BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 1086|
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THIRD READING
Bill No: SB 1086
Author: Alarcon (D), et al
Amended: 7/11/01
Vote: 27 - Urgency
SENATE ENERGY, U.&C. COMMITTEE : 8-1, 5/15/01
AYES: Bowen, Alarcon, Battin, Murray, Sher, Speier,
Vasconcellos, Vincent
NOES: Morrow
SENATE APPROPRIATIONS COMMITTEE : 10-0, 7/9/01
AYES: Alpert, Battin, Bowen, Burton, Johnson, Karnette,
Murray, Perata, Poochigian, Speier
SUBJECT : Air pollution: liquified natural gas:
production
SOURCE : Author
DIGEST : This bill, to the extent funds are made
available from the General Fund to the California Energy
Commission (CEC), provides grants or loans from those funds
for projects that demonstrate the viability of equipment
that converts gas from solid waste landfills into liquefied
natural gas for use as transportation fuel.
ANALYSIS : Current law establishes the Agricultural
Industry Energy Program (AIEP), which permits loans to be
made for the purchase of equipment and services for energy
efficiency and development demonstration projects
including, but not limited to, the production of methane or
CONTINUED
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ethanol, the use of wind, photovoltaics, and other sources
of power.
Current law allocates $15 million to CEC in grants to be
used for pilot projects designed to encourage the
development of bio-gas digestion power production
technologies. Of the $15 million, $10 million shall be
used to provide grants to encourage the development of
manure methane power production projects on California
dairies. The remaining $5 million must be used to provide
grants to reduce peak usage in southern California to
produce replacement energy as a byproduct of the anaerobic
digestion of bio-solids and animal waste.
Current law requires the CEC to operate a renewable energy
program to fund landfill gas-to-electricity projects funded
by a public purpose surcharge on each electricity user's
bill.
This bill finds that:
1. The use of alternative fuel such as natural gas offers
an immediate opportunity to reduce emissions from heavy
trucks.
2. The recent increase in natural gas prices, coupled with
increased demand from energy generators, present serious
obstacles for fleet operators that have been required or
encouraged to convert to natural gas.
3. There is a critical need to expand natural gas supplies
both for electrical energy generation and for use as a
clean transportation fuel.
4. California's solid waste landfills offer an immediate
and significant source of affordable methane that can be
converted to liquefied natural gas (LNG).
5. New demand for methane-produced fuel will encourage
improvements in the recovery of landfill gas and may
significantly reduce greenhouse gas emissions.
6. Grants to fund pilot projects will advance the
commercialization of landfill gas treatment equipment
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and accelerate the production of LNG from the state's
solid waste landfills.
This bill :
1. Provides, to the extent funds are made available from
the General Fund to the CEC, grants or loans to projects
the commission determines are related to the research,
development, and demonstration of equipment needed to
produce LNG from solid waste landfills for use as a
transportation fuel.
2. Provides that the CEC shall develop guidelines,
including evaluation criteria, for administering the
program.
3. Specifies that up to 2 1/2 % of the amount appropriated
may be retained by CEC for administrative costs.
4. Contains a 65% match requirement.
The bill also specifies that the program is subject to
existing statutes collectively known as the Energy
Research, Development, Demonstration, and Commercialization
Act of 1993. The act contains, among other things,
eligibility criteria, a biennial reporting requirement, a
January 1, 2005 sunset, and royalty provisions. It also
specifies that eligible recipients of grants and loans are
small businesses, and provides that the maximum loan
duration is 10 years.
Background
Methane is a byproduct of garbage decomposition that's
naturally produced at solid waste landfills and has, in
some instances, been used to power electric generators.
According to information provided by the author, the
average solid waste landfill is capable of producing
between 5,000 and 30,000 gallons of LNG each day.
The existing CEC renewable energy program, paid for by a
surcharge on each electricity user's bill, funds landfill
gas-to-electricity projects. Last year, 23 new landfill
gas projects with a capacity of 70 megawatts (MW) were
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awarded grants averaging $0.014 per kilowatt hour (kwh).
Funding is also available for existing landfill gas
projects. The staff of the CEC believes the landfill
gas-to-electricity projects have successfully provided
relatively low-cost electricity and reduced greenhouse gas
emissions.
This bill proposes a grant program for new landfill gas
projects which specifically convert the methane to LNG, a
transportation fuel that's used to power a large number of
heavy duty vehicles. Substituting LNG for diesel or other
fuels greatly reduces NOx and particulate emissions.
Converting landfill gas to LNG requires the installation of
equipment that removes impurities from the gas, then chills
the gas to convert it to a liquid state. LNG is natural
gas that's been condensed to a liquid, typically by
cryogenically cooling it to -327.2 degrees Fahrenheit. A
truck operating on LNG has to use, on average, twice as
much LNG by volume in order to operate than a truck running
on diesel fuel would have to use.
The author believes the $15 million set aside by this bill
will allow the CEC to fund projects that can produce over
36 million gallons of LNG per year, providing fuel for
2,800 heavy duty vehicles. An added benefit is NOx
reductions of 1,800 tons per year, which can offset NOx
increases from other sources, such as powerplants. Not
included in those calculations is the cost of retrofitting
the heavy duty vehicles so they can run on LNG.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/11/01)
Waste Management
California Natural Gas Vehicle Coalition
Sierra Club
Coalition for Clean Air
Planning and Conservation League
ARGUMENTS IN SUPPORT : Waste Management states that this
bill establishes an extremely important technology
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demonstration program to promote the conversion of landfill
gas to LNG for use as a clean transportation fuel. The
bill includes a one-time appropriation of $15 million to
the Energy Commission for the administration of the
demonstration program.
Beginning in July of this year, hundreds of operators of
heavy-duty refuse trucks, transit buses, and other public
vehicles that are located in the South Coast Air Quality
Management District will be required to purchase vehicles
that are powered by natural gas. In many cases, LNG will
be the only practical option. Yet today, there is not an
adequate supply of LNG to meet the needs of fleet operators
that will either be required or encouraged by various local
air districts to convert to clean-burning natural gas.
This bill recognizes the opportunity to capture large
quantities of landfill gas (about 76 million cubic feet per
day) that is currently being flared. With the assistance
and encouragement of the state, this gas could be treated
and liquefied to produce as much as 784,000 gallons of LNG
each day - enough LNG to power 8,000 heavy-duty urban fleet
vehicles. The annual emission reductions resulting from
such a conversion are estimated to be about 6,000 tons of
NOx and 76 tons of particulates.
NC:sl 7/11/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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