 levels, a 40 percent reduction in methane, a 40 percent reduction in hydrofluorocarbon gases, and a 50 percent reduction in anthropogenic black carbon, by 2030.

Comments

Need to expand definition? The current definition of “biomethane” used by the CPUC excludes the majority of California’s biomethane from being injected into gas utility pipelines as it currently only allows for a single conversion technology, anaerobic digestion. By expanding the definition, California is allowing for more biomethane conversion to be considered by the CPUC for the purposes of establishing biomethane procurement targets. According to the proponents of this bill, expanding the definition of biomethane to include additional organic materials would help the state reduce Short-Lived Climate Pollutant emissions, air pollution, wildfire, and landfilling of waste. The proponents also note that this bill also increases the potential for in-state biomethane production with the potential to provide flexible generation power, long-duration energy storage, renewable hydrogen, and low carbon fuels for heavy duty vehicles, backup generators, microgrids, and hard-to-electrify end uses.

Emissions and continued use of natural gas. Opponents contend that this bill will result in cost increases for gas utilities’ ratepayers. They argue that thermal conversion of biomass to methane is a costly and ineffective climate solution. Methane is a much more potent GHG than CO₂, and opponents fear that methane leakage can outweigh the climate benefits of producing methane from biomass. They argue that to the extent biomethane derived from gasification of biomass is intended to displace the use of gas, far more savings could be realized through investment in measures that reduce gas demand overall, such as building electrification. Opponents encourage the state’s focus to remain on measures that reduce methane generation and that advance zero-emissions climate solutions.

Impacts to ratepayers. SB 1440 required the CPUC to only adopt targets that are cost-effective means of achieving reductions in climate pollutants. Nonetheless, developing methane production may likely result in increased costs to gas utility ratepayers when compared to not reducing methane emissions from gas use. More importantly, California’s Climate Change Scoping Plan, Short-Lived Climate Pollutant Reduction Strategy, and Forest Carbon Plan all call for increased biogas production from organic waste to reduce carbon emissions and air pollution. However, expanding the definition of biomethane to include additional materials could factor into the CPUC’s determination to adopt biomethane procurement targets and potentially result increased costs to gas ratepayers by requiring procurement that may be above the cost of providing gas. Conversely, expanding the definition of materials eligible for the biomethane targets has the potential to reduce costs to achieve the targets, should the CPUC adopt procurement targets, by expanding the pool of materials that can be accessed to satisfy the procurement requirements.

Related/Prior Legislation

SB 1440 (Hueso, Chapter 739, Statutes of 2018) required the CPUC in consultation with the ARB consider adopting specific biomethane procurement targets or goals for each gas corporation and required, if the CPUC adopts those targets or goals, to take certain actions in regards to the development of the targets or goals and the procurement of the biomethane to meet those targets or goals.

SB 1383 (Lara, Chapter 395, Statutes of 2016) required state agencies to consider and, as appropriate, adopt policies and incentives to significantly increase the sustainable production and use of renewable gas, including biomethane to meet the state’s climate change, renewable energy, low-carbon fuel, and short-lived climate pollutants goals, including black carbon, landfill diversion, and dairy methane targets.

AB 2313 (Williams, Chapter 571, Statutes of 2016) required the CPUC to consider options to increase instate biomethane production and use.

SB 840 (Committee on Budget and Fiscal Review, Chapter 341, Statutes of 2016) required the CPUC to reevaluate its requirements and standards for biomethane to be injected into common carrier pipelines.

SB 360 (Cannella, 2015) would have authorized the CPUC to consider providing the option to all gas corporations to engage in competitive bidding and direct investment in ratepayer financed biomethane collection equipment in California. The bill died in the Senate Committee on Energy, Utilities and Communications.

SB 687 (Allen, 2015) would have established a renewable gas standard in California and expanded the definition of biomethane. The bill died in the Senate Committee on Appropriations.

AB 1900 (Gatto, Chapter 602, Statutes of 2012) directed the CPUC to identify landfill gas constituents, develop testing protocols for landfill gas injected into common carrier pipelines, adopt standards for biomethane to ensure pipeline safety and integrity, and adopt rules to ensure open access to the gas pipeline system.

AB 2196 (Chesbro, Chapter 605, Statutes of 2012) ensured that biogas qualifies for RPS credit, provided its production, delivery and use meet certain conditions.

SB 1122 (Rubio, Chapter 612, Statutes of 2012) required IOUs to collectively procure at least 250 megawatts of generation eligible for the RPS from bioenergy generation project, including biogas projects.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, unknown increase in ongoing costs (General Fund and special funds) to the state as an energy utility ratepayer.

SUPPORT: (Verified 8/19/20)

Bioenergy Association of California (source)

Association of California Water Agencies

BizFed, Los Angeles County Business Federation

Butte County Fire Safe Council

California Air Pollution Control Officers Association

California Association of Sanitation Agencies

California Biomass Energy Alliance

California Hydrogen Business Council

California Hydrogen Coalition

California Manufacturers & Technology Association

California Natural Gas Vehicle Coalition

California Waste Haulers Council

Capstone Turbine Corporation

City of Torrance

Clean Energy

CR&R Environmental Services

Environmental Defense Fund

Los Angeles County Board of Supervisors

Los Angeles County Solid Waste Management Committee/Integrated Waste

Management Task Force

Monterey Regional Waste Management District

Northern Sonoma County Air Pollution Control District

Placer County Air Pollution Control District

Republic Services, Inc.

Resource Recovery Coalition of California

San Joaquin Renewables, LLC

Sierra Business Council

Solid Waste Association of North America-California Chapter

Southern California Gas Company

TSS Consultants

Watershed Research and Training Center

Western Placer Waste Management Authority

Wisewood Energy

OPPOSITION: (Verified 8/19/20)

Center for Biological Diversity

Earthjustice

Leadership Counsel for Justice and Accountability

Natural Resources Defense Council

Sierra Club California

ARGUMENTS IN SUPPORT: According to the author, “AB 3163 is critical to meeting California’s clean energy goals and reducing harmful pollution. This bill will expand the definition of biomethane to include cellulosic waste like dead trees and agricultural material. Without the expansion of this definition, this organic waste will be sent to landfills or openly burned, which releases massive amounts of air pollution. Instead, AB 3163 will help convert this waste into pipeline quality biomethane to be used as a source of clean and renewable energy.”

ARGUMENTS IN OPPOSITION: Opponents contend that this bill will result in cost increases for ratepayers. They argue that thermal conversion of biomass to methane is a costly and ineffectual climate solution. Methane is a much more potent GHG than CO₂, and opponents fear that methane leakage can outweigh the climate benefit of producing methane from biomass. To the extent, biomethane derived from gasification of biomass is intended to displace the use of gas, far more savings could be realized through investment in measures that reduce gas demand such as building electrification. Opponents encourage the focus to remain on measures that reduce methane generation and that advance zero-emissions climate solutions.

ASSEMBLY FLOOR: 52-11, 6/8/20

AYES: Aguiar-Curry, Arambula, Bigelow, Brough, Burke, Calderon, Carrillo, Cervantes, Chau, Chen, Choi, Cooley, Cooper, Cunningham, Megan Dahle, Daly, Diep, Eggman, Flora, Fong, Frazier, Gallagher, Eduardo Garcia, Gipson, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kiley, Lackey, Levine, Low, Mathis, McCarty, Medina, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Petrie-Norris, Quirk-Silva, Ramos, Rodriguez, Blanca Rubio, Salas, Santiago, Voepel, Waldron, Weber, Rendon

NOES: Bauer-Kahan, Boerner Horvath, Chiu, Chu, Gonzalez, Kalra, Kamlager, Smith, Mark Stone, Ting, Wicks

NO VOTE RECORDED: Berman, Bloom, Bonta, Friedman, Gabriel, Cristina Garcia, Gloria, Limón, Maienschein, Mayes, Muratsuchi, Quirk, Reyes, Luz Rivas, Robert Rivas, Wood

Prepared by: Kenia Miranda-Verdugo, Nidia Bautista / E., U., & C. / (916) 651-4107

8/21/20 18:02:25

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SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 3163 (Salas) - Energy: biomethane: procurement

Bill Summary:

This bill would expand the definition of “biomethane” to include methane that is produced from the non-combustion thermal conversion of eligible biomass feedstock, for purposes of the California Public Utilities Commission’s (CPUC) consideration of adopting biomethane procurement targets.

Fiscal Impact:

• Unknown increase in ongoing costs (General Fund and special funds) to the state as an energy utility ratepayer (see staff comments).

Background:

Biomethane is renewable energy produced from organic materials such as forest and other wood waste, livestock waste, agricultural waste, and other organic wastes sources. Currently, these organic materials are disposed in landfills, which can emit methane as they are piled and left to decay, or this waste is burned which ultimately releases black carbon, an even more damaging climate pollutant. Biomass conversion consists of biogas that has been cleansed and processed to remove impurities. According to the ARB, biomass conversion cuts methane and black carbon emissions by 98 percent compared to open burning or wildfire.

SB 1440 (Hueso, Chapter 739, Statutes of 2018). SB 1440 requires the CPUC, in consultation with the ARB, to consider adopting biomethane procurement targets or goals divided proportionately between the gas investor-owned utilities (IOUs) if the CPUC makes specified findings, including that the targets or goals are a cost-effective means of achieving reductions in short-live climate pollutants and other greenhouse gas (GHG) emissions reductions. SB 1440 also requires the targets and goals to be consistent with state and federal law, including with organic waste disposal reduction targets developed by ARB and the Department of Resources and Recycling and Recovery, as well as, meeting specified delivery environmental requirements.

SB 1383 (Lara, Chapter 395, Statutes of 2019). SB 1383 requires ARB to approve and implement the comprehensive short-lived climate pollutant strategy to achieve, from 2013 levels, a 40 percent reduction in methane, a 40 percent reduction in hydrofluorocarbon gases, and a 50 percent reduction in anthropogenic black carbon, by 2030.

The current definition of biomethane. The current definition of “biomethane” used by the CPUC excludes the majority of California’s biomethane from being injected into utility pipelines as it currently only allows for a single conversion technology known as anaerobic digestion.

Proposed Law:

This bill would expand the definition of biomethane, which would allow for more biomethane conversion to be considered by the CPUC for biomethane procurement targets. Specifically, this bill would expand biomethane to include methane produced from an organic waste feedstock, such as agricultural crop residues, lawn and garden clippings, tree prunings, livestock waste, and municipal sewage.

Related Legislation:

SB 1440 (Hueso, Chapter 739, Statutes of 2018) required the CPUC in consultation with the ARB consider adopting specific biomethane procurement targets or goals for each gas corporation and requires, if the CPUC adopts those targets or goals, to take certain actions in regards to the development of the targets or goals and the procurement of the biomethane to meet those targets or goals.

SB 1383 (Lara, Chapter 395, Statutes of 2016) required state agencies to consider and, as appropriate, adopt policies and incentives to significantly increase the sustainable production and use of renewable gas, including biomethane to meet the state’s climate change, renewable energy, low-carbon fuel, and short-lived climate pollutants goals, including black carbon, landfill diversion, and dairy methane targets.

AB 2313 (Williams, Chapter 571, Statutes of 2016) required the CPUC to consider options to increase instate biomethane production and use.

SB 840 (Committee on Budget and Fiscal Review, Chapter 341, Statutes of 2016) required the CPUC to reevaluate its requirements and standards for biomethane to be injected into common carrier pipelines.

SB 360 (Cannella, 2015) would have authorize the CPUC to consider providing the option to all gas corporations to engage in competitive bidding and direct investment in ratepayer financed biomethane collection equipment in California. The bill died in the Senate Committee on Energy, Utilities and Communications.

SB 687 (Allen, 2015) would have established a renewable gas standard in California and expanded the definition of biomethane. The bill died in the Senate Committee on Appropriations.

AB 1900 (Gatto, Chapter 602, Statutes of 2012) directed the CPUC to identify landfill gas constituents, develop testing protocols for landfill gas injected into common carrier pipelines, adopt standards for biomethane to ensure pipeline safety and integrity, and adopt rules to ensure open access to the gas pipeline system.

AB 2196 (Chesbro, Chapter 605, Statutes of 2012) ensured that biogas qualifies for RPS credit, provided its production, delivery and use meet certain conditions.

SB 1122 (Rubio, Chapter 612, Statutes of 2012) required IOUs to collectively procure at least 250 megawatts of generation eligible for the RPS from bioenergy generation project, including biogas projects.

Staff Comments:

SB 1440 requires the CPUC to only adopt targets that are cost-effective means of achieving reductions in climate pollutants. Nonetheless, developing methane production may likely result in increased costs to gas utility ratepayers when compared to not reducing methane emissions from gas use. For example, a California Energy Commission study found that the cost of methane produced synthetically such as through thermal gasification of biomass would be 8 to 17 times more expensive than the expected price trajectory of natural gas. Additionally, under the BioMat program, the CPUC anticipates that energy derived from such types of biomass will reach its cap of $212/MWh and would cost ratepayers $1.4 billion for just 50 MW of procurement. In contrast, contracts for solar resources are now under $25/MWh.

The State of California is an energy utility ratepayer, making up roughly one percent of electricity and four percent of natural gas consumption in California. Therefore, increases in energy rates also increase state spending on energy consumption. This bill would potentially increase costs to gas utility ratepayers, which includes the State of California.

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Ben Hueso, Chair

2019 - 2020 Regular

Bill No: Hearing Date: 8/3/2020

SUBJECT:

DIGEST: This bill expands the definition of “biomethane” to include methane that is produced from the non-combustion thermal conversion of eligible biomass feedstock, for purposes of the California Public Utilities Commission’s (CPUC) consideration of adopting biomethane procurement targets.

ANALYSIS:

Existing law:

1. Establishes the CPUC has regulatory authority over public utilities, including gas corporations. (California Constitution Article XII, §§3 and 4)
2. Requires the CPUC, in consultation with the California State Air Resources Board (ARB), to consider adopting specific biomethane procurement targets or goals for each gas corporation so that each gas corporation procures a proportionate share, as determined by the CPUC, of biomethane annually, as specified. (Public Utilities Code §651)
3. Defines “biomethane” for that purpose as biogas that meets specified standards adopted by the CPUC for injection into a common carrier pipeline. (Public Utilities Code §650)

This bill expands the definition of “biomethane” to include methane that is produced from the non-combustion thermal conversion of eligible biomass feedstock, CPUC’s consideration of adopting biomethane procurement targets as required by statute. This expanded definition would include methane produced from an organic waste feedstock, rather than biogas that meets those specified standards and is either produced from the anaerobic decomposition of organic material or produced from the noncombustion thermal conversion of specified materials, including: agricultural crop residues, lawn and garden clippings, tree prunings, livestock waste, municipal sewage, and other.

Background

About biomethane. Biomethane is renewable energy produced from organic materials such as forest and other wood waste, livestock waste, agricultural waste, and other organic wastes sources. Currently, these organic materials are disposed in landfills, which can emit methane as they are piled and left to decay, or this waste is burned which ultimately releases black carbon, an even more damaging climate pollutant. Biomass conversion consists of biogas that has been cleansed and processed to remove impurities. According to the ARB, biomass conversion cuts methane and black carbon emissions by 98 percent compared to open burning or wildfire.

SB 1440 (Hueso, Chapter 739, Statutes of 2018). SB 1440 requires the CPUC, in consultation with the ARB, to consider adopting biomethane procurement targets or goals divided proportionately between the gas investor-owned utilities (IOUs) if the CPUC makes specified findings, including that the targets or goals are a cost-effective means of achieving reductions in short-live climate pollutants and other greenhouse gas (GHG) emissions reductions. SB 1440 also requires the targets and goals to be consistent with state and federal law, including with organic waste disposal reduction targets developed by ARB and the Department of Resources and Recycling and Recovery, as well as, meeting specified delivery environmental requirements.

SB 1383 (Lara, Chapter 395, Statutes of 2019). SB 1383 requires ARB to approve and implement the comprehensive short-lived climate pollutant strategy to achieve, from 2013 levels, a 40 percent reduction in methane, a 40 percent reduction in hydrofluorocarbon gases, and a 50 percent reduction in anthropogenic black carbon, by 2030.

Need to expand definition? The current definition of “biomethane” used by the CPUC excludes the majority of California’s biomethane from being injected into utility pipelines as it currently only allows for a single conversion technology known as anaerobic digestion. By expanding the definition, California is allowing for more biomethane conversion to be considered by the CPUC for biomethane procurement targets. According to the proponents of this bill, the goal is to strive towards reducing gas emissions and gas demands. They argue that while this bill does not grant an opportunity for zero-emissions, the alternative would be to leave organic waste as-is, which would result in higher methane emissions.

Emissions and continued use of natural gas. Opponents contend that this bill will result in cost increases for gas utilities ratepayers. They argue that thermal conversion of biomass to methane is a costly and ineffectual climate solution. Methane is a much more potent GHG than carbon dioxide, and opponents fear that methane leakage can outweigh the climate benefit of producing methane from biomass. They argue that to the extent, biomethane derived from gasification of biomass is intended to displace the use of gas, far more savings could be realized through investment in measures that reduce gas demand such as building electrification. Opponents encourage the focus to remain on measures that reduce methane generation and that advance zero-emissions climate solutions. However, SB 1440 requires the CPUC to only adopt targets that are cost-effective means of achieving reductions in climate pollutants. Nonetheless, developing methane production may likely result in increased costs to gas utility ratepayers when compared to not reducing methane emissions from gas use. More importantly, California’s Climate Change Scoping Plan, Short-Lived Climate Pollutant Reduction Strategy, and Forest Carbon Plan all call for increased biogas production from organic waste to reduce carbon emissions and air pollution. In that regard, this bill seems consistent with those plans and strategies.

Prior/Related Legislation

SB 1440 (Hueso, Chapter 739, Statutes of 2018) required the CPUC in consultation with the ARB consider adopting specific biomethane procurement targets or goals for each gas corporation and requires, if the CPUC adopts those targets or goals, to take certain actions in regards to the development of the targets or goals and the procurement of the biomethane to meet those targets or goals.

SB 1383 (Lara, Chapter 395, Statutes of 2016) required state agencies to consider and, as appropriate, adopt policies and incentives to significantly increase the sustainable production and use of renewable gas, including biomethane to meet the state’s climate change, renewable energy, low-carbon fuel, and short-lived climate pollutants goals, including black carbon, landfill diversion, and dairy methane targets.

AB 2313 (Williams, Chapter 571, Statutes of 2016) required the CPUC to consider options to increase instate biomethane production and use.

SB 840 (Committee on Budget and Fiscal Review, Chapter 341, Statutes of 2016) required the CPUC to reevaluate its requirements and standards for biomethane to be injected into common carrier pipelines.

SB 360 (Cannella, 2015) would have authorize the CPUC to consider providing the option to all gas corporations to engage in competitive bidding and direct investment in ratepayer financed biomethane collection equipment in California. The bill died in the Senate Committee on Energy, Utilities and Communications.

SB 687 (Allen, 2015) would have established a renewable gas standard in California and expanded the definition of biomethane. The bill died in the Senate Committee on Appropriations.

AB 1900 (Gatto, Chapter 602, Statutes of 2012) directed the CPUC to identify landfill gas constituents, develop testing protocols for landfill gas injected into common carrier pipelines, adopt standards for biomethane to ensure pipeline safety and integrity, and adopt rules to ensure open access to the gas pipeline system.

AB 2196 (Chesbro, Chapter 605, Statutes of 2012) ensured that biogas qualifies for RPS credit, provided its production, delivery and use meet certain conditions.

SB 1122 (Rubio, Chapter 612, Statutes of 2012) required IOUs to collectively procure at least 250 megawatts of generation eligible for the RPS from bioenergy generation project, including biogas projects.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Bioenergy Association of California (Sponsor)

Association of California Water Agencies

Butte County Fire Safe Council

California Air Pollution Control Officers Association

California Association of Sanitation Agencies

California Biomass Energy Alliance

California Hydrogen Business Council

California Hydrogen Coalition

California Manufacturers & Technology Association

California Natural Gas Vehicle Coalition

California Waste Haulers Council

Capstone Turbine Corporation

City of Torrance

Clean Energy

CR&R Environmental Services

Environmental Defense Fund

Los Angeles County Solid Waste Management Committee/Integrated Waste

Management Task Force

Monterey Regional Waste Management District

Northern Sonoma County Air Pollution Control District

Placer County Air Pollution Control District

Republic Services, Inc.

Resource Recovery Coalition of California

San Joaquin Renewables, LLC

Sierra Business Council

Solid Waste Association of North America-California Chapter

Southern California Gas Company

TSS Consultants

Watershed Research and Training Center

Western Placer Waste Management Authority

Wisewood Energy

OPPOSITION:

Center for Biological Diversity

Earthjustice

Leadership Counsel for Justice and Accountability

Natural Resources Defense Council

Sierra Club California

ARGUMENTS IN SUPPORT: According to the author:

AB 3163 is critical to meeting California’s clean energy goals and reducing harmful pollution. This bill will expand the definition of biomethane to include cellulosic waste like dead trees and agricultural material. Without the expansion of this definition, this organic waste will be sent to landfills or openly burned, which releases massive amounts of air pollution. Instead, AB 3163 will help convert this waste into pipeline quality biomethane to be used as a source of clean and renewable energy.

ARGUMENTS IN OPPOSITION: Opponents contend that this bill will result in cost increases for ratepayers. They argue that thermal conversion of biomass to methane is a costly and ineffectual climate solution. Methane is a much more potent GHG than carbon dioxide, and opponents fear that methane leakage can outweigh the climate benefit of producing methane from biomass. To the extent, biomethane derived from gasification of biomass is intended to displace the use of gas, far more savings could be realized through investment in measures that reduce gas demand such as building electrification. Opponents encourage the focus to remain on measures that reduce methane generation and that advance zero-emissions climate solutions.

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ASSEMBLY THIRD READING

ATR Bill Id:AB 3163

Author:(Salas)

As Amended Ver:May 5, 2020

Majority vote

SUMMARY:

Adds methane that is produced from the noncombustion thermal conversion of eligible biomass feedstock, as specified, to the definition of "biomethane" for purposes of gas utility biomethane procurement targets.

Major Provisions

For purposes of gas utility biomethane production targets established by SB 1440 (Hueso), Chapter 739, Statutes of 2018, adds to the definition of "biomethane" methane produced from the noncumbustion thermal conversion of the following materials, when separated from other waste:

1. Agricultural crop residues;
2. Bark, lawn, yard, and garden clippings;
3. Leaves, silvicultural residue, and tree and brush prunings;
4. Wood, wood chips, and wood waste;
5. Nonrecyclable pulp or nonrecyclable paper materials;
6. Livestock waste; and,
7. Municipal sewage sludge or biosolids.

COMMENTS:

Current law directs the Public Utilities Commission (PUC) to adopt policies and programs that promote the in-state production and distribution of biomethane. In 2014, the PUC adopted health and safety standards that limit the amounts of certain constituents determined to be harmful to either human health or pipeline integrity in pipeline injected biomethane. The standards were to address the reluctance of gas utilities to inject biomethane into natural gas pipelines.

The PUC acknowledged that its biomethane standards would increase the costs of a biomethane producer who seeks to inject biomethane into the pipeline system. In response to these concerns and legislative mandates, the PUC adopted a $40 million ratepayer-funded program to offset a portion of gas producer costs of connecting to utility pipelines. As modified by 2016 legislation, program funding will pay up to 50% of a biomethane project's interconnection cost, up to $3 million per project. The PUC noted that the capped subsidy would "limit the financial exposure of utility ratepayers."

In 2016, the Legislature passed SB 1383 (Lara), which requires ARB to develop a comprehensive strategy to reduce short-lived climate pollutants (SLCPs) in the state to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in hydrofluorocarbons (HFCs), and a 50% reduction in anthropogenic black carbon by 2030.

SB 1383 also directed the California Energy Commission (CEC) to develop recommendations for the development and use of renewable gas, including biomethane and biogas, as part of its 2017 Integrated Energy Policy Report. Those recommendations identified cost-effective strategies and considered priority end uses of renewable gas in relation to existing state policies and climate goals. The primary recommendation of the CEC was to:

Focus on cost-effective strategies to develop markets for renewable gas produced from anaerobic digestion used as a transportation fuel in near-zero emission, heavy-duty vehicles is the most likely near-term solution.

The CEC recommended:

Implement policies to build commercial markets for renewable gas. The PUC should continue its efforts to implement dairy renewable gas pilot projects to demonstrate interconnection to the common carrier pipeline system, as outlined in the Order Instituting Rulemaking 17-06-015. Following completion of dairy pilot projects, the PUC should continue to evaluate methods to promote increased use of renewable gas. Under Assembly Bill 2313 [2016] the PUC should evaluate the current monetary incentive programs for renewable gas production and pipeline interconnection and consider whether it is prudent and reasonable to continue those incentives, which are funded through utility rates. Pursuant to SB 1383, ARB should consider additional infrastructure development and procurement policies to encourage dairy renewable gas projects, and state agencies should consider and, as appropriate, adopt policies and incentives to significantly increase the sustainable production and use of renewable gas.

SB 1383 also requires the PUC to direct gas utilities to implement no less than five dairy biomethane pilot projects to demonstrate interconnection to the common carrier pipeline system. The pipeline infrastructure costs for these pilot projects may be rate-based pursuant to SB 1383. The pilot program rules ensure that the projects will not result in an increase of criteria pollutants or toxic air contaminant emissions in the air basins where the projects are located.

In 2018, SB 1440 (Hueso), Chapter 739, Statutes of 2018, requires PUC to consider adopting biomethane procurement targets or goals for IOUs. SB 1440 also requires the PUC, in consultation with ARB to consider adopting biomethane procurement targets or goals divided proportionately between the IOUs if the PUC makes specified findings. If targets or goals are adopted, the PUC must: 1) consider the recommendations of the California Energy Commission for the development and use of renewable gas; 2) Ensure the goals or targets are consistent with organic waste disposal reduction targets developed by the ARB to reduce the landfill disposal of organics and organic waste reduction goals developed by the Department of Resources Recycling and Recovery; and, 3) Ensure that biomethane meets specified delivery conditions and directly results in environmental benefits to the state. In the years since the passage of SB 1440, some groups have raised concerns regarding the creation of new sources of methane for pipeline injection.

This bill adds methane produced from the noncombustion thermal conversion of any of the specified organic materials to the definition of biomethane for purposes of the SB 1440 program.

According to the Author:

Increasing biogas production and use is critical to meet California's climate and clean energy policies. Organic waste causes the vast majority of California's black carbon and methane emissions, two of the most damaging short-lived climate pollutants. Biogas provides the lowest carbon fuel of any kind, often carbon negative. Converting organic waste to biogas cuts emissions and saves this material from being open burned. Correcting the definition of biogas to be consistent with the Renewable Portfolio Standards definition will also help California to meet its renewable energy and low carbon fuel goals. Biogas can be used to replace diesel in heavy-duty trucks where there is no zero-emission alternative and can provide flexible generation and baseload power to fill in around solar and wind power. Additionally, biogas can be used for energy storage, fuel for backup generators, and renewable hydrogen for fuel cells, all of which will help to make microgrids and the electricity grid generally more reliable.

Arguments in Support:

A letter from the Bioenergy Association of California states AB 3163:

…will help California to meet its climate change and clean energy policies by facilitating the development and production of instate biogas from organic waste. AB 3163 will increase in-state biogas by expanding the definition of pipeline biogas to include any RPS eligible biogas that meets applicable pipeline standards. Passing AB 3163 will help California to reduce landfill waste, open burning of agricultural and forest waste, and catastrophic wildfires.

Arguments in Opposition:

A group letter from environmental groups (Earthjustice, Sierra Club California, the Leadership Counsel for Justice and Accountability, Center for Biological Diversity and Natural Resources Defense Council) in opposition to the bill states:

Unlike biomethane derived from the anaerobic decomposition of organic material from sources such as landfills and wastewater treatment plants, biomass like wood and agricultural crop residue produce much smaller and more dispersed volumes of methane over years (and decades) of natural decomposition, as much of the biomass is converted aerobically or is incorporated on site as soil carbon. Synthetic processes such as thermal conversion of biomass to methane therefore create methane at much higher quantities than would otherwise occur. Accordingly, AB 3163 would turn California's goal of reducing emissions from methane on its head by enabling methane creation through a costly process with significant potential to increase greenhouse gas pollution.

FISCAL COMMENTS:

According to the Assembly Appropriations Committee, no new state costs.

VOTES:

ASM NATURAL RESOURCES: 7-2-2

YES: Friedman, Flora, Brough, Chau, Eggman, Mathis, McCarty

NO: Muratsuchi, Mark Stone

ABS, ABST OR NV: Cristina Garcia, Limón

ASM APPROPRIATIONS: 12-2-4

YES: Bigelow, Calderon, Carrillo, Chau, Megan Dahle, Diep, Eggman, Fong, Eduardo Garcia, McCarty, Robert Rivas, Voepel

NO: Bauer-Kahan, Petrie-Norris

ABS, ABST OR NV: Gonzalez, Bloom, Bonta, Gabriel

UPDATED:

VERSION: May 5, 2020

CONSULTANT: Lawrence Lingbloom / Elizabeth MacMillan / NAT. RES. / FN: 0002840

Date of Hearing: June 2, 2020

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 3163

Author:(Salas) – As Amended Ver:May 5, 2020

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

SUMMARY:

This bill expands the meaning of “biomethane” as that term is used for the California Public Utilities Commission’s (CPUC’s) consideration of adopting biomethane procurement targets applicable to the state’s gas corporations.

Specifically, this bill expands the current-law definition of “biomethane” to include “methane produced from an organic waste feedstock” that meets the following conditions:

1. The methane is produced from the anaerobic decomposition of organic material, including codigestion.
2. The methane is produced from the noncombustion thermal conversion of any of the following materials, when separated from other waste:
   1. Agricultural crop residues.
   2. Bark, lawn, yard, and garden clippings.
   3. Leaves, silvicultural residue, and tree and brush prunings.
   4. Wood, wood chips, and wood waste.
   5. Nonrecyclable pulp or nonrecyclable paper materials.
   6. Livestock waste.
   7. Municipal sewage sludge or biosolids.

FISCAL EFFECT:

No new state costs.

COMMENTS:

Background and Purpose. The state has many programs to encourage the in-state production and use of biomethane, that is, methane biogas produced by anaerobic digestion of waste products such as agricultural waste, wastewater organic matter and digestible materials in landfills. (It has also made available significant funding for this purpose.) Among those programs is the statutory requirement that the CPUC, in consultation with the Air Resources Board, consider adopting biomethane procurement targets applicable to the state’s investor-owned gas utilities, such as Southern California Gas Company and San Diego Gas and Electric. Statute requires the CPUC, before adopting such a biomethane procurement requirement, to make a number of environmentally protective findings.

This bill expands the statutory definition of “biomethane,” notably to include methane produced from the noncombustion thermal conversion of various organic materials. The bill does not change, reduce or limit the findings the CPUC must make before adopting a biomethane procurement standard.

According to the author:

Increasing biogas production and use is critical to meet California’s climate and clean energy policies. Organic waste causes the vast majority of California’s black carbon and methane emissions, two of the most damaging short-lived climate pollutants. Biogas provides the lowest carbon fuel of any kind, often carbon negative. Converting organic waste to biogas cuts emissions and saves this material from being open burned. Correcting the definition of biogas to be consistent with the Renewable Portfolio Standards definition will also help California to meet its renewable energy and low carbon fuel goals. Biogas can be used to replace diesel in heavy-duty trucks where there is no zero-emission alternative and can provide flexible generation and baseload power to fill in around solar and wind power. Additionally, biogas can be used for energy storage, fuel for backup generators, and renewable hydrogen for fuel cells, all of which will help to make microgrids and the electricity grid generally more reliable.

Several environmental organizations (Earthjustice, Sierra Club California, the Leadership Counsel for Justice and Accountability, Center for Biological Diversity and Natural Resources Defense Council object, contending:

Unlike biomethane derived from the anaerobic decomposition of organic material from sources such as landfills and wastewater treatment plants, biomass like wood and agricultural crop residue produce much smaller and more dispersed volumes of methane over years (and decades) of natural decomposition, as much of the biomass is converted aerobically or is incorporated on site as soil carbon. Synthetic processes such as thermal conversion of biomass to methane therefore create methane at much higher quantities than would otherwise occur. Accordingly, AB 3163 would turn California’s goal of reducing emissions from methane on its head by enabling methane creation through a costly process with significant potential to increase greenhouse gas pollution.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: May 13, 2020

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 3163 (

Author:Salas) – As Amended Ver:May 5, 2020

SUBJECT: Energy: biomethane: procurement

SUMMARY: Adds methane that is produced from the noncombustion thermal conversion of eligible biomass feedstock, as specified, to the definition of “biomethane” for purposes of gas utility biomethane procurement targets (SB 1440).

EXISTING LAW:

1. Requires the California Air Resources Board (ARB) to approve and implement a comprehensive short-lived climate pollutant (SLCP) strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in hydrofluorocarbon gases (HFCs), and a 50% reduction in anthropogenic black carbon, by 2030.
2. Requires the California Energy Commission (CEC), ARB and the Public Utilities Commission (PUC) to develop recommendations for development and use of renewable gas, then consider and adopt policies and incentives to increase production and use of renewable gas, including biomethane and biogas, that reduces SLCPs in the state. Requires prioritization of fuels with the greatest greenhouse gas (GHG) benefits, including consideration of carbon intensity and reduction in SLCPs.
3. Requires ARB and PUC to establish energy infrastructure development and procurement policies for dairy biomethane projects, including directing gas utilities to implement at least five dairy biomethane pilot projects.
4. Requires the PUC to adopt policies and programs that promote the in-state production and distribution of biomethane and requires that those policies and programs facilitate the development of a variety of sources of in-state biomethane.
5. Requires the PUC to consider options, including whether to allow recovery in rates, to facilitate the procurement and installation of utility infrastructure necessary to achieve interconnection between the natural gas transmission and distribution pipeline network and biomethane generation and collection equipment, and of gathering lines for a dairy cluster biomethane project and to achieve interconnection with facilities that generate biomethane.
6. Requires the PUC to adopt pipeline access rules that ensure that each gas corporation provides nondiscriminatory access to the gas pipeline system to any party for the purposes of physically interconnecting with the gas pipeline system and effectuating the delivery of gas.
7. Requires the PUC to adopt standards for biomethane that are reasonably necessary to protect public health, ensure pipeline integrity and safety, and to adopt monitoring, testing, reporting and recordkeeping protocols.
8. Requires the CEC to hold public hearings to identify impediments that limit procurement of biomethane in California, including impediments to interconnection, and to offer solutions.
9. Requires the PUC, in consultation with ARB, to consider adopting biomethane procurement targets or goals divided proportionately between gas utilities if the PUC finds:
   
   1. That the targets or goals are a cost-effective means of achieving reductions in short-lived climate pollutants and other GHG emissions reductions according to developed ARB strategies.
      
   2. The targets or goals are in compliance with all state and federal laws.
      
10. If targets or goals are adopted, the PUC must:
    
    1. Consider the recommendations of the CEC for the development and use of renewable gas;
       
    2. Ensure the goals or targets are consistent with organic waste disposal reduction targets developed by ARB to reduce the landfill disposal of organics and organic waste reduction goals developed by the Department of Resources Recycling and Recovery; and
       
    3. Ensure that biomethane meets specified delivery conditions and directly results in environmental benefits to the state.
       
11. Defines biomethane as a biogas that meets safety standards adopted by the PUC for injection into pipelines and meets specified monitoring, testing, reporting, and recordkeeping requirements.
    
12. Defines “biogas” as gas that is produced from the anaerobic decomposition of organic material.
    
13. Defines “biomenthane” as biogas that meets the standards adopted for injection into a common carrier pipeline.
    

THIS BILL:

1. Adds to the definition of “biomethane” methane produced from the noncumbustion thermal conversion of the following materials, when separated from other waste:
   1. Agricultural crop residues;
   2. Bark, lawn, yard, and garden clippings;
   3. Leaves, silvicultural residue, and tree and brush prunings;
   4. Wood, wood chips, and wood waste;
   5. Nonrecyclable pulp or nonrecyclable paper materials;
   6. Livestock waste; and,
   7. Municipal sewage sludge or biosolids.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement:

Increasing biogas production and use is critical to meet California’s climate and clean energy policies. Organic waste causes the vast majority of California’s black carbon and methane emissions, two of the most damaging short-lived climate pollutants. Biogas provides the lowest carbon fuel of any kind, often carbon negative. Converting organic waste to biogas cuts emissions and saves this material from being open burned. Correcting the definition of biogas to be consistent with the Renewable Portfolio Standards definition will also help California to meet its renewable energy and low carbon fuel goals. Biogas can be used to replace diesel in heavy-duty trucks where there is no zero-emission alternative and can provide flexible generation and baseload power to fill in around solar and wind power. Additionally, biogas can be used for energy storage, fuel for backup generators, and renewable hydrogen for fuel cells, all of which will help to make microgrids and the electricity grid generally more reliable.

1. Background. Current law directs the PUC to adopt policies and programs that promote the in-state production and distribution of biomethane. In 2014, the PUC adopted health and safety standards that limit the amounts of certain constituents determined to be harmful to either human health or pipeline integrity in pipeline injected biomethane. The standards were to address the reluctance of gas utilities to inject biomethane into natural gas pipelines.

The PUC acknowledged that its biomethane standards would increase the costs of a biomethane producer who seeks to inject biomethane into the pipeline system. In response to these concerns and legislative mandates, the PUC adopted a $40 million ratepayer-funded program to offset a portion of gas producer costs of connecting to utility pipelines. As modified by 2016 legislation, program funding will pay up to 50% of a biomethane project’s interconnection cost, up to $3 million per project. The PUC noted that the capped subsidy would “limit the financial exposure of utility ratepayers.” To date, the PUC has not received any applications for the biomethane subsidy program. However, one landfill gas project is reported to be preparing to apply, and five dairy biomethane projects are also possibilities.

In 2016 the Legislature passed SB 1383 (Lara), which requires ARB to develop a comprehensive strategy to reduce SLCPs in the state to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in HFCs, and a 50% reduction in anthropogenic black carbon, by 2030.

SB 1383 also directed the CEC to develop recommendations for the development and use of renewable gas, including biomethane and biogas, as part of its 2017 Integrated Energy Policy Report. Those recommendations were released in April and the CEC identified cost-effective strategies and considers priority end uses of renewable gas in relation to existing state policies and climate goals. The primary recommendation of the CEC was to:

Focus on cost-effective strategies to develop markets for renewable gas produced from anaerobic digestion used as a transportation fuel in near-zero emission, heavy-duty vehicles is the most likely near-term solution.

The CEC recommended:

Implement policies to build commercial markets for renewable gas. The PUC should continue its efforts to implement dairy renewable gas pilot projects to demonstrate interconnection to the common carrier pipeline system, as outlined in the Order Instituting Rulemaking 17-06-015. Following completion of dairy pilot projects, the PUC should continue to evaluate methods to promote increased use of renewable gas. Under Assembly Bill 2313 [2016] the PUC should evaluate the current monetary incentive programs for renewable gas production and pipeline interconnection and consider whether it is prudent and reasonable to continue those incentives, which are funded through utility rates. Pursuant to SB 1383, ARB should consider additional infrastructure development and procurement policies to encourage dairy renewable gas projects, and state agencies should consider and, as appropriate, adopt policies and incentives to significantly increase the sustainable production and use of renewable gas.

SB 1383 also required the PUC to direct gas utilities to implement no less than five dairy biomethane pilot projects to demonstrate interconnection to the common carrier pipeline system. The pipeline infrastructure costs for these pilot projects may be rate-based pursuant to SB 1383. The pilot program rules ensure that the projects will not result in an increase of criteria pollutants or toxic air contaminant emissions in the air basins where the projects are located.

In 2018, SB 1440 (Hueso), Chapter 739, Statutes of 2018, required PUC to consider adopting biomethane procurement targets or goals for IOUs. SB 1440 requires the PUC, in consultation with ARB to consider adopting biomethane procurement targets or goals divided proportionately between the IOUs if the PUC makes specified findings. If targets or goals are adopted, the PUC must: 1) consider the recommendations of the California Energy Commission for the development and use of renewable gas; 2) Ensure the goals or targets are consistent with organic waste disposal reduction targets developed by the ARB to reduce the landfill disposal of organics and organic waste reduction goals developed by the Department of Resources Recycling and Recovery; and 3) Ensure that biomethane meets specified delivery conditions and directly results in environmental benefits to the state. In the years since the passage of SB 1440, some groups have raised concerns regarding the creation of new sources of methane for pipeline injection.

This bill is consistent with the version of SB 1440 passed by this committee in 2018. It adds methane produced from the noncombustion thermal conversion of any of the specified organic materials to the definition of biomethane for purposes of the SB 1440 program.

REGISTERED SUPPORT / OPPOSITION:

Support

Aries Clean Energy, LLC

Bioenergy Association of California

California Association of Sanitation Agencies

California Natural Gas Vehicle Coalition

Capstone Turbine Corporation

Clean Energy

CR&R, Inc.

Natural Gas Vehicles for America

Placer County Air Pollution Control District

Reimagine Power, Inc.

Republic Services, Inc.

Resource Recovery Coalition of California

San Joaquin Renewables, LLC

San Joaquin Valley Air Pollution Control District

Sempra Energy Utilities

Sierra Institute for Community and Environment

TSS Consultants

US Biogas, Inc.

Wisewood Energy

Opposition

Center for Biological Diversity

Earthjustice

Leadership Counsel for Justice & Accountability

Natural Resources Defense Council

Sierra Club California

Union of Concerned Scientists

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