(2)Existing law establishes the Clean Transportation Program, administered by the State Energy Resources Conservation and Development Commission, to provide funding to certain entities to develop and deploy innovative technologies that transform Californias fuel and vehicle types to help attain the states climate change policies. Existing law requires the commission to give preference to those projects that maximize the goals of the program based on specified criteria and to fund specified eligible projects, including, among others, alternative and renewable fuel projects to develop and improve alternative and renewable low-carbon fuels. Existing law creates the Alternative and Renewable Fuel and Vehicle Technology Fund, to be administered by the commission, and requires the moneys in the fund, upon appropriation by the Legislature, to be expended by the commission to implement the program.

This bill would expand the purpose of the program to include developing and deploying innovative technologies that transform Californias fuel and vehicle types to help reduce criteria air pollutants and air toxics. The bill would no longer require the commission to provide certain project preferences. The bill would provide that the goals of the program shall be to advance the states clean transportation, equity, air quality, and climate emission policies and would require the commission to ensure program investments support specified requirements. The bill would require the commission, on and after January 1, 2025, to expend at least 50% of the moneys appropriated to the program on programs and projects that directly benefit or serve residents of disadvantaged and low-income communities and low-income Californians, and would require at least 50% of funding for tangible location-based investments to be expended in disadvantaged and low-income communities.

(3)Existing law establishes the Air Quality Improvement Program under the administration of the State Air Resources Board for the purpose funding air quality improvement projects relating to fuel and vehicle technologies. The primary purpose of the program is to fund projects to reduce criteria air pollutants, improve air quality, and provide funding for research to determine and improve the air quality impacts of alternative transportation fuels and vehicles, vessels, and equipment technologies. Existing law establishes a list of projects eligible for funding under the program. Existing law creates the Air Quality Improvement Fund, and requires the state board to expend the moneys in that fund, upon appropriation by the Legislature, to implement the Air Quality Improvement Program.

This bill would instead provide that the purpose of the program is to fund air quality improvement projects relating to zero-emission fuel and vehicle technologies and that the primary purpose of the program is to fund projects to reduce criteria air pollutants in the logistics, trucking, off-road, warehouse, and port sectors, improve air quality in nonattainment basins, and improve the air quality impacts of zero-emission transportation fuels and vehicles, vessels, and equipment technologies. The bill would also revise the list of projects eligible for funding under the program.

(4)Existing law, until January 1, 2024, increases vehicle registration fees, vessel registration fees, and specified service fees for identification plates by a specified amount. Existing law requires the revenue generated by the increase in those fees to be deposited in the Alternative and Renewable Fuel and Vehicle Technology Fund and either the Air Quality Improvement Fund or the Enhanced Fleet Modernization Subaccount, as provided.

Existing law, until January 1, 2024, imposes on certain vehicles a smog abatement fee of $20, and requires a specified amount of this fee to be deposited in the Air Quality Improvement Fund and in the Alternative and Renewable Fuel and Vehicle Technology Fund.

This bill would extend those charges in the amounts required to make those deposits until January 1, 2035.

(5)This bill would declare that it is to take effect immediately as an urgency statute.

The California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 creates the Clean Transportation Program, administered by the State Energy Resources Conservation and Development Commission, to provide funding to certain entities to develop and deploy innovative technologies that transform Californias fuel and vehicle types to help attain the states climate change policies.

This bill would state the intent of the Legislature to enact future legislation related to the Clean Transportation Program.

 THIRD READING  

Bill No: SB 84

Author: Gonzalez (D), et al.

Amended: 5/18/23

Vote: 27 - Urgency

SENATE TRANSPORTATION COMMITTEE: 10-4, 4/11/23

AYES: Gonzalez, Allen, Archuleta, Becker, Blakespear, Cortese, Limón, McGuire, Umberg, Wahab

NOES: Niello, Dahle, Newman, Seyarto

NO VOTE RECORDED: Dodd, Nguyen

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-2, 4/26/23

AYES: Allen, Gonzalez, Hurtado, Menjivar, Skinner

NOES: Dahle, Jones

SENATE APPROPRIATIONS COMMITTEE: 4-2, 5/18/23

AYES: Portantino, Ashby, Wahab, Wiener

NOES: Jones, Seyarto

NO VOTE RECORDED: Bradford

SUBJECT: Air quality programs: funding

SOURCE: CALSTART

DIGEST:

This bill extends the sunset on the funding for the Clean Transportation Program and the Air Quality Improvement Program, and revises the terms of those programs.

ANALYSIS:

Existing law:

1. Establishes, through Executive Order, goals for the deployment of Zero Emission Vehicles (ZEV), including having 100% of light-duty vehicles sold be ZEVs by 2035 and 100% of medium- and heavy-duty vehicles sold be ZEVs by 2045.

Clean Transportation Program

1. Establishes the Alternative and Renewable Fuels and Vehicle Technology Program (now known as the Clean Transportation Program, or CTP), administered by the California Energy Commission (CEC), to develop and deploy technologies and alternative and renewable fuels to help attain the state’s climate change policies. Funding for the CTP program comes from miscellaneous vehicle-related charges including vehicle registration fees, boat registration fees and special license identification fees. (HSC § 44272) These fees sunset on January 1, 2024.
2. Requires, in administering the CTP, the CEC to provide preferences to projects meeting any of fourteen criteria:
   1. Helps transition from the use of petroleum fuels
   2. Consistency with climate change policy
   3. Reduces air pollutants
   4. Decreases the discharge of water pollutants
   5. Does not adversely impact the sustainability of the state’s natural resources
   6. Provides non-state matching funds
   7. Promotes California-based firms and jobs
   8. Uses existing or proposed fuel infrastructure
   9. Reduces GHG emissions by at least 10%
   10. Uses alternative fuel blends of at least 20%
   11. Drives new technology
   12. Transitions workers to alternative and renewable fuel and vehicle technology sectors
   13. The project is in a non-attainment area
   14. The project advances the comprehensive strategy for vehicles as articulated in the California Air Resources Board’s Mobile Source Strategy.
3. Limits CTP funding only to projects that meet any of the following 13 criteria:
   1. Develop and improve alternative and renewable low-carbon fuels
   2. Optimize alternative and renewable fuels for existing engine technologies
   3. Produce alternative and renewable low-carbon fuels
   4. Decrease the impact of the alternative and renewable fuel life-cycle carbon footprint
   5. Develop alternative and renewable fuel infrastructure
   6. Develop and improve technology for all vehicles that provide better fuel efficiency and lower GHG emissions
   7. Accelerate the commercialization of alternative and renewable fuels
   8. Retrofit medium- and heavy-duty vehicles for higher fuel efficiency
   9. Promote alternative and renewable fuel infrastructure development
   10. Workforce training programs related to technologies that transform fuels and vehicles
   11. Block grants and incentive programs administered by public entities and not-for-profit technology entities
   12. Assessments performed by state agencies to determine the impacts of increasing the use of low-carbon transportation fuels and technologies
   13. Funding for homeowners to offset costs to supply plug-in electric vehicles

Air Quality Improvement Program

1. Establishes the Air Quality Improvement Program (AQIP), administered by the California Air Resources Board (CARB), with the primary purpose of funding projects to reduce criteria air pollutants, improve air quality, and provide funding for research to determine and improve the air quality impacts of alternative transportation fuels and vehicles, vessels and equipment technologies. Funding for the AQIP comes from fees on special license identification fees and vessel fees. These fees sunset on January 1, 2024.
2. Requires CARB to provide a preference to projects with higher cost-benefit scores and authorizes CARB to give a preference based on the following criteria:
   1. Reductions in criteria or toxic air pollutants
   2. Contribution to regional air quality improvement
   3. Ability to promote the use of clean alternative fuels and vehicle technologies
   4. Ability to achieve climate change benefits
   5. Ability to support clean vehicle market transformation
   6. Ability to leverage private capital investments
3. Limits eligible projects to the following:
   1. On- and off-road equipment projects
   2. Projects that provide mitigation for off-road gasoline exhaust
   3. Projects that provide research to determine air quality impacts of alternative fuels
   4. Projects that augment the University of California’s agricultural experiment station and cooperative extension programs
   5. Incentives for small off-road equipment replacement
   6. Incentives for medium- and heavy-duty vehicles and equipment mitigation
4. Requires CARB to submit a biannual report evaluating the AQIP.

Enhanced Fleet Modernization Program

1. Establishes the Enhanced Fleet Modernization Program (EFMP) under CARB to reduce GHG emission, improve air quality, and provide benefits to low-income residences through replacement of high-polluting vehicles with cleaner, more efficient vehicles or mobility options. The Clean Cars 4 All program is part of the EFMP.

This bill:

1. Extends the sunset on the expiring fees (smog abatement, vehicle registration, vessel registration, special identification plates) for 11 years, until January 1, 2035.
2. Requires, beginning January 1, 2025, the CEC to ensure that the CTP supports:
   1. Annually increasing deployment of infrastructure and other projects that advance the adoption of medium- and heavy-duty vehicles
   2. Annually increasing deployment of light-duty vehicle infrastructure to fill gaps in current deployment, as specified.
3. Requires, beginning January 1, 2025, that no less than 50% of the CTP expenditures shall be on programs and projects that directly benefit or serve residents of disadvantaged communities and low-income Californians, and at least 50% of the funds for location-based investments be expended in disadvantaged and low-income communities. A non-exclusive list of eligible categories of projects which could count toward this requirement is specified. Requires the CEC to consult with specified advisory groups to ensure that these provisions are implemented.
4. Revises the CTP by eliminating a preference for projects which reduce greenhouse gas emissions from gasoline and diesel fuels, and projects which use higher blends of alternative fuels.
5. Revises the purpose of the AQIP to focus on reducing criteria air pollutants in the logistics, trucking, off-road, warehouse and port sectors, improve air quality in nonattainment basins, and to remove research as a program purpose.
6. Requires under the EFMP that replacement vehicles must be either plug-in hybrid or zero emission unless CARB makes a specific determination about inadequate vehicle or charging availability.

Comments

1. Author’s Statement. “The transportation sector is the single largest contributor of emissions in California, and decarbonizing this sector will require consistent and long-term funding commitments to spur the transformative changes that are needed to meet our ambitious climate and air quality goals. Over the last fifteen years, the Clean Transportation Program, the Air Quality Improvement Program, and the Enhanced Fleet Modernization Program have proven themselves as some of the most important and transformative programs in this statewide effort. Unfortunately, the dedicated funding that supports these programs will sunset on January 1, 2024, leaving these critical programs unfunded and unable to continue to help support our zero emission transition. SB 84 will ensure these important state efforts do not cease to exist, by extending the existing fees that fund the programs, at their current levels, through 2035. The bill will also make programmatic changes to ensure investments in clean technologies continue to be effective, equitable, and in-line with current greenhouse gas and pollution reduction goals. This includes requiring 50% of the Clean Transportation Program funds to be spent on programs and projects that directly benefit or serve residents of disadvantaged and low-income communities.”
2. Background. Transportation is the largest source of greenhouse gas emissions in California, about 40% overall. Vehicles are also a major source of air pollution; air pollution from mobile sources is responsible for about 80% of nitrogen oxide emissions and 90% of diesel particulate matter emissions. In 2008 the Legislature established the vehicle-related fees which are the subject of this bill to primarily support climate and air quality programs. Those fees were to have sunset in 2016. In 2013 the Legislature extended the sunset on those fees at the same amount until 2024 in AB 8 (Chapter 401 of 2013). Three programs are funded, the CTP, the AQIP and the Enhanced Fleet Modernization Program (EFMP).
3. How Much? The fee extensions in the bill are $3 in vehicle registration fees, $10 in vessel registration fees, $8 in smog abatement fees, and $5 on identification plates for construction and agricultural vehicles. These fees annually raise about $185 million with most coming from the vehicle registration and smog abatement fees. About $110 million goes to the CTP, $42 million goes to the AQIP, and $33 million goes to the EFMP.
4. What Did We Get? Through August 2021, the CTP invested more than $1 billion and installed or planned 15,154 EV charging stations, funded 83 new or upgraded hydrogen fueling stations, funded 27 manufacturing projects, launched 71 projects to promote production of sustainable fuels within California, provided workforce training for more than 20,000 individuals, and created several new programs and standards.^[1] It is difficult to judge the effectiveness or efficiency of these investments given the wide variety of goals and purposes of the program.

The biggest AQIP program is the Truck Loan Assistance Program. Through June 2022 the program has invested $214 million, with nearly half benefitting disadvantaged communities, and financed 40,400 clean vehicles and equipment.

The biggest EFMP program is Clean Cars 4 All (CC4A) which provides incentives for lower-income households to scrap their older, more polluting vehicles for cleaner vehicles. A recent study found that over six years the CC4A spent $90 million and placed 11,000 vehicles in eligible households.^[2] According to a recent CARB report^[3], the CC4A program is about half as efficient as the Clean Vehicle Rebate Program in terms of cost per GHG reduction or cost per criteria pollutant reduction, though that CC4A program intentionally provides greater incentives because it is targeted to lower-income households who need more assistance.

1. Do This. This bill requires that the CTP focus on light-duty vehicle charging, medium- and heavy-duty vehicle charging and deployment, and equity. This reflects the current major challenges to a successful ZEV transition as the lack of vehicle charging, particularly at the homes of lower-income individuals, is one of the biggest barriers to light-duty vehicle adoption. The cost and availability of medium- and heavy-duty ZEVs is a big problem attracting increasing attention, while the difficulty in building higher-capacity charging stations may be the most serious limitation of all.
2. Equity Emphasis. Many California environmental and transportation policies provide special consideration for disadvantaged communities. California’s Clean Cars 4 All program is only available to low-income residents in disadvantaged communities. The Clean Vehicle Rebate Program (CVRP) provides higher rebates for low- and moderate-income customers. The CPUC’s program to subsidize EV charging infrastructure provides higher rebates for low-income customers. And the federal government, through its Justice40 initiative, has a goal of 40% of federal investments in clean transportation, transit, clean energy, and climate change go to disadvantaged communities. This bill continues that special consideration and makes it stronger by requiring that at least 50% of CTP funds go to disadvantaged communities and low-income Californians.
3. Time for an Update? Many of the provisions in the statutes impacted by this bill date back almost 10 years to AB 118 in 2014 and in some cases back to the original statutes of 2008. But the problems identified in 2008 have gotten far more acute. California has responded with new laws, programs and goals along with substantial resources. It may be appropriate to consider revising those AB 118 statutes as well.
4. Opposition. Opposition comes from the hydrogen industry who asks for 30% of the CTP funding annually, for a total of $300 million, which it argues will create a statewide and self-sufficient fueling network of 1000 stations. This request would establish the only industry-specific set-aside in the CTP. It isn’t clear why the hydrogen industry doesn’t believe it would receive reasonable funding from the CTP if left to compete like every other technology.

Battery electric cars are far ahead of the hydrogen competition: In 2022, less than 1% of the ZEVs sold in California were hydrogen. The other 99% were battery electric.^[4] Hydrogen-powered cars are not yet available in commercial quantities in California, nor anywhere the world. The competition for medium- and heavy-duty vehicles is much closer, though one major manufacturer recently said that hydrogen powertrains were three to five years behind battery electric powertrains. Like battery electric technology, hydrogen will need government support to become competitive. That support exists. A good example is the $7 billion federal clean hydrogen hub program intended to reduce the cost and increase the capacity to produce sustainable hydrogen. Rather than set aside a specific amount for one technology it may be preferable to leave the funding decision to the CEC who can focus the funding where it is most needed to achieve our goals.

1. Budget Proposal. The Governor’s Budget proposes extension of the same fees as this bill until July 1, 2035. Only minor modifications to the programs are proposed, the most notable of which is limiting the CTP funding to zero-emission technologies.
2. Urgency. This is an urgency bill requiring a 2/3 vote on the Floor.

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

According to the Senate Appropriations Committee:

• Annual revenues of approximately $173 million annually to support the following programs until 2035:
  • Approximately $110 million for the CTP, administered by the CEC. (Alternative and Renewable Fuel and Vehicle Technology Fund - ARFVTF)
  • Approximately $30 million for the AQIP, administered by the CARB. (Air Quality Improvement Fund - AQIF)
  • Approximately $33.4 million for the EFMP, $30.6 million administered by the Bureau of Automobile Repair (BAR), and $2.8 million administered by CARB. (Enhanced Fleet Modernization [EFM] Subaccount)
• Ongoing costs, in the millions annually (fully offset by continued fee revenues deposited into the ARFVTF, AQIF, and EFM Subaccount), for CARB, the CEC, and BAR to continue to administer the AQIP, CTP, and EFMP, and fund the following authorized positions to support those programs:
  • CTP: 76.4 PY within the CEC (there currently 9.4 vacancies).
  • AQIP: 12.0 PY within CARB (there are currently zero vacancies).
  • EFMP: 9.0 PY within BAR, and 5.0 PY within CARB (there is currently 1.0 vacancy within CARB and 1.0 within BAR)

SUPPORT: (Verified 5/19/23)

CALSTART (source)

Abb INC.

Abode Communities

Bp Pulse Fleet

Byd America

BYD Motors, INC.

California Electric Transportation Coalition

California Environmental Voters

California Trucking Association

Chargepoint, INC

Chargerhelp!

Chargie

Coalition for Clean Air

Electric Vehicle Charging Association

EVbox INC

EVgo Services LLC

Flo

Freewire Technologies

Natural Resources Defense Council

Plug in America

Proterra

Qmerit

The Greenlining Institute

Union of Concerned Scientists

Valley Clean Air Now

Volvo Group North America

Xeal

Zeem Solutions, INC.

OPPOSITION: (Verified 5/19/23)

Alliance for Automotive Innovation

California Hydrogen Business Council

California Hydrogen Coalition

Prepared by: Randy Chinn / TRANS. / (916) 651-4121

5/23/23 11:06:05

**** END ****

1. . 2021-2023 Investment Plan Update for the Clean Transportation Program; December 2021; CEC-600-2021-038-CMF. ↑

2. Procedural Equity in Implementing California’s Clean Cars 4 All Program by Pierce, Connolly and Blanco; UCLA Luskin Center for Innovation; May 2021. ↑

3. FY 2022-23 Low Carbon Transportation Investments and Air Quality Improvement Program Funding Plan, Appendix H. ↑

4. California Energy Commission; New ZEV sales in California for 2022: 292,496 battery electric, 50,748 plug in hybrids, 2,574 hydrogen. ↑

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 84 (Gonzalez) - Clean Transportation Program: Air Quality Improvement Program: funding

Bill Summary:

SB 84, an urgency measure, would extend the sunset on specified vehicle registration, smog abatement, vessel registration, and special identification plate fees until January 1, 2035, and make specified revisions to the Clean Transportation Program (CTP) and Air Quality Improvement Program (AQIP).

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 18, 2023

Fiscal Impact:

• Annual revenues of approximately $173 million annually to support the following programs until 2035:
  • Approximately $110 million for the CTP, administered by the California Energy Commission (CEC). (Alternative and Renewable Fuel and Vehicle Technology Fund - ARFVTF)
  • Approximately $30 million for the AQIP, administered by the California Air Resources Board (CARB). (Air Quality Improvement Fund - AQIF)
  • Approximately $33.4 million for the Enhanced Fleet Modernization Program (EFMP), $30.6 million administered by the Bureau of Automobile Repair (BAR), and $2.8 million administered by CARB. (Enhanced Fleet Modernization [EFM] Subaccount)
    
• Ongoing costs, in the millions annually (fully offset by continued fee revenues deposited into the ARFVTF, AQIF, and EFM Subaccount), for CARB, the CEC, and BAR to continue to administer the AQIP, CTP, and EFMP, and fund the following authorized positions to support those programs:
  • CTP: 76.4 PY within the CEC (there currently 9.4 vacancies).
  • AQIP: 12.0 PY within CARB (there are currently zero vacancies).
  • EFMP: 9.0 PY within BAR, and 5.0 PY within CARB (there is currently 1.0 vacancy within CARB and 1.0 within BAR)

Author Amendments:

Make certain clarifying changes and do the following:

• Require the guidelines for the EFMP to ensure that replacement vehicles are either a plug-in hybrids or a zero-emission vehicles, unless CARB, in consultation with the CEC, determines that charging and refueling capabilities are inadequate in certain areas, or an adequate supply of vehicles are not available in new or secondary markets, as specified.
• Expand the primary purposes of the AQIP to include funding of projects in the off-road and warehouse sectors.

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 84 (Gonzalez) - Clean Transportation Program: Air Quality Improvement Program: funding

Bill Summary:

SB 84, an urgency measure, would extend the sunset on specified vehicle registration, smog abatement, vessel registration, and special identification plate fees until January 1, 2035, and make specified revisions to the Clean Transportation Program (CTP) and Air Quality Improvement Program (AQIP).

Fiscal Impact:

• Annual revenues of approximately $173 million annually to support the following programs until 2035:
  • Approximately $110 million for the CTP, administered by the California Energy Commission (CARB). (Alternative and Renewable Fuel and Vehicle Technology Fund - ARFVTF)
  • Approximately $30 million for the AQIP, administered by the California Air Resources Board (CARB). (Air Quality Improvement Fund - AQIF)
  • Approximately $33.4 million for the Enhanced Fleet Modernization Program (EFMP), $30.6 million administered by the Bureau of Automobile Repair (BAR), and $2.8 million administered by CARB. (Enhanced Fleet Modernization [EFM] Subaccount)
    
• Ongoing costs, in the millions annually (fully offset by continued fee revenues deposited into the ARFVTF, AQIF, and EFM Subaccount), for CARB, the CEC, and BAR to continue to administer the AQIP, CTP, and EFMP, and fund the following authorized positions to support those programs:
  • CTP: 76.4 PY within the CEC (there currently 9.4 vacancies).
  • AQIP: 12.0 PY within CARB (there are currently zero vacancies).
  • EFMP: 9.0 PY within BAR, and 5.0 PY within CARB (there is currently 1.0 vacancy within CARB and 1.0 within BAR)

Background:

Existing law, the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007, AB 118 (Nunez), Chap. 750/2007, provided for a temporary increase in vehicle registration fees (+$3), Smog Abatement Fee (+$8), boat registration fees ($10/$20), and special identification plates (+$5) until January 1, 2016 to fund three programs: the Alternative and Renewable Fuels and Vehicle Technology Program (now known as the CTP), AQIP, and the Enhanced Fleet Modernization Program (EFMP). These fees and the programs they support were extended until January 1, 2024 with the enactment of AB 8 (Perea), Chap. 401/2013.

Existing law establishes the CTP, administered by the CEC, to provide competitive grants, revolving loans, loan guarantees, and other financial assistance to specified eligible entities to develop and deploy innovative technologies that transform California’s fuel and vehicle types to help attain the state’s climate change policies. The CTP aims to: 1) expedite development of conveniently located fueling and charging infrastructure for low- and zero-emission vehicles; 2) accelerate advancements and adoption of alternative fuel and advanced technology vehicles, including low-and zero-emission medium- and heavy-duty vehicles; 3) expand in-state production of alternative low carbon renewable fuel; and 4) support manufacturing and workforce training to help meet the needs of the state’s growing clean transportation and fuels market. The program is funded by money collected from vehicle and vessel registration, vehicle identification plates, and smog abatement fees, raising about $110 million each year.

Existing law establishes the AQIP, administered by CARB in consultation with air districts, to provide competitive grants, revolving loans, loan guarantees, and other financial assistance to specified eligible entities to fund air quality improvement projects that reduce criteria air pollutants, improve air quality, and provide funding for research to determine and improve the air quality impacts of alternative transportation fuels and vehicles, vessels, and equipment technologies. The program is funded from smog abatement fees, vessel registration fees, and vehicle identification plates, raising approximately $30 million annually.

Existing law establishes the Enhanced Fleet Modernization Subaccount within the High Polluter Repair or Removal Account (HPRRA) to implement the EFMP, which was developed by CARB in consultation with BAR, and allows for the voluntary retirement of high-polluting passenger vehicles and light-duty and medium-duty trucks. EFMP is funded by an additional $1 surcharge on vehicle registrations, which provides approximately $33.4 million annually. The EFMP has both a local and state component, administered by CARB and BAR, respectively.

Through August 2021, the CTP invested more than $1 billion and installed or planned 15,154 electric vehicle (EV) charging stations, 83 new or upgraded hydrogen fueling stations, 27 manufacturing projects, 71 projects to promote the production of sustainable fuels within California, provided workforce training for more than 20,000 individuals, and created several new programs and standards. It is difficult to judge the effectiveness or efficiency of these investments given the wide variety of goals and purposes of the program, a fact corroborated by the Legislative Analyst’s Office in a 2018 report on the state’s climate policies.

The biggest AQIP program is the Truck Loan Assistance Program, which helps small business truckers secure financing for newer trucks to meet compliance deadlines for CARB’s In-Use Truck and Bus Regulation. Through June 2022, the program has invested $214 million, with nearly half benefitting disadvantaged communities, and has financed 40,400 clean vehicles and equipment.

The biggest EFMP component is Clean Cars 4 All (CC4A), which provides incentives for lower-income households to scrap their older, more polluting vehicles for cleaner vehicles. A recent study found that over six years, the CC4A spent $90 million and placed 11,000 vehicles in eligible households.

Proposed Law:

SB 84, an urgency measure, would extend the following fees and surcharges until January 1, 2035:

• An $8 increase to the smog abatement fee, with $4 deposited into the AQIF and $4 deposited into the ARFVTF
• A $3 increase to vehicle registration fees, with $2 deposited into the ARFVTF, and $1 deposited into the AQIF.
• A $5 increase to the special identification plate fee (for agricultural and construction vehicles), with $2.50 deposited into the ARFVTF, and $2.50 deposited into the AQIF.
• A $10 increase to vessel fees in even-numbered years, with $5 deposited into the ARFVT, and $5 deposited into the AQIF.
• A $20 increase to vessel fees in odd-numbered years, with $10 deposited into the ARFVT, and $10 deposited into the AQIF.

SB 84 would make the following changes to the CTP:

• Specify that the goals of the program must be to advance the state’s clean transportation, equity, air quality, and climate emission policies, as specified.
• Require the CEC, when developing the annual investment plan on or after January 1, 2025, to ensure that investments support the following:
  • Annually increasing deployment of infrastructure and other projects that advance or support the deployment of medium- and heavy-duty vehicles to meet specified program goals.
  • Annually increasing the deployment of light-duty vehicle infrastructure technology to fill current deployment gaps, and advance the goals of Executive Order No. N-79-20 (100% ZEVs by 2035).
• Require, on and after January 1, 2025, at least 50% of CTP expenditures to be on programs and projects that directly benefit or serve residents of disadvantaged communities and low-income Californians, and at least 50% of the funds for location-based investments to be expended in disadvantaged and low-income communities. A non-exclusive list of eligible categories of projects which could count toward this requirement is specified. CEC would also be required to consult with specified advisory groups to ensure these provisions are implemented.
• Eliminate preferences for projects that: reduce greenhouse gas emissions from gasoline and diesel fuels, use higher blends of alternative fuels, or decrease the discharge of water pollutants.

This bill would also make the following changes to the AQIP:

• Revise the AQIP’s primary purpose to focus on reducing criteria air pollutants in the goods movement sector and improving air quality in nonattainment basins, and removing funding for research as a program purpose.
• Remove from the eligible projects list those that provide research to determine the air quality impacts of alternative fuels and projects, as specified, as well as projects that augment the University of California’s agricultural experiment station and cooperative extension programs for specified research on biofuels and biomass.
• Include precommercial demonstrations of advanced vehicles, engines, equipment, and transportation systems to the specified list of incentives for medium- and heavy-duty vehicles and equipment mitigation.

Related Legislation:

2023-24 Budget Trailer Bill. The Governor has proposed a trailer bill to extend the sunset to June 30, 2035 on the same fees extended by this bill, and make several changes to the CTP.

AB 241 (Reyes), which is currently pending in the Assembly Appropriations Committee, is nearly identical to this bill.

AB 2836 (Garcia), Chap. 355/2022, extended the authority to charge various fees that support the Carl Moyer Memorial Air Quality Standards Attainment Program and the Waste Tire Management Program for ten years, to January 1, 2034.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2023 - 2024 Regular

Bill No: SB 84

SUBJECT: Clean Transportation Program: Air Quality Improvement Program: funding

DIGEST: This bill extends the sunset on specified vehicle-related fees until 2035, and revises the terms of the Clean Transportation Program—one of the largest programs funded by those fees.

ANALYSIS:

Existing law:

1. Establishes, through Executive Order, goals for the deployment of zero- emission vehicles (ZEV), including having 100% of light-duty vehicles sold be ZEVs by 2035 and 100% of medium- and heavy-duty vehicles sold be ZEVs by 2045.

Clean Transportation Program

1. Establishes the Alternative and Renewable Fuels and Vehicle Technology Program (now known as the Clean Transportation Program, or CTP), administered by the California Energy Commission (CEC), to develop and deploy technologies and alternative and renewable fuels to help attain the state’s climate change policies.
   
2. Funding for the CTP program comes from miscellaneous vehicle-related charges including vehicle registration fees, boat registration fees, and special license identification fees. These fees sunset on January 1, 2024. (Health and Safety Code (HSC) § 44272)
3. In administering the CTP, the CEC is required to provide preferences to projects meeting any of fourteen criteria:
   1. Helps transition from the use of petroleum fuels;
   2. Consistency with climate change policy;
   3. Reduces air pollutants;
   4. Decreases the discharge of water pollutants;
   5. Does not adversely impact the sustainability of the state’s natural resources;
   6. Provides non-state matching funds;
   7. Promotes California-based firms and jobs;
   8. Uses existing or proposed fuel infrastructure;
   9. Reduces GHG emissions by at least 10%
   10. Uses alternative fuel blends of at least 20%;
   11. Drives new technology;
   12. Transitions workers to alternative and renewable fuel and vehicle technology sectors;
   13. The project is in a non-attainment area; and
   14. The project advances the comprehensive strategy for vehicles as articulated in the California Air Resources Board’s (CARB) Mobile Source Strategy.
4. Limits CTP funding only to projects that meet any of the following thirteen criteria:
   1. Develop and improve alternative and renewable low-carbon fuels;
   2. Optimize alternative and renewable fuels for existing engine technologies;
   3. Produce alternative and renewable low-carbon fuels;
   4. Decrease the impact of the alternative and renewable fuel life-cycle carbon footprint;
   5. Develop alternative and renewable fuel infrastructure;
   6. Develop and improve technology for all vehicles that provide better fuel efficiency and lower greenhouse gas (GHG) emissions;
   7. Accelerate the commercialization of alternative and renewable fuels;
   8. Retrofit medium- and heavy-duty vehicles for higher fuel efficiency;
   9. Promote alternative and renewable fuel infrastructure development;
   10. Workforce training programs related to technologies that transform fuels and vehicles;
   11. Block grants and incentive programs administered by public entities and not-for-profit technology entities;
   12. Assessments performed by state agencies to determine the impacts of increasing the use of low-carbon transportation fuels and technologies; and
   13. Funding for homeowners to offset costs to supply plug-in electric vehicles.

Air Quality Improvement Program (AQIP)

1. Establishes the AQIP, administered by CARB, with the primary purpose of funding projects to reduce criteria air pollutants, improve air quality, and provide funding for research to determine and improve the air quality impacts of alternative transportation fuels and vehicles, vessels, and equipment technologies. Funding for the AQIP comes from fees on special license identification fees and vessel fees. These fees sunset on January 1, 2024.
2. Requires CARB to provide a preference to projects with higher cost-benefit scores and authorizes CARB to give a preference based on the following criteria:
   1. Reductions in criteria or toxic air pollutants;
   2. Contribution to regional air quality improvement;
   3. Ability to promote the use of clean alternative fuels and vehicle technologies;
   4. Ability to achieve climate change benefits;
   5. Ability to support clean vehicle market transformation; and
   6. Ability to leverage private capital investments.
3. Limits eligible projects to the following:
   1. On- and off-road equipment projects;
   2. Projects that provide mitigation for off-road gasoline exhaust;
   3. Projects that provide research to determine air quality impacts of alternative fuels;
   4. Projects that augment the University of California’s agricultural experiment station and cooperative extension programs;
   5. Incentives for small off-road equipment replacement; and
   6. Incentives for medium- and heavy-duty vehicles and equipment mitigation.
4. Requires CARB to submit a biannual report to the Legislature evaluating the AQIP.

This bill:

1. Extends the sunset on the expiring fees (smog abatement, vehicle registration, vessel registration, special identification plates) for 11 years, until January 1, 2035.
2. Beginning January 1, 2025, requires the CEC to ensure the CTP supports:
   1. Annually increasing deployment of infrastructure and other projects that advance the adoption of medium- and heavy-duty vehicles; and
   2. Annually increasing deployment of light-duty vehicle infrastructure to fill gaps in current deployment, as specified.
3. Beginning January 1, 2025, requires that no less than 50% of the CTP expenditures shall be on programs and projects that directly benefit or serve residents of disadvantaged communities and low-income Californians, and at least 50% of the funds for location-based investments be expended in disadvantaged and low-income communities. A non-exclusive list of eligible categories of projects which could count toward this requirement is specified. Requires the CEC to consult with specified advisory groups to ensure these provisions are implemented.
4. Revises the CTP by eliminating a preference for projects which reduce GHG emissions from gasoline and diesel fuels, and projects which use higher blends of alternative fuels.
5. Revises the purpose of the AQIP to focus on reducing criteria air pollutants in goods movement and in non-attainment basins, and to remove research as a program purpose.
   

Background

1. California’s transportation emissions. The transportation sector has long relied on liquid petroleum fuels as the primary energy source for internal combustion engine (ICE) vehicles, including cars, trucks, locomotives, marine equipment, and aircraft. Combustion of fossil fuels in vehicles emits significant amounts of GHGs, criteria pollutants, and toxic air contaminants. In 2019, the transportation sector accounted for approximately 50 percent of statewide GHG emissions and thus was by far the single largest source of carbon pollution in the state. In addition, the transportation sector accounted for over 80 percent of statewide NOx emissions and 30% of fine particulate matter emissions, including toxic diesel particulate matter.
   
   While we have made substantial progress over the past few decades, it is clear California must transition away from fossil fuels to zero-emission technologies with all possible speed and pursue policies that result in less driving, to meet its GHG and air quality targets.
   
2. Air Pollution has Disproportionate Impacts. Communities adjacent to congested roadways, including ports and distribution centers, are exposed to the highest concentration of toxic pollutants from vehicles and equipment consuming fossil fuels, leading to a number of demonstrated health impacts such as respiratory illnesses, higher likelihood of cancer development, and premature death. Millions of California residents living in low-income and disadvantaged communities experience disproportionate levels of negative health impacts from air pollution.
   
   Research shows large disparities in exposure to pollution between white and non-white populations in California, and between disadvantaged communities and other communities, with Black and Latino populations experiencing significantly greater air pollution impacts than white populations. CARB has found that mobile sources are the largest sources of pollution exposure disparity for Black populations and disadvantaged community residents. Specifically, mobile sources accounted for 45 percent of the exposure disparity for the Black population, and 37 percent of the exposure disparity for people in disadvantaged communities.
   
   Studies consistently show that mobile source pollution exposure near major roadways contributes to and exacerbates asthma, impairs lung function, and increases cardiovascular mortality. Unfortunately, these communities are often low-income and communities of color. Individuals living in communities located near ports and freight hubs are also subject to higher cancer risks than surrounding communities due to their increased exposure to high quantities of diesel PM. Sadly, children living in these communities are also unduly burdened by adverse health impacts. Increased exposure to vehicular traffic pollution has been associated with a number of adverse childhood health impacts, including slower lung development, increased symptoms and medication use in asthmatic children, and even increases in the development of asthma in children.
   
3. What have these programs delivered? Through August 2021, the CTP invested more than $1 billion and installed or planned 15,154 electric vehicle (EV) charging stations, 83 new or upgraded hydrogen fueling stations, 27 manufacturing projects, 71 projects to promote the production of sustainable fuels within California, provided workforce training for more than 20,000 individuals, and created several new programs and standards. It is difficult to judge the effectiveness or efficiency of these investments given the wide variety of goals and purposes of the program, a fact corroborated by the Legislative Analyst’s Office in a 2018 report on the state’s climate policies.

The biggest AQIP program is the Truck Loan Assistance Program. Through June 2022, the program has invested $214 million, with nearly half benefitting disadvantaged communities, and financed 40,400 clean vehicles and equipment.

The biggest Enhanced Fleet Modernization Program (EFMP) is Clean Cars 4 All (CC4A), which provides incentives for lower-income households to scrap their older, more polluting vehicles for cleaner vehicles. A recent study found that over six years, the CC4A spent $90 million and placed 11,000 vehicles in eligible households. Dollar-for-dollar, CC4A is less efficient than other incentive programs, but that is because of the high-engagement approach deemed necessary to work with applicants in underserved communities.

Comments

1. Purpose of Bill. According to the author, “The transportation sector is the single largest contributor of emissions in California, and decarbonizing this sector will require consistent and long-term funding commitments to spur the transformative changes that are needed to meet our ambitious climate and air quality goals. Over the last fifteen years, the Clean Transportation Program, the Air Quality Improvement Program, and the Enhanced Fleet Modernization Program have proven themselves as some of the most important and transformative programs in this statewide effort. Unfortunately, the dedicated funding that supports these programs will sunset on January 1, 2024, leaving these critical programs unfunded and unable to continue to help support our zero emission transition. SB 84 will ensure these important state efforts do not cease to exist, by extending the existing fees that fund the programs, at their current levels, through 2035. The bill will also make programmatic changes to ensure investments in clean technologies continue to be effective, equitable, and in-line with current greenhouse gas and pollution reduction goals. This includes requiring 50% of the Clean Transportation Program funds to be spent on programs and projects that directly benefit or serve residents of disadvantaged and low-income communities.”
   
2. Hydrogen: close second or also-ran? The only groups who have registered their opposition to this bill are the California Hydrogen Business Council, and the California Hydrogen Coalition. According to their letter, hydrogen infrastructure only receives 4% of the state’s ZEV infrastructure funding.
   
   Moreover, the CEC’s 2022-23 Investment Plan Update for the CTP anticipates that between public and private investments California will meet the goal of 200 hydrogen refueling stations (called for in Governor’s Executive Order (EO) B-48-18). These 200 stations will have sufficient capacity to serve 273,000 fuel cell vehicles. Automakers expect to have 65,000 light-duty fuel cell electric vehicles (FCEV) on the road even in 2028, so station capacity should not be a near-term barrier to light-duty fuel cell vehicle deployment once these stations are operational. However, increasing numbers of medium- and heavy-duty hydrogen vehicles could create greater demand for greater volumes of the fuel. The extent of this demand for hydrogen trucks, buses, and off-road vehicles will be assessed this year by the CEC, pursuant to SB 643 (Archuleta, Chapter 646, Statutes of 2022).
   
   In light of this—and before the SB 643 report has been published—the hydrogen industry is asking for 30% of CTP funding annually, the only industry-specific set-aside in the program. For comparison, the post-2014 CTP has had a fixed 20% set-aside for hydrogen, which this would expand substantially. This is, briefly, to shrink the ever-growing margin between EV and FCEV vehicle numbers. But should hydrogen vehicle numbers catch up to EVs? According to CEC sales data for 2022, hydrogen vehicles only comprised 1% of ZEV sales, but is the discrepancy between the two simply the result of market and consumer preferences? At what point does earmarking CTP monies for hydrogen stop being about helping hydrogen catch up, and start being an ineffective use of limited state resources?
   
   In allocating CTP monies each year, CEC relies on an Advisory Committee that was established to provide advice and guidance to the CEC and to serve as a forum to consult on matters relative to developing the CTP Investment Plan. The Advisory Committee is composed of a range of policy, technology, public health, and environmental quality experts—including those with ample knowledge of FCEV technology. In the interest of not tying the hands of the Advisory Committee and the CTP in deciding each year what the highest and best used of CTP funds is, it is committee staff’s opinion that a ten-year, 30% set-aside for hydrogen would not be desirable.
   
3. Shifting focus from GHGs. SB 84 expands the emphasis for the CTP from “attain[ing] the state’s climate change policies” to also include “reduc[ing] criteria air pollutants and air toxics.” This deserves further consideration. When we address emissions from any sector, we must be cognizant of the problem we are trying to solve. Is the desire to mitigate GHG emissions and slow (or even stop) global climate change? Or is it to reduce harmful air pollutants that affect local communities? Both are laudable and important and fortunately, both can be addressed simultaneously by shifting to zero-emission technology. However, the latter—air pollutants like diesel particulate matter or smog-forming ozone—have a much more immediate and geographically distinct impact than reducing GHG emissions.
   
   As described in the background, the communities in California that are the most burdened by air pollution from transportation are suffering real, debilitating health impacts today. Thus, it seems entirely appropriate to ensure CTP is not myopically focused on reducing GHGs but explicitly considers criteria air pollutants and air toxics as well. Again, when the entire state is running on ZEVs, both twin goals will be achieved to our best ability.
   
   However, until then, tough decisions and prioritizations need to be made about how, when, and where the state spends its limited climate and transportation dollars. Between making criteria air pollutants and air toxics explicit emphases in CTP and ensuring at least 50% of CTP monies directly benefit or serve residents of disadvantaged and low-income communities and low-income Californians, SB 84 represents a concerted effort to ensure those decisions are made in a way that advances environmental justice for the most pollution-burdened Californians.
   

DOUBLE REFERRAL:

This bill was heard by the Senate Transportation Committee on April 11, 2023, where it was approved on a 10-4 vote.

Related/Prior Legislation

Budget Trailer Bill – The Governor has proposed a budget trailer bill to extend the sunset of the existing CTP at the existing funding level until July 1, 2035, with minimal programmatic changes.

AB 241 (Reyes) of 2023 is identical to this bill. This bill is pending in the Assembly Transportation Committee.

SB 726 (Gonzalez, 2021) sought to require the development of a comprehensive transportation sustainability strategy and requires CARB to set a GHG reduction target for the whole transportation sector. This bill also revises and recasts the CTP, as specified. SB 726 died on the Assembly floor.

AB 1389 (Reyes, Chapter 339, Statutes of 2022) expanded the list of criteria under CTP that a project is required to meet in order to be given preference for funding by CEC to include that the project is in a nonattainment area, as specified, and that the project advances the comprehensive strategy for vehicles, as provided.

SOURCE:

CALSTART

SUPPORT:

Abb INC.
Abode Communities
Bp Pulse Fleet
Byd Motors, INC.
CA Coalition for Clean Air
California Electric Transportation Coalition
California Environmental Voters
Calstart
Chargepoint, INC
Chargerhelp!
Chargie
Electric Vehicle Charging Association
Evbox INC
Evgo Services LLC
Flo
Freewire Technologies
Greenlining Institute
Nrdc
Plug in America
Proterra
Qmerit
Union of Concerned Scientists
Valley Can (clean Air Now)
Volvo Group North America
Xeal
Zeem Solutions, INC.

OPPOSITION:

California Hydrogen Business Council
California Hydrogen Coalition

ARGUMENTS IN SUPPORT:

According to the bill’s sponsor, CALSTART, “Since the CTP, AQIP, and EFMP programs were established, California has developed a home-grown ZEV industry, employing nearly 70,000 Californians in vehicle and infrastructure manufacturing and supply-chain jobs. Without reauthorizing the fees established to support these programs, these clean transportation investments will lose approximately $173M in funding per year and will be left without a stable ongoing funding source, which could have unintended consequences on the state’s job market and economy, and its ability to reach its clean air and GHG reduction goals. This fixed source of funding has been made more important by the recent economic downturn affecting the state budget and general fund appropriated ZEV package.

In addition to ensuring stable funding for these critical programs, SB 84 updates the CTP to prioritize investments in areas of the state where pollution is highest, dedicates 50 percent of funds for disadvantaged and low-income communities, and requires the CEC to consult with the Disadvantaged Community Advisory Group. This measure recognizes the disproportionate harm greenhouse gas emission poses to our most vulnerable communities and seeks to update our clean transportation and air quality programs to ensure that zero-emission transportation is more accessible and equitable in California.

SB 84 allows our state to build on the success of the CTP, AQIP, and EFMP programs by ensuring that state funding will be available in future years to encourage adoption of ZEVs and upgrades to cleaner vehicle technology while prioritizing investments in historically pollution-burdened communities.”

ARGUMENTS IN OPPOSITION:

According to two groups representing the hydrogen industry in opposition, “ We suggest the Clean Transportation Program reauthorization be amended to update and renew California’s committment to hydrogen. Specifically, we suggest the program allocate 30% of program dollars, not to exceed $30M, for a total of $300M to create a statewide and self-sufficient fueling network of 1,000 fueling stations. This allocation is not arbitrary, it aligns with the 2021 Hydrogen Self-Sufficiency Analysis done by the ARB which states, “self-sufficiency can be achieved in most representative scenarios by 2030 with $300 million or less in State support beyond AB 8 (2014).” It also aligns with the ACCII regulation which indicates a minimum of 17% of the zero emission vehicle fleet will be fuel cell by 2035 for a total of 1.7 million fuel cell vehicles - - a figure necessitating well over 1,000 stations.

Hydrogen is a critical part of California’s transition to zero emission transportation. Whether it is the costs associated with a charging-only future, concerns around availability of precous metals, serving the 40% of residents living in multi-family dwellings super-commuters, single-vehicle households, or drivers in larger vehicle classes, a complete transition away from fossil fuels or energy security, hydrogen is a safe, non-toxic, non-greenhouse gas option ready and willing to support California’s energy and transportation transition.”

-- END --

SENATE COMMITTEE ON TRANSPORTATION

Senator Lena Gonzalez, Chair

2023 - 2024 Regular

Bill No: Hearing Date: 4/11/2023

SUBJECT:

DIGEST: This bill extends the sunset on the funding for the Clean Transportation Program and the Air Quality Improvement Program, and revises the terms of those programs.

ANALYSIS:

Existing law:

1. Establishes, through Executive Order, goals for the deployment of Zero Emission Vehicles (ZEV), including having 100% of light-duty vehicles sold be ZEVs by 2035 and 100% of medium- and heavy-duty vehicles sold be ZEVs by 2045.

Clean Transportation Program

1. Establishes the Alternative and Renewable Fuels and Vehicle Technology Program (now known as the Clean Transportation Program, or CTP), administered by the California Energy Commission (CEC), to develop and deploy technologies and alternative and renewable fuels to help attain the state’s climate change policies. Funding for the CTP program comes from miscellaneous vehicle-related charges include vehicle registration fees, boat registration fees and special license identification fees. (HSC § 44272) These fees sunset on January 1, 2024.
2. In administering the CTP, the CEC is required to provide preferences to projects meeting any of fourteen criteria:
   1. Helps transition from the use of petroleum fuels
   2. Consistency with climate change policy
   3. Reduces air pollutants
   4. Decreases the discharge of water pollutants
   5. Does not adversely impact the sustainability of the state’s natural resources
   6. Provides non-state matching funds
   7. Promotes California-based firms and jobs
   8. Uses existing or proposed fuel infrastructure
   9. Reduces GHG emissions by at least 10%
   10. Uses alternative fuel blends of at least 20%
   11. Drives new technology
   12. Transitions workers to alternative and renewable fuel and vehicle technology sectors
   13. The project is in a non-attainment area
   14. The project advances the comprehensive strategy for vehicles as articulated in the California Air Resources Board’s Mobile Source Strategy.
3. Limits CTP funding only to projects that meet any of the following 13 criteria:
   1. Develop and improve alternative and renewable low-carbon fuels
   2. Optimize alternative and renewable fuels for existing engine technologies
   3. Produce alternative and renewable low-carbon fuels
   4. Decrease the impact of the alternative and renewable fuel life-cycle carbon footprint
   5. Develop alternative and renewable fuel infrastructure
   6. Develop and improve technology for all vehicles that provide better fuel efficiency and lower GHG emissions
   7. Accelerate the commercialization of alternative and renewable fuels
   8. Retrofit medium- and heavy-duty vehicles for higher fuel efficiency
   9. Promote alternative and renewable fuel infrastructure development
   10. Workforce training programs related to technologies that transform fuels and vehicles
   11. Block grants and incentive programs administered by public entities and not-for-profit technology entities
   12. Assessments performed by state agencies to determine the impacts of increasing the use of low-carbon transportation fuels and technologies
   13. Funding for homeowners to offset costs to supply plug-in electric vehicles

Air Quality Improvement Program

1. Establishes the Air Quality Improvement Program (AQIP), administered by the California Air Resources Board (CARB), with the primary purpose of funding projects to reduce criteria air pollutants, improve air quality, and provide funding for research to determine and improve the air quality impacts of alternative transportation fuels and vehicles, vessels and equipment technologies. Funding for the AQIP comes from fees on special license identification fees and vessel fees. These fees sunset on January 1, 2024.
2. Requires CARB to provide a preference to projects with higher cost-benefit scores and authorizes CARB to give a preference based on the following criteria:
3. Reductions in criteria or toxic air pollutants
4. Contribution to regional air quality improvement
5. Ability to promote the use of clean alternative fuels and vehicle technologies
6. Ability to achieve climate change benefits
7. Ability to support clean vehicle market transformation
8. Ability to leverage private capital investments
9. Limits eligible projects to the following:
10. On- and off-road equipment projects
11. Projects that provide mitigation for off-road gasoline exhaust
12. Projects that provide research to determine air quality impacts of alternative fuels
13. Projects that augment the University of California’s agricultural experiment station and cooperative extension programs
14. Incentives for small off-road equipment replacement
15. Incentives for medium- and heavy-duty vehicles and equipment mitigation
16. Requires CARB to submit a biannual report evaluating the AQIP.

This bill:

1. Extends the sunset on the expiring fees (smog abatement, vehicle registration, vessel registration, special identification plates) for 11 years, until January 1, 2035.
2. Beginning January 1, 2025, requires the CEC to ensure that the CTP supports:

• Annually increasing deployment of infrastructure and other projects that advance the adoption of medium- and heavy-duty vehicles
• Annually increasing deployment of light-duty vehicle infrastructure to fill gaps in current deployment, as specified.

1. Beginning January 1, 2025, requires that no less than 50% of the CTP expenditures shall be on programs and projects that directly benefit or serve residents of disadvantaged communities and low-income Californians, and at least 50% of the funds for location-based investments be expended in disadvantaged and low-income communities. A non-exclusive list of eligible categories of projects which could count toward this requirement is specified. Requires the CEC to consult with specified advisory groups to ensure that these provisions are implemented.
2. Revises the CTP by eliminating a preference for projects which reduce greenhouse gas emissions from gasoline and diesel fuels, and projects which use higher blends of alternative fuels.
3. Revises the purpose of the AQIP to focus on reducing criteria air pollutants in goods movement and in nonattainment basis, and to remove research as a program purpose.

COMMENTS:

1. Author’s Statement. “The transportation sector is the single largest contributor of emissions in California, and decarbonizing this sector will require consistent and long-term funding commitments to spur the transformative changes that are needed to meet our ambitious climate and air quality goals. Over the last fifteen years, the Clean Transportation Program, the Air Quality Improvement Program, and the Enhanced Fleet Modernization Program have proven themselves as some of the most important and transformative programs in this statewide effort. Unfortunately, the dedicated funding that supports these programs will sunset on January 1, 2024, leaving these critical programs unfunded and unable to continue to help support our zero emission transition. SB 84 will ensure these important state efforts do not cease to exist, by extending the existing fees that fund the programs, at their current levels, through 2035. The bill will also make programmatic changes to ensure investments in clean technologies continue to be effective, equitable, and in-line with current greenhouse gas and pollution reduction goals. This includes requiring 50% of the Clean Transportation Program funds to be spent on programs and projects that directly benefit or serve residents of disadvantaged and low-income communities.”
2. Background. Transportation is the largest source of greenhouse gas emissions in California, about 40% overall. Vehicles are also a major source of air pollution; air pollution from mobile sources is responsible for about 80% of nitrogen oxide emissions and 90% of diesel particulate matter emissions. In 2008 the Legislature established the vehicle-related fees which are the subject of this bill to primarily support climate and air quality programs. Those fees were to have sunset in 2016. In 2013 the Legislature extended the sunset on those fees at the same amount until 2024 in AB 8 (Chapter 401 of 2013). Three programs are funded, the CTP, the AQIP and the Enhanced Fleet Modernization Program (EFMP).
3. How Much? The fee extensions in the bill are $3 in vehicle registration fees, $10 in vessel registration fees, $8 in smog abatement fees, and $5 on identification plates for construction and agricultural vehicles. These fees annually raise about $185 million with most coming from the vehicle registration and smog abatement fees. About $110 million goes to the CTP, $42 million goes to the AQIP, and $33 million goes to the EFMP.
4. What Did We Get? Through August 2021 the CTP invested more than $1 billion and installed or planned 15,154 EV charging stations, funded 83 new or upgraded hydrogen fueling stations, funded 27 manufacturing projects, launched 71 projects to promote production of sustainable fuels within California, provided workforce training for more than 20,000 individuals, and created several new programs and standards.^[1] It is difficult to judge the effectiveness or efficiency of these investments given the wide variety of goals and purposes of the program.

The biggest AQIP program is the Truck Loan Assistance Program. Through June 2022 the program has invested $214 million, with nearly half benefitting disadvantaged communities, and financed 40,400 clean vehicles and equipment.

The biggest EFMP program is Clean Cars 4 All (CC4A) which provides incentives for lower-income households to scrap their older, more polluting vehicles for cleaner vehicles. A recent study found that over six years the CC4A spent $90 million and placed 11,000 vehicles in eligible households.^[2] According to a recent CARB report^[3], the CC4A program is about half as efficient as the Clean Vehicle Rebate Program in terms of cost per GHG reduction or cost per criteria pollutant reduction, though that CC4A program intentionally provides greater incentives because it is targeted to lower-income households who need more assistance.

1. Do This. The bill requires that the CTP focus on light-duty vehicle charging, medium- and heavy-duty vehicle charging and deployment, and equity. This reflects the current major challenges to a successful ZEV transition as the lack of vehicle charging, particularly at the homes of lower-income individuals, is one of the biggest barriers to light-duty vehicle adoption. The cost and availability of medium- and heavy-duty ZEVs is a big problem attracting increasing attention, while the difficulty in building higher-capacity charging stations may be the most serious limitation of all.
2. Equity Emphasis. Many California environmental and transportation policies provide special consideration for disadvantaged communities. California’s Clean Cars 4 All program is only available to low income residents in disadvantaged communities. The Clean Vehicle Rebate Program (CVRP) provides higher rebates for low- and moderate-income customers. The CPUC’s program to subsidize EV charging infrastructure provides higher rebates for low income customers. And the federal government, through its Justice40 initiative, has a goal of 40% of federal investments in clean transportation, transit, clean energy, and climate change go to disadvantaged communities. This bill continues that special consideration and makes it stronger by requiring that at least 50% of CTP funds go to disadvantaged communities and low income Californians.
3. Time for an Update? Many of the provisions in this bill date back almost 10 years to AB 118 in 2014 and in some cases back to the original statute of 2008. But the problems identified in 2008 have gotten far more acute. California has responded with new laws, programs and goals along with substantial resources. Should the programs and funding addressed in this bill be updated to reflect this changed environment? Some issues to consider:
   1. Goal Alignment. Since 2008 we have established much more aggressive goals for zero-emission vehicles and much more stringent regulation of criteria pollutants. Should those goals and regulations be reflected in these programs?
   2. Funding. This bill raises about $185 million annually. Is this sufficient to achieve the goals in the necessary timeframe? This should be considered in the context of the new programs that California has instituted since 2008 (e.g. cap and trade, low carbon fuels), new federal funding, the progress made from the last 15 years of the CTP and AQIP, and state General Fund expenditures. Also, vehicle registration fees, which provide the majority of funding raised by this bill, are regressive. Does this strike the right balance between fairness and equity?
   3. Muddled statute. The CTP statute amended by this bill has been layered upon over the years creating a somewhat muddled mix. It is clear that this bill strongly emphasizes increasing funding for vehicles, particularly zero-emission vehicles, and their associated charging infrastructure, as well as requiring minimum investments to help disadvantaged communities. But this emphasis is in the context of other existing provisions which establish different preferences. Some clean-up will sharpen the statute and provide greater assurance that the resulting program reflects the author’s intent.
4. Opposition. Opposition comes from the hydrogen industry who asks for 30% of the CTP funding annually, for a total of $300 million, which it argues will create a statewide and self-sufficient fueling network of 1000 stations. This request would establish the only industry-specific set-aside in the CTP. It isn’t clear why the hydrogen industry doesn’t believe it would receive reasonable funding from the CTP if left to compete like every other technology.

Battery electric cars are far ahead of the hydrogen competition: In 2022, less than 1% of the ZEVs sold in California were hydrogen. The other 99% were battery electric.^[4] Hydrogen-powered cars are not yet available in commercial quantities in California, nor anywhere the world. The competition for medium- and heavy-duty vehicles is much closer, though one major manufacturer recently said that hydrogen powertrains were 3-5 years behind battery electric powertrains. Like battery electric technology, hydrogen will need government support to become competitive. That support exists. A good example is the $7 billion federal clean hydrogen hub program intended to reduce the cost and increase the capacity to produce sustainable hydrogen. Rather than set aside a specific amount for one technology it may be preferable to leave the funding decision to the CEC who can focus the funding where it is most needed to achieve our goals.

1. Budget Proposal. The Governor’s Budget requests extension of the same fees as this bill until July 1, 2035. Only minor modifications to the programs are proposed, the most notable is limiting the CTP funding to zero-emission technologies.
2. Double Referral. This bill has been double-referred to the Senate Environmental Quality Committee.
3. Urgency. This is an urgency bill requiring a 2/3 vote on the floor.

Related Legislation:

Budget Trailer Bill – The Governor has proposed a budget trailer bill to extend the sunset of the existing Clean Transportation Program at the existing funding level until July 1, 2035.

AB 241 (Reyes) – Identical to this bill. This bill is pending in the Assembly Transportation Committee.

AB 2836 (Garcia; Chapter 355 of 2022) – Extends various fees that support the Carl Moyer Memorial Air Quality Standards Attainment Program until January 1, 2034.

SB 726 (Gonzalez; 2021) – Revises the Alternative and Renewable Fuel and Vehicle Technology Program. This bill died in the Assembly.

AB 8 (Perea; Chapter 401 of 2013) – Extended the sunset on the fees established in AB 118 until 2024.

AB 118 (Nunez; Chapter 750 of 2008) – Established the Fleet Modernization Program, the Alternative and Renewable Fuel and Vehicle Technology Program, and the Air Quality Improvement Program funded by vehicle registration fees, smog abatement fees, vessel registration fees and special identification plate fees.

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

Unknown

POSITIONS: (Communicated to the committee before noon on Wednesday, April 5, 2023.)

SUPPORT:

Abb INC.

Byd Motors, INC.

CA Coalition for Clean Air

California Electric Transportation Coalition

Calstart

Chargepoint, INC

Chargie

Electric Vehicle Charging Association

Evbox INC

Evgo Services LLC

Flo

Freewire Technologies

Nrdc

Proterra

Qmerit

The Greenlining Institute

Valley CAN (Clean Air Now)

Volvo Group North America

Xeal

Zeem Solutions, INC.

OPPOSITION:

California Hydrogen Business Council

California Hydrogen Coalition

-- END --

1. . 2021-2023 Investment Plan Update for the Clean Transportation Program; December 2021; CEC-600-2021-038-CMF. ↑

2. Procedural Equity in Implementing California’s Clean Cars 4 All Program by Pierce, Connolly and Blanco; UCLA Luskin Center for Innovation; May 2021. ↑

3. FY 2022-23 Low Carbon Transportation Investments and Air Quality Improvement Program Funding Plan, Appendix H. ↑

4. California Energy Commission; New ZEV sales in California for 2022: 292,496 battery electric, 50,748 plug in hybrids, 2,574 hydrogen. ↑