United States: 2016 California Energy And Climate Legislative Update

Last Updated: March 10 2017
Article by Camarin E.B. Madigan and Ella Foley Gannon

California took legislative action in 2016 aimed at addressing climate change, advancing renewable energy, and maintaining the state's emphasis on safety in the energy sector.

In 2016, the California legislature took further aggressive action aimed at climate change, calling for the state to reduce statewide greenhouse gas (GHG) emissions to 40% below 1990 levels by the year 2030. It coupled this ambition with a number of intended protections for vulnerable communities in California that have traditionally borne the brunt of emissions and other impacts associated with energy production. The state also advanced renewable energy, especially biomass-fueled electricity, energy efficiency, and energy storage (at both bulk and distributed scales) by promoting their consideration and procurement through a variety of programs. Finally, California maintained its emphasis over the last several years on legislating additional safety measures in the energy sector—especially for nuclear sites and oil and gas operations.

GREENHOUSE GAS EMISSIONS REDUCTIONS AND FUNDING

In 2016, California took considerable strides to promote the reduction of GHG emissions by setting ever more ambitious goals for the state's own GHG emissions reductions, and also called on the US Congress to take action. Other notable legislation regulates how California will use its funds to meet its new goals, mandates increased emissions transparency, and creates a climate change infrastructure working group.

GHG Reductions—SB 32 (Pavley)

Health and Safety Code: adds §38566

California's landmark GHG emissions reduction law (AB 32) required that California cut its emissions to 1990 levels by 2020. SB 32 extends AB 32 to 2030, requiring even deeper cuts in emissions. Under SB 32, the state must achieve a 40% reduction of its GHG emissions below 1990 levels by 2030.

Changes to Greenhouse Gas Reduction Fund—AB 1550 (Gomez), SB 824 (Beall), and AB 1613 (Committee on Budget)

AB 1550—Health and Safety Code: amends §39713
SB 824—Public Resources Code: amends §75230, adds §75231
AB 1613—amends Budget Act of 2016

The legislature was also active in 2016 in passing legislation regarding how its ambitious GHG targets can be advanced through use of the Greenhouse Gas Reduction Fund (GGRF)—a fund composed of revenues generated from the state's Cap-and-Trade Program and designated for state programs designed to reduce GHG emissions and provide economic, environmental, and public health co-benefits.

AB 1550 requires that a minimum of 35% of proceeds from the GGRF be invested in lifting up low-income and disadvantaged Californians with three different designations: 25% minimum to projects located directly within disadvantaged communities; another 5% minimum for projects that benefit low-income households regardless of where they are located within California; and a final 5% minimum for projects that benefit low-income households located in low-income communities.

SB 824 changes the regulations for GGRF money that goes to transit—allowing transit agencies that get money from the GGRF to pass that money on to other transit agencies.

Lastly, AB 1613 allocates hundreds of millions of dollars toward a variety of climate change reduction and transit programs.

Infrastructure Planning—AB 2800 (Quirk)

Public Resources Code: adds and repeals §71155

AB 2800 requires the creation of a climate-safe infrastructure working group composed of engineers and climate scientists to help address the "dangerous disconnect" between engineering and climate science that threatens the safety and benefits of costly public infrastructure projects.

GHG Intensity Reporting—AB 1110 (Ting)

Public Resources Code: amends §§398.1, 398.2, 398.4, and 398.5

Since 1998, California has required utilities to report their power purchases and to provide consumers with Power Content Labels in all advertisements sent via mail or the internet. But these labels have not included the amount of GHGs created by power plants generating the energy. AB 1110 changes this by mandating the use of transparent standards to help consumers determine which green energy options are most effective.

Federal Action—AJR 43 (Williams)

AJR 43 calls on the US Congress and the president to enact a "carbon tax and dividend program." It has no legal impact; rather, it is a political statement representing California's commitment to emissions reductions.

ENVIRONMENTAL JUSTICE

The legislature has enacted a series of bills reflecting environmental justice concerns, particularly the concern that California's Cap-and-Trade Program has not benefitted the poor communities that are most impacted by toxic air emissions.

Changes to Air Resources Board—AB 197 (Garcia)

Government Code: adds Article 7.6 to Chapter 1.5 of Part 1, Division 2, Title 2

Health and Safety Code: amends §§39510 and 39607; adds §§38506, 38531, 38562.5, and 38562.7

AB 197 curbs some of the authority of the California Air Resources Board (CARB) to implement GHG reductions. First, it would establish a legislative oversight committee to which the Chair of CARB would report once a year. Second, the bill would add two ex officio members of the legislature to CARB and make the terms of voting members six years. And third, the bill would require CARB, in implementing the 40% GHG reduction target, to consider "social cost" and prioritize more direct emission reductions from specific sources.

Transformative Climate Communities Program—AB 2722 (Burke)

Public Resources Code: adds Part 4 to Division 44

AB 2722 invests $250 million in transformative climate community plans in disadvantaged communities that are most burdened by, and vulnerable to, high levels of pollution. These grants will be awarded to community development groups and their local agencies and partners with transformative climate community plans that demonstrate climate, economic, workforce, health, and environmental benefits to the community.

Procurement Planning—AB 1937 (Gomez)

Public Utilities Code: amends §§399.13 and 454.4

AB 1937 requires utility companies' procurement plans to demonstrate that they actively sought out and gave preference to new fossil fuel plants outside those areas already suffering from "cumulative pollution burdens."

RENEWABLE ENERGY, DISTRIBUTED GENERATION, AND ELECTRIC STORAGE

In addition to making a variety of small changes to existing renewable energy programs in the state, the California legislature passed two bills to promote the use of biomass facilities in response to rampant tree mortality throughout the state that has created an abundance of wood-based biomass "fuel." The 2016 legislative session also included bills that were passed that seek to facilitate the adoption of energy storage facilities—especially those at the bulk scale—and to maximize efficient distribution of stored energy.

Renewable Program Changes—SB 1393 (De Leon)

Health and Safety Code: amends §44258.5

Public Resources Code: amends §25302.2

Public Utilities Code: amends §§399.11, 399.12, 399.30, 400, 454.51, 9508, and 9621

SB 1393 modifies select exemptions from the minimum renewable energy resources procurement requirements relating to hydroelectric generation. The bill also removes the requirement for a local publicly owned electric utility to notify and report to the California Energy Commission (CEC) regarding plans to deliberate in public on its renewable energy resources procurement plan. Lastly, the bill requires the California Public Utilities Commission (CPUC) to ensure that all costs resulting from an investor-owned utility's (IOU's) failure to satisfy the need for renewable integration will be borne by the IOU or community choice aggregator responsible for that failure.

Interconnection Disputes—AB 2861 (Ting)

Public Utilities Code: adds §769.5

AB 2861 directs the CPUC to establish a resolution process for interconnection disputes arising under Rule 21 procedures for generation projects connected to IOUs' distribution systems. The bill sets a goal of resolving disputes within 60 days and would require the CPUC to appoint a qualified electrical systems engineer to advise CPUC staff.

Self-Generation Incentive Program—AB 1637 (Low)

Public Utilities Code: amends §§379.6 and 2827.10

AB 1637 authorizes the CPUC to collect double the currently approved amount for the Self-Generation Incentive Program (SGIP) for distributed generation resources and energy storage technologies, increasing total funding by $249 million. The bill also expands and extends net energy metering for fuel cell resources. In addition, AB 1637 further modifies the SGIP after an update in summer 2016 that established the provision of $83 million per year for behind-the-meter-generation technologies, including wind, fuel cells, and energy storage. This follows a recent decision by the CPUC to assign 75% of the SGIP budget to energy storage.

Bioenergy Feed-In Tariff—AB 1923 (Wood)

Public Utilities Code: amends §399.20

AB 1923 requires the CPUC to direct IOUs to authorize all bioenergy electric generation facilities with a generating capacity of up to 5 megawatts (MW) to participate in the bioenergy feed-in tariff (FIT) if the facility delivers no more than 3 MW to the grid. It also increases from 3 MW to 5 MW the limit on the capacity of a FIT-program eligible bioenergy electric generation facility, opening the door for more small producers of renewable energy to recycle and reuse organic waste.

Biomass Contracts—SB 859 (Committee on Budget and Fiscal Review)

Food and Agricultural Code: amends §568 and adds to §§412 and 569

Government Code: adds to §§12802.10 and 16428.86

Health and Safety Code: amends §39712; adds and repeals §44274.3

Public Resources Code: amends §§6009.1, 42997, and 4299; adds §§717 and 4799.05

Public Utilities Code: adds §399.20.3

SB 859 supports biomass plants within the state by calling on electricity retailers to enter into five-year contracts for 125 MW of biomass capacity with facilities that generate energy from wood harvested from high fire-hazard zones. SB 859 signifies the governor's acknowledgment of the importance of the biomass industry as it pertains to the state's renewable energy portfolio standard and the eradication of dead and dying trees from high fire-hazard zones. This law is intended to provide some certainty to the biomass industry, which has struggled due to antiquated contracts.  

Bulk Energy Storage—AB 33 (Quirk)

AB 33 directs the CPUC to consider large-scale storage, specifically with respect to pumped hydroelectric energy. The bill comes after the California Independent System Operator (CAISO) identified a need for fast-ramping, flexible resources to balance the grid and mitigate the potential impacts of over-generation from renewables. The law directs regulators to "assess the potential costs and benefits of all types of long duration bulk energy storage resources, including impacts to the transmission and distribution systems of location-specific long duration bulk energy storage resources."

Distributed Energy Storage—AB 2868 (Gatto)

Public Utilities Code: adds §§2838.2 and 2838.3

AB 2868 requires the CPUC to direct California's three IOUs to accelerate the deployment of distributed energy storage by filing applications for new programs and investments of up to 500 MW. This bill directly increases the market for energy storage in California, as the 500 MW is in addition to the 1.325 GW procurement goal that California established in 2013.

ENERGY EFFICIENCY AND DEMAND RESPONSE

Five laws seek to enhance statewide energy efficiency by, among other measures, establishing statewide efficiency goals; improving oversight and reporting; revamping rebate-acquisition rules for installations such as heating, ventilation, and air conditioning systems (HVACs); and ensuring that low-cost financial assistance is available for certain clean energy and energy efficiency projects.

Energy Efficiency Resource Standard—AB 1330 (Bloom)

Public Utilities Code: amends §§454.55 and 454.56

AB 1330 creates the Energy Efficiency Resource Standard (EERS), a statewide target for energy efficiency savings for public and investor-owned utilities. The bill establishes a target of double efficiency savings in California by 2030 and requires fuller, more frequent disclosure of IOUs' progress toward efficiency goals. The law also requires the CPUC to ensure that there are sufficient funds available for the utilities to meet these annual targets.

Efficiency Savings Evaluation and Program Oversight—SB 1393 (De Leon)

Health and Safety Code: amends §44258.5

Public Resources Code: amends §25302.2

Public Utilities Code: amends §§399.11, 399.12, 399.30, 400, 454.51, 9508, and 9621

SB 1393 (other aspects of which are discussed above) expands the required contents of the CEC's bi-annual integrated energy policy report (IEPR) to include an evaluation of energy efficiency savings accruing from negative therm-interactive effects in all reports adopted after 2019. This law expands the CPUC's role with respect to reviewing and making recommendations on programs to enhance efficiency and reduce pollution to include oversight of such programs conducted by academics and private and/or nonprofit organizations.

HVAC Efficiency—SB 1414 (Wolk)

Public Resources Code: adds §25402.12

Public Utilities Code: amends §399.4

SB 1414 directs the CEC—in consultation with various agencies and stakeholders—to approve a plan that will promote the installation of central air-conditioning and heat pumps that comply with the state's building code and energy-efficiency regulations. Notably, this law requires recipients of energy-efficiency rebates or incentives for HVAC installations and retrofits to provide proof of compliance with specified codes and standards.

Financial Assistance for Energy Conservation—SB 1207 (Hueso)

Public Resources Code: amends §§25417.5 and 25421

SB 1207 is designed to ensure that low-cost financial assistance is available for clean energy and energy efficiency projects in California by extending the State Energy Conservation Assistance Account, which provides grants and loans to schools, hospitals, public care institutions, and local government agencies. The law aims to maximize energy savings during the period of January 1, 2018 to January 1, 2028.

Procurement of Demand Response—AB 2454 (Williams)

Public Utilities Code: amends §454.5

AB 2454 seeks to bring more high-value demand response to California by ensuring that the CPUC makes decisions based on the most up-to-date information regarding available (a) demand response options and (b) means by which to reduce costs and California's reliance on fossil fuels. AB 2454 will also require IOUs to demonstrate compliance with a procurement plan before the CPUC approves a contract for any new gas-fired generating unit.

NUCLEAR ENERGY

Two laws were passed in 2016 that deal with the improvement of safety and disaster preparedness for nuclear energy facilities.

Nuclear Storage—AJR 29 (Chavez)

AJR 29 urges the passage of the Interim Consolidated Storage Act of 2015 (H.R. 3643) and encourages the US Department of Energy to implement the prompt and safe relocation of spent nuclear fuel from the San Onofre Nuclear Generating Station to a licensed and regulated interim consolidated storage facility.

Diablo Canyon—SB 968 (Monning)

Public Utilities Code: adds §712.5

SB 968 requires Pacific Gas and Electric Company to submit to the CPUC an assessment, conducted by an independent third party, of the economic impacts that could occur in the San Luis Obispo County region if the Diablo Canyon Nuclear Power Plant were to temporarily or permanently shut down, and the potential ways in which local authorities could mitigate the adverse impacts.

NATURAL GAS AND OIL

Following in the wake of the natural gas storage leak at Aliso Canyon, four laws passed in 2016 pertain to the maintenance and oversight of oil and natural gas wells, with a particular emphasis on the remediation of older ("idle") wells and emergency response.

Natural Gas Storage Moratorium—SB 380 (Pavley)

Public Resources Code: adds and repeals §3217

Public Utilities Code: adds and repeals §§714 and 715

SB 380 maintains the ban on natural gas injections at the Aliso Canyon gas storage facility until specified criteria—including the testing of wells' structural integrity—are met. The law also requires state regulators to complete a safety review, determine if Aliso Canyon should be permanently closed, and consider how to ensure electric and natural gas reliability if it is closed.

Response to Natural Gas Storage Leaks—SB 887 (Pavley)

Health and Safety Code: adds Div. 26, Part 4, Chapter 6

Public Resources Code: amends §3403.5 and adds PRC Div. 3, Chapter 1, Art. 3.5

Public Utilities Code: adds §1103

SB 887 seeks to enshrine additional safety reforms for California's natural gas facilities in response to the Aliso Canyon gas leak. First, the law requires all gas storage facilities to continually monitor natural gas concentrations to detect leaks, and sets standards for the regular maintenance and inspection of wells. The monitoring includes daily self-inspections and more comprehensive agency-administered inspections in alternating business quarters. Second, the law requires operators of natural gas facilities to develop detailed emergency response plans. Finally, it encourages greater use of energy storage via renewable fuels and reduction of reliance on fossil fuels.

Idle Well Remediation—AB 2729 (Williams)

Public Resources Code: amends §§3308, 3208.1, 3238; amends, repeals, and adds §§3202, 3204, 3205, 3206, 3207, and 3208; adds §§3016, 3206.1, and 3206.3

AB 2729 calls for "responsible" well management practices to ensure "timely remediation" of idle wells. Under existing law, there is little incentive for operators to close idle wells, and idle wells have the potential to have leaks and damage that go unnoticed for years due to a lack of effective oversight and an absence of similar regulations that govern active wells.  

Enforcement over Oil and Gas Operations—AB 2756 (Thurmond)

Public Resources Code: amends §§3236.5, 3350, 3351, 3352, 3356, and 3357; adds and repeals Div. 3, Chapter 1, Art. 4.3

AB 2756 would increase the Division of Oil, Gas, and Geothermal Resources' enforcement and oversight of oil and gas operations, particularly with respect to the use, maintenance, and abandonment of oil and gas wells.

WATER-ENERGY NEXUS

Water-Energy Nexus Registry—SB 1425 (Pavley)

Public Resources Code: adds Div. 34, Part 6

SB 1425 creates a voluntary registry to track energy consumption and climate pollution from water use. Juliet Christian-Smith, a Union of Concerned Scientists climate scientist, argues that "[w]hen it comes to climate change, California's water sector is like a slow-dripping faucet . . . It may not seem like much, but the energy used to pump, treat, transport, deliver and heat water really adds up. This new law will help provide reliable data to identify conservation and clean energy opportunities that are needed to ensure that water is part of California's climate solution."

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

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