Assembly Select Committee on Select Committee on Building a Zero-Carbon Hydrogen Economy

Good afternoon. I'd like to welcome everybody here. Thank you for your interest in attending. This is the second hearing of the Assembly Select Committee on Building a Zero Carbon Hydrogen Economy. And today's hearings, we're going to cover a wide range of topics, but we are under some deadlines, and so we're trying to make sure we, between the first hearing and the second hearing, we've covered at least all the major issues and stakeholders out there.

Our first panel today will focus on biological sources of hydrogen so we can have a conversation about those issues. And our panel before this focused exclusively on the three pillars and whether the three pillars should be adopted or not. We then will do this. I do want everybody to know that we spent quite a bit of time in two hearings last summer talking about biomass week and biogas and just bioenergy in General.

So we've had quite a, the stakeholders have had quite a bit of conversation about this already, just hasn't been in the public eye through an official hearing. And that's why we wanted to make sure we covered some of those points here today. Our second panel will be hearing people from the environmental justice groups, people that are in communities that work directly and have been impacted by energy projects directly in their community. They have requested and want to have some time to present to the public also.

And we really appreciate that. So we have them here. We thought it was important. Our last panel is to deal with, to close the loop from our first panel, where we had sort of a, we should or we shouldn't in terms of the three pillars and the last panel.

And then what we encourage in terms of the comments, although you're allowed to make public comments about anything you want, we've extended the public comments to two minutes because we would like people to begin the process of offering to us any creative ways that we can address industry's concerns with complying with its three pillars and other people's concerns with the need for and the value of the three pillars.

Is there a way we can creatively address that and get a win win, or at least something that both sides can live with in terms of moving forward? And in my mind, that's the real fruitful part, and it's the appropriate sort of ending of two Select Committee hearings in a fairly short period of time. But we have a lot of work that we have to do to discuss bills and moving forward with bills, etcetera. So with that, we're going to go ahead and start this off.

I'll just encourage you folks to make sure you have the microphone pretty close, although this room seems to have better acoustics and better sound systems than others. And our first panel is biofuels. What is the appropriate hydrogen policy approach concerning biofuels? And our first presenter is Julia Levin, Executive Director of the Bioenergy Association. Welcome, Julia. Thanks for being here.

Thank you. And I'm hoping there will be slides, but I'll start talking while we wait. So I am the Executive Director of the Bioenergy Association of California. We have about 100 Members in California, including many cities and counties, tribal Members, public research institutions, community and environmental groups, as well as private companies that are all working to convert organic waste to energy to meet the state's climate change, clean energy, air quality and other sustainability goals.

So I'm going to focus today on why biogenic hydrogen or hydrogen from organic waste and waste biogas should be included in any sort of a renewable or green hydrogen policy. Ls sea next please. So climate scientists agree around the world that reducing methane and other short lived climate pollutants is by far the most urgent thing we can do for the climate. In fact, it's really the only thing that benefits the climate at scale right away.

Everything we're doing to reduce fossil fuels will take several decades, two centuries to begin to cool the climate down, and we just don't have that long left. So we have to focus more on reducing methane, black carbon and other short lived climate pollutants. Next please.

In California that is overwhelmingly about organic waste, 87% of our methane emissions come from organic waste and more than 90% of our black carbon emissions come from wildfires, open burning of forests and ag waste and diesel trucks. And all of these can be reduced or eliminated by converting organic waste to renewable hydrogen and using it in place of diesel. Next please.

So in addition to reducing short lived climate pollutants, biogenic hydrogen is also really important because it's the only form that can provide carbon negative emissions, which we're going to need to reach carbon neutrality by mid century as required by state law. According to Lawrence Livermore, National Lab bioenergy, using only organic waste combined with carbon capture and sequestration can provide two thirds of all the carbon of negative emissions. We need to reach carbon neutrality by mid century and can do so quite cost effectively. Next please.

The Legislative Analyst and the California Air Resources Board have also found that investments in converting organic waste to energy are extremely cost effective. And that's because they reduce methane and black carbon climate super pollutants upstream and displace fossil fuels and provide beneficial co products like compost or biochar. Next please.

Now I'd like to focus on air quality because I think there are some legitimate concerns about biomass combustion. But combustion doesn't generate hydrogen, so we are not talking about burning anything to generate hydrogen here. There's a lot of attention on dairies in California, but the biggest source of air pollution by far in the San Joaquin Valley is not dairies, diesel powered trucks, which cause half of all the air pollution in the San Joaquin Valley.

They're also the largest source of air pollution in the south coast air district, the two most polluted air districts in the country. And if we want to get those diesel trucks off the road right away, we should be generating renewable hydrogen and using it in zero emission fuel cell trucks because we're not going to be able to electrify heavy duty 18 Wheeler trucks that have to go up and down the state and across the Sierras.

This is the most urgent climate solution in both the south coast and the San Joaquin Valley. A close second, though, is wildfires, which are getting worse in California despite the two last wet years. A bad wildfire season can cause as much or more air pollution and climate pollution than the entire transportation or energy sector in California. And a single large wildfire causes thousands of premature deaths from the smoke.

So these are critical air pollution, public health issues that can be addressed by converting organic waste to hydrogen and using it in place of diesel. Next please.

Just how clean is bioenergy? According to the Statewide Association of Local Air Districts, Capcoa and the Placer County Air Pollution Control District and the Air Board has made similar findings. Biomass reduces particulate matter or black carbon by 98 or 99%, reduces methane and other volatile organic compounds by 95% or more, and reduces nox or smog forming pollution by 40% to 70%. And that's when you combust the material or the biogas.

If you use a non combustion conversion technology and then use the hydrogen in a fuel cell or a linear generator, you have virtually no emissions. This is really the holy grail for energy. Next please. So this is my last slide.

So this is a slide based on data from UC Davis and Lawrence Livermore National Lab, of how much organic waste California generates each and every year. And to sum it up, we produce enough technically available organic waste every year to replace about 4 billion gallons billion with ... of gasoline or diesel. That's all the diesel on the road and all the diesel backup generators.

And by far the most beneficial thing we can do with it is convert it to hydrogen, which you can use in a non combustion conversion technology. It's an enormous opportunity. And I just want to underscore one last thing. The distinction between the blue lines and the green lines. The blue lines is digestible. Waste can be anaerobically digested, which produces biomethane or converted to compost. But you can see the green lines are where the really big quantities come in.

And that requires other non combustion conversion technologies like gasification or pyrolysis, which are not combustion. They're very high heat. And one of the benefits of using that very high heat is it destroys PFAS. Chemicals. Chemicals another serious threat to human health. So there are just enormous benefits of doing this the right way, but it is critical that we do it the right way. And so we do think there needs to be environmental safeguards, like no trees cut down for the primary purpose of energy.

We should not be growing food crops for the sake of energy. We should set a lifecycle, carbon intensity. And there are other environmental safeguards that we need to establish in California. But the opportunity here, and the benefits are enormous. Thank you.

Wow. Right on time, too. I'm going to pause this hearing for a minute because.

Thank you. Alrighty. Thank you very much, Julie. And I'm sorry that we had a little bit of that distraction while you were on your presentation, but we're going to jump over now to Jamie Kurtz from the leadership council. All right, Jamie Katz. I'm sorry, not Kurt.

Perfect. Thank you so much. Yes, Jamie Katz. My pronouns are she or they. I'm a Staff Attorney with Leadership Council for Justice and Accountability.

Move that microphone in front of your mouth.

oh, of course, yes. Jamie Katz. She or they pronouns. Staff Attorney with Leadership Council for Justice and Accountability. I appreciate the opportunity to speak to the Committee. Today I'm going to explain why factory farm gas, otherwise known as dairy biomethane, is harmful to the climate and nearby communities, why it is expensive and inefficient, and why we don't need it to produce hydrogen. We work alongside the most impacted communities in the San Joaquin and eastern Coachella valleys.

Of particular relevance today, we work alongside a number of communities like Pixley and Planada, near some of the largest dairies in the state and the country. Residents of these communities live in the most polluted air basin in the country, and far too many communities and households in the San Joaquin Valley lack access to clean drinking water as a result of nitrate contamination and overdrafting. A major contributor to these environmental injustices are the large factory farm dairies with thousands, sometimes tens of thousands, of densely confined animals.

Their massive operations are also major sources of methane emissions. For context, 2000 cows produce approximately the same amount of fecal waste as a City of 1 million people as of 2022. 2000 cows is now the average size of a dairy in the San Joaquin Valley. That manure, and specifically the decision industrial dairy facilities have made to concentrate and liquefy that manure, provide the feedstock for factory farm gas by creating methane.

Factory farm gas has been subsidized by hundreds of millions of California public dollars in recent years, including $230 million from CDFA, $383 million from the PUC, $25 million from the CEC, as well as funding from the Aliso Canyon mitigation settlement and the Low carbon fuel standard. As a result, there's been a rapid build out of digesters and biomethane infrastructure and an acceleration of dairy herd concentration around this infrastructure.

The recently released USDA agricultural Census shows an accelerated trend of small dairies closing and large dairies getting larger. For example, the average herd size in California grew by about 13% between 2012 and 2017, whereas the average herd size grew an astonishing 43% between 2017 and 2022. Of particular note, although between 2017 and 2022, the total number of cows decreased in California.

The number of cows in the San Joaquin Valley, where the largest dairies are concentrated, actually increased during the same period when subsidies for digesters were accelerating. Industry advocates would have you believe that the production of factory farm gas would allow factory farm dairies to maintain its business as usual operations, all while addressing methane emissions and even improving local air and water quality. The truth is that the production of factory farm gases only useful for maintaining the status quo.

A status quo where the health and well being of Low income rural communities of colors communities of color is a costly, unjust externality. The production of factory farm gas harms air and water quality, exacerbates dairy's overdraft of groundwater, and people we work with who live near dairies report that digesters do not improve odors or address flies. Studies actually show that digestion of manure exacerbates air pollution and water pollution.

And while there is very little monitoring at larger dairies, especially regarding methane emissions, two recent studies show that dairy digesters emit a significant amount of methane. The process of converting factory farm gas into hydrogen is inefficient and can create even more pollution. For example, one project in Fresno county burns factory farm gas in an internal combustion engine, which generates electricity to power an electrolyzer, which in turn produces hydrogen. Not only does this process lose significant energy at each conversion, it also produces significant air pollution.

Relying on factory farm gas to produce hydrogen will encourage and incentivize large dairies to maintain and expand their herd sizes and their practice of concentrating and liquefying unimaginable volumes of manure and thereby continuing to pollute nearby communities in order to keep polluting, producing methane. We already know what we need to do to rapidly and responsibly build out solar and wind, and to electrify everything that we can where we truly need hydrogen. We can do so with hydrogen produced using solar and wind energy.

That complies with the three pillars. Environmental justice groups spent last year co developing a shared platform on hydrogen, which we would be happy to share with a Committee. Finally, we urge this Committee and all decision makers to not replicate the history of ignoring and sacrificing low income communities of color in your effort to chart a course for hydrogen. We appreciate the opportunity to address this Committee and welcome any future opportunities for you to meet with residents. Thank you very much.

Two speakers on time, right on time. We appreciate it. Pressure's on.

All right. Sam Wade, Director of Public Policy, Renewable Natural Gas coalition, thanks very much for. The chance to provide our input today while my slides are being pulled up, I'll just respond to Jamie briefly. First and foremost, we appreciate your recognition that the state has directed the investment in this dairies to occur for methane mitigation. And because we've directed that money toward these farms, we believe there needs to be a long run place for their gas to be used and hydrogen is a fantastic option for that gas to be used in the long run.

Consolidation in the dairy space is a long run trend that's not driven by abatement strategies like anaerobic digesters. And the state is not just using anaerobic digesters, but also using other technologies to reduce methane from from the dairy sector generally. Finally, EPA has explicitly said in the past that ad does reduce odor from dairies and therefore we disagree fundamentally with the assertion that it does not help with local air quality issues.

So, turning to my prepared slides here just briefly, if I could have the second slide please. We're the National Trade Association for the RNG industry and we represent over 400 Members that work on biogas to power biogas to pipeline quality, renewable natural gas and bio and electrolytic hydrogen producers. Biohydrogen produced from biomass or biogas is an affordable green and yet often overlooked part of the hydrogen equation.

Turning biomass wastes and residuals into biohydrogen can help decarbonize hard to electrify industries, contribute to the circular economy, recycle nutrients and agricultural systems, and help to permanently store carbon either in the soil or in finished products or underground. Next slide please. Biohydrogen can be produced by multiple technologies and from a variety of feedstocks. Julie did a great job of covering sort of the suite of feedstocks that California has, and she already pointed to the Lawrence Livermore work around this. This figure is also from that study.

It basically found that all these feedstocks could be tapped and utilized in some way, potentially as hydrogen, to both simultaneously take care of the methane issues and the forest fire challenges that the state faces, while also potentially grabbing carbon and sequestering it. And that's the important thing that biohydrogen can achieve. That electrolytic hydrogen cannot in most cases is carbon negative performance when fully optimized with storage of carbon in some form.

The wet or digestible organic waste streams that are shown in gray here, as Julia already pointed out, break down to methane in the base case. And capturing this methane is the primary goal of our industry today. The direction from the Legislature under SB 1383 to tackle methane as a potent, short lived climate forcer is the reason that you've seen so much investment into things like dairy digesters in the state. That was smart policy. It should be continued.

But as I mentioned, we need a long run home. It's critical to allow these projects to produce hydrogen or some other form of zero emission energy carrier in the future if direct combustion of methane is to be phased out in the future. Despite its importance as a resource and the current ongoing active investment in the dairy feedstock, it's only a small share of what's shown here on the slide. And yet the investment community is looking at that type of project as an example.

And if we abandon the good work that's already been done there, don't be surprised if you have trouble motivating capital to be deployed to produce hydrogen from some of these other feedstocks. So biohydrogen is. If I could have the next slide, please.

Biohydrogen is currently produced at lower prices than electrolytic hydrogen in most cases, and this is demonstrated by the current mix of hydrogen supplying the fuel cell vehicle fleet in California in 202254% of the hydrogen used in vehicles was from fossil gas, 44% was from biohydrogen and 2% was from electrolysis. And if you can see the trend here, fossil gas has actually increased recently, in part due to Low carbon fuel standard pricing.

So because both electrolysis and biohydrogen are currently struggling to compete with fossil derived hydrogen, we really need more certainty from the State of California on these issues, and also, hopefully, from the Federal Government with respect to the 45 volts tax credit. To be clear, we support electrolytic hydrogen delivered derived from renewable power.

And we believe that electrolytic hydrogen will become more available in the future and will come down in cost significantly, and has the potential to be the largest source of clean hydrogen in the long run. But we cannot ignore the benefits of biohydrogen just because we want to support electrolytic hydrogen. They have different benefits. Electrolytic and hydrogen will be critical for storing solar and wind.

Biohydrogen delivers all the benefits we're already targeting in state law, including methane reduction, reduced forest fire risk, nutrient recycling, and carbon sequestration opportunities. So my last slide is about the three pillars. And I know the Committee here has already heard a lot about those topics, but I wanted to tie the concepts to the gas system, which, you know, these same issues are debated with respect to delivery of renewable gases.

The Department of Energy and other federal experts have long recognized that we do need to think about how to deliver the energy carriers to produce hydrogen, and that the biogas portion of the gas system is important to look at carefully with respect to incrementality or additionality. Well, first, let me say we want to align ourselves with the arches comments to the Federal Government on these topics, which is what is on the slide here. But with respect to incrementality and additionality, we believe that such limits are not necessary for gaseous biogas to biohydrogen.

For example, requiring RNG projects and hydrogen production facilities to come online after or at the exact same time as the hydrogen production facility is simply unworkable commercially because the number of entities involved and the scale involved, most of the RNG projects are much smaller than the hydrogen production facility, so matching those two effectively and triggering them all to come online at the exact same date is very difficult to do commercially.

Also, it's highly unlikely that RNG from existing non fossil uses will be diverted from hydrogen production and back filled with fossil fuels. The existing markets already ensure that that will not occur. Happy to keep going on time matching, but also happy to stop there, I think.

Yeah, your time is up. I think it's appropriate. So let's open this up to questions. Go ahead, Assemblymember.

Thank you Mister chair. First, I want to say thank you for putting this together and the work that you've done and your staff really appreciate that. Gives me an opportunity to learn from the presenters and an opportunity for me to make comments on on what has been presented in front of us. But I do have to present a couple of bills this afternoon, so I'm going to be in and out.

I'll try to be here as much as possible as I can, but I got to go and present a couple of bills first, I think it's important that we acknowledge the hard work that the Administration and stakeholders have put into earn California hydrogen have designation of the $1.2 billion in federal funding I'm very excited about the future of the industry in our state, and I'm hopeful that we can continue to be on this momentum.

I'm optimistic that we can both develop a healthy industry and ensure hydrogen as a valuable tool in California's zero carbon energy future. And I'm glad that we have panel here to talk about the biofuels issue. Thank you for representations, and I'm also excited to learn how we can ensure hydrogen is providing real benefits to the climate and to air quality as well. In particular, I'm curious to learn more about the biofuel to hydrogen conversion.

Again, I appreciate your presentations and what the onset emissions are associated with that process as well. One of the things that we talked a lot about in the last hearing was the three pillars. The three pillars. The conversations we had about the three pillars, which you touched on a little bit.

And to me really, I think that we have to be mindful of the Low income communities and the struggles that we face, because I do represent those communities in the high desert, LA County and San Marino county. But I am hopeful that we can find a balance where these communities also have an opportunity for economic growth. This is going to be a game changer for California, for the communities that you talked about, the ones that I represent.

Not to say that we have to keep on sacrificing those communities with the bad decisions and not providing the resources that they need. One of the things that we lack, I believe, for those communities to be able to thrive, is those economic opportunities. Hydrogen, to me, can be one of those mechanisms to improve the quality of life of those communities. Again, being careful with how we proceed with the hydrogen industry.

The other thing to me that is important is also to mention that without any additional fee, fuel that is green is going to really not make us meet the ambitious goals that the state set to 2045. With me, again, I just want to be thankful for being part of these discussions. Thank you again for doing this. And again, I just am optimistic that we will find that balance where we can address those Low income communities that have been ignored for so long and again.

But one of those reasons why they're ignored is because of the lack of economic opportunity, opportunity for those communities. Again, that is not to say that we have to continue to ignore the quality of life, the environmental concerns, but I want to be able to take the opportunity that we have in California to be able to use the federal funding that's come our way.

And with that, I'd like to thank again and hopeful that we can find that balance where we can support those communities that have been forgotten for so long. Appreciate your comments. Thank you.

Well, and I appreciate the fact that because we have this as a Select Committee, this is all being recorded. And so anything that's covered that you missed, that you're interested in, you'll be able to follow up on and stuff. Okay, then. Miss Levin, I have. Miss Levin, I should say a couple questions for you on your last slide regarding the potential for organic waste. Does that assume all the organic waste becomes hydrogen?

It doesn't assume anything. It's just a presentation of how much technically available organic waste we generate every year. And then I translated that into how many billions of gallons of gasoline is that equivalent to how many standard million standard cubic feet of biomethane and how many kilograms of hydrogen? But it doesn't assume we will use it all. And there are other benefits uses. We're not saying all of it should.

Go to hydrogen, but that's the total potential that's technically available. That's the total potential that is available. Right. And today, how much organic waste. How much organic waste biogas does California use? Do you know?

It's a minuscule fraction of that total potential. The last I looked, it was 15% of our total organic waste.

It was 12%.

15% of our organic waste is used for any beneficial alternative.

Okay.

We still landfill most of it, or it's piled and left to decay. Or piled and burned.

Great. So 85% of it is still available. 85% of it is left to decay. Or. What was the other thing you said?

Well, so if it's urban organic waste, the food waste that we throw away, or pizza boxes that have too much cheese.

So the vast majority of that 85% becomes methane.

Exactly. Or even worse, if it's piled and burned, or burned in a wildfire, it becomes black carbon.

And Mister Wade, do you have any further statistics?

Yeah, I'll just add that I think that the penetration of renewable gas in the gas system is still less than 5%. So the use says a gaseous energy carrier is Low. There's certainly still a significant share that goes to biogas to power or biomass to power.

Thank you. How about once biomass and biogas is put into the pipeline for transportation? Is there any way to differentiate that from the fossil fuel that is in the pipeline?

The first differentiator is the standards to put biomethane in the pipeline are actually far more strict than the standards for fossil fuel gas. It was an unintended consequence of a Bill AB 1900 by former Sami Mangato that was designed to promote in state biomethane. That Bill rightly asked the Air Board and the Office of Environmental Health Hazard Assessment to propose health protective standards, which the two agencies did, but in their report said right up front, we should also be doing this for natural gas.

But we're not required to, and you haven't directed us to. And so we have very, very protective standards. In fact, the airborne in OEHHA just proposed an update, but we don't do that for natural gas. And so it is more clean going in. Once it's in the pipeline, it's methane, it's ... four. So at that point, it's indistinguishable to answer your question.

And then for either of you, and Jim, if you have. I'm sorry, Mister Katz, if you have the answer, but can you enlighten us on how admissions from digesters are currently calculated, reported? Are there admissions from digesters, and are they calculated and reported? Mister Wade?

I can take a first crack at that, sure. So, within the airborne's rules around the incentive rules for this, there's very careful monitoring of the actual methane produced. And there's a utility grade meter that measures how much methane is captured and injected into the gas system. And then there's also an assessment of, of how much raw biogas you captured. And so between those two, you can assess a loss factor, and those loss factors are very Low compared to the amount of methane captured.

So the idea that installing digesters still leak a whole lot is not true, and demonstrated by the fact that we are paid for the amount we inject. So you can clearly see these are effective methane capture tools.

Okay, so, yeah, just to respond to that, I think, first of all, we again, would be happy to produce the studies that show that there's significant methane emissions that continue to come from facilities that have these digesters. In addition, the storing manure anaerobically in water produces more methane than if it's stored in a way where it interacts with oxygen. And finally, just to be clear, although there is sporadic testing, sporadic satellite data, there is not consistent fence line monitoring of these facilities. So we do not, in fact, know what the methane emission profiles are of these facilities. We're basing it on monitoring based on non publicly available data.

So, a couple of points. You mentioned the facilities, and by that, I take it you mean the whole dairy operation? Dairy digesters only deal with the manure. They were not designed to address every issue at dairies. There's still enteric fermentation, which is methane emissions directly from the cow. That's half. There's nothing the dairy digesters are going to do to stop that. That has to be addressed in other ways.

But there is no scientific question that dairy digesters are capturing the vast majority of the methane from the manure, which would not all be aerobically digesting out in the wild. It's in large piles, it's often in open lagoons where, other than the surface, the rest of it is also anaerobic, aerobically digesting. And the methane is 100% going up in the atmosphere. So we know how much, as Sam said, we know how much we're putting in the pipelines.

That is a net reduction in the amount going up in the atmosphere. It's going to generate the same amount of methane. I haven't seen any studies that say we produce more methane this way we capture more, but it's virtually all anaerobically digesting either way. So we need to capture the methane.

So I would say, I mean, one, the methane that's whatever is captured is still used. It's still burned, it's still used in whatever application it's used, and it's still creating emissions from that. And again, the fundamental issues are, one, when you have this much manure in this small of an area, the fundamental issue is how much manure you have versus how much cropland there is. The manure, the digestion doesn't make the manure go away. It doesn't reduce the amount of nitrogen content.

When you apply that manure to, to cropland and it gets into the groundwater and that digestate, when you apply to cropland also continues to emit methane. And again, when you store manure in water, when you store it anaerobically, it produces more than other alternatives. What we need to do is be supporting other ways of dairying that require less concentration of dairy herds and minimizing the anaerobic and liquid storage of manure.

So I heard nearly all of your comments today have been about dairy, and that's your primary focus.

Yeah, that's my concern.

I would just be happy to respond sort of. Generally, there are folks here today who are prepared to provide public comment specifically on biomass. And I would say, although it is not sort of a deep expertise of mine, we have seen through the proliferation of dairy digesters, what happens when you commodify pollution. And we have a lot of concerns.

Thank you. Before we move on, number one, the major criteria that we've had since we began these discussions almost a year ago, but they weren't in Committee hearing format, was that we wanted to make sure that people presented their comments in front of the opposition specifically so we could have this back and forth. And Miss Levin was able to offer.

And that's exactly what we think is the best way for us to develop good policy, is that nobody gets to just make a claim that goes sort of unresponded to because they did it privately in some office or whatever. And you can stretch. We appreciate, and we appreciate the fact that you're willing to do that. So in the spirit of that Members, do you have anything else with this panel before we let them go?

I do. Following up on the discussion, just now I'm a little bit confused. Then are you saying that we're better off not doing anything about the manure, just leaving it there? To me, it's a better approach to utilize the resources that are there. If I can call manure resource to produce hydrogen. The byproducts of creating hydrogen from methane, the manure, those byproducts are then worse than leaving the manure the way that it's been right now.

Sure. No, I appreciate the question. I think it's an important one. I think it's a question of what is the alternative that we're discussing. California has a number of programs to Fund abating methane production from the agricultural sector. So investment in digesters has received an outside share of that funding. But there's also the alternative manure management program there. Incentives for transitioning to pasture based dairies. There are alternatives. I think our fundamental position is one that we should be supporting ways of dairying. That prevent that.

Minimize the production of methane in the first place. Versus creating methane that then we have to capture and identify some use for. That is still going to leak. Going to still. So if you don't create the methane in the first place, then you don't have to address something to do with it. And in addition, in order to capture whatever amount of methane we are. And try to find some beneficial use for it. You are continuing to create local air pollution, local water pollution.

And digesters don't address those issues. They continue. The manure solids that come out of a digester. Are applied to cropland, contribute to 94% of groundwater pollution from dairies. And there's not a way to address that with the way digesters operate.

Thank you. Any other questions? So I'm gonna give each a minute to close. And we're gonna go in reverse order if we can. Mister Wade.

Yeah, sure. Happy to. Thank you very much again for the opportunity. I would say fundamentally I agree that we need to think about these waste as resources. And we have to find a way to turn these waste into fuels. With the minimal amount of environmental impact possible. The choice of hydrogen as an energy carrier is clearly cleaner than the choice of methane in many instances.

And so to be prohibited from ending up in the cleanest energy carrier or one of the cleanest energy would be a real problem from our industry's perspective. The majority of this industry was started to abate methane. And to help control one portion of issues associated with farms. We've never claimed we solve all environmental issues associated with farms.

But we do believe we are contributing to the sustainability of the dairy industry and would like to be able to continue to do so in the long run, especially to the hydrogen economy, essentially. Essentially.

Thank you, Mister Katz.

Thank you so much. I think just briefly, I think there's been a lot of discussion about all of the federal funding that's available to support the development of a hydrogen economy in California. And I think it's important for us to draw our attention to a lot of the concerns and safeguards in the 45 that the treasury released as part of 45 volts, including really significant concerns about the inclusion of factory farm gas as a feedstock for hydrogen.

And I think also, I mean, certainly to the comments that you made, like, we also have tremendous concerns about the diesel emissions contributing to air quality in the San Joaquin Valley, but we think that that's a separate question. Right. We believe that we need to get diesel trucks off the road.

We need to find ways of reducing those emissions, and we don't need to continue the practice of telling San Joaquin Valley communities that they need to live with one source of pollution in order to address another. And we believe that there's a way of transitioning that, whether it be through electric trucks or whatever the future may be, in a way that reduces those emissions. Thank you.

Thank you, Miss Levin.

So I want to close by thanking all of you, especially when you have multiple overlapping hearings today. This is such a timely and critical issue. Every study that has looked at how are we going to decarbonize will, maintaining energy reliability, maintaining our industrial, manufacturing and other sectors, and how are we going to do it in a way that protects communities is absolutely critical. I just want to say I think biogenic hydrogen needs to be included in the debate. Apologies for the cough and my voice.

We do need environmental safeguards as well, and we are happy to talk about those. But there's so many benefits of doing this.

Did she say she was done?

Yeah.

That's not an appropriate way for us to end, but it is how we're going to have to end this. First panel, thank you both very much for being here. And if our panel, two panelists would come on up for the issue of community issues. Right. Thank you for being here and.

You're okay, Miss Levin. And so we have Ari Eisenstadt. I'm the Energy Justice Manager, California Environmental Justice Alliance, which commonly known as CEJA. And Faraz Rizvi, Policy and Campaign Manager, Asian Pacific Environmental Network. And if you will, go ahead and kick us off, Ari.

Thank you so much. My name is Ari Eisenstadt. My pronouns are he himself. And I am an Energy Justice Manager at CEJA. And I think, as you know, family Member Bennett, we represent tens of thousands of low income communities of color. Well, people of color. And I really appreciate being invited here to talk today about hydrogen's impacts on EJ communities. We're deeply committed to decarbonization and mitigating the impacts of the climate crisis, particularly given that the communities we serve are those hit first and worst.

This commitment is backed by collective decades of work by Seha staff and alliance Members to develop and implement policies, regulations and programs that reduce climate warming pollutants and their co pollutants. It's because of this deep expertise that we come here to offer a strong word of caution about hydrogen, and a call to ensure that we do not replicate the disasters of our fossil fuel driven economy.

With hydrogen as a state, we've taken a headfirst dive into completely transforming the economy, while ignoring the people and communities who will be most directly impacted by hydrogen facilities. There is ample data indicating that hydrogen has the potential to cause immense harm. We know that hydrogen is a volatile, extremely flammable gas that is difficult to transport, requires immense amounts of energy and water to produce, and will require hundreds of billions in public investment to make viable.

Even still, I'm not here today to try to dissuade the Legislature from pursuing federal funding for hydrogen, or to say that there is no place for hydrogen in California's future. I am here to encourage you to let environmental justice communities choose for themselves the extent and nature of how hydrogen shows up in their lives. Part of how this happens is in upholding the state's laws and processes like CEQA that ensure that EJ communities have the opportunity to consent to projects far before shovels hit the ground.

Another part of this is giving equal airtime to energy alternatives that aren't hydrogen. This includes properly accounting for the potential of community solar, long duration storage, wind energy efficiency and demand response to solve for the same issues that hydrogen purports to solve. Giving communities agency also involves fully accounting for hydrogen's costs and benefits. And this means a full, publicly accessible assessment of the public health costs, costs, ratepayer impacts, and more of hydrogen infrastructure, which currently doesn't exist.

And if it does, it's hidden behind many different NDAs that arches is erecting as a barrier to public participation. EJ communities have been fighting for truly clean, carbon free energy for much longer than hydrogen has been an option for California. And we're hoping that we can start comparing hydrogen not as much to fossil fuels. But as more to other sources of clean energy, we know that we have to decarbonize.

And so we're hoping that we can start choosing between hydrogen and other clean energies, as opposed to hydrogen and fossil fuels. We see that as not really a part of the debate anymore. We've seen also what happens when the state ignores community Members. We've seen the disastrous consequences of our current energy grid, exorbitant prices, unreliable energy resources, lack of resilience, and toxic pollution, resulting in endless horrors for Low income people of color.

To date, state led and sponsored hydrogen processes like arches have replicated this same unilateral, opaque, and inaccessible decision making that got us here in the first place. So while the EU's three pillars are a good regulatory starting point for hydrogen, they are just that, a starting point. We stand at a unique moment in the energy history of California, the United States, and the planet.

And so if you had a time machine and could go back to the 1930s, when oil wells were dominating the California landscape, what would you have done? Would you have continued to fight for fossil fuels and sacrifice the planet and people? We have the opportunity right now to build a just energy future and correct that course. But to do that, we need community choice at every level of the hydrogen process.

We can either deregulate, build fast, and spend the next half century suffering the health and environmental consequences, or we can learn from the past and make space for environmental justice communities to truly consent and build it right. So, in closing, we're hoping that this Committee's charge can be to fully assess hydrogen, not as a standalone technology, but with full consideration of its pollution potential, ratepayer costs, and in direct comparison to other clean options, not just fossil fuels. Thank you.

Anything you can do about our outside noise, please.

Thank you very much for being on time. Our next speaker.

Yeah, Faraz Rizvi from APEN Asian Pacific Environmental Network. Ari really kicked us off and has articulated so many things that I've always also will be echoing. I'm really grateful for being asked to come here and speak about the community's concerns and issues regarding the use of hydrogen in California's climate future. It's clear no secret that environmental and environmental justice organizations are really concerned about the implications of hydrogens for the community we represent.

And we welcome this Committee's willingness to explore these issues and begin the conversation for the relevant regulatory framework that maximizes both emissions reductions and community protections. The reality is oil and gas companies want us to believe that hydrogen is some kind of magic climate solution. But the truth is, is that the primary function of hydrogen today is to produce more fossil fuels.

Currently, 95% of all hydrogen is produced from fossil fuels like oil, coal and fracked gas through a carbon intensive and polluting process called steam methane reforming. 70% of the hydrogen produced in the United States is specifically used to refine petroleum. When hydrogen is produced and used this way, it emits a huge amount of carbon dioxide and also particulate matter, nitrogen oxides and other toxins that cause serious health issues for people living nearby.

From Richmond to South LA, APEN brings together families and neighbors who live alongside the state's biggest oil refineries to fight for clean air and a healthy future. Our kids attend preschool and elementary schools on the fence line of refineries, and so many of them have asthma that at recess, teachers hand out inhalers like they hand out snacks. Our communities have seen firsthand that when oil refineries expand to produce more hydrogen, it means even more pollution and health issues for our families.

For example, in Richmond, the Chevron refinery brought new dirty hydrogen units online in 2018. Since then, residents have experienced record breaking levels of flaring. For the past three years, Chevron's flaring has dumped 52 to 63 tons of sulfur dioxide into the air annually, a pollutant that stinks of rotten eggs and exacerbates respiratory issues for people living nearby.

Right now, oil and gas lobbyists are walking the halls of Congress and lobbying federal agencies to funnel even more money from 45 volts tax credits and other federal investments to expand dirty fossil hydrogen.

Together with Big Ag, the oil lobby is rewriting internationally accepted definitions of green hydrogen and demanding that dirty fossil hydrogen be allowed to claim the highest tier of 45 volts tax credits and attempting to lock in Low projections for methane leakage that allow their dirty energy projects to claim full decades of subsidies, regardless of whether their actual on the ground projects ever meet these projections. In California, we have an opportunity to set the standards and protect our communities.

As billions of dollars, as billions of federal dollars pour into our state to Fund hydrogen projects, we can ensure that our public funds are used to to build a truly clean hydrogen economy that is end to end zero emission. We have to reject oil executives attempts to use accounting gimmicks and loopholes to leverage dollars from public hydrogen subsidies to Fund dirty fossil hydrogen projects. We especially need near term targets to ensure that demand for retail hydrogen does not outpace clean hydrogen production.

And we must set strong standards to protect the air, land, water and bodies of millions of Californians. So that's on production. There are also concerns on delivery and storage. As Ari said, hydrogen is highly explosive. It's also the smallest particle in the universe, making it very prone to leakage. In July of 2023, the first hydrogen fueling station in Bakersfield exploded, destroying an entire bus while it charged. That does not create an illusion of safety for our communities.

We believe that this community has an essential duty to build consensus with frontline communities on relevant safeguards and protections. And while this panel is a step in the right direction, it's imperative that hydrogen projects themselves include robust community engagement processes. Recent efforts at Seqa streamlining for hydrogen infrastructure are deeply concerning and highlight the fears our organizations have about the absence of health, safety and environmental concerns about hydrogen infrastructure.

To add to this, the well documented lack of transparency around projects included in the Arches hydrogen hubs programs confirms our suspicions that industry tends to leave communities to, such as refinery communities in the Bay Area and LA or dairy digester adjacent communities in Central California, completely out of any conversation about hydrogen. This erasure can replicate the environmental injustices of the last century's reliance on fossil fuels, leaving out residents whose lives, communities, jobs and health will be most directly impacted.

The same industry that spent decades denying climate change is even real are now convincing decision makers that this technology hasn't, which has an immense carbon footprint, is a missing ingredient for our climate goals. And I know I'm at time, but I don't think in these five minutes I've been able to exhaustively articulate the sheer volume of community concerns. But we really want to frame this as a starting point to begin those conversations. Thank you.

We appreciate that every panelist is completely frustrated by a five minute time limit in terms of their presentation, and there is nobody contending that everything we need to present is going to happen in these hearings.

But it does get you and your basic comments out into the public for somebody who watches this either now or later and does allow an opportunity for those conversations to continue. So we encourage you to not view this as the only opportunity. I do have a question for you. You repeatedly made the comments about having the community be involved, and could you give us 60 seconds of the key elements of community involvement with hydrogen that you think are most important?

Sure. Yeah. And I think Firaz would also probably be very well equipped to answer this question, given that APEN does direct community organizing. But I can give a. I'll give a little 30 second and then hand it over to Firaz. I think part of it is making sure that communities know everything there is to know about a project while it's in the proposal phase.

One of the things that has been extremely difficult with arches, which I think many of us see as the number one place where hydrogen is being implemented right now, is that we can't find out anything about it unless we sign an NDA that basically prohibits us from talking to community Members about what we learn. And that's a way to really stifle direct community engagement, and it's been very effective.

We don't know very much at all, and so we don't know where projects are going to be, what they're going to look like, what the pollution burden could be from those. And that means that communities can't actually participate in those decisions. And so we have our own ways of doing community organizing where we try to bring community Members to decision making spaces and try to bring decision making spaces to community Members. But that can't happen if we're not allowed to do our jobs.

And so one of the things that we really are hoping for going forward really appreciate that you've helped facilitate a family Member is this type of transparency between decision making spaces and folks like us, but also directly with community Members, who we much prefer that they speak for themselves than speak through advocates like us.

So I'll turn to you, give us a minute or so on what you think are the most important steps we need to do to protect the communities that you're specifically trying to protect.

Yeah, I mean, I think that's an excellent question. And I think there are a number of things that are really important. And, you know, as Ari, you know, suggested with arches, there's lots of concerns about, you know, how private those pro those programs are.

I think recently what I uploaded in my comments, the potential for CEQA streamlining, we actually do need robust environmental processes to make sure that, you know, they're from end to end, that there isn't pollution that's coming to our communities, that there is actually protections in terms of delivery and storage. And I think these need to be communicated. We need to make sure resources are handed out to communities that are bilingual.

You know, for example, a lot of the communities that we represent, you know, are Mandarin speaking and speak other languages. So making sure that there is culturally sensitive outreach as well, and, you know, making sure that there are plenty of touch points for communities to have relevant stakeholder conversations and give public comment.

So I think there are a number of robust processes, and, you know, there is a kind of, you know, duality between wanting to scale this up very quickly and also wanting to make sure that communities are consulted, that there is a level of consent into which, you know, how these are going to impact them. What are the mitigation efforts for any potential pollution, and, you know, even, for example, making sure that the benefits from these projects are going to communities that are going to house them. How are we benefiting the communities in South LA, in Wilmington that are going to be, or in Richmond that are going to be ground zero for a lot of these projects?

Great assemblymember anything? You're both very articulate spokespersons for your groups, and I mean that sincerely really appreciate the beginning of conversations with you and hope we can continue to have those conversations as the search for the right hydrogen policy for California continues. So thank you both very much. I'm going to give you both 1 minute to close.

Sure. Thank you so much. Just really want to close to. By echoing what Firaz just mentioned about the places where these projects are going to happen, we've started finding out, you know, through, through the grapevine trickles of projects that are beginning, some in tribal communities, some in the communities that we work with, some, you know, in the central valley that Jamie works with.

And at that point, while there's stuff that we can still do to support, it's a little bit too late, you know, for real community consent at that point, we're sort of grasping at straws, you know, putting together community benefits agreements which are only meant to account for harm that happens in the first place. We want to make sure that communities get to decide if that harm occurs at all and not then are in the process of having to negotiate for their safety.

And so one of the things that we do know is that communities want resilience against things like blackouts. They want pollution burdens eliminated, not just reduced marginally. And so those are the types of things that we're going off of and that we want directly compared to what hydrogen has to offer to make sure that community choice is actually a part of the conversation.

Thank you very much. And your close?

Yeah, I think I really want to spend some time talking about the fact that, you know, I think there's this impression within the Legislature that hydrogen is, you know, inherently a clean climate solution. You know, because, you know, fuel cells don't really have emissions from them. And I think what I really want to stress is that this is actually, this obscures the reality of hydrogen market right now. And that hydrogen is actually deeply embedded in the fossil fuel production chain. It's not something in the future.

It exists right now. And how we use utilize this from taking it from the fossil fuel production chain into these end uses, how we scale that market up, is going to really impact our communities. And so we need to be clear that if we're going to use hydrogen for California's climate future, we're not doing so in a way that's going to continue to extend so much of this infrastructure that is the legacy of fossil fuels for the last century.

Thank you both very much. Really appreciate it. All right, we'll move on to our next panel. So we didn't switch over to NRDC.

That's right. That's right. Hello. I want to thank you both for being here and welcome the fact that as the day has moved on, the crowd noise outside has diminished. So this panel, panel is creative policy solutions to achieve the goals of the three pillars. And as I described early in my introductory comments, the goals of the three pillars.

The ultimate goal of the three pillars is trying to make sure that California ends up with the right portfolio of renewable resources and it doesn't get skewed by anything but hydrogen policy in particular. So any creative way that we can get there would be great. We're honored to have Miss Janice Lin, the founder and President of the Green Hydrogen Coalition, to kick this off. Here's Lin.

Thank you, Chair Bennett. Thank you, Committee Members. My name is Janice Lin. First, a quick intro. The Green Hydrogen Coalition is an independent, educational nonprofit and our mission is to accelerate the realization of green hydrogen production and needed infrastructure to achieve economy wide decarbonization. I want to emphasize, especially on the heels of the last panel, that our goal is to displace fossil fuels at scale as fast as possible.

I'd like to thank all of you for your leadership in clean energy, for hosting these hearings, and for recognizing the important role of renewable hydrogen going forward. So on the three pillars, our hydrogen economy needs to be implemented with climate integrity. I think we can.

I didn't hear that.

Implemented with climate integrity. This is something we can all agree on, and that's why the concept of three pillars exists. For our hydrogen economy to displace large volumes of fossil fuels, we need to scale it. And this requires the concurrent development of production at scale transport, storage and multisectoral end use without visibility into affordable delivered hydrogen. Renewable hydrogen at scale. Users of gasoline, diesel, natural gas, they're just not going to switch.

Getting this ecosystem started is really hard, and I'd like to thank you for your recognition of the importance of the power sector in getting us going. The Green hydrogen coalition supports climate integrity and the intent of the three pillars for the country as a whole. The question is, how do we get there? Importantly, it must be implemented in a practical way and phased in over a long period of time to avoid constraining near term progress as our renewable hydrogen economy is just getting started.

We also recommended to treasury that the three pillars must be implemented in a way that considers the policy context of various states. There is a huge amount of diversity of states across the US nationally. Our efforts to ensure climate integrity on the production side also has to be balanced. And with our overarching goal for how to accelerate the displacement of fossil fuel use on the end use side. That's where we're going to get our air quality improvements.

And this cannot happen overnight because of the scale of our fossil fuel use. Three pillars is fundamentally about achieving climate integrity, and I believe the goal for this panel is how to do that in California. And as a californian, I just want to say I'm really proud to be part of California and for our leadership, that's happening already. We are already very far along in decarbonizing our grid through our RPS and SBC.

I'll note that these policies already embody many of the principles of the three pillars. Additionality, deliverability and time matching are already a fundamental part of our power sector goals. Indeed, we will need, as you've recognized, renewable hydrogen to get to that last 10%. It's for this reason that we recommended to treasury that any region with clean grids should be exempt from additionality requirements or the EAC's energy tribute certificates should be reduced. Treasury should report first movers and not punish them.

Many regions with high renewable penetration are already experienced significant curtailment. We should be using finding ways to encourage the use of this curtailed renewables, and we can do that through book and claim even the European Union. Their directive allows for grids with high renewable energy content to be deemed renewable. California is also a leader when it comes to transportation fuels. CARB's LCFS program is a super effective program to defossilize the transportation sector.

We support CARB's quarterly matching approach and indeed recommended that to Treasury as a great way to. As a great model to move forward. The three pillars are being proposed at the federal level primarily to avoid unintended consequences nationally. From a market development standpoint, we think the final rule should be implemented by the Treasury as part of the rules for their incentive program, and we believe that our existing policies and mechanisms already ensure that any electrolytic hydrogen produced here will be clean and cleaner over time.

We are already a role model for the rest of the country. So the debate that we have on the three pillars is a national debate about whether to force compliance sooner and or selectively on one load because of our existing clean energy policy with the RPS and SB 100. That's why we don't need three pillars to be applied to fast growing loads like AI data centers, battery electric vehicles. And we think in the near term, we don't need it for electrolytic hydrogen production either.

So for this reasons, we respectfully also offer the suggestion that we think it would be a mistake to preemptively implement additional three pillars guidelines in state law, because our worry is it would disadvantage California vis a vis the incentive program that's being rolled out nationally and likely push production outside of the state. It would push the benefits, the economic benefits, the job creation, and put the pollution reduction benefits on the end use farther out of reach. We think arches does have a great plan for how to get started. And based on time. Okay.

And based on. Go ahead. And based on ...

Two sentences. So, based on their analysis, which was done by third parties, and objectively that the three pillars would limit the amount of diesel, we can displace something on the order of 18.77 million gallons per year, which would be combusted. And that's just at the ports. So I'll just wrap by saying it's super important that all of us align on our goal to end fossil fuel use. And that starts by accelerating the development of a scalable, reliable renewable fuel alternative. Thank you.

Thank you very much. And our next speaker is Miss Katelyn Roedner Sutter, California State Director of the Environmental Defense Fund.

Thank you very much. Appreciate you inviting me here today. It's good to be with you all. I am Katelyn Roedner Sutter, California Director for Environmental Defense Fund. I think you are familiar with EDF, so I won't go into background at this point. I guess I will just start by sort of underscoring the importance of the outcomes that are supposed to be achieved through the three pillars. Hydrogen, of course, has immense potential as an important climate solution in certain hard to decarbonize sectors.

But in order to maximize the potential climate benefits, it matters how it is produced, how it's managed, and how it's used. And I know we're talking about production today, but that entire value chain matters when we think about the role of hydrogen in a decarbonized economy. One of the most important factors, and I'm thinking here specifically, of course, about electrolytic hydrogen. One of the important factors for determining the climate impacts of electrolytic hydrogen is the sourcing of electricity. It's, of course, a very energy intensive process.

EDF has done extensive research on this, and our latest peer reviewed research demonstrates that without additionality or as I will get into policy that is intended to avoid increased emissions, hydrogen can, in fact cause system wide greenhouse gas emissions to be significantly higher relative to the fossil fuels that we're replacing. So all of this is to say, is the focus on emissions really matters? And that is what the goal of three pillars is, is to make sure that we are reducing emissions and not increasing emissions.

I'm not gonna rehash all of the arguments that we've had about three pillars. Your first hearing was excellent and covered a lot of ground on that. So all I will say is it is a framework really designed to maximize climate benefits. And Janice mentioned the EU experience, and I think that demonstrates that that framework is certainly feasible.

All of that being said, and remembering our goal is about emission reductions, there is some potential for alternative approaches to three pillars that could, under very certain circumstances, achieve the same outcome of ensuring we do not see increased power sector emissions.

You know, we've talked a little bit about curtailments and other approaches, but what I am going to talk about is an alternative to the incrementality requirement based on state emission cap, so economy wide emission limits that can demonstrate their effectiveness at preventing increases in greenhouse gas emissions. California is pretty unique here in that the centerpiece of our climate policy is an economy wide emissions cap established under AB 32.

Tying hydrogen eligibility to a stringent state emissions cap could achieve the same outcome as the incrementality pillar, that is, ensure ensuring system wide emissions do not increase as a result of hydrogen production. The incrementality requirement itself, within three pillars, is a proxy for determining that generation used for hydrogen electrolysis would not have otherwise existed.

But it's not a perfect proxy because it cannot ensure that future clean generation capacity that would have otherwise existed to serve other grid connected end uses is not then in the future diverted to hydrogen electrolysis, whereas an effective stringent state cap could provide an alternative mechanism to prevent against that. There are some qualifications to this, though. First is this applies to an emissions cap which is different from a clean energy standard or renewable portfolio standard, integrated resource plans, all of that.

Those are all important, but they don't provide the same assurance of emission reductions because there is not an emissions limit and emissions is not the metric of those policies. An emissions cap is fundamentally about declining greenhouse gas pollution and needs to be sufficiently stringent to ensure that the covered emissions are in fact declining. The second qualification is the deliverability boundary needs to align with the state cap. That is, both the electrolyzer and the electricity procured are covered by the cap.

California deals with this by covering our imported electricity with our emissions cap. And then lastly, leakage risk, that is, the risk of emissions decreasing in California and then increasing outside of California, needs to be mitigated as much as possible. And California does have policy in place that does that in that imported electricity. The importers of electricity must turn in compliance allowances on the basis of their emissions intensity for the imported power. And CARB actually is in the process.

Right now, they have contracted with a third party to do an analysis of our leakage, our existing leakage policy, to see if it's working, basically. So that work is happening already. And I will just wrap up by saying that it's important to remember that the three pillars are not the end goal in and of themselves. The end goal is to ensure that the build out of a hydrogen economy does not increase emissions and increase climate pollution, instead of decrease climate pollution.

And so when we have robust and ambitious policy in place that can ensure that emissions do not increase, that should be considered, along with further modeling and analysis and all of that, and assuming it is sufficiently stringent and durable and minimizes leakage, California's emissions cap could potentially fit the Bill.

Thank you both very much. And I want you to know that we welcome, if you have a thought about something that somebody, but either one of you have said, feel free to offer that in terms of comments as we're doing these questions and questions and answers, etcetera, because our goal is try to get as much good thinking out there as possible, and again, make sure that comments are made in an environment where they can be countered by the opposition.

So I'm going to start with you, Miss Lin, and that is, I appreciate that you said you align yourselves with ARCH's. ARCH's position has been to not have the three pillars. You said not adopt the three pillars. In your fairly extensive document that you submitted to the Treasury Department, you actually have some solutions like grandfathering and quarterly matching, etcetera. So since the focus of this panel is on creative policy solutions, you know, we have over here don't do anything with three pillars.

And so to the extent that people align themselves with that, that's fine. And we had a whole discussion about do we or don't we? Right now, if I'd like to focus on. So you talked about grandfathering projects in, and in your document, you talked about, but at some point in time, have hourly matching, be, you know, be the, be the standard and be the requirement. Am I correct? There was a dollar.

Yes. These were our. And we did share our comments with every Member of the Select Committee.

We already have.

Yes. Thank you. So these were comments to the treasury. And our recommendations to the treasury are that, as Katelyn said, that the goals of the three pillars is to reduce emissions and to ensure that we don't have unintended consequences. On a national basis. And we also had a pretty extensive section that not every state should be treated the same. There are states out there that still rely on a lot of fossil fuels in their power sector. So we need to have a level playing field.

First of all, we don't. Ideally, the way we see it is that renewable hydrogen will be one of the world's most traded commodities. So the more we can harmonize, especially our federal incentive program, around a common eligibility criteria, the better. Just not every state needs to be treated the same. In our comments, we also, we made very strong recommendations about not to reward for punish first movers. Right. It's those first projects that are so hard to get going.

It's so hard to finance a project and to have the rules change in between. That's why we're strongly supportive of grandfathering. For example, in terms of incremental resource. I think just like bluntly saying, is it new within three years is not refined enough. Right. We need to look at was it repowered, was it uprated, was it expanded? We need to consider any curtailed renewable electricity. You know, we've been talking a lot of wind and solar. What about hydro units that have been installed or fully depreciated?

And maybe they are being cycled differently today because of intermittent generation. Would we not be able to use that pre existing resource that's right there in a more effective way? So fundamentally it's about system optimization.

So if I could ask your advocacy for grandfathering in, I assume, is because when people do a project, the logic, I want to check myself in terms of the logic being, well, when they create the project, they want to know, these are the rules that I have to meet for this project. And we should say, we would never, we'd never tighten that up with grandfathering.

We would never be able to go back and say, hey, you now have to move from if you came in under annual matching or if you came under quarterly matching, no matter how good the technology gets, et cetera, or how easy it may become because of technology to do hourly matching, that wouldn't be appropriate from your perspective.

It's our view that it's so hard to finance and get a project developed today that having to plan for that change today, because these are fundamentally capital intensive assets, all the upfront cost needs to be planned for. You need to project your IRR, your cash flow to today. It's really difficult to figure out how to switch that midstream. We don't even have, you know, we had a whole section about not getting ahead of where the monitoring and compliance organizations are. Right.

Like how would you, do, you do have a section on after a certain time period, those projects should have to meet the new standard of hourly matching. Correct. After a certain date. It's like if you're, you're grandfathered in, if you come in at this point at x time, you're grandfathered in.

Yes.

If you come in for new projects after, maybe it's 2030, I don't have the details. But the new project, after a certain date, all new projects would have to be hourly matched.

That's correct. Provided, provided that the monitoring and compliance organizations that need to certify and do this have been in place and have demonstrated that for at least a year. So you have to work out the capabilities.

Sure. And California, being a leader, would probably at some point in time have the agencies that would be able to do hourly matching, I would hope. Right?

Certainly. So California, whatever the Federal Government does with respect to the three pillars, there's a very strong incentive, financial incentive, for any project that's developed here to comply. And it's just hard to say now exactly when those bodies, those compliance and tracking organizations will be ready, will be developed.

But your document did identify that after a certain date, hourly matching would be appropriate. Right. Thank you. If I could go here. You're trying to have the focus be, you're trying to have the focus be on emissions. Let's not get as caught up in all the other stuff, but just bottom line is we have to have verifiable emissions reductions.

And if we're doing it in a way that is actually causing emissions to go up, which is where what some people are concerned about with hydrogen, hydrogen done the wrong way, some people are saying, will cause emissions to go up.

Correct.

Hydrogen produced heavily by fossil fuel would not fit. But can you explain a little bit more how an emissions cap could work?

Sure.

What is it that you, what do you posed in terms of? If there was an interest in that, how would it work?

So I guess let me start by saying I am one of those people who is concerned that hydrogen will actually be harmful to the climate if we don't do it. Right. So I think those are very real concerns, and those concerns exist at every step along the value chain. So I mean, that's, that's a very real concern. Fundamentally, the framework of the three pillars is to prevent on the production side, especially for electrolytic hydrogen, that we aren't creating a climate problem instead of a climate solution.

Recognizing that California does have a significant suite of climate policies. Where. Where are we? Truly, not to make a bad pun, but where is the policy additional? And that's where we started looking at the emissions cap, because the reason, and to be clear, California has an emissions cap that covers about 80% of our economy. It is enforced by a declining number of allowances.

So every single year, the California Air Resources Board issues a set number of allowances, and one allowance equals one ton of greenhouse gas emissions. And there are fewer and fewer and fewer over time, which is why we can say with, you know, much greater certainty that emissions will, in fact, go down over time, because the number of permits available, if you will, goes down over time. California is one of two states that has this. Washington state just adopted a very similar approach a couple years ago.

New York is considering it right now. Maryland is considering it right now. So, I mean, this is something that California has had in place for over a decade at this point. And the certainty it provides because of those declining number of allowances is very unique compared to a procurement standard or something like that, or like the renewable portfolio standard, which is important. Like, don't mishear this, but it plays a different role than the emissions cap.

Would it be a similar structure to how we have AB 32 right now, or do you see it as being different? Can you, for Assembly Members, can you just give us this basic structure of how you would see an emissions cap working with the hydrogen sector?

Sure. So, I mean, this would be enabled by AB 32 because that's what enabled the development of an economy wide emissions cap. I think the way we would imagine this working, and this is, I'm gonna answer your question, is, when we think about 45 volts, for instance, the three pillars should be the foundation.

And then we could envision some sort of process where a California project, or whether arches applies to doe for a different approach because of the emissions cap that is already in place now, we need to have a long term emissions cap well beyond 2030. So there's some things we need to deal with here. But it basically would be that process.

A project would demonstrate that, you know, our emissions, the system wide emissions, are not going to go up because of our project, because of the system that is in place.

So we. So if I could be clear, so a project could meet the three pillars, or a project could say, we're not going to meet the three pillars specifically, but we are going to qualify under the admissions cap, is that what you're saying?

This applies to the additionality pillar.

Exactly.

So it's.

We're not going to meet the. I'm sorry, we're not going to meet the additionality pillar, correct? Yeah. And instead of meeting the additionality pillar, we're going to apply under the admissions.

We are subject to this other program that ensures that system wide emissions decrease as the additionality pillar is also attached.

As a creative solution to the additionality pillar. But there'd still be, the other pillars would still be in, in force, right? Members, questions? Thank you. Assembly Member Carrillo.

Thank you. Not familiar with the document that you talked about where you suggest to grandfather facilities. Would that allow for those grandfather facilities, if that were the case, to come into compliance?

If they decide to expand their facility in using land use terms, when a facility has been existing, and if they want to expand to whether it be in 25%, 50%, then would that be a recommendation that that's the time when the facility would have to comply with the standards that are going to be set for hydrogen? Would that be something that you see possible?

Yeah, that's an excellent question. And that level of detail was not in our comments, but it is certainly a great scenario that is worth thinking about. There's so many layers to this.

At a point in time in the future, if a facility were to change and operate, you would imagine that that would be a new financing, a new development project, and depending on what the Treasury's rules are at the time, my guess, and I don't know how the IR's ultimately it will be up to them to decide that particular circumstance, but I don't know how they would rule, but I could imagine that that could be something that they would say, well, if you're in the new project time limit, you have to comply, not using.

The grandfathering term, for locations where there's been heavy investment that are practically shovel ready to start the facility because of the investment, because of the time that they've gone through, anticipating that we'll find a solution soon enough for these facilities to be able to break ground again, being shoved already, and keeping in mind the constraints of the three pillars, one of them that you just mentioned, the additionality, I'm sorry.

And the other pillar where 100% renewable energy may not be the starting point, what if it's 60%, 70%, so that we are able to jumpstart these shallow weather facilities, and again, to be able to take advantage of the federal funding that's available. And I say that because you mentioned that there are other states that are still producing energy, very, very dirty.

And to me that really puts us in a big disadvantage, not knowing how these other states are going to be able to receive the funding from the federal money that's available. That would put us at a disadvantage rather than putting California at an advantage for having been so proactive in the clean energy goals that we have set. Again, not knowing what those states are, not knowing if they would benefit from this federal funding.

But to me that's a real concern, having not the equal play field for California since again, we've been able to put these aggressive goals to produce clean energy and those states who are not even friendly in producing clean energy, would that put us at a big disadvantage? I think that it would. Again, not knowing if those states are going to be receiving funding.

I couldn't agree with you more. And in fact, that's why we recommended that for states like California that have these requirements, these emission caps mandates in our renewable power sector, the Treasury should not punish states like cutting forward. In fact, we should be held up as a higher standard, say like encouraged.

Yeah. And just close on what you just about punishing those ready sites, shovel ready projects to start this technology. That's a real concern for me, having to punish those that have been trying to comply. And now with this new requirement that we're exploring to talk about the three pillars, that has to be 100%, I would ask that the chair that we start a conversation to see how we can facilitate that with the ultimate goal to get to the 100% on the three pillars.

Every technology that is arising, we know that within time and sooner than later we'll be able to advance in technology to be able to meet the three pillars. We'd appreciate if we are able to have a conversation.

Great.

Thank you, Mister chair.

Well, that's exactly why we're in this part of the panel, which is what are creative solutions and phasing in as a creative solution, relying on an emissions cap and sort of accelerating or emphasizing the admissions cap for that. I want to make sure anything else, because this is the most important part of the task ahead of us, is how do we square these sort of stakeholders, some stakeholders very far apart and other stakeholders somewhere in between. But how do we square all of that?

I'd like to examine a couple of things, if I could. One, on this issue of additionality, I'm going to run something by that I have in my head and give you both a chance to respond to it. And that is.

And so one of the concepts of additionality is, no, the hydrogen producer, the new hydrogen producer can't just come and buy up the renewable resource that's being used by the community choice aggregate. They have to come up with a creative way for a new renewable resource, either create one or use the curtailed energy, you know, something, you know, repower up something that was already out there.

So if we, if we just allow, if we don't have that as a requirement for new startups, because we keep, you know, we say we don't want to, we don't want to hamstring a new startup, right? If the, if the, if the new startup is going to not have that requirement, we have that potential problem with hydrogen with a $3 credit competing with the community choice aggregates.

Because the argument I hear from the community choice aggregates constantly about the drawing a blank on the resource adequacy requirement that they have is they're competing with each other because there's a fixed number of renewable resources and they can't really expand the number of renewable resources partially because of how the grid is set up, etcetera. So that is a big argument for additionality. It's my understanding that's a big argument for additionality. I appreciate seeing you both shaking your head.

And so if we allow the beginning companies to not have an additionality requirement, how do we address that concern that there's going to be a crowding out in the short run of the renewable resources that they are buying. They want to give you an opportunity to. And you might say there isn't. So you might say there is, but you might say your solution might address that. It might not. But go ahead, either one of you.

So a couple thoughts, I guess. First, I think of the three pillars again as fundamentally about preventing an increase in emissions, not ensuring ccas have a Low price for their power.

Can I just, I'm just going to interrupt you. Here's how it turns into an increased emissions at some point in time, if there's an increase in demand for electricity and you can't expand your renewable resources, then they're not going to let the grid go down. They're just going to go out and use natural gas to increase. You know, somebody's going to use more natural gas.

Let's, you know, either a CCA is going to meet the, violate their requirement because they can't compete after the prices go up or something's going to happen. But if the energy demand goes up, so that's how it relates to emissions. So it's not because our goal here is to protect the ccas necessarily, although we are, as a Legislature, concerned about making sure that electricity rates don't, don't keep going up higher and higher, which could happen with this competition. But anyway, back to you.

That was actually kind of where I wanted to go, is I think there is a bigger question here, and that is we need to build so much more clean generation, sort of regardless. I mean, both to produce hydrogen, but also to ensure that we meet our existing clean energy goals, to ensure that we improve reliability, we need to increase our connection with the rest of the west and clean resources that are produced across the region. So I hear the concern.

I think there is so much more we need to do to address that concern beyond just the three pillars, I guess. I mean, this is a much. But yes, we need to build a whole lot of clean generation.

It's a fundamental issue of our time right now. Absolutely. From the standpoint of energy. So we need as many incentives as possible to create more renewable energy. I want to turn it back over to Miss Lin.

Yeah, I agree with you, Katelyn. And ultimately, it's a challenge of system optimization. And I mean system optimization in the broadest sense. First of all, starting with the CCAs in this case, you mentioned likely they all have long term contracts for now, in the short term. So those would not be disrupted if they're in a perverse way. I actually think the additionality requirement may make it more expensive to. Well, it will make it more expensive to produce electrolytic hydrogen because of the additionality requirements.

Some of the way the draft rule has been written, it would prohibit you from existing, utilizing existing resources. Remember my hydro example or curtailed renewables super effectively. And what you would want is through that incentive to encourage more development. And remember, not all the development of renewable electricity plants is going to be pumped pumping the electricity through the grid. We're going to have a lot of large scale projects that are co located.

And the advantage of using some grid electricity is now you can improve the capacity factor of that electrolysis equipment. So instead of just running it, say, six or 7 hours a day with your big co located solar farm, you can plug in and take clean energy off the grid at night. And when you can run that electrolysis equipment more fully, it drops the cost down.

And from a system optimization point, the hydrogen that's being the electricity that those hydrogen electrolysis equipment's using isn't just competing with ccas. Remember, the hydrogen that's being produced is also providing an alternative fuel to displace diesel. Diesel in trucks, diesel in the ports, gasoline. And so that has a systemic benefit of reducing spending by consumers, by taxpayers. Most of that cost actually goes out of state.

Thank you. Ccas have been around for quite some time. So some ccs, I mean, yes, they have long term contracts, but long term contracts expire when those long term contracts expire and you have hydrogen sitting there ready to say, we're going to buy that contract, or we're going to out compete with you for that contract, because they have a $3 incentive, that's a problem for CCAs.

And again, I'm bringing this up so you can respond to it, because that's the second thing is that we're trying to create the right overall incentives, as you said, sort of system wide in terms of being able to do this. So I want to turn my attention to hourly matching, and that is that.

My understanding is that if we, let's say we stay with annual hourly matching, which is what some people write, somebody could go out and buy their energy credit at 02:00 in the afternoon on July 15, nice, sunny, hot day. And then you use that credit to plug into the grid at 02:00 in the morning on December 15, when the grid is probably pretty dirty because there's no solar into the grid.

And if that is allowed, and I'm trying to check my thinking, that's why I'm bringing this. If that is allowed, then there's not very much incentive for anybody to develop a reduction renewable energy source at 02:00 in the morning on December 15, because we're meeting our energy needs because of these credits. So it doesn't give us the balanced renewable portfolio that we need. We need a balanced renewable portfolio. So that means we need incentives for people to develop at 02:00 in the morning on December 15.

Renewable resource. And quite frankly, one of the interesting things, I think, is hydrogen could be that renewable resource at 02:00 in the morning if we send the right price signals. Right, and I want to go back to price signals because that's one final thing. If we send the right price signals. Hydrogen could actually be produced on July 15, right, at 02:00 in the afternoon, but stored for six months and then used at 02:00 in the morning on December 15.

And now we have a much, we created an incentive for somebody, it's a cost to store hydrogen for six months and all that, but we created an incentive for somebody to go to that cost so that ultimately, at 02:00 in the morning on the 15th, we are, we don't need to do, use fossil fuel any longer. That's, that would, that would be the goal. That would be certainly better for California.

So I'm trying to, you know, I'm trying to find out whether, because there's two things we're trying to do. We're trying to get the hydrogen industry off the ground financially, but we're also trying to end up with a robust, renewable portfolio of energy sources that keep California, you know, on renewables 24 hours a day, if we can, or create as many price signals as possible. So I got one other thing after that about price signals and the incentive. But am I wrong? That hydrogen, that couldn't be a good use for hydrogen at 02:00 in the morning on December 15?

I love your example. I'm smiling so much because that's exactly the use case of why I got excited about renewable hydrogen in 2016, because I used to be super into battery storage, which I still am. But the use case that you describe is the price signals. It's a compensation mechanism for compensating for what seasonal storage is. The example right now, there's no way to get paid for.

We use the seasonal storage we have as natural gas in an underground cavern to generate electricity, that's our seasonal storage today. But if we had a price signal for seasonal storage in the form of renewable electricity, in the form of hydrogen stored in mass quantities, that would solve that. And then on the production side, I believe it's actually a Bill that's being introduced by Senator Becker SB 993.

It's the idea of a tariff, a beneficial tariff that would be as no cost shifting, but as Low cost as possible to incentivize beneficial load, like the production of renewable hydrogen at certain times of the day, kind of like a time of use tariff.

Doesn't hourly matching help us send that price signal? I see a head shaking, yes. Does hourly matching help send that price signal at 02:00 in the morning on December 15?

It does. It's a compliance mechanism and the incentives through the tax credit, but it's not necessarily aligned with the, well, it would be aligned because you're matching renewable energy, but it's not necessarily. It's in addition to a price signal that we could do here.

Sure, there are other price signals we could send, but hourly matching would help send that price signal, because if you have to match within that hour and it's 02:00, you gotta find some renewable energy someplace at 02:00 so you're gonna pay more, and maybe you'll use your $3 kilowatt hour credit that you got to pay to get that extra renewable energy. But somehow we have to get the price up at 02:00 in the morning so that people will have an incentive to do that. I'm gonna.

May I clarify?

Can you give us an idea of the massive investment to store hydrogen for six months, the real estate cost of storing hydrogen for six months? And then I like to follow up on the CCAs and the fact that today we rely on importing energy from other states.

Yes. So on the topic of hydrogen storage and transportation, the good news is we already do this commercially today. Hydrogen is stored today in commercially developed salt caverns. It's not renewable hydrogen. Soon it will be. There's one in central Utah. It needs to be stored in a rock formation, geologic salt. So it's perfectly sealed. You stick water down there, you melt out the salt, and you have this perfectly sealed cavern. These are big caverns, like the size of the Empire State building.

And what connects those caverns to large off takers today is hydrogen pipelines. We have something on the order of 1600 miles already of hydrogen pipelines, including 17 miles in LA.

So then it wouldn't be a significant investment on having the capacity to store hydrogen for six months?

It's very cost effective, like gigawatt hours of storage. I think of those salt caverns. As you know, we have petroleum reserves that could be a renewable energy Reserve. But not every state has a salt cavern salt dome. I don't believe we have these geologic formations in California, which is why we need to collaborate with other states. Back to your point, Caitlin, about. It's a regional solution, and the good news is our neighboring states have these, and we can interconnect with them.

With the CCA example that you used earlier, we know that they go through long term contracts to provide the energy, and we know that some of that energy, according to the contracts, has to be clean produced or a certain percentage so that they can meet the requirements of those contracts when those contracts expire. The long term, 2025 years, whatever the case may be, do you feel comfortable that we would still not be relying on importing energy from other states?

Our energy use is huge, especially the liquid fossil fuel. When I talk about let's accelerate, it's our reduction of reliance on fossil fuels. Even an industry analyst, when you look out to 2050, our energy demand is still going to require molecules. I'm of the belief that we can make those molecules, we can make them here with our abundant feedstocks and give the fossil fuels a little competition. Right.

Okay. Thank you. You look like you're wanting to say something.

I was going to take the answer to that question in a slightly different direction and say that as far as electricity, yes, I think we will continue to import electricity, and I don't think that's a bad thing. Importing electricity has been very, very important to maintaining reliability in the state. And the more we can import and export clean electricity, we can take advantage in California of, you know, maybe it's not sunny here, but the wind is blowing in Wyoming.

Like we want to take some of that power. You know, hopefully someday we will have offshore wind built off the coast of California that we then have as a resource to sell to the rest of the west. So I think it's a good thing that we have those relationships.

And if I could, with regards to Utah. Utah has a salt mines and Los Angeles actually is building the connection to the salt. They are producing clean hydrogen. They're going to store it in the salt mines and bring it down, down for LA power. And that is a project that is approved and moving and all of that. It is a. So, yes, the storage of hydrogen is certainly doable and is starting to, will certainly expand as we go forward.

We have been quite some time on our panel here today, and unless I hear other questions, I know we want to make sure because we have two minutes for each speaker in terms of comments, and we want to hear creative ideas. You're welcome to say anything you want, but what we hope we hear from you are creative ideas rather than necessarily a rehashing of things that we may have heard. But like with the other panels, we want to give you both of these opportunity. So 1 minute to close, Miss Lin.

Thank you. Chair Bennett, may I just quickly say that I don't think three pillars is a price signal. It's a compliance requirement for an incentive. A price signal is a different thing. And I'm happy to chat with you offline about that. I would like to close by sharing appreciation for everybody in this room for this Select Committee.

I believe that we all want the same goal, which is to reduce our reliance on fossil fuels, to have greater energy Independence, to reuse the abundant renewable resources that we have. And this is all within our grasp. And on this topic of three pillars, there are really a lot of strongly held views here. And my recommendation for all of us is to stay open minded, to listening to each other and to really make sure that we look at, don't lose the forest through the trees. Right.

Keeping our eye on the prize is how do we scale an affordable, reliable, renewable hydrogen ecosystem so we have an alternative to fossil fuels. And that goal is daunting because we use a lot of fossil fuels today and it can't happen overnight. So thank you for all of your efforts. Thank you everybody and your comments today. We're so grateful to be part of this conversation.

Thank you very much.

Thank you. I would echo the appreciation for this hearing and conversation today and for all of your great questions and interest. I would just close by saying, you know, I think we need to keep our eye on the fact that the three pillars is fundamentally about avoiding potential climate damage from hydrogen. And that should be our foundation, is how do we make sure that we are not creating another climate problem by producing hydrogen. And so that's, that is the importance of the three pillars.

And that, like I said, should be the foundation. We are in a unique situation in California, and I'm very open to thinking about how that, you know, how we can use something like our economy wide emissions cap to ensure those same outcomes of not increasing greenhouse gas pollution.

Thank you. And before I let you go, I'm sorry, but I see one thing here that I definitely wanted to make sure I gave you guys both a chance to respond to. So, you know, there's this whole issue of hourly matching that has been significant battle over. But my understanding, and again, I'm trying to give you guys an opportunity to respond, is that on hourly matching, isn't California's currently required to implement hourly matching according to PUC section 398.6?

And I've got the text here, and that is, beginning January 12028 every retail supplier that offers an electricity product for sale to retail customers in the state shall annually report to the Energy Commission all of the following. The retail supplier source of electricity used to serve loss adjusted load for each hour during the previous calendar year.

So in other words, hourly matching already to the extent feasible, the emissions of greenhouse gases associated with each of those sources of electricity in calculating those emissions of greenhouse gases to retail supplier shall not include or consider any avoided greenhouse gas emissions and an annual total of greenhouse gas emissions in an annual average greenhouse gas emissions intensity calculated as the annual total greenhouse gas emissions divided by the retail supplier's natural annual total loss adjusted load.

Bottom line is, the way I have been told this reads is that it actually is going to call for hourly matching, because one of the biggest concerns I hear from the industry is why should hydrogen only have hourly matching if you're not going to have it for everybody else? This is the expansion of hourly matching in January 28.

So if we're going to expand hourly matching in January 28, is there a way to make hydrogen production consistent with this requirement so that everybody's going to be treated the same? Hydrogen said, we don't want to be treated differently, but if we're going to start now having everybody else have hourly matching, is there a way to have hydrogen have hourly matching also? Right.

Thank you for mentioning that, because in my comments, I mentioned that the rules we have in place already embody the spirit of the three pillars, additionality, deliverability and hourly matching. And it's our view that the load serving entities are in the best position to ensure that and ensure that our grid is clean. So all incremental energy that's going on the grid there is that compliance mechanism.

Thank you. Your response?

I think just the only thing I would add is, from our perspective, hourly matching is very achievable by 2028. We already see some of the national tracking system operators, excuse me, energy tag and Emirates doing this. We see PJM doing this. I mean, this is a, you know, people understand this and it can be scaled to the point that we need for the hydrogen industry by 2028.

You two are outstanding in terms of your knowledge and the way you present yourself. And I really mean that. This has been, we've had three great panels and you guys are just great in terms of polishing this off. Now, let's see if the public will comment with the same sage capability that you guys have. Right? Members of the public, two minutes each. Thank you.

Good afternoon. Assemblymember Bennett. My name is Garza with SECO. I want to shout out my colleagues who did an amazing job presenting. I want to add on to something that on top of my colleagues remarks in the meetings we've been in and the conversations we have, it's very clear there's robust conversation happening around electricity and where we're going to get our electricity usage and how we're going to manage that.

Something we've seen that is lacking in the conversation that seems glaring to us is where are we going to get the water? This is a very water intensive industry, and that is something that we have not heard, been a part of the calculations, especially in a drought state. I got some facts and figures from the Rocky Mound Institute. This is SMR steam methane reformation uses 4.5 water to produce 1 hydrogen.

That's SMR electrolysis, which is the direction we want to go to make sure that it is clean. And no fossil fuels are used in that process is 9 water to create 1 hydrogen. And that is not including the cooling and the other infrastructure needed to operate these facilities. That's an addition to these facts and figures. So that's something we want to bring into the conversation, talk about, and really have a robust debate and conversation of where we're going to get this water.

I'd also like to enter into the zeitgeist so everyone is aware. Colorado already passed their hydrogen Bill. And it's Colorado Bill advanced the use of clean hydrogen. HB 281. They've already done it. They rushed through it. Water was not a part of their conversation. I'd like to point out that California gets 4.44 million acre feet of water from the Colorado river. Okay. We have not taken into account what that allocation is going to look like. We get our majority share of water from Colorado. Thank you. So we'd like to start that conversation. So thank you very much.

Mister Bennett. Members Mikhael Skvarla here on behalf of California Hydrogen Coalition, California Hydrogen Business Council and Linde PLC. Just want to address a couple of things we brought up today with regard to the CCAs and hydrogen entities competing for electrons. California is a non compete state when it comes to electrons, CPUC or PUC. So Public Utilities Code 454.53 sets up provisions that don't allow that. It's just not allowed. A hydrogen entity cannot go and steal contracted electrons from another entity.

Also, the backlog on the interconnection queue is over 500 gigawatts. Even if every elect, even if every molecule of hydrogen was produced with electrolytic hydrogen, it would represent less than 8% of the overall backlog. We don't have an additionality problem in the State of California. We have an interconnection of problem. We need to expedite that as fast as possible. That's where the policy should be focused with regard to.

I think our friend from EDF here made some great points with regard to the uniqueness of California's policies. This is what we've been saying through this debate for the entire time, the combination of the cap and trade program, the RP's, and how those interplay with the IPER and the irps with regard to procurement plans set up a unique situation in the State of California where we can manage any potential induced emissions as we have for other additional loads such as charging data centers, so on.

Lastly, kind of on the last point with regard to the time matching and those things, what you referenced was the power source disclosure legislation by Senator Becker. That's not the same as hourly time matching. That's a power source disclosure which is done once a year. We currently do power source disclosure on an annual basis. Now it's creating additional granularity for the hourly. It's not a matching system, it's not a rec system, it's not a compliance instrument. It is just simply, simply for disclosure. Thank you.

Thank you.

Hello. Melissa Romero with California Environmental Voters. I'd want to start out by just saying that environmental groups are in agreement that hydrogen will be part of our clean energy future. And we do actually have specifics about what we want to see in terms of defining green hydrogen and how hydrogen is used in order to actually get the benefits that we all are talking about here. Hydrogen is a very energy intensive and water intensive resource.

So we really should be asking tough questions about how we're going to do this in a way that's not going to put a strain on our grid, that's not going to use limited water resources, that's not going to increase costs, and that's also going to actually reduce emissions.

We hear a lot of pushback about the three pillars, and the reality is that without using new clean energy to power a hydrogen facility, without those facilities being located geographically near that facility, and without the clean energy running at the same time that the hydrogen facility is using it, we will increase emissions and that does not pass the smell test for climate action. Given the membership role that Chevron and Shell have to play in this work, we are very concerned.

We need to be explicit about not allowing fossil fuel produced hydrogen to be considered green or clean when it comes to our climate solutions. Thank you.

Hi, good afternoon. Assemblymember Bennett Members of the Committee. I'm Ryan Kenny with Clean Energy. Great discussion today. I just want to mention my company is Clean Energy. I'm Ryan Kenny, Clean Energy. Our company is the nation's largest provider of renewable natural gas transportation fuel. We also have a subsidiary, a new subsidiary called Rameer, which is taking a co product, not a byproduct a co product of hydrogen production called graphene and that is used in industrial applications to decarbonize the industrial sectors such as cement.

So there is a large growing interest in my company, especially to use hydrogen. But right now, largely it's cost prohibitive. And policies such as. As the three pillars we believe are going to lead to continue exclusion from companies like mine making a difference here in California to meet our clean air and clean decarbonization goals.

I do want to just mention, I know the goal of this Committee was looking at creative solutions, but one thing I thought was kind of missing in the discussion was really how can the Legislature help the industry get off the ground? And that's really the fundamental component, I think, of this discussion. Emission reductions are important in the transportation sector, where we are. 98% of the natural gas used in transportation is renewable natural gas. The LCFS is driving those reductions.

And right now there's pathways in the LCFs for not just Linox trucks for renewable natural gas, but also as feedstocks for electric vehicles and hydrogen. So we are decarbonizing the transportation sector, including hydrogen right now through the LCS. So I just ask that you please keep in mind the impact to businesses in the industry. We want to get this off the ground. We're interested in working with the Legislature, but the three pillars really are providing a barrier to getting that going. So thank you.

Thank you.

Thank you. Michael Boccadoro with West Coast Advisors. I think, as most of you know, my role in California for the last seven years has been figuring out how to reduce dairy methane by 40%. We worked with Senator Laird on creating a constructive incentive based approach. It's working very well. And as dramatic as a 40% reduction is, we are very close to achieving the full 40% reduction in manure methane mandated by 1383. And we'll be there within a couple of years.

And that's because we've had an incentive based approach that doesn't tell farmers how to farm, but it works with each farmer in finding a way that best suits their needs for that farm to produce methane on that farm. I understand the environmental justice community doesn't like digesters, but some of the irony of this is that what they are proposing, dry manure handling systems, virtually impossible to have wholly dry manure only handling on a dairy. And the irony of it is it will dramatically worsen water quality.

It will increase truck traffic because we'll have to export much of that manure because we. We can't utilize it on our own farms. Wet manure systems allow us to be much more efficient utilizing the resources that Mister Carillo mentioned. Pasture based dairy farming works wonderful and we have a number of dairies in California that do that on the north coast. It works up there because we have rainfall and we have natural pastures.

But pasture based dairy farming in the San Joaquin Valley leads to a couple of problems. More land use, more water use, more dairy cows to produce the same amount of milk, and significantly more enteric methane because of the cow's diet. Not easy solution or a simple solution. And then their preferred option, direct regulation, which is what we're currently seeing at the Air Resources Board with a petition that was filed.

Direct regulation will harm the very small dairies they claim they're concerned about and lead to further, further consolidation of the dairy sector. We're achieving the reductions because we've developed a program here that works with the farms we have here. Dairy consumption is increasing across the country. We need to find solutions. Thank you

Mister Chairman, Mister Hart, Mike Monagan on behalf of the State Building and Construction Trades Council, I'm not so sure my message is going to be creative, but it's going to be simple.

One, put a pause on legislation in this space to allow Washington DC rulemakers to do their job. Three, that will allow the funds, the $1.2 billion allocated to come to California for projects. Especially, as Mister Cariel pointed out, there are shovel ready projects. Now they're just waiting for the signal. The lastly last part of this is that the building trades, the 500,000 men and women in our industry are prepared to go to work and build these projects just as we've built power plants for decades. Thank you.

Thank you.

Thank you Mister chair and Mister Hart, Jason Ikerd on behalf of the California Municipal Utilities Association, CMUA. So CMUA represents the state's publicly owned electric utilities and they're serving about 25% of the state's population. And my message is simple, like Mister Monaghan's and actually quite aligned with it. CMUA's Members have a good track record when it comes to affordability, reliability and decarbonization of the electric sector. And building out hydrogen infrastructure is going to be an essential part of continuing, continuing that trend.

And so we're very supportive of that. But as Mister Monagan just pointed out, there are literal billions of dollars on the table at the federal level. There is an active effort being made to determine what projects and infrastructure are going to be eligible for that funding. And so there is a real risk of the Legislature getting ahead of that effort and precluding us from becoming the hydrogen hub that we can in California.

And so in that sense, we urge, least at the moment, a rejection of the three pillars, you, because we do not want to get to a point where we preclude ourselves from being able to receive those funds. So thank you for the opportunity to speak today. And again, perhaps not creative, but it's clear and simple.

Thank you.

Hello. Good afternoon, others. Nicole Rice, California Renewable Transportation Alliance and thank you for, for this opportunity to make these comments real quickly. First of all, I just want to thank the Committee for expanding the speakers and presentations today to be able to have additional voices as part of this discussion. I think this is how we're going to get to a good balance for the proper policy.

Want to align my comments on our organization with the comments of the speakers who were on the first panel as it relates to the use of biofuels under this discussion, I do want to emphasize that we do have, all of us in this room, a similar goal, and that is to decarbonize California to improve our environmental impacts, to provide additional benefits to communities that have been disadvantaged by pollution in California, and to reach that ultimate goal in 2024.

I think it is important to note, though, that there's a lot of conversation today about fossil fuel and moving away from fossil fuels, something, again that CRTA agrees with. But renewable natural gas that is produced from biomethane is not a fossil fuel. As long as we continue to have societal organic waste, we're going to need to do something with that waste and the methane that and other environmental impacts that are produced from that waste.

And so the use of renewable natural gas and creating a market and making sure that that fuel has somewhere to go in the market for the investments that have been made thus far is very important. Even the Air Resources Board has identified the critical role that RNG can play, both in transportation. As we continue to have combustion on the roads as well, we get closer to 2045, but also in those hard to decarbonize sectors. And so the use of that fuel throughout the economy will help us again achieve our decarbonization goals. Thank you.

Thank you.

Christina Scaringe at the Center for Biological Diversity thanks to the chair and the Committee, biogenic sources aren't clean and should play no role in hydrogen production. California incorrectly treats for feedstocks as carbon neutral. Though thoroughly refuted by the IPCC, EPA and others, greenhouse gas lifecycle assessments show combustion or gasification of forest material to make energy leads to a net increase of carbon emissions for decades to centuries.

Biomass gasification and paralysis to produce hydrogen produce large amounts of CO2 and health harming pollutants including methane, carbon monoxide, liquid hydrocarbons, solid char and ash residues, tars and soot, fine particulate matter, nitrogen oxide, sulfur oxide, benzene, toluene, Xylens, and persistent organic pollutants such as polycyclic aromatic hydrocarbons. Fine particulate matters can penetrate deeply into the lungs and bloodstream. It's linked to higher risk of premature death, heart disease, stroke and aggravated asthma. Nox damages the respiratory system and contributes to acid rain. Benzene is a known carcinogen.

Toluene and xylenes damage the brain and nervous system, respiratory system, kidneys and liver. Cleaning tar buildup on equipment creates large amounts of toxic wastewater. CCS has for years shown to be ineffective, unsafe, and very energy intensive, typically using 15% to 25% more energy, and it doesn't resolve the significant climate and pollution, the air pollution of biomass processes. These processes don't reduce methane emissions as claimed. Bioenergy generates substantial methane emissions that are far less likely if we just left it in the forest.

Especially we're chipped, lopped and scattered on the floor. Biomass facilities harm communities with air, water and noise pollution, CO2 leakage, earthquake risk and ecosystem damage. To reduce emissions from waste, we should reduce waste, not create a profitable market for waste based sources where incentives will likely increase production and pollution. Thank you.

Thank you.

Just refer to my written comments as well.

Thank you Mister chair Members, my name is Hunter Stern. I'm with IBEW Local 1245. I'm also the chair of the Coalition of California Utility Employees. It's about 60,000 utility workers working for what we call Pos, municipal utilities as well as IOUs. We have very strong interest in clean hydrogen, green hydrogen. We have projects with the Munis that we're working on them very closely. These are important and clear opportunities.

I do want to point out that while you're, and I only heard the third panel, the other two I missed. I apologize. They look very good in terms of the people involved. But no comments from labor. Chris Hannon of the state building trades was a leader in creating the hydrogen hub and the program that's before us now. We are very interested in the jobs that come along with these projects. They are clean and green projects, the ones that our Members, our utilities are engaged in.

We want to execute those and we're looking forward to the opportunity. We I agree with Mister Monahan's previous comments. We don't want to get something in front of the federal work and federal action we need access to those funds to make this work. It's not just the 1.2 billion that the feds have committed to California, it's seed money. There's another eight to 9 billion on top of it from a private companies that are willing to invest in these projects. We're keen on that.

There was a couple of things that I heard the last panel that did concern us. One of the most successful points of our clean energy revolution in this state is keeping jobs here. We've created tens of thousands of jobs building solar and wind projects. Hearing that we want to import wind energy from Wyoming, sort of outside of the State of California, that's. Thank you. That's subsidizing. That's using electric customers to subsidize this. So we want the projects here. We're keen on those work and we look forward to working with you to make it happen.

I do want to let you know we had labor and ... at our first Select Committee hearing. I wanted to let you know that. So we generally did not. Go ahead.

Yes. Thank you, Mister chair and Members Kristin Olsen-Cate of California Strategies here today on behalf of Monarch Bioenergy, I want to align my comments with those of Julia Levin and Sam Wade from the first panel and talking about creative solutions. I just wanted to compliment the chair and the Members who are here today because I think it's these kind of hearings that are going to lead to the creative solutions that can make sure California is a leader in this hydrogen space.

We believe in a both and all approach to meeting our clean energy goals if we have any hope of getting there. And so that's our goal today, is to make sure we're using all of the approaches to make sure that we're able to deliver on those ambitious California important clean energy goals.

But I just want to say, as a former Member myself and is now a Member of the capital community at large, it's rare that we see hearings like this when you're really diving deep into the questions that matter so much about how this is ultimately going to materialize. So, as I said, I just want to compliment you on holding these hearings the way you've organized the hearings, the panelists you've brought to the hearings.

I look forward to hopefully seeing more of that throughout the legislative process on a number of topics, but it is rare. So I wanted to take a real point at just complimenting you on that because I, I think it shows real leadership in moving important policy forward. And lastly, as you know, I also represent Sempra energy and we are very involved in the hydrogen space, as many of you know, in a number of different arenas.

And we have a sinovation, a Sempra innovation center that I know as someone Member Brian has been to near Long Beach and it's a fascinating place to learn more about what's possible in this space. And so we would want to invite any and all of you to attend as your schedules allow. Thank you.

Thank you, Mister Chairman. Members Greg Cook, representing the Northern California Power Agency. With regard to today's hearing and more specifically the last panel that you just had to discuss the policy solutions to achieve the three pillars goals, we have real concern about the Committee getting terribly involved in that question. This is a matter that is being discussed at the federal level today.

Any recommendation from California that would be contrary to what the Federal Government guidelines are would be premature and possibly jeopardize California's participation in the $1.2 billion arches program, of which we have a project that's in the first tier. Once again, Mister chair, I'm going to invite you and your Committee Members to visit our facility in Lodi, 40 miles down the road, and you can see what can possibly happen in California today to increase and improve electricity reliability.

At the same time, take advantage advantage of the wonderful natural resources that we have through our clean energy programs and at the same time, hopefully reduce electricity costs. I think this is a discussion that I encourage you to continue and I would hope that at a future hearing you'll invite NCPA to come to the Committee and present formally the proposal that we have for your consideration.

Again, I urge no formal action as it relates to three pillars until such time as we have clarification from the Federal Government. Thank you very much. Thank you.

Good afternoon, Mister chair and Members of the Committee. My name is Alfredo Arrendondo. I'm here on behalf of a company called Hcycle. They're a renewable hydrogen developer focused on taking organic waste and converting that to hydrogen, with the facility to be developed in the Bay Area. With the groundbreaking hopefully later this year.

I'll be brief, I think I wanted to revisit a topic that was broached by the last panel, which is focusing on existing programs that work really well, like the Low carbon fuel standard and one of the key tenets of that program, and now one of the key tenants of 45 volts is a standard that focuses on carbon intensity.

So they say, in my own words, if you want to be welcomed into the party, you have to show your math, show your work, and if you can achieve a carbon intensity lower than what the standard is setting, and it's a declining standard in the lcfs at that, then you can participate. And the incentive then is if you can get lower or even negative, you get the best reward at the party.

And so with that, I just wanted to remind folks that I think that there are some other key components that haven't necessarily been discussed at length, including the carbon intensity aspect of LCFS and 45e. Thank you.

Thank you very much. I think we're at the end, unless that gentleman's there. Right. And so just not quite two and a half hours for this presentation. Really appreciate it. I want to welcome Assembly Member Bryan here and Assembly Member Kalra. So it was, I think, appreciate the comments of Miss Olson-Cate, who appreciated the hearing. Felt like it went well. Is there anything you want you gentlemen want to add or comment on before we adjourn this meeting?

I just want to thank you chair, again, for continuing to push this work forward, even during the busy and overlapping Committee schedule. Your commitment to this issue and to convening important stakeholders across all perspectives on this issue is the way policymaking should be. So thank you, Mister chair.

I second that. And I'll third it too. And appreciate the panelists and the public comment, too. It's very valuable. This is a dense topic that requires a lot of careful consideration and appreciate this venue and the leadership that you've shown to pull us all together.

Really articulate panelists today. So appreciate it all. Thank you very much. Thank you.