Amended  IN  Senate  March 25, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 662

Introduced by Senator Archuleta

February 19, 2021

An act to add Section 43869.5 to the Health and Safety Code, and to amend Section 740.8 of, and to add and repeal Section 745.5 of, the Public Utilities Code, relating to energy. An act to amend Sections 237.5, 740.3, and 740.12 of the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 662, as amended, Archuleta. Energy: transportation sector: green hydrogen.
Existing law, enacted as part of the Clean Energy and Pollution Reduction Act of 2015, requires the Public Utilities Commission (PUC), in consultation with the State Energy Resources Conservation and Development Commission (Energy Commission) and the State Air Resources Board (state board), to direct electrical corporations to file applications for programs and investments to accelerate widespread transportation electrification, as defined, to achieve specified results. The PUC is required to approve, or modify and approve, programs and investments in transportation electrification, including those that deploy charging infrastructure, through a reasonable cost recovery mechanism, if they meet specified requirements.
This bill would revise the definition of “transportation electrification” for this purpose to include the use of hydrogen when used as a transportation fuel in fuel cell electric vehicles. The bill would require the PUC, in consultation with the state board and the Energy Commission, to authorize gas corporations to file applications for programs and investments to accelerate widespread transportation electrification to advance specified environmental objectives. The bill would require the PUC to approve, or modify and approve, programs and investments in transportation electrification, including hydrogen and hydrogen-related pipelines, hydrogen distribution, and make-ready infrastructure for hydrogen, using a reasonable cost recovery mechanism if they are consistent with the specified environmental objectives, do not unfairly compete with nonutility enterprises, include performance accountability measures, and are in the interest of ratepayers, as defined.
By expanding the definition of transportation electrification, the bill would expand the matters that a local publicly owned electric utility must consider when updating an integrated resource plan, thereby imposing a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires the State Air Resources Board (state board) to adopt specified hydrogen fuel regulations that, among other things, ensures that, in any year immediately following a 12-month period in which the mass of hydrogen fuel dispensed for transportation purposes in California exceeds 3,500 metric tons, no less than 33.3% of the hydrogen produced or dispensed in California for motor vehicles be made from eligible renewable energy resources, as defined.

This bill would require, on or before July 1, 2022, the state board to develop and implement regulations to require that, by December 31, 2024, on a statewide basis, not less than 44% of the hydrogen produced or dispensed in California for motor vehicles be green hydrogen, as defined. The bill would require that the green hydrogen percentage be increased to 52% by December 31, 2027, 60% by December 31, 2030, and 100% by December 31, 2045.

Existing law, enacted as part of the Clean Energy and Pollution Reduction Act of 2015, requires the Public Utilities Commission (PUC), in consultation with the State Energy Resources Conservation and Development Commission (Energy Commission) and the state board, to direct electrical corporations to file applications for programs and investments to accelerate widespread transportation electrification, as defined, to achieve specified results. The PUC is required to approve, or modify and approve, programs and investments in transportation electrification, including those that deploy charging infrastructure, through a reasonable cost recovery mechanism, if they meet specified requirements.

This bill would require the PUC, in consultation with the state board, to direct gas corporations to file applications for programs and investments to accelerate use of hydrogen as a transportation fuel to advance specified environmental objectives. The bill would authorize the PUC to approve, or modify and approve, programs and investments in, among others, hydrogen production, distribution, and nonretail refueling stations, if the programs and investments use a cost recovery mechanism in the interest of ratepayers, do not compete with retail hydrogen fueling enterprises, and include specified investment and workforce measures. These provisions would be repealed on January 1, 2036.

Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because some provisions of this bill would be a part of the act and because a violation of an order or decision of the commission implementing its requirements would be a crime, the bill would impose a state-mandated local program by expanding the application of a crime.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 237.5 of the Public Utilities Code is amended to read:

237.5.
 “Transportation electrification” means the use of electricity from external sources of electrical power, sources, including the electrical grid, for all or part of to power, in whole or in part, vehicles, vessels, trains, boats, or other equipment that are mobile sources of air pollution and greenhouse gases and the related programs and charging charging, fueling, and propulsion infrastructure investments to enable and encourage this use of electricity. Transportation electrification also includes the use of hydrogen when it is used as a transportation fuel in fuel cell electric vehicles.

SEC. 2.

 Section 740.3 of the Public Utilities Code is amended to read:

740.3.
 (a) The commission, in cooperation with the Energy Commission, the State Air Resources Board, air quality management districts and air pollution control districts, regulated electrical and gas corporations, and the motor vehicle industry, shall evaluate and implement policies to promote the development of equipment and infrastructure needed to facilitate the use of electricity electricity, hydrogen, and natural gas to fuel low-emission vehicles. Policies to be considered shall include both of the following:
(1) The sale-for-resale and the rate-basing of low-emission vehicles and supporting equipment such as batteries for electric vehicles vehicles, make-ready infrastructure for the use of hydrogen as a transportation fuel, and compressor stations for natural gas fueled vehicles.
(2) The development of statewide standards for electric vehicle charger connections and compressed natural gas vehicle fueling connections, including installation procedures and technical assistance to installers.
(b) The commission shall hold public hearings as part of its effort to evaluate and implement the new policies considered in subdivision (a).
(c) The commission’s policies authorizing utilities to develop equipment or infrastructure needed for electricity-powered electricity-powered, including hydrogen fuel cell electricity-powered, and natural gas-fueled low-emission vehicles shall ensure that the costs and expenses of those programs are not passed through to electrical or gas ratepayers unless the commission finds and determines that those programs are in the ratepayers’ interest. The commission’s policies shall also ensure that utilities do not unfairly compete with nonutility enterprises.

SEC. 3.

 Section 740.12 of the Public Utilities Code is amended to read:

740.12.
 (a) (1) The Legislature finds and declares all of the following:
(A) Advanced clean vehicles vehicles, including both battery electric and hydrogen fuel cell electric vehicles, and fuels are needed to reduce petroleum use, to meet air quality standards, to improve public health, and to achieve greenhouse gas emissions reduction goals.
(B) Widespread transportation electrification is needed to achieve the goals of the Charge Ahead California Initiative (Chapter 8.5 (commencing with Section 44258) of Part 5 of Division 26 of the Health and Safety Code).
(C) Widespread transportation electrification requires increased access for disadvantaged communities, low- and moderate-income communities, and other consumers of zero-emission and near-zero-emission vehicles, including both battery electric and hydrogen fuel cell electric vehicles, and increased use of those vehicles in those communities and by other consumers to enhance air quality, lower greenhouse gases emissions, and promote overall benefits to those communities and other consumers.
(D) Reducing emissions of greenhouse gases to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050 will require widespread transportation electrification.
(E) Widespread transportation electrification requires electrical corporations to increase access to the use of electricity electricity, and gas utilities to increase access to the use of hydrogen, as a transportation fuel.
(F) Widespread transportation electrification should stimulate innovation and competition, enable consumer options in charging equipment and services, attract private capital investments, and create high-quality jobs for Californians, where technologically feasible.
(G) Deploying electric vehicles should assist in grid management, integrating generation from eligible renewable energy resources, and reducing fuel costs for vehicle drivers who charge in a manner consistent with electrical grid conditions.
(H) Deploying electric vehicle charging infrastructure and increasing the number of hydrogen stations should facilitate increased sales of electric zero-emission vehicles by making charging and refueling easily accessible and should provide the opportunity to access electricity and hydrogen as a fuel that is cleaner and less costly than gasoline or other fossil fuels in public and private locations.
(I) According to the State Alternative Fuels Plan analysis by the Energy Commission and the State Air Resources Board, light-, medium-, and heavy-duty vehicle electrification results in approximately 70 percent fewer greenhouse gases emitted, over 85 percent fewer ozone-forming air pollutants emitted, and 100 percent fewer petroleum used. These reductions will become larger as renewable generation increases.
(2) It is the policy of the state and the intent of the Legislature to encourage transportation electrification as a means to achieve ambient air quality standards and the state’s climate goals. Agencies designing and implementing regulations, guidelines, plans, and funding programs to reduce greenhouse gas emissions shall take the findings described in paragraph (1) into account.
(b) The commission, in consultation with the State Air Resources Board and the Energy Commission, shall direct electrical corporations to file applications for programs and investments to accelerate widespread transportation electrification to reduce dependence on petroleum, meet air quality standards, achieve the goals set forth in the Charge Ahead California Initiative (Chapter 8.5 (commencing with Section 44258) of Part 5 of Division 26 of the Health and Safety Code), and reduce emissions of greenhouse gases to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050. Programs proposed by electrical corporations shall seek to minimize overall costs and maximize overall benefits. The commission shall approve, or modify and approve, programs and investments in transportation electrification, including those that deploy charging infrastructure, via a reasonable cost recovery mechanism, if they are consistent with this section, do not unfairly compete with nonutility enterprises as required under Section 740.3, include performance accountability measures, and are in the interests of ratepayers as defined in Section 740.8. Not less than 35 percent of the investments pursuant to this subdivision shall be in underserved communities as that term is defined in Section 1601.
(c) As part of a separate proceeding from those initiated pursuant to subdivision (b), the commission, in consultation with the State Air Resources Board and the Energy Commission, shall authorize gas corporations to file applications for investments in programs to accelerate widespread transportation electrification to reduce dependence on petroleum, meet air quality standards, and reduce emissions of greenhouse gases to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050. Programs proposed by gas corporations shall seek to minimize overall costs and maximize overall benefits. The commission shall approve, or modify and approve, programs and investments in transportation electrification, including hydrogen and hydrogen-related pipelines, hydrogen distribution, and make-ready infrastructure for hydrogen, via a reasonable cost recovery mechanism if they are consistent with this section, do not unfairly compete with nonutility enterprises, as required by Section 740.3, include performance accountability measures, and are in the interests of ratepayers as defined in Section 740.8.

(c)

(d) The commission shall review data concerning current and future electric transportation adoption and charging infrastructure utilization prior to authorizing an electrical corporation to collect new program costs related to transportation electrification in customer rates. If market barriers unrelated to the investment made by an electric corporation prevent electric transportation from adequately utilizing available charging infrastructure, the commission shall not permit additional investments in transportation electrification without a reasonable showing that the investments would not result in long-term stranded costs recoverable from ratepayers.

(d)

(e) This section applies to an application to the commission for transportation electrification programs and investments if one of the following conditions is met:
(1) The application is filed on or after January 1, 2016.
(2) The application is filed before January 1, 2016, but has an evidentiary hearing scheduled on or after July 1, 2016.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code.
SECTION 1.

(a)This act shall be known, and may be cited, as the Green Hydrogen Act of 2021.

(b)The Legislature finds and declares all of the following:

(1)Hydrogen fuel cell electric vehicles are electrically driven vehicles that produce zero emissions of greenhouse gases, criteria air pollutants, or toxic air contaminants.

(2)Hydrogen fuel cell electric vehicles are a commercially available, one-for-one replacement technology for conventional, petroleum-fueled vehicles in medium- and heavy-duty applications.

(3)The increased use of hydrogen as a transportation fuel can provide significant supplies of clean, safe, and competitively priced fuels, which not only can improve air quality but also can reduce dependence on foreign energy supplies.

(4)A high quality, reliable, and cost-competitive hydrogen fuel production, distribution, and nonretail fueling infrastructure network must be built to develop and sustain a market for medium- and heavy-duty hydrogen fuel cell electric vehicles.

(5)Utility participation in the construction and operation of nonretail medium- and heavy-duty hydrogen refueling stations is needed to promote competition with oil companies and others selling hydrogen as a transportation fuel and to help develop a market for hydrogen fuel cell electric vehicles.

(6)There are long-term benefits to utility ratepayers from the production, distribution, and sale of hydrogen for use as a transportation fuel.

(7)That it should be the Public Utilities Commission’s policy to support utility hydrogen production, distribution, and nonretail fueling programs in the medium- and heavy-duty sectors.

(8)Ensuring that renewable standards for hydrogen transportation fuel align with those set forth by the state for electricity under The 100 Percent Clean Energy Act of 2018 will ensure that hydrogen transportation fuel is at least as clean and renewable as electricity in the state.

(9)Hydrogen fuel cell electric vehicles will be critical components in achieving all of the state’s air quality and climate change goals through successful implementation of laws, regulations, and orders, including, but not limited to, the Innovative Clean Transit regulations (Article 4.3 (commencing with Section 2023) of Chapter 1 of Division 3 of Title 13 of the California Code of Regulations), the Zero-Emission Airport Shuttle Regulation (Subarticle 14 (commencing with Section 95690.1) of Article 4 of Subchapter 10 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations), the In-Use Off-Road Diesel-Fueled Fleets Regulation (Article 4.8 (commencing with Section 2449) of Chapter 9 of Division 3 of Title 13 of the California Code of Regulations), the commercial harbor craft regulations (Section 2299.5 of Title 13 of, and Section 93118.5 of Title 17 of, the California Code of Regulations), the State Air Resources Board’s proposed revisions to Title 13 of the California Code of Regulations known as the Proposed Advanced Clean Trucks Regulation, Executive Order N-79-20, and reducing emissions of greenhouse gases to 40 percent below 1990 levels by 2030.

(10)On December 7, 2020, Senator Nancy Skinner, D-Berkely, introduced Senate Bill 18, which, among other things, proposes to require the Public Utilities Commission, State Air Resources Board, and Energy Commission to consider green hydrogen, defined to mean hydrogen gas that is not produced from fossil fuel feedstock sources and does not produce incremental carbon emissions during its primary production process, as a zero carbon-emitting resource for purposes of the state’s electricity supply goals and to consider other potential uses of green hydrogen in all of their decarbonization strategies.

SEC. 2.Section 43869.5 is added to the Health and Safety Code, to read:
43869.5.

(a)Notwithstanding any other law, the state board shall, no later than July 1, 2022, develop and implement hydrogen fuel regulations that ensure all of the following:

(1)Require that, by December 31, 2024, on a statewide basis, no less than 44 percent of the hydrogen produced or dispensed in California for motor vehicles be green hydrogen.

(2)Require that, by December 31, 2027, on a statewide basis, no less than 52 percent of the hydrogen produced or dispensed in California for motor vehicles be green hydrogen.

(3)Require that, by December 31, 2030, on a statewide basis, no less than 60 percent of the hydrogen produced or dispensed in California for motor vehicles be green hydrogen.

(4)Require that, by December 31, 2045, on a statewide basis, 100 percent of the hydrogen produced or dispensed in California for motor vehicles be green hydrogen.

(b)For purposes of this section, “green hydrogen” means hydrogen gas that is not produced from fossil fuel feedstock sources and does not produce incremental carbon emissions during its primary production process.

SEC. 3.Section 740.8 of the Public Utilities Code is amended to read:
740.8.

As used in Section 740.3, 740.12, or 745.5, “interests” of ratepayers, short- or long-term, mean direct benefits that are specific to ratepayers, consistent with both of the following:

(a)Safer, more reliable, or less costly gas or electrical service, consistent with Section 451, including electrical service that is safer, more reliable, or less costly due to either improved use of the electric system or improved integration of renewable energy generation.

(b)Any one of the following:

(1)Improvement in energy efficiency of travel.

(2)Reduction of health and environmental impacts from air pollution.

(3)Reduction of greenhouse gas emissions related to electricity and natural gas production and use.

(4)Increased use of alternative fuels, including hydrogen for the transportation sector.

(5)Creating high-quality jobs or other economic benefits, including in disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.

SEC. 4.Section 745.5 is added to the Public Utilities Code, to read:
745.5.

(a)The commission, in consultation with the State Air Resources Board, shall direct gas corporations to file applications for programs and investments to accelerate use of hydrogen as a transportation fuel to reduce dependence on petroleum fuels, meet air quality standards, achieve the goals set forth in Executive Order N-79-20, and reduce emissions of greenhouse gases to 40 percent below 1990 levels by 2030 and to 80 percent below 1990 levels by 2050.

(b)Subject to subdivision (c), the commission may approve, or modify and approve, programs and investments authorized pursuant to subdivision (a), including those that do any of the following:

(1)Produce or distribute hydrogen for use as a transportation fuel, including distribution via hydrogen-dedicated distribution infrastructure.

(2)Construct and maintain medium- and heavy-duty nonretail hydrogen refueling stations to be owned and operated by the utility or to be transferred to nonutility operators, or that support the construction and maintenance of medium- and heavy-duty nonretail hydrogen fuel cell electric vehicle conversion and maintenance facilities.

(3)Provide incentives for the conversion of medium- and heavy-duty diesel fueled vehicles to hydrogen fuel cell electric vehicles or to promote the purchase of factory-equipped medium- and heavy-duty hydrogen fuel cell electric vehicles.

(c)In approving, or modifying and approving, programs and investments under this section, the commission shall ensure all of the following:

(1)The costs and expenses of the program or investment are not passed through to ratepayers unless the commission finds and determines that the program is in the interests of ratepayers, as defined in Section 740.8.

(2)The program or investment does not compete with nonutility enterprises in the retail hydrogen fueling space.

(3)The program or investment prioritizes and maximizes the impacts within disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.

(4)A skilled and trained workforce, as described in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code, is to be used to complete approved work under the program or investment.

(d)This section shall remain in effect only until January 1, 2036, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2036, deletes or extends that date.

SEC. 5.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.