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california legislation > SB 771

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SENATE THIRD READING
SB 771 (Kehoe)
As Amended June 30, 2011
Majority vote

SENATE VOTE :38-0

NATURAL RESOURCES 9-0 UTILITIES & COMMERCE 13-0

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|Ayes:|Chesbro, Knight,|Ayes:|Bradford, Fletcher, |
| |Brownley, Dickinson, | |Buchanan, Fong, Fuentes, |
| |Grove, Halderman, Hill, | |Furutani, Beth Gaines, |
| |Monning, Skinner| |Roger Hernández, Huffman, |
| | | |Knight, Nestande, |
| | | |Skinner, Valadao|
| | | | |
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APPROPRIATIONS 17-0

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|Ayes:|Fuentes, Harkey,| | |
| |Blumenfield, Bradford, | | |
| |Charles Calderon, Campos, | | |
| |Davis, Donnelly, Gatto, | | |
| |Hall, Hill, Lara, | | |
| |Mitchell, Nielsen, Norby, | | |
| |Solorio, Wagner | | |
| | | | |
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SUMMARY : Specifies that natural gas engines, landfill gas
engines, digester gas engines, landfill gas turbines, digester
gas turbines, and microturbines are ultralow-emission energy for
energy generation based on thermal energy systems and thus
eligible for financial assistance under the California
Alternative Energy and Advanced Transportation Financing
Authority (CAEATFA) Act. Specifically, this bill :

1)Distinguishes the term "ultralow-emission energy" from the
term "renewable energy" for the purpose of accurately
describing the different types of equipment, technology, and
devices that are eligible under CAEATFA.

2)Includes within the meaning of "Ultralow-emission energy" the








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following equipment: natural gas engines, landfill gas
engines, digester gas engines, landfill gas turbines, digester
gas turbines, and microturbines.

EXISTING LAW:

1)Creates CAEATFA for the purpose of promoting the development
and utilization of alternative energy sources and the
development and commercialization of advanced transportation
technologies. CAEATFA consists of five members: the Director
of Finance, the chairperson on the California Energy
Commission, the president of the Public Utilities Commission,
the State Controller, and the State Treasurer, who serves as
the chairperson of CAEATFA.

2)Permits CAEATFA to provide bond financing to lend assistance
to a participating party to enter into loan agreements to
finance projects that use an alternative energy source or
advanced transportation technologies.

3)Permits CAEATFA to approve a sales and use tax exemption on
tangible personal property utilized for the design,
manufacture, production, or assembly of advanced
transportation technologies or alternative energy source
products, components or system. This sales and use tax
exemption will sunset on January 1, 2021.

4)Requires CAEATFA to establish a renewable energy program to
provide financial assistance to public power entities,
independent generators, utilities, or businesses manufacturing
components or systems, or both, to generate new and renewable
energy sources, develop clean and efficient distributed
generation, and demonstrate the economic feasibility of new
technologies, such as solar, photovoltaic, wind, and
ultralow-emission equipment.

5)Defines "renewable energy" as either of the following:

a) A device or technology that conserves or produces heat,
processes heat, space heating, water heating, steam, space
cooling, refrigeration, mechanical energy, electricity, or
energy in any form convertible to these uses, that does not
expend or use conventional energy fuels (e.g., oil,
gasoline, natural gas), and that uses biomass, solar








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thermal, photovoltaic, wind, or geothermal electrical
generation technologies; or,

b) Ultralow-emission equipment for energy generation based
on thermal energy systems such as natural gas turbines and
fuel cells.

FISCAL EFFECT : According to the Assembly Appropriations
Committee:

1)Minor, absorbable special fund costs to CAEATFA and the Air
Resources Board.

2)Special fund cost pressure of an unknown amount, potentially
in the millions of dollars, to fund ultralow-emission energy
projects that, absent this bill, would not be eligible for
CAEATFA financial assistance.

COMMENTS : CAEATFA was created in 1980 with an authorization of
$200 million in revenue bonds to finance projects utilizing
alternative sources of energy, such as cogeneration, wind and
geothermal power. It was renamed in 1994 as currently titled
and its charge expanded to include the financing of "advanced
transportation" technologies.

During the energy crisis of 2001, its authority was again
expanded, this time to provide financial assistance to public
power entities, independent generators, and others for new and
renewable energy sources, and to develop clean distributed
generation.

CAEATFA's authority is broad but in practice it has not been
utilized until recently. The State Treasurer has tried to
reinvigorate the authority and has launched a sales and use tax
exemption program to stimulate green manufacturing as authorized
by SB 71 (Padilla, et al.), Chapter 10, Statutes of 2010.

Landfilling is the main method for disposal of municipal and
household solid wastes or refuses in the United States.
Although maintained in an oxygen-free environment and relatively
dry conditions, landfill waste produces significant amounts of
landfill gas (mostly methane). With Californians dumping more
than 42 million tons of waste per year, the total amount of
landfill gases produced in California is tremendous.








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Landfill gas is generated by the natural degradation of
municipal solid waste by anaerobic (without oxygen)
micro-organisms. Once the gas is produced, the gas can be
collected by a collection system, which typically consists of a
series of wells drilled into the landfill and connected by a
plastic piping system.

Anaerobic digestion is a biological process that produces a gas
principally composed of methane (CH4) and carbon dioxide (CO2)
otherwise known as biogas. These gases are produced from
organic wastes such as livestock manure, food processing waste,
etc.

Anaerobic processes could either occur naturally or in a
controlled environment such as a biogas plant. Organic waste
such as livestock manure and various types of bacteria are put
in an airtight container called digester so the process could
occur. Depending on the waste feedstock and the system design,
biogas is typically 55 to 75% pure methane. State-of-the-art
systems report producing biogas that is more than 95% pure
methane.

According to the author, meeting our state's renewable energy
portfolio standard goals will require additional solar, wind,
and geothermal power generation. Some of these generation
sources will be intermittent so meeting our goals will also
require relying on clean technologies and equipment that can
harness renewable power from gases that are byproducts from
landfills, farms, and ranches. Ensuring that these technologies
are eligible for state incentives (through programs like
CAEATFA) is important to achieving our state energy goals.


Analysis Prepared by : Mario DeBernardo / NAT. RES. / (916)
319-2092


FN: 0002246













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