BILL ANALYSIS Ó AB 1657 Page 1 Date of Hearing: May 11, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1657 (O'Donnell) - As Amended April 7, 2016 ----------------------------------------------------------------- |Policy |Natural Resources |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | |Transportation | |15 - 0 | | | | | | | | | | | ----------------------------------------------------------------- Urgency: Yes State Mandated Local Program: NoReimbursable: No SUMMARY: This bill establishes the Zero- and Near-Zero-Emission Intermodal Terminals Program (Intermodal Terminals Program) and the Port Building and Lighting Efficiency Program (Port Efficiency Program) to fund projects to reduce emissions and increase energy efficiency from freight movement and public port operations. Specifically, this bill: AB 1657 Page 2 1)Creates the Intermodal Terminals Program, to be administered by the California Air Resources Board (ARB) and funded by the Greenhouse Gas Reduction Fund (GGRF), to pay for equipment upgrades and investments at port terminals to help transition the state's freight system to zero-emission and near-zero-emission operations. 2)Creates the Port Efficiency Program, to be administered by the California Energy Commission (CEC), to fund energy upgrades and investments at public ports that reduce electrical load and increase on-site renewable generation using GGRF monies appropriated by the Legislature. 3)Prohibits vessel upgrades from being considered for funding for both the Intermodal Terminals and the Port Efficiency Programs. FISCAL EFFECT: 1)Cost pressures, likely in the hundreds of millions of dollars (GGRF) to fund the two incentive programs. 2)Assuming $100 million in annual funding, increased ongoing costs $2.2 million and 14.5 positions (GGRF) for the ARB to establish and implement the new incentive program. 3)Assuming $50 million in annual funding, increased ongoing costs of $1.1 to $1.5 million and 8 positions for CEC to establish and implement the new incentive program. COMMENTS: AB 1657 Page 3 1)Purpose. According to the author, California ports need to reduce emissions while also improving energy efficiency and promoting economic growth. This bill is intended to provide a framework to help publicly finance port infrastructure improvements using GGRF monies generated by the state's cap and trade program. 2)Background. The California Global Warming Solutions Act of 2006 (AB 32) requires ARB to adopt a statewide GHG emissions limit equivalent to 1990 levels by 2020 and adopt regulations, including market-based compliance mechanisms, to achieve maximum technologically feasible and cost-effective GHG emission reductions. As part of the implementation of AB 32 market-based compliance measures, ARB adopted a cap-and-trade program that caps the allowable statewide emissions and provides for the auctioning of emission credits, the proceeds of which are quarterly deposited into the GGRF available for appropriation by the Legislature. The 2014-15 Budget Act allocated cap-and-trade revenues for the 2014-15 fiscal year and established a long-term plan for the allocation of cap-and-trade revenues beginning in fiscal year 2015-16. The Budget continuously appropriates 35% of cap-and-trade funds for investments in transit, affordable housing, and sustainable communities. Twenty-five percent of the revenues are continuously appropriated to continue the construction of high-speed rail. The remaining 40% are to be appropriated annually by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion. AB 1657 Page 4 An expenditure plan for the 40% was not included in the 2015-16 Budget Act, with the exception of $227 million appropriated to continue funding for specified existing programs. The remaining 2015-16 revenues, along with 2016-17 revenues totaling $3.1 billion, are available for appropriation this year. 3)Previous Legislation. AB 678 (O'Donnell) requires ARB, in conjunction with the CEC, to develop the Energy Efficient Ports Program to fund energy efficiency projects that help reduce emissions of GHG and air pollutants at public ports. AB 678 was approved by this Committee but was later held on suspense in the Senate Appropriations Committee. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081