Assembly Budget Subcommittee No. 4 on Climate Crisis, Resources, Energy, and Transportation, Wednesday, March 11, 2026
No chapters available yet
Legend
Transcript markers
- text Sentence being played
- text Search result
- text Intervention cited by the link you opened
Click a sentence to play the video from that moment. Select text to quote it with the speaker, timestamp and link.
More options
Speaker 1
And I'm sorry. I must stand by. Everybody gets the same one minute for this. So, it's just I'm gonna catch
Speaker 6
Thank you, mister chair, and thank you for allowing us to come out in front of you first before everybody else. As you know, I have to go to other committee hearings. I have been part of the legislative group which has worked on this issue for many months. Sustained aviation fuel and renewable fuels are important for so many reasons. There is only one way to decarbonize emissions from aviation, and that is through sustainable aviation fuel.
And yet, we have heard reasons why we shouldn't move forward with the governor's proposal, but these benefits and proposals keep getting ignored. We have not heard, talk about the reasons why we should not consider this proposal, and there are many. The proposal we have are quality benefits, for frontline communities and residents who have who live near airports. For instance, after 38% reductions in sulfur oxides, 11% reduction in carbon monoxide, 62% reduction in hazardous exhaust particulates, these proposals will mean jobs for workers, jobs that has we have seen disappear over the past year. These are family wage jobs that provide a means of raising a family, putting kids through college.
There aren't many jobs like that anymore, and we want to do everything we can to protect them.
Speaker 7
I'm a proud supporter of union labor and commitment to continue fighting for union jobs in state, and that's my cue. Thank you, mister chair.
Speaker 1
Thank you very much. Appreciate it. I realize we have many people in the, room today. We've had lots of interest in two of the proposals that we have in front of us. I want to emphasize that what we do at these budget hearings is a little bit different than what we do at the policy hearings.
At budget hearings, we do allow people to have one minute of testimony at the end. At a policy hearing, you're only allowed to stand up and say whether you support or oppose the proposal. There's more of a policy debate that that goes on. What we're trying to do at these budget hearings is collect the information that we need to analyze budget proposals from the administration. So what we have today are proposals from the administration.
They're here to give us the information that we're looking for about those budget, the questions that we have. They're here to advocate about why the administration is proposing that. We then always have a legislative analyst office, always gives us the legislative analyst analysis, which is an independent analysis that the legislature has asked the legislative analyst office to to provide to us. And we have been very appreciative over the years in terms of the insights that they bring. That's an informational piece of information also for us.
And they are expected just like the office of management and budget and the congressional budget office. The congressional budget office at the national level is trusted pretty well, bipartisan. And the same thing's true with the legislative analyst office here in terms of having the trust of people when they bring us their analysis. Then in addition to that, we sometimes have if we have academic researchers or people that are independent, from the normal third house lobbying, effort, to provide us some additional information. But we are making no decision today.
We're only beginning the process of with with two of these items that I'm I'm sure we'll have many more conversations about. Beginning the process of identifying what are the issues, what are the potential unintended consequences of adopting the action. And so today is the beginning of the discussion, not the end of the discussion. And so we will be, I certainly will be trying to identify what are those critical issues that we need to analyze, get more information on, etcetera, as we go forward. So, again, if everybody will take that into consideration as you're making your comments.
We've had lots of people contact us before this hearing. Wanted to try to put this hearing in perspective. Thank you very much. And with that, we're going to go to a sustainable aviation fuel tax credit trailer bill, the Department of Finance, and if everybody will identify themselves when they, begin to speak, and if we have, all of the panelists come up.
Speaker 1
Give me one minute. We will be ready. Okay. Who would like to begin from the Department of Finance?
Speaker 8
Good morning, chair and members. Andrew March with the Department of Finance. So the governor's budget includes a one to two dollar tax credit against the state diesel excise tax for sustainable aviation fuel sold for use in California from 2026 to 2036. The value of the tax credit is 1 to $2 depending on the carbon intensity of the sustainable aviation fuel, which, for ease of, time, I'll be referring to a SAF, throughout the remainder of this item. The reason why this proposal is in the governor's budget is that the aviation sector is one of the hardest to decarbonize sectors.
Overall, it's widely regarded as it's difficult to use hydrogen fuel or battery electric, planes, to meet the same demand that you can get from fossil jet fuel. So the federal government, and the state has acknowledged that sustainable aviation fuel is a key to decarbonizing the aviation sector. This proposal will help decarbonize the aviation sector. And with that, that concludes my comments. I'm joined by colleagues from the Air Resources Board, the California Department of Tax and Fee Administration.
We're happy to answer your answer any questions or clarify any comments made by the, my colleagues, to my right.
Speaker 9
Helen Kirstein with the legislative analyst office. So we're recommending rejecting the proposal, and there are really five main reasons we're recommending this. I'll go through them relatively quickly and then happy to take questions. So the first reason is that according to our analysis, this is a relatively expensive way to decarbonize. And in general, we think the state should focus on the more cost effective approaches first and then proceed to the to the less cost effective approaches.
The second point I wanted to make is that we also think that there's a lot of uncertainty related to the environmental benefits of this proposal and of staff, and we think that they could be significantly overstated. And there are two main reasons for that. One is that one of the effects of this proposal could be to shift the type of renewable fuel. So, basically, shift from renewable diesel to sustainable aviation fuel. To the extent that happens and it's really just a swapping out of renewable fuels, the net environmental benefit would be smaller.
Also, there is a lot of uncertainty in the literature about exactly how beneficial these fuels are. It's very difficult to measure including sort of what what the what the environmental benefits or cost would be of the inputs, and there's enough complexity that there's some disagreement in the literature. Then the third point I wanted to make is that there's a lot of uncertainty related to the potential revenue loss. So, basically, this is a tax this is a credit against diesel excise tax revenues. The administration estimates that this tax credit could be in the range of 165,000,000 to 300,000,000, kind of at the upper range.
We think that it could be smaller than that, but we also think it could be substantially larger, potentially a billion dollars or more per year. So to the extent that that's the case, certainly, that would be a pretty significant hit to diesel excise tax revenues. And then, of course, if you have drops in diesel excise tax revenues, that significantly impacts transportation. So these dollars would go typically go to a variety of types of projects. They go to local streets and roads.
They go to state projects under the state SHOP program. They also go to a a program that's called the trade corridor enhancement program. And so the the larger these tax credits are, the less funding would be available for those key transportation programs. And then the final point that I wanted to make is that in our view, this proposal deviates from really the spirit of voter improved restrictions on transportation dollars. So the voters have put into place a number of restrictions, over the years in terms of those diesel and gasoline tax revenues, generally restricting them to streets, roads, and certain mass transit activities.
This would basically divert those funds instead to the aviation sector, which we think is not consistent with the spirit. Not the letter, but not, but with the spirit of of voter restrictions. So happy to take questions at the appropriate time.
Speaker 10
My name is Aaron Smith. I'm a professor at UC Berkeley, and I I've worked on biofuels for about twenty years, and and I thank you for the opportunity to to be here to to share my my thoughts about about SAF. Air travel, as we've heard, is one of the hardest sectors to decarbonize. Batteries are too heavy to be used in long haul flights. Hydrogen takes up too much space, and so SAF has been touted as potentially one of the solutions to decarbonizing aviation.
We need something that's a liquid fuel that we can drop into fuel tanks just like we do with with current jet fuel. I wanna say three things regarding this proposal. The first, I believe the the SAF tax credit would lead to substantially more SAF being bought into the state than being projected by the administration. SAF is expensive, and therefore, bringing in that SAF would come at high cost both to the state budget and potentially to purchases of gasoline and diesel at the pump. And number three, the net reduction in carbon emissions would be small and expensive.
So to elaborate a little bit, what what is SAF? SAF is chemically very similar to regular jet fuel, except it's made from vegetable oils or animal fats. So it could be like the vegetable oil you buy at the the grocery store that you use for cooking. It could be recycled cooking oil that's been collected from restaurants or or food processors. It could be beef tallow or or corn oil that might have otherwise been used for livestock feed.
It's produced in large facilities that much like oil refineries. In fact, some of the existing SAF facilities used to be oil refineries. So to my first point, that the tax credit would lead to high SAF production. There's a lot of potential in this industry for for SAF production. There are currently six facilities in the country that are equipped to produce SAF from vegetable oils or animal fats.
If these facilities were to produce SAF, they would produce six and a half times the amount at capacity, they would produce six and a half times the amount that's been projected by the governor's office. Now, of course, they might not do that, but the the potential and the capability is there. Additionally, as an alternative to oils and fats, you can make SAF from ethanol. There's only one facility that I know of in The United States that is using that technology. There's uncertainty about how ready that technology is to scale up, but we have to be thinking about that possibility that that technology could also scale up if in appropriate incentives were there.
So to project the actual amount of SAF that would be induced by the proposed tax credit, my colleagues and I have developed a model that incorporates this tangled web that we have of federal and state policies. And our model projects SAF production at least double that projected by the administration and up to seven and a half times the administration's projection depending on how quickly SAF from from ethanol would scale up. So that's my first point. A lot more SAF. Second point, SAF production is costly for the state budget and for drivers.
The SAF tax credit would reduce diesel excise tax receipts by between 2075% given that large increase in in the amount of SAF produced. These lost taxes represent money, as we've heard, that would not be available for road construction, maintenance, and repairs. In addition, drivers would likely pay more at the pump for gasoline and diesel. To understand why, we have to dig into state and federal policies, and I'm happy to ex expand on on on that later, but we would should expect through the state's low carbon fuel standard to have higher obligations for petroleum diesel because a large part of what would happen under this tax credit is production that is currently going to renewable diesel, which is a very similar product to SAF, except we're using it in trucks in California, which shift that to aviation fuel, thereby essentially raising the cost of compliance under the low carbon fuel standard, potentially raising gas and diesel prices by 10 to 15¢. My third point is that the net reduction in carbon emissions would be small and expensive.
To understand why, remember that this proposed tax credit would cause substantial diversion from renewable diesel, which is currently being produced to SAF. SAF is more expensive to produce but has similar emissions. So we'd be introducing a lot more cost but only getting small emissions reductions. We have only so many resources to spend on climate change mitigation. Choosing expensive policies to reduce emissions means that we are choosing to reduce emissions less than we otherwise could with more efficient policy.
So in summary, SAF is expensive to produce and would generate few benefits for the climate. Promoting it only makes sense if it it creates a clear path to future cost reductions, future emissions reductions, and if we carefully manage the unintended consequences.
Speaker 1
Thank you very much. So I wanna kick this off for the administration and for supporters that have already spoken assembly members that have already spoken in in support of the proposal. And that is that these are are arguments that are being made because we're asking questions about them doesn't mean that we are not open to rebuttal arguments to exactly what they've made. So today is the opportunity for us to frame this issue and give the administration time to come back with responses to these arguments. I'm going to try to identify the arguments that I I would like to hear rebuttals to as we go forward.
And that same thing is true. We invite anybody in the public to contact us, send us letters, send letters to our committee staff in terms of rebuttals. Consistently, for the five years that I've been here as a assembly member, what I found the most satisfying is to take the strongest argument from one side and let the other side knock it down and then take their response and give it back to the other side. Then after you do that a few times, you usually figure out what you think, about a particular issue. So this will be an ongoing back and forth.
And today, the goal is to identify what the committee members are concerned about and would like to have rebuttals to, etcetera. We for the benefit of everybody, the public and every all the other stakeholders involved, we actually identify the questions that that we have before this hearing started. And so in anticipation of that, we hope that the administration's been able to potentially be prepared for some of those things. I would also like to point out that this won't be the last of higher pressured budget hearings. And I think we're gonna have higher pressured budget hearings this year because everybody knows the budget is getting in a more precarious position each year and that a structural deficit is likely down the road, that we have some beneficial revenues right now, but that the projections are we have some real challenges.
So with each of these items, you're we're going to see somebody once and somebody who's going to get cut is gonna be an unhappy about that. And that is what exactly what we need to be able to hear in terms of what are the relative benefits and disadvantages of any proposal because all proposals have that. So with that, I'd like to start with questions for the administration. Is the is this tax credit going to be limited just to California producers?
Speaker 8
So the answer is no. So it's it's, applies to staff sold into the state. And the reason is that 1988, the US Supreme Court, heard a very similar sort of tax credit structure for ethanol produced in the state of Ohio. The supreme the US Supreme Court ruled that, that tax credit was not was in violation of the commerce clause and that states could not, in effect, discriminate against out of state production. So that's why the the tax credit is structured as it is because of a decision by the US Supreme Court.
Speaker 1
So do you have any response to people's concerns that this will be leading to importation of SAF fuel rather than the fuel being purchased here?
Speaker 8
Yeah. So a couple of things. So one, the proposal relies on the existing low carbon fuel standard program, and it requires a carbon intensity that's 50% less than fossil jet fuel. Met much of the, renewable fuels that are produced in the Midwest use, crop based, so soybean oil or corn oil. Those are unlikely to qualify for this tax credit.
So we can sort of assume that maybe some of that production won't be, brought into the state. Two, in LCFS, and my colleague from CARB can also speak to this, it examines the life cycle emissions. So if if SAF is being, imported into the state, that's also included in the life cycle emissions of that. Three, in order for a a company or a firm to be eligible for this tax credit, they would also need diesel excise tax, in the state. So it's not a transferable tax credit, So it's unlikely, to our knowledge that there are any firms that currently would meet that criteria where they would, be producing SAF in the state and have diesel excise tax liability that they could then offset.
Speaker 1
Thank you. So that answer both deals with whether they can. And then the second question that we have here about leakage, basically, it's the same answer that you're not gonna get much leakage because you don't think we'll get much in the way of imports. Right? Alright.
Any response to that?
Speaker 10
Yeah. I have I have a a couple of responses. So the first one, I think about and Matt can correct me if I'm wrong, but but almost all the renewable diesel produced in The United States is consumed in California. Two thirds of that is produced from renewable, or waste feedstocks that are eligible for this tax credit. So that's a really big pool of, feedstock to use to produce these fuels that could produce SAF that could come into the state of California.
My other point is, I mean, it's it's correct that you need a diesel tax liability in order to be able to claim this credit. But if there are firms out there with tens of millions of dollars of diesel excise tax liability and there's other firms that are generating SAF and have this tax credit, I I I believe that they would find a way to set up a business structure where they could potentially claim Response?
Speaker 8
I would just note, so there are other state diesel or state staff tax credits. So in the state of Washington, they have a staff credit staff tax credit, in the state of Illinois. We haven't seen that that happen in those states. For example, in the state of Washington, there's actually a trigger on where a company would need to be able to produce 20,000,000 gallons of SAF in the state in order to trigger that tax credit to be on. There are renewable diesel facilities that produce, renewable diesel in the state of Washington that haven't shifted over to SAF.
So we haven't seen this happen in these other states. So, certainly, one can speculate that these firms would change their behavior, but we haven't seen that happen in these other states that do have, in some cases, more generous tax credits like the state of Illinois. Alright.
Speaker 1
Assembly members, I'd like everybody to feel free to enter into the to the back and forth here so that so that I love it. So that we really I I wanna narrow you know, use this opportunity to both get responses and have everybody try to clarify an issue, then we'll go to another aspect.
Speaker 12
Thank you. To the comment that you made about other states doing this already and even more generous, how how does our what you all what the governor is proposing, how is it different than what other states are doing? Are you modeled after any particular one? I'm saying that you were saying you didn't see that happen in other states. So how closely aligned are we with other states in this policy?
Speaker 8
Yes. So it's it's similar to the state of Washington's as far as it's it's, how it's structured based on a dollar to $2 based on the carbon intensity. The state of Illinois provides a dollar 50 at 50% carbon intensity, so 50¢ more than what this what California or Washington would provide at that same carbon intensity. So I think those are the two largest, sustainable aviation fuel tax credits in the nation. There are other ones in other states that have various, caps or limit the type of, feedstock or or production that they provide the tax credit for.
And I
Speaker 10
state of Illinois does not yet have a low carbon fuel standard. So what we have to do is think of all the policies, and you can stack up subsidies from all of these policies, in order to to cover the excess cost of producing SAF. So Illinois does not have a, low carbon fuel standard. Washington State has a clean fuel program that's relatively new, and so you maybe will see, evolution there. But, I mean, as I said, almost all the renewable diesel that's used in the country is used in state of California, and many of those facilities are ready to about a switch over to SAF if
Speaker 1
if required. Will you move your microphone so it's right in front of your mouth when you're speaking? Yeah. Thank you. Much good
Speaker 12
So to clarify what I just heard, so the governor's, proposition is is that other people are doing this in other states, and we're not seeing any gaming of the system. But I I think what I hear you saying is our ecosystem is different in the sense that we also have additional program, LCFS Yes. Which combined with this program could allow for some of the a changing of the behaviors of companies to maximize
Speaker 1
And this is an invitation for the other three panelists that haven't spoken. If you have something you want you you think is important or germane about any one of these topics, put you into it, if you wanna be able to continue to do that. Alright. I'm gonna move on to what's the rationale for paying for this out of the diesel tax, excise tax? Why not some other, you know, some other sources?
Why I mean, we're the the perception is this is Robin Peter to pay Paul. Right? Why take this out of diesel excise tax which has all these other implications?
Speaker 8
Yeah. So our understanding is that many of these firms are not profitable and may not have corporate income tax. So providing a tax credit wouldn't necessarily be beneficial to them. It'd also be a general fund tax credit. So given that many of these firms, their largest liabilities tax liabilities are in the motor fuels area.
The diesel excise tax was a tax we selected, but, certainly, there are other taxes or other ways to structure this. There could be you know, you could include a proposal to back fill the diesel excise tax. It's not included in our proposal, but that is something that could be considered.
Speaker 12
I have a follow-up question, but you said something at the end that I'm more intrigued about to understand. You said to backfill that you could backfill the diesel excise tax. Are you talking about from the general fund, so whatever's lost from That's Well, let me let you say Yeah. That's certainly
Speaker 8
one that's certainly one option. You could use general fund, the greenhouse gas reduction fund. Those are all options that that the legislature could choose to backfill the lost revenue.
Speaker 12
And so with the in consideration of taking out the diesel diesel excise tax, so you would be capping then the amount of credits they could receive based on the liability related to how much they contribute.
Speaker 8
Exactly. So if a if a firm only has a $100,000,000 of diesel excise tax liability, yet they produced a sustainable aviation fuel above and beyond that, they wouldn't be able to claim it in that calendar year. There there's no refund, so it'd only be they would be able to carry that forward and be able to claim that credit against future diesel excise tax liability, but they can never go negative on their diesel excise tax liability.
Speaker 12
Okay. And then how many companies would actually in this in our state would be eligible for that?
Speaker 8
So so right now, at this moment, there are four companies that have certified pathways, through the low carbon fuel standard that would meet the criteria. However, we don't know those firms' diesel excise tax liabilities, so we wouldn't know whether they would be able to take advantage of this tax credit or not. So the universe is for for just those that have a certified pathway. Mhmm.
Speaker 12
But of those four, the governor's office is not aware of what their liability relates to diesel excise to know what the exposure is. If how many actually could could actually take advantage
Speaker 8
of We we've heard from some of those firms that they do not have diesel excise tax liability. We don't necessarily have a way to verify that because it is private information. Right. But at least two of those firms have confirmed that they do not have diesel excise tax liability, which would leave only two left.
Speaker 12
Only two potential, but wouldn't know and and until they file their taxes, basically. And then, back to the backfill. So it would be taking money out of this pot that is used for transportation infrastructure and things of that sort, which is extremely important. I wear the chair of transportation hat, and talking about the fact that we don't have sustainable funding for our transportation system. So it does give me cost concern using this particular pot.
And I think I've heard some arguments say, as it relates to diesel excise tax, that if this wasn't done, then those resources wouldn't be there because those companies wouldn't be able to produce. They wouldn't be able to stay in California, so to speak. Can you speak to that as it relates specifically to this diesel excise tax liability? And I don't know if LAO has any comments on
Speaker 8
that. You know, we we haven't sort of, assumed that, understanding that certain stakeholders, that, you know, that could be a valid argument that, if there's a firm that, views this tax credit as being sort of make or break and that they would then, leave the state, then that production would similarly leave. However, I think maybe the LEO would note that diesel demand may is is not as would necessarily go away overnight, so some of that diesel excise tax may may be made up by other firms.
Speaker 9
Yeah. If I may so diesel excise tax is paid on any diesel that's used in the state. It's not just produce diesel that's produced in the state. So even if we were to see a change in the refinery structure in the state, we that would necessarily translate into, you know, a commensurate change in diesel excise tax revenue. So I think, I think one of the things to think about here is that, you know, this is money now that is going to our transportation system, and it's going to our streets.
It's going to our roads. Under this proposal, that would instead go to subsidize, sustainable aviation fuel. And likely, a lot of what would happen is some of those producers, some of those refineries that are currently producing renewable diesel, maybe they would shift to producing somewhat more sustainable aviation fuel. Maybe there'd be some additional importing. But I don't think that absent this, we would see a decline in diesel excise tax revenue because of a decline in refineries in the state because that's just that's not what's driving diesel excise tax revenue.
Speaker 8
other taxes that refineries pay. So although you may not see a diesel excise tax revenue, you may see impacts both locally and to other taxes that, that a refinery would pay. So it's not sort of this zero sum game that the diesel excise tax revenues will
Speaker 12
Just one more follow-up just in this in this vein, because I wanna make sure I understand the point. As I understand, this conversation started in the fall at the end of session. I'm kinda run out of time to deal with and address it. And some of it a lot of the conversation was around jobs and Mhmm. Making sure our producers can stay in the state and keep economy afloat.
And I didn't hear the members' comments earlier who are working on this, bill or supporting it, so I don't know what their vein was. But if I could hear from the governor's office the the problem trying to solve, given that we have LCFS and all of those other things, what is the exact problem trying to solve?
Speaker 8
So I think number one is to help the aviation sector decarbonize. Sustainable aviation fuel is two to three times more expensive per to produce than fossil jet fuel. And as you heard from my colleagues at the table, sustainable aviation fuel is is largely considered the only way to decarbonize the aviation sector right now. Additionally, as we've heard from stakeholders in previous hearings is that this could help, certain firms stay in the state and lead to continuation of jobs, of of prevailing wage union jobs.
Speaker 16
Can I just add one thing, assembly member Wilson? Thanks for that question. Matthew Botill with the California Air Resources Board. So in thinking about the the history here, over the last few years, we've had kind of a roller coaster of incentive policy that have established at the federal level with federal tax credits originally being established up to $2 a gallon for SAF and then being pulled back the more recent administration down to a dollar a gallon. And so what we've kind of seen is this whipsaw effect happening with some of the producers as they've been make trying to make plans about bringing SAF into, California or the rest of the country for that matter on the federal tax side, making it challenging to have the economics payout on the production.
And the structure right now in the market is that it is more attractive to produce renewable diesel on the incentive side, and so that's why they're they're moving into more renewable diesel production. When we think about our long term climate goals and, as my colleague Andrew March mentioned, decarbonizing the aviation sector, We're looking for pathways to decarbonize the aviation sector as one of the few sectors where we actually see fuel demand growing over time, not declining. For light duty and for medium heavy duty, we have strategies to decline demand in those sectors. But on the aviation side, we actually see growth in fuel demand over time. We've got this mismatch.
We've got incentives that are kind of pushing liquid fuels into the heavy duty sector and away from the aviation sector, but we've got a growing demand in the aviation sector for more fuels. And so we're trying to figure out how do we align these things. Thought we were gonna be there with the federal tax credits, not, and so now there's a seller option.
Speaker 12
Go ahead. I'm just gonna say you mentioned demand. And as we know it, we're you know, because of the war in Iran, there is a jet fuel, shortage, looming. And so couldn't the market, manage this as it relates to sustainable aviation fuel? Is it making more appealing when you're declining on the other side?
And then I really am gonna be done for now.
Speaker 16
Of course, demand and supplier are inexperiably linked. What the economics suggest would be that this would just result in more fossil, fuel to meet that demand. And so it's cheaper to produce, you know, trying to to, meet that demand with with fossil production. Obviously, as those price dynamics change, the the economics change, but, you know, the the history here, bears out that, without, you know, a kind of equilibrium on the the pricing, you're gonna see more fossil fuel into the system over time, in a fossil jet fuel, which is, you know, counter to our our broader decarbonization goals.
Speaker 17
Yeah. But I I think that the point that the assembly member was making was that if there's a shortage, you're not gonna see that being able to make up that difference, which would then change the price point for folks in the private net market that are producing this.
Speaker 16
I mean, these are short term trains too, so, possibly, but, you know, hard to predict what's gonna happen anytime.
Speaker 17
Go ahead. So, I just wanna clarify what I heard, because I've heard the two arguments in favor of this proposal are, one, the environmental benefit of decarbonizing a hard to decarbonize industry, which I understand. The other one is keeping the jobs in California. We obviously we heard our colleague, who represents Phillips sixty six, in her district. I think she said about 500 jobs, that are dependent on this work as well.
The flip side of that is I hear from the environmental community, yes, decarbonizing a hard to decarbonize industry, but it's only 1% of our greenhouse gas emissions, and we are there's a a huge trade off in what we can do with that money to reduce greenhouse gas emissions elsewhere that might be more effective or, from the economics per perspective of our streets and our roads that our cities and our counties are dealing with. And then also on the jobs perspective, what I just heard from you and I'm hoping you can clarify is we actually don't know if Phillips sixty six is one of those entities that would even be able to take advantage of this because we don't know if they have a diesel tax liability, which means that it could, in fact, not have any impact on their jobs. Can you can you clarify?
Speaker 8
Yeah. So, maybe I'll take the the last question first. Please. So our understanding is that Phillips sixty six does have diesel excise tax liability. They have they're one of the firms that have confirmed.
So there are two firms that said that they do not, and then this firm has said that they do. So I
Speaker 17
I think I heard that as we know that two don't, and we don't know about the other two.
Speaker 8
Apologies. Said that earlier. So so, yeah, so, Phillips sixty six has confirmed that they do have diesel excise tax liability, so they would be able to benefit from this proposal.
Speaker 8
Regarding, I think there there are two other questions. One, about the the general cost, as this as Elio mentioned compared to other strategies. When we're looking at some of our other strategies that we have in the state that are funded by the greenhouse gas reduction fund, the the cost of about a $170 per ton of GHG emission reduction is not necessarily out of the ordinary. For example, one one program that's that this committee has heard before is the low carbon transit operations program, which is funded by the greenhouse gas reduction fund. It's around a $165 a ton.
Overall, our GGRF investments, average around a $110 a ton. So there's quite a there's quite a quite a variety of sort of how how we're looking at that as far as a cost perspective. Yeah. And then as far as the point about 1% of aviation fuel or 1% of of greenhouse gas emissions, I think I'll tee it up for my for my colleague from the air resources board, but as we see, greenhouse gas, emissions shift over time, we would expect to see that dynamic change.
Speaker 1
We're gonna go to we're gonna go to miss Kirsten. She wants to respond to that comment. I'm I'm gonna you're still on.
Speaker 17
Yeah. You can respond one second. I I will express my frustration that this wasn't part of the discussion around the greenhouse gas reduction fund last year. We had a working group that worked on it for an entire year, and I think throwing around averages of how much it cost per ton in GGRF is, misleading. When you have programs that are in it, like the high speed rail that takes up a fourth of the the greenhouse gas production fund, but it has not yet produced a single, greenhouse gas production, That's part of that calculation.
And then you also have programs like sustainable land management and sustainable farming practices that reduce a significant amount of greenhouse gas reductions much more than this program per ton at a much smaller dollar figure. We were able to look at all of those in their totality and determine a package of things that we thought made sense for California. So I'm a little bit wary of taking a one off from away from that discussion. I understand you've identified a different funding source, and I and I can appreciate that. But when we talk about how we structured the capital invest program, it was looking at it in its totality.
I'll go ahead and come over here.
Speaker 9
Just a couple comments. I think one thing is, I think, just fundamentally, just because we're doing other things that may be not the most cost effective, I think it's perhaps not the strongest argument for doubling down on that approach. And many of those other programs have a lot of potential co benefits too, which have to be considered. And so we'd certainly wanna think about the co benefits of this as well as those other programs. But also just on the numbers, that $170 number assumes all that that that this program actually has all of the the assumed benefits that that that that really it's met we're measuring them correctly.
We're not having this switch of the fuels. It assumes all of that, and it assumes that they all come just from this program, not from any of the other programs that we're using both at the state and federal level to subsidize this fuel. So we've got the low carbon fuel standard. We've got the renewable fuel standard at the federal level. We've got all of these programs that are stacking.
And when you think about all of those programs stacking, number one, probably the cost effectiveness is significantly less. And then if you think about those other issues about potential overstatement because of the shuffling issue, and I think doctor Smith did some work on this as well, so he can speak perhaps to that. But the cost effectiveness would be much, much less potentially under that kind of scenario. So we could be talking, you know, very, very ineffective from a cost effectiveness standpoint.
Speaker 1
Doctor. Smith, and then we're gonna go to a semiannual member Gallagher. Yeah.
Speaker 10
So as we heard, you have to think about how this would stack on top of all of the other programs that we have. And so, you know, the sort of the easy way to think about it is that jet fuel is three times as expensive to produce as SIFF is three times expensive producers as jet fuel. So it's gonna cost a lot for us to use that instead of jet fuel. Our modeling indicated that the incremental carbon emissions you get from adding this tax credit on top of everything else, 1 to $2,000 a ton, depending on, you know, what kind of production comes in.
Speaker 13
Yeah. Thank you, mister chairman. I mean, start up, I I wanna just completely agree with my colleague from the North Coast. Why didn't we have this discussion, you know, in GGRF, you know, last year? And and especially with how we're allocating, you know, these monies and how are we getting the biggest bang for our buck.
I'll I'll add to that wildfire mitigation, fuels reduction that we could be doing in our forested lands. The LAO has pointed this out many times is one of the most cost effective ways to reduce carbon. Why aren't we doubling down on that, you know, those efforts? I think we could be doing that. That's something we should be discussing.
But, you know, I think it's interesting that you're here today on behalf of the governor concerned about the loss of refinery blue collar union jobs and another refinery, you know, going out of the state when we all know the history. You know, I've been here a long time. And I was here two years ago when your boss said, I'm gonna jam the legislature, you know, with his proposals to stop the the oil companies from gouging us. That was the word that was used. Right?
And we fast tracked these policies through the legislature. I opposed them. We fast tracked them, and the workers came in here and said, don't do that. That's actually really bad. That's gonna hurt refineries.
There was a whole long long list of them who came in here. But nonetheless, your boss said, nope. This is what needs to happen. I'm gonna jam the legislature. And you know what?
Unfortunately, this institution let it happen. And what's happened since those policies have been passed? Two refineries have closed. We've lost 18% of our refined gas. Jet fuel is not down because of the Iran war.
It's down because of these policies and the shutdown of those two refineries. 1,200,000 gallons of jet fuel that is not here today because of that policy. But now you come here today and you say, well, we're really concerned about the loss of refineries and jobs. Where was that two years ago? And this is where I'm gonna get to my question.
Yeah. What discussions were done on on behalf of the administration with leadership to stop the re the closure of refineries, to talk about this GGRF fund. Where was that effort even last year, you know, to make sure that this wasn't gonna happen? Because it's kind of it's a little bit too late. We've already lost two refineries now, and gas prices are going up, and we're losing jet fuel supplies.
Like, so
Speaker 13
I think they should have to answer that. What have you been doing before this day?
Speaker 1
I'm gonna intercede before I'm gonna intercede before we it's the number one focus here is try to get the information about the administration's proposal and counter arguments about that. To the extent that you can answer the question that that was asked, feel free, but it's perfectly fine for you to say you weren't involved in that part of it. We have people from from the Department of Finance who are just specifically focused on this tax credit. So do you have information of in response that's responsive to mister Gallagher's question?
Speaker 8
Unfortunately, as I remember Gallagher, I do not. Those weren't discussions that we had regarding the budget sort of over the last couple of years. Happy to take those questions back though and see if we have response for you.
Speaker 1
Thank you. And I I just want to emphasize we've have you this this is gonna take a little bit of time today, and the next item is gonna take a little bit of time also. So for for everybody, because we have a number of you that have come in since then. At the beginning of this, I I said, the emphasis here, we're not making a decision today. We're trying to get the information that we need about this as we try to create budget priorities.
So if we can try to stay as focused as possible on pulling out questions that they can be responsive to, that they have information about, that will help us clarify this is what I'd like to do. So I'm gonna jump to the yes, sir.
Speaker 13
I mean, just the gentleman here here today, he he he works for the governor. Right? But I understand he wasn't involved in those discussions. I do think that we can't really talk about the subject matter here today if we don't talk about the history of how we got here.
Speaker 13
And so that's why I do think eventually I would love to have someone from the administration come and report to us That's about what they've been doing since that time.
Speaker 1
Fine fine fine request to make that request today. But there are tens of thousands of people that work for the governor, and they all can't answer, all those questions about what happened then. But that's a that's that's a fine request as as we do it. So, I want to go back and try to make sure we're we're getting to these questions, and this is a healthy robust real quickly, you talked about life cycle analysis. That's true on low low carbon fuel standards, But is this tax credit going to have a life cycle analysis also?
Speaker 1
So I just wanna get that on the record in terms of whether that was was going to be the case, for this. Wanna frame the the big this question in in the big picture. I think there's strong support amongst legislature that we don't we wanna try to make sure refineries don't close prematurely. So we're we're we're interested in trying to do that. There's strong support for we wanna try to decarbonize all the hard to decarbonize areas.
The questions being raised here today are, is this the most efficient way to do this? Does this have unintended consequences doing this this way? What's what's the what's going to be the impact? So I I want to come back. I appreciate you saying it doesn't have to be this way, but right now, it is coming from the diesel tax, and it will have an impact on that.
And the administration right now with this proposal is comfortable with the impact, the decreasing of the funding for transit transportation. They feel like this is this is an appropriate trade off?
Speaker 8
Yes. I mean, when you're looking at overall the amount of funding that goes towards transportation of at a $165,000,000, this would be a a small decrease in the overall amount.
Speaker 1
Great. Thank you. And then there's some there's been some some statements and arguments made by LAO and doctor Smith that this can potentially increase diesel prices. And at a time when we're focused on the product I mean, the cost of living issue, how can what does the administration have strategies to make sure this doesn't increase have a have a negative impact on diesel prices? And and gasoline prices because there can be a shift shift in refinery capacity.
Speaker 8
So I believe the analysis that UC Berkeley relied on is is assuming this sort of shuffling between renewable diesel and sustainable aviation fuel and decreasing the number of low carbon fuel standard credits that are produced. That that sort of hinges on the assumption that there there wouldn't be, from our perspective, that there wouldn't be additional biofuel capacity in the nation. Over the last five years, we've seen biofuel production increase steadily. So we would anticipate that additional SAF would be additive to renewable diesel, and that there could actually be additional low carbon fuel standard credits that would be produced, which wouldn't have that sort of impact that, that others have been claiming.
Speaker 10
response? You So I I mean, I wouldn't characterize it as an assumption. I mean, we were modeling the the cost curves for these these different different fuels. And so the the argument there is to say we're producing in the nation a certain amount of renewable diesel. If we incentivize SAF, we're gonna produce it on top of what we're already doing using these waste fats and oils.
So my question is, are those waste fats and oils just sitting there not being used right now? Because if if they are, why aren't these companies using them to make renewable diesel right now? They could be. So that suggests to me that those fats and oils are not just sitting there waiting to be used. And so in order to be able to use them to make SAF, you're gonna have to bid up the prices.
And you bid up the prices, and that's gonna be gonna be raising costs. And so so I'm not you know and and that's what we sort of have out of our modeling. That if you wanna use more of these fats and oils to make biofuel, you're gonna have to drive up the price in order to do that because you someone else is gonna have to give up their use of it. And so, and so it's not so much we're assuming that there'd be substitution, but that barrier of if you expand, you're gonna be raising cost means that you'd be more likely just to see a switch from what's currently be used to make renewable diesel instead used to make SAF.
Speaker 16
Yeah. Just just a couple of additional points. You know, it it does appear that there is a fair bit of additional capacity in the existing biofuels refineries to to increase the amount of renewable diesel and and and SAF production as well. He says
Speaker 16
Total total announced capacity versus the amount of volumes that are that are coming to to to California. And I will say, kinda going back to my earlier points, that some of the changes in the federal tax code did inject a lot of chaos into this situation. And one of those things that one of those changes was limitations on the amount of imported feedstocks and how those get credited under the tax credit program at the federal level, which has kind of created a situation where some of those imported waste oils now, you know, may have a may have a harder time finding a home. And so, you know, there may be additional ability to import waste oils to be able to increase the overall total capacity. And, you know, just I I I heard from someone with Gallagher about thinking about the history of this.
I mean, we have seen, over the last ten years, the total production capacity of renewable fuels go from almost zero to now what's, you know, around, four to 5,000,000,000 gallons nationally. So there was a lot of predictions when we first rolled out our our programs about the inability for, fuels to be able to be produced, renewable fuels to be able to produce that that haven't come to pass. And so, you know, this is, something that, you know, we could see potentially continue in the future as production grows.
Speaker 1
So if you have data on on the potential excess capacity out there, I I would appreciate being able to see that.
Speaker 10
was just gonna say, I mean, and there's two things here. There's do you have the excess capacity in your refinery to produce more? But in order to actually take advantage of that capacity, you've gotta buy the feedstock. You gotta buy the waste oils and fats to put in there. And so that's
Speaker 1
And and that's what I'm hoping to find out. Yeah. They have if they have information about the excess feedstock that is out there. Is it is it out there? Question for the administration, and that is, why not do this do this tax credit against these other taxes instead of just renewable diesel?
Why not against corporate profits? Why not why limit what what why
Speaker 8
My understanding is that many of these firms do are not profitable and don't have a large corporate tax liability unless there was a sort of a refundable tax credit made. So that's that's certainly an option. It would it would introduce, some additional complexity to the system versus what we proposed.
Speaker 17
Thank you so much. Actually, I wanted to ask a question about kind of the flip side of this proposal, which is loss of revenue in in programs. Three specific programs, the shop program, the local streets and roads, and the trade corridor enhancement programs. When I was on a city council, we utilized those programs, and I seem to remember SHOP in particular being very overprescribed that the amount of projects that come in for that funding far exceeded the amount that we had in the account. So if those are the three main programs that are gonna be impacted by the cost, the the potential shift of this funding away, can you tell me what the status of those programs are?
Have what level of of requests are you getting in those programs? I know we've got, I believe, cities in in CSAC who have waited on this proposal as a result of that. How will it impact, our cities and our county's ability to access those programs?
Speaker 8
Yep. I have a colleague from my transportation unit that, may be able to answer, some of those questions for you as someone member.
Speaker 1
Great. Time for the big switch. Perfect. Alright. So we have somebody from LAO that that can also help answer that question.
And so you could no. First first, we want the administration to be able to answer the question. Right? There you go. You're on.
Speaker 20
Good morning. Ted Dillon from Department of Finance. I can speak for Paul.
Speaker 1
That microphone really right up to your mouth there for a break. We have fans on here that we can barely hear over.
Speaker 17
can Yeah. So for the for those three the three identified, I and I know that there's probably more than that, but the SHOP program, the state highways operation and protection program, the local streets and roads, and the traffic corridor enhancement programs that could potentially see a reduction in funding if this was was approved. Can you talk about how many proposals are coming in from local jurisdictions for for money from those pots? How much less would be available to them to do projects? Can you help us to quantify what the impact on local government operations could be if that funding is not available to them?
Speaker 20
Yes. So, assuming we use a 165,000,000 reduction, you know, based on this proposal So from our calculation, the local would be the impact to the local side would be about 77,000,000. So that's to go to local streaming role, then the remaining 88,000,000 would be for all of the state investment and transportation. So that includes SHOP. So SHOP, we would be looking at 47,000,000.
So let's go to Caltrain, and that money go to SHOP. And then you have 47,000,000 plus 23,000,000 to SHOP and Cowtrain. And then for TCEP, which is $46,000,000, and then you have RMRA as well. These but, anyway, the stay would be $8,087,000,000 in total, and then local is 77,000,000 in total.
Speaker 20
So Caltrain, that's the money that go to the state highway account for Caltrans operation.
Speaker 17
Yeah. For each of these programs, you know how many in the last funding cycle, how many applications came in and how many were funded? Do you have, like,
Speaker 20
a specific program that, application what what program are you referring to?
Speaker 17
So when funding is made available specifically for local government. When funding is made avail available and local governments put together their RFPs and they apply for the funding, how many proposals did you get versus how many were you able to fund?
Speaker 20
So, unfortunately, that I don't I don't have that information, but I'll, you know, happy to, you know, work with, you know, Caltrain and be able to provide that information for you.
Speaker 21
Yeah. Just to provide additional clarity, Frank Jimenez with the legislative analyst office. So there are three impacted programs. There's SHOP, which is Cal trans, major rehabilitation. So that's not local governments applying to Caltrans for funding.
This is Caltrans going out, doing work on the state highway system, which go through Yeah. Right. Many local communities. So there's no, like, application there from from locals, for that funding. There wouldn't be any immediate impacts in the near term based on the reductions, that are estimated by the administration.
Caltrans would continue with its current workload, but that would mean less money in the out years. Ultimately, less projects being done over the long run. On the local streets and the roadside, that's funding that the state sub allocates out to cities and counties. So they're not applying for the state. A lot of that money goes out by various formulas, mostly driven by population.
So that's less money going to cities and counties across the straight the state that's going to their local coffers. So it's not necessarily that there's less application, but less money going out. So there will be very disparate impacts across cities and counties across the state. And then TCEP, the trade corridor enhancement program, that's a competitive program. So that's less funding available to allocate to local governments.
I'm happy to work with your office in getting back how many local communities apply to that particular program and how many awards. But, generally, all the money that's provided to that program on ongoing basis is is used every year.
Speaker 17
Right. So just to clarify, so the first two, however much comes in by formulas allocated out
Speaker 14
Thank you, mister chair. Okay. So I think we're focused really on two questions. So number one, is this a prudent investment, relative to other choices that we have before us? And I, you know, hear the LA LAO saying that your assessment is no.
And I guess my my key question there is, I think I need to better understand where we are with respect to, I guess, what I would call the innovation curve for sustainable aviation fuel. So California, you know, the state, we've set very ambitious and aggressive decarbonization goals. We have a long history and, actually, I would say a very successful history in making state funded investments in early, and emergent technologies, you know, I e rooftop solar when the costs are here, and then over time, the cost goes down and the subsidy is not needed. So is that what we're talking about? Are we making an investment that we expect to stabilize an industry and pay off over the long term?
Are are we just supporting an industry that we're gonna need to support for the next hundred years?
Speaker 1
I'm gonna kick it to Department of Finance first or anybody from the administration to answer first, and then I'm gonna go to doctor Smith to answer in LAO.
Speaker 16
Yeah. And this is Matt Bottiga with the California Resources Board. Happy to take a first shot at at this. And so I think you've heard from a number of our panelists about the the challenges in decarbonizing the aviation sector. When we did our 2022 scoping plan, we looked at what are the technology options for decarbonizing aviation.
We identified three main strategies, sustainable aviation fuel, battery electric aviation, and hydrogen combustion aviation. The hydrogen and battery electric side, very nascent industries. There's a lot of technical challenges and engineering challenges to overcome there. So because of those, those potential challenges and, the availability the availability of sustainable aviation fuel, the production pathways that exist, we put in place in the scope and plan a target that we would have 80% of our aviation fuel demand be met with save sustainable aviation fuel by 2045 as the primary strategy for that sector, knowing that battery and hydrogen combustion was going to be a big challenge. That is not true for some of the other fuel demand sectors like the heavy duty space or the light duty space where they have a much clearer path on innovation on battery electric and hydrogen fuel cell electric vehicles.
So, you know, if we're going to get to those 2045 objectives of carbon neutrality, we need to make investments in the types of long term approaches that are necessary to get there. Sustainable aviation fuel is one of those. As I mentioned earlier, there seems to be a mismatch in the incentives to get us to that twenty forty five objective, and this would be one way to kind of equal the playing field. And
Speaker 10
Yeah. You're you're asking, exactly the right question. And and so as we've heard, sustainable aviation fuel producer using current technology with with oils and fats, three times as more as expensive as jet fuel. It needs a lot of subsidy support to be produced. It's also a relatively mature technology.
So I don't see a pathway for potentially lower costs over time for this kind of fuel. In terms of scalability, I mean, we're talking, you know, a a pretty small fraction of California jet fuel use. If you expand that out to the rest of the country, we'd pretty soon run out of waste for fees and oils, and we'd have to plant the entire United States with soybeans in order to produce enough fuel to to be able to replace old jet fuel in The United States. So so I I'm pessimistic that it's that it's sustainable, economically sustainable there. And and so, you know, I'm optimistic that twenty years from now, might have e fuels where we have super cheap electricity, where we can we can manufacture hydrocarbon liquid fuels.
But but I I I don't see a a a huge learning curve for this particular technology.
Speaker 14
So you said sorry. You said that it is a mature technology, which is why you're pessimistic about the ability to drive down the cost curve. Alright.
Speaker 16
Can I can I add just one one piece? And and I I think doctor Smith made a couple of points here that I
Speaker 16
Yes. So in terms of producing sustainable aviation fuel from oils and oil based feedstocks, that is relatively mature. He did mention e fuels. This is being able to, produce sustainable aviation fuel from, renewable or nonrenewable electricity, for instance, or alcohol to jet technologies. These are, more costly.
And while the production pathways are known, they are even less economical than producing sustainable aviation fuel from waste oils or or virgin oil feedstocks, you know, making it even harder to get to those technologies when you have the incentive stack that we currently have. So even less kind of reason for a producer to, go into those later stage SAF production technologies. I just wanted to clarify.
Speaker 9
Yeah. I I just echo some of the comments that doctor Smith made. So it's our in our assessment, it seems likely that this would probably basically fund the existing technologies and the existing sort of relative even though, in general, SAF is is not as cost effective, it would probably be the more cost effective of the SAF, which is the sort of, you know, using those, tried and true approaches rather than innovation. And so I think another way to think about this, because we do think that that is exactly one of the times we might wanna do something that's not cost effective, is if we can really change the change the sort of structure and get innovation so that we can build what we need for the future. And we just don't see that built into this structure.
Also, because this is basically just subsidizing likely in our minds existing technology, again, we don't feel like you need to do it right now. You could do the more cost effective approaches, and then later on, you know, when this is really your last thing that you need to do, you could you could do this kind of approach. But, again, if you want, you could structure it differently and maybe really try to focus on that innovation curve, but we don't feel like as structured
Speaker 14
Right. That's helpful. I guess I would just say that I'm gonna definitely listen to the chair's guidance and stay focused on on this topic, but I I think that there you know, some of what of the conversation we're having does speak to a, larger and more important truth that we have goals. We need to align investments to support those goals. If we look at those goals and say, oh, that's literally impossible, then we need to have a bigger conversation.
But my understanding is that this is kind of an existential moment for SAF in California. So I don't know that we have optionality to say, oh, if we don't do this today, we're gonna do it in five years. So I I think that's also important for us to acknowledge because I do think that if we don't make this investment now, we're never bringing SAF back to California.
Speaker 10
I I would disagree with that. Okay. I think there's a lot of these facilities that are already producing renewable diesel, that's a very similar product. They could pivot, and and a lot of refineries already are ready to to pivot if necessary to produce SAF. So they're they're similar enough that I think that if we're continuing to use renewable diesel and the federal government is incentivizing that even more as as California through the LCFS, then that renewable diesel capacity is gonna be there and that could be pivoted to SAF, I think, any point.
Speaker 14
So I have another so I think because there's two questions. That's the first one. The second really is, like, the unintended consequences.
Speaker 1
That question. Let me let him respond, and then you can do that next question.
Speaker 8
Yeah. Thank thank you, chair. I would just note this this notion that renewable diesel production could easily shift to SAF, I think, is maybe a little bit misguided. It requires significant investments in order to shift the refinery, from renewable diesel to produce sustainable aviation fuel, significant capital investments, and it takes time to do that. Additionally, the process itself is is more intensive.
You you receive few less yield for your feedstock. It also requires significantly more hydrogen to produce. So I I just wanna make that very clear that it's not necessarily that I'm producing renewable diesel today. Tomorrow, I can easily produce sustainable aviation fuel. There is a long a longer lead time to be able to make that transition.
Speaker 1
Had some interesting conversations about that, in my office, but I will keep those to myself for right now and go on.
Speaker 14
Okay. So as I said, it's yes. We've got kind of two key questions before us. The first being is this, you know, a good use of our investment? What's the ROI?
The second, and equally important, are there unintended consequences, and are we somehow going to unwittingly drive up the, you know, the cost of diesel and gas? It seems like you all are working off of very, very different assumptions regarding, the scarcity of the, I guess, necessary ingredients in the market. I guess that one, that feels like that should be knowable for for the committee, that we should be able to get to one version of the facts and one version of the understanding of, the market scale. So I guess just as a follow-up, can you send to our offices kind of the, you know, the market data that supports your perspective? So it's the the Berkeley study is predicated on an assumption that there's a scarcity of ingredients in the market, if I understand.
Whereas, CARB perspective, it has or DOF's perspective is that there's actually a lot of, market capacity, and therefore, won't drive up the price.
Speaker 16
Just just to clarify my my point. I think the the question about, like, how much fuel production capacity exists is is relatively knowable because that's, you know, based off a refinery size and and refinery throughput. The question about how much feedstock, how much inputs into those refineries is available is a much more challenging question to actually, you know, hone in on and say it's noble. There's definitely ranges. There's been lots of studies that have been done, and it does rely on, kind of what your, approach is to understanding the market dynamics of the availability of that feedstock, how much could get produced based on certain pricing.
So happy to share information with you all, but I just will say that that is one of those areas where there's gonna be a quite a bit of a diversity of of views on it.
Speaker 1
I think that assembly member Wilson has has a question. I think that this was an invitation from assembly member Petrie Norris. If you're going to set to send us your assumptions of of about this feedstock question in particular and and and capacity questions. But if you'll send that to the committee so that all the committee members have that. Assembly member Wilson, and we're gonna we're gonna narrow start to narrow this down.
Right? Okay. This could yep. Oh, you don't have a question anymore? Oh, great.
Well, let me let me let me let alright. I'm I'll wrap this up then. And that is I I mentioned earlier, but I'll mention again, I think there's strong interest in the legislature to keep our refineries that are operating here in California operating. We we need that certainly, and and we're we're trying to be supportive of of that happening. We're also trying to keep jobs here in California.
We also want to try to decarbonize hard decarbonize sectors. Assembly member was asking those questions. Is this the moment? Is this the is this the moment where we're this investment is going to help jump us to a new technology that that is is going to do that? So we want to accomplish all of those things, and that is the one place where I think we have pretty strong agreement is that is if we can make technological improvements, those are good investments to make, if if we can do that.
The question that is being raised by the LAO and by the Berkeley study, etcetera, is not just is this a good investment, etcetera, but are there unintended consequences, or are there consequences that are out there? So a real concern for me is I want to keep the jobs in California. And I'm not I need to be convinced that these jobs are not going to go to to production facilities outside of the state who are going to say, hey, we can we can collect this tax credit in California. Will we be incentivizing? Because in my mind, the real what we're really trying to do is we have one refinery that is probably the focus of the of this effort that we're trying to try to get some help to.
I'd like to get help to that refinery without necessarily creating a program that may end up having the benefits spill outside of the state. If I'd I'd like to be more creative. I'm not opposed to getting the money to that refinery, but let's get the money to that refinery if that's what we want to do. We simply are trying to subsidize that without necessarily, again, getting it out of the state. The second thing is I'd like to do that in a way that doesn't cost jobs in the other sector that is going to be receive less funding.
So just as we're making arguments, these are refinery jobs that are being protected. If we decrease the funding for SHOP and all of these other programs, that is that creates fewer jobs in those industries that that are out there. So for me, the the the jury is still out in terms of these unintended consequences. I think we had a very healthy and robust conversation here today. This is an invitation to continue the conversation.
This obviously has lots of interest. And so, again, no decision can be made, but let's continue the conversation. Everybody is invited to keep funneling it to committee staff, and committee staff will make sure the other committee members get this as as we go forward. And if we have to have another conversation about this, we will have another conversation about this here if we have to. Right?
Because it's it's important to get the these kinds of things correct. And with that, I really wanna thank the panelists and I wanna thank everybody. This was a very, I wanna say appropriate and professional conversation, that everybody had. And a lot of times, political conversations aren't real professional, nowadays and stuff. So, it, was very healthy for us.
So thank you all. Thank you very much. And I appreciate staff for making sure everybody knew in advance what the big questions were, so that we could have such a healthy debate. We're gonna go on to issue number two, zero emission vehicle incentive trailer bill. You got questions on this one too?
How about you? You got big stuff on it? Yeah. You wanna go first? Yeah.
We'll we'll start you off. Right? Okay.
Speaker 1
Members have priority. Okay. This is, issue number two, zero emissions vehicle incentives trailer bill. And, before we get started with the Department of Finance, starting, we have an esteemed assembly member who has another place that she has to be and has asked to make her comments right now.
Speaker 12
Thank you so much, mister chair, for the flexibility. I have the opportunity to speak to some students, and they came all this way to the capital. I wanna make sure I get a chance to honor that request. And so, I think, you know, this this need to inject 200,000,000 into our zero emission vehicle, progress is extremely important given the fact that what, happened at the federal level in terms of withdrawing funds. So I'm very supportive of it.
I am very supportive of it being towards light duty as that's where I think the injection needs to be and can be deployed quickly within this next year. I recognize that there has been desire from those, and I'm looking in the room because I see them, who wanna see some of these funds go to medium and heavy duty. Although I primarily would like to see the injection into light duty, I recognize the need for that, and I look forward to the conversations, surrounding that. And I would say that when looking at medium and heavy duty, I think we should lean towards the medium, duty space versus the heavy duty space and look for other ways to ensure that we're able to fund HVIP and and things like that because that's extremely important. But as it relates to this 200,000,000, I think it's better suited to that direct injection, and I think there should be, three things that I'll add that, for our new vehicles having that split between, the OEM and this, type of incentive, I think, is beneficial.
I think our cap our MSRP cap should be raised on, the price of a vehicle and it including just like the base model. I think if you upgrade your stereo, it shouldn't matter when it comes to these types of incentives. So I think do things are different between what's eligible as it relates to the cap versus not. I don't think we should do income caps at this stage. In terms of the used vehicles, I do think we should have a portion to our used vehicles.
There is a lot of used vehicles, and that is an opportunity for someone of low income or or lower income to be able to get into the EV market versus buying a new vehicle. And we've had a lot of those come into the market because of the lease requirement, so that's extremely important. And then last but not least, we're gonna stay on subject because I see to the chair, I think it's worth flexibility, that we still have to address this issue as it relates to multifamily, homes. 40% of our folks live in in across the state live in multifamily home, and so we really wanna, advance on this zero emission progress. We're gonna have to work on infrastructure and multifamily.
This money is not to be deployed to that, but it's in the greater context. We need to be, considering that, and I look forward to continuing to discuss. And thank you for the flexibility, mister chair.
Speaker 1
Department of Finance. Again, if everybody will identify themselves before they begin.
Speaker 24
Good morning. Brandon Merritt, Department of Finance. And actually, I'm gonna turn it over to my colleague from CARB to present this item.
Speaker 1
Alright. And you can those microphones are mobile. You can pull them nice and
Speaker 4
close. There you Excellent. Well, good morning, chair, members. Courtney Smith, California Air Resources Board. As you know, earlier this year, the governor proposed a one time $200,000,000 appropriation to the California Air Resources Board, and this is to establish a new incentive program for zero emission vehicles.
And it's focused on helping keep California's ZEV transition moving forward, especially in the wake of the federal administration's cancellation of the federal tax credit. This proposed pro program is very much focused on helping more residents become first time buyers by providing incentives that are at the point of sale, focused for first time purchases or leases of new and used light duty zero emission vehicles. And the reason we're focusing on first time buyers is because research shows that once you go electric, you don't go back. For someone that once owned a zero emission vehicle, the chance that their second vehicle is electric is 82%. So by limiting it to the first time buyers, this program will really help focus on expanding the ZEV market in California.
Importantly, the proposed program would require for one to one funding match, with original engine manufacturers that participate. So this effectively doubles California's investment. With the expiration of the federal tax credit, we are seeing that consumer demand for light duty zero emission vehicles has slowed, and so this is creating a critical moment and a need for us to take action so that way we can maintain momentum of that transition. And I think most most folks know that addressing, pollution from mobile sources, remains critical as they are still the largest contributor to ozone and particulate matter pollution in this state. So this program would help fill in a very important gap that exists in our current ecosystem of clean transportation investments.
So with that, I'm happy I think we're all happy to answer any questions you have and look forward to the discussion.
Speaker 1
Great. Thank you. Anybody else from department of finance administration will go to LAO?
Speaker 9
Helen, Christine again with the legislative analyst office. So we're recommending rejection of this proposal, and there are three reasons I wanna highlight for that. The first is that in our view, this proposal doesn't meet the really high bar that we're recommending the legislature apply to new proposals this year. And that's really as I think my colleague last week spoke to the committee about this. That's in light of the significant budget challenges that we think the the the state is facing, not just this year, but really on an ongoing basis, given the structural deficit facing the state.
We think certainly that GHG reduction is important, but the state does have other programs that are aimed at that. And so we think that funding this new program in light of that is is less of an urgent and critical health and safety need. Secondly, we would note that it's hard to evaluate this program because there's not a lot of details at this point. A lot of those will be worked out through the regulatory process that CARB is expecting to undertake. So it's very difficult to assess, but just given the amount of money available, it we think it's unlikely this is gonna make a big difference in ZEP sales.
So 200,000,000 one time, you know, that's not probably gonna move the marketplace in a in a huge way just because the even if you assume about half of the vehicles qualify, we're still talking about maybe a thousand dollar rebate per vehicle. So in context of the the the cost of vehicles, still relatively modest. And then third, we would note that this could result in duplication. The state has supported other programs and currently has some other programs in place related to zero emission vehicles. Some of those are running out of money.
And so thinking about how does this interact with those, I think, would be important. We don't have those details yet because they're still to be worked out, but really understanding, like, does it make sense to add a new program? How does that you know, does that affect administrative costs? How does that affect how we can analyze which program is having which effect? Those types of things would be really important.
So happy to take questions at the appropriate time.
Speaker 17
Oh, thank you so much. And I think that that's one of the fundamental questions I did have is, can you walk us through what current, support networks or incentives there are in the the light, the medium, and the heavy duty space?
Speaker 4
Yes. Absolutely. Yeah. Appreciate the question. As I mentioned earlier, this proposed investment is really intended to fill a gap, in our broader ecosystem of investments.
So on the light duty side, we currently have, Clean Cars for All program as well as the DCAP program, which is statewide that is very much focused on providing, assistance and incentives for light duty vehicles, for low income disadvantaged communities. So we do have programs that exist. Money is still flowing. There are some programs, as LAO noted, that are slated to run out of money this year. In addition, on the medium and heavy duty side, last year, the legislature allocated a 132,000,000 from the Hino settlement to go to our HFIP program, which is focused on medium and heavy duty.
In addition to that, we are, we have between last year and this year's fiscal year, 70,000,000 in the air quality improvement program pot of money, so we plan to focus that. We we need to decide, but it'll be in the medium, heavy, or off road vehicle space. There's also a $130,000,000 proposed as part of, the governor's budget for the Carl Moyer program, which focuses on scrapping and replacing polluting vehicles. And then in addition to that, we also have a 177,000,000 proposed as part of the, CAP program. This is not directly intended to support this is the community air protection program.
It's not directly a vehicle program, but oftentimes, communities through their community emission reduction plans decide to invest in infrastructure, cleaner buses. That's another pot. On the medium heavy duty space, in addition to those programs I mentioned, we also have the clean fuels reward, which is, part of our low carbon fuel standard program. That is anticipated to be available this summer, and it very specifically focuses on, providing supplemental support for class eight heavy duty trucks. So as as you're hearing, we have a broad ecosystem of incentives.
What you didn't hear me say is that we have an incentive program that's focused on us supporting the ZEV market broadly. And that is what this proposal aims to do is to be able to support it in a time where we're seeing, I would argue, an unprecedented decline in market demand that we've seen since and as a result of the federal government stepping back from the federal tax credit.
Speaker 17
And I appreciate just to dive into the data a little bit. You've got a a great chart in the analysis about zero emission vehicle sales. How is that relative to all auto sales? Is the loss of the incentive at the federal level, do you see that in the data, or is there an overall decrease in folks purchasing vehicles?
Speaker 4
So since about 2022, we have seen the portion, so the the percentage of sales, in California going towards zero emission versus internal combustion engine counterpart be within the range of about 20%, and it's ratcheted up through time. At the highest point, it was 29%, and that was the third quarter last year, and that was a result of folks running to take advantage of that tax credit before it expired. And so you've definitely seen in California a upward march towards more and more of the proportion of purchases being zero emission until now. And so in the fourth quarter of last year, we saw sales decline to 19%. But it's important to drill down into that number because I think it masks a little bit the severity of that that that decline.
October remains high, and that's hangover from from the surge that we saw in that third quarter. Vehicle registration data takes a minute sometimes, so that's reflected in that October number. But when you look at November and December, those sales rates are 1315% respectively, a significant decline, numbers we haven't seen since 2021. So this is the what we are seeing is that more folks are choosing internal combustion engines when they go to purchase a vehicle than they had otherwise. And that's the problem we are hoping to help address with this proposal.
Speaker 17
No. That was really helpful. Thank you. And then, I think my last question for now, one of the criticisms of of many of these types of programs is that it tends to subsidize folks who have a higher income. I appreciated your explanation on how this was geared towards first time electric vehicle purchasers.
I think that that's a really good thing to to highlight, and I'm supportive of that. But are there any additional metrics that or mechanisms that you can put in place to make sure that this is incentivizing folks who otherwise would not be able to afford an electric vehicle to get into an electric vehicle as opposed to just helping pay down part of the cost for folks who already can afford it?
Speaker 4
Sure. No. I appreciate the question. Anytime you have an incentive program, there's always the risk that you aren't changing behavior. Right?
That someone would have purchased it anyway, and you're just making it cheaper for them. Fortunately, we have really good data that suggests this does change behavior. There's research out of MIT that suggests that for every thousand dollars that you incent, you actually can increase demand to 6%. So we know incentives work. In terms of trying to limit, the instances in which we're not changing behavior, they would have done it anyway or we're incenting folks who could otherwise afford it, A few thoughts on that.
First, typically, when when you talk about mark market transfer transformation, early adopters for technology tend to be middle and higher income. They've already had an electric vehicle. So by that point alone, they would not be eligible for this program since it is focused on first time buyers. In addition, the MSRP cap ensures that we are not incenting electric luxury vehicles, which also tend to be higher income folks who are pursuing that option. And, ultimately, you know, the focus of this program is very much about expanding that market.
The reality is is affordability, it remains an issue for middle income folks as well. And so the sooner that we're able to deploy this money, the sooner we're able to get, Californians out on the lot experiencing this technology and being able to have a a more affordable clean transportation option.
Speaker 17
Right. I'll just see if the LAO has anything to to add or any comments.
Speaker 9
Yeah. I think not not much to add. I mean, I do think how you structure this program is gonna be really important. Right? Because we don't wanna just encourage folks who would have already gotten zero emission vehicles.
We don't wanna just pay them for what they would have done otherwise. And I think there is some other some other work that's been done that suggests, in some cases, our past programs have have done that, including a state audit and talk about how how it was difficult to piece that out. So I think really thinking about how that's done is important and thinking about how, again, this stacks with other programs because there are these other programs that are in place. And then also sometimes utilities are providing programs that are funded by LCFS as well. And how that all put comes together, I think will be, really critical as you as you think about if you wanna do this, how do you wanna do this, and what bang for your buck are you gonna get.
But, again, you know, I think our our perspective is also that, you know, are many, many calls on your limited budget, and so you're gonna so trying to make sure you're really targeted could make a lot of sense.
Speaker 18
Yeah. This is kind of an in the weeds question, but I'm hoping that you might be able to give me some kind of answers in department of finance. As part of the, 2025 budget, the motor vehicle account is very important to me, for a number of reasons. And it's my understanding that, almost all of the money that was slated to go to the motor vehicle count, a 166,000,000, and it's been described as headed towards insolvency. And I don't know if you know that, but I'm sure you do.
And that that worries me, but almost all that money, GGRF funds, a 150 a 115,000 from GGRF funds now that was going to go to that motor vehicle account is no longer going to go there. So I'm wondering if you can answer or either validate my concern on that front.
Speaker 24
Sure. I'm gonna turn it over to my colleague who is, more versed in the NDA.
Speaker 7
Good morning. Matthew Masito, Department of Finance. That is correct that the 2025 budget act included the transfer of GGRF to the motor vehicle account. But, with the updated revenue forecast for, this governor's budget, it was determined that, the fund had, sustainable balances for, the current year and the budget year. So those transfers were proposed to be, pulled back.
Speaker 1
So I'm gonna follow-up on that question. What changed? What do what do you mean? When we were told they were on the brink of bankruptcy if we didn't put GGRF funds in, are we now going to be a year from now hearing how the Department of Motor Vehicles is on the brink of bankruptcy again? What what changed?
Did some new revenue source show up?
Speaker 7
No. It's it was just simply that, you know, the the fund brings in $5,100,000,000 in or so in revenue. And so a change like a 166,000,000 or so is really, in comparison to that total number. It's not a large percentage. So basically And so the forecast, you know, moves up and down, and it moved up enough to where they we did not believe that the transfer was needed.
Speaker 1
So, basically, we're saying they have to they have to adjust their budget and and deal with a lower budget amount than we than we projected?
Speaker 9
So I think fundamentally, yeah, there's just maybe the forecast was off a little bit, and it is difficult to forecast these things. But fundamentally, I think the structure the the issue in the NBA has not gone away. That's a long term issue of sort of a structural imbalance that has faced that fund for many, many years. And so, you know, there is, the the administration's determined that we don't need to do this that that that, approved transfer this year, but, I think there is a high likelihood that we will be back to talking about the fund condition of the NBA, in pretty short order because the the the issues that have been driving the the challenges with that fund are still there.
Speaker 1
Exactly. Right. That actually So gets me to, you know, one of my questions, which is pointed out. There are all kinds of programs that have had federal cuts. And certainly health and and human services, enormous cuts in health and human services.
The administration not backfilling those programs, but has chosen to backfill this program. Could you give us the rationale for why this program and not the other programs?
Speaker 1
Why the administration Give the rationale for why are we backfilling this federal cut when we have tremendous this this this this budget committee is not designed necessarily to advocate for health and human services, but it is the question that I'm going to get asked, by my sub chairs and by my fellow colleagues saying, why are we putting this money, you know, putting money into this when we could be, you know, helping with health and human services?
Speaker 24
Right. And I would just say that this this area, specifically, ZEP has a historical record of success being funded out of GGRF. And in particular, given the federal withdrawal from this area of investment, It's designed to fill the near term affordability gap by providing a small, relatively small, but meaningful target support to stabilize the ZEP market and encourage continued growth in that absence of the federal withdrawal.
Speaker 1
So the second question is, you know, the devil's in the details as the LAO has has has pointed out. The challenge there's there's two challenges of as my colleague pointed out, you know, wants to try to make sure this is really going to people that really need it and not just having high income people. The identification of the the dealer is not going to know whether you're a first time buyer or not. So it seems that there are many ways and the dealer's going to have an incentive to make it easy for somebody to identify as a first time buyer. What do you anticipate being the procedures that you're going to follow?
Is it just gonna be that they have to sign some affidavit saying they're a first time buyer?
Speaker 4
Yeah. So as, program administrators that care about accountability, this is certainly something that is, a priority for us to address. How we see this playing out is entering into contractual arrangements with the original engine manufacturers. Any dealer that with wishes to participate will also have to agree to certain terms and conditions. In terms of ensuring that those who benefit from this program are, in fact, first time buyers, We do have a I I will say we do have a workshop March 24 where we are planning to have and get more input on on program design.
But one of the ways that we are thinking about addressing that is to require that beneficiaries of this program, sign an affidavit under penalty of perjury, that they are, in fact, first time buyers. There are, of course, other more onerous ways that we could go through, you know, to to try to attempt to do that. But I think, ultimately, the the beauty of this program is and its innovation is the fact that it is designed in a way to get the money out there quickly and make an impact quickly. So there's always a trade off anytime you try to put more additional application requirements and, income verification and first time buyer verification, your program becomes more and more full of red tape. And so we are trying to strike that balance here to make sure that we're getting this money out quickly.
Speaker 1
So I think it I think it's acknowledged that this isn't a lot of money given given the federal cutbacks and, you know, what we'll be able to do. You haven't determined what the, you know, which what what the what the amount of the rebate will be, how many rebates will there be, you know, what manufacturers will receive the rebates, or how will you decide, you know, which manufacturers are gonna be this sort of enormous demand relative to the small amount of money that we have here. Can you help me? What's going to be the size of the rebates? How many rebates do you anticipate?
Speaker 4
As I mentioned, we are planning a workshop on March 24. Just for context, presuming that the legislature agrees with the governor's proposal, we wanna be prepared to roll out this program, you know, a month after the ledge session ends. So we are doing the work now to to be in that position, including having conversations with manufacturers and going through a public process that we anticipate will be wrapped by that time. And so many of these things are things that we plan to discuss through that process. But what I can share with you is that in terms of incentive amount, we are envisioning the incentive amount to likely be within a range of 1,500 all in to 7,500 all in.
So the California portion of that would be $7.50 or $17.50. And we'll through that public process, we'll be able to narrow in. We do have research that suggests that 3,500 might be a sweet spot in terms of being able to, really change behavior while also balancing with that with making sure that the money get translates into as many rebates as possible. And then in terms of what that means for, well, how many rebates are there? If the incentive were 1,500 all in, that's with the OEM match, we could expect around 260,000 rebates.
And those would be, again, for first time buyers. So there's still folks who will be purchasing zero emission vehicles because we know once you go electric, you don't go back, but those will be focused on those first time buyers. If we ended up in the higher end of the range, 7,500 as a max, let's say, you're looking at closer to 52,000 rebates. So we look forward to getting public input on what that sweet spot is. In terms of your question, Chair, around manufacturers and who will benefit, as I mentioned, we're in conversation with manufacturers.
One idea that we will discuss further in a couple of weeks is manufacturers who are interested and eligible, that we divide that money up among them. So that way, there's an equal opportunity for for them to be able to offer the choices that we know California consumers are looking for.
Speaker 1
Two areas that are of concern, and one is manipulation of the rebate so that it doesn't actually translate into a rebate, it translates into greater profits for either the dealer or the manufacturer. Without going into all of those details, I just want you to know those are details that will be important to me as I look at this program and whether we decide to move forward with this program. So I hope you can really come up with some ways. I know one of the things is, you know, the the MSRP, you know, and and the reason you put a max on that is so that you can try to make sure that it's actually getting to the customer and not just being absorbed by somebody in the in the process. But on the first time buyer, I think there's lots of ways for people to manipulate this.
And one of the ways is just the husband and wife setup. I think if we already have somebody who's purchased a vehicle, and now this is a second is a second electric vehicle that they're purchasing, I'm not interested in subsidizing that. So can you is it possible to make the affidavit be that it is this is the first time for the household?
Speaker 4
Yeah. That's a that's a great suggestion. Definitely take it back to the team.
Speaker 1
Great. Thank you. I know that we have manufacturers out there that we've worked with, and I think that have been supportive of the fact that California has been very ZEV friendly. And I think we've welcomed that partnership with them. We need those people to continue to feel that.
I feel like this is certainly more of a symbolic statement to them that we we care about trying to keep this market moving, and we know that it's but it was a was a tough time. I would like to have us not make the mistake in my mind of thinking that it's that it's the rebate is the only thing that that that we're gonna that we're gonna get there. I'm I'm a little worried that we're gonna we've been plateauing it, that we may plateau out at 25% or so and just have other people. Those are people that don't have range anxiety. Those are people that like being first adopters, But we need more creativity, and we need lower priced options before we're going to get to that next level beyond that.
And this rebate is is almost like a, hey, keep trying. Alright? But in China, they have so many models and they have so much lower prices that they're adopting like crazy over there. Until we get to that point here, we're we're gonna have trouble, and and we should just recognize that as we go forward. So thank you very much.
If there are no other questions, I think we'll we'll oh, senate member Connolly.
Speaker 25
No. I appreciate the, conversation. And coming from a district where there was relatively high adoption, and I I can say that, from everything I've heard, I think the, subsidies and credits do make a difference in those levels. That having been said, we have been talking about, you know, as we increase funding in this direction, how that's impacting impacting existing programs like Clean Cars For All, you mentioned that as another program.
Speaker 25
the fact is according to the analysis, funding will run out of that program this fiscal year. So if you can talk a little bit more about why the decision to go this direction versus, supporting that kind of program, let alone increasing funding for that kind of program or mid or medium and heavy duty incentives as well, so that there's trade offs.
Speaker 4
Well, I'll certainly acknowledge that our clean transportation needs are important and broad. I think the idea with this program, as I mentioned, is to fill a gap that there is nothing to to currently fill. It also, though, does help benefit in some ways our equity needs. This would absolutely be available to low income communities through California, presuming it's their first time buying an electric vehicle. Importantly, we're also trying to include provisions to allow this to be used for used vehicles because, typically, low income folks are not purchasing new off the lot.
So this very much is a a more expansive approach to affordability. It's absolutely available to low income folks through California. But as I mentioned earlier, we recognize that affordability is also a middle income issue.
Speaker 4
Yeah. So in terms of medium and heavy duty, as I mentioned, we have a lot of programs right now and money right now through equip, through HVIP. How many more acronyms can I do? Clean Fuels Reward, which is gonna be coming on this summer. And so it is not to say that in continued investment is not needed in those areas, but we appreciate, you know, it is a it is a challenging budget year.
So really being able to be strategic in how we're filling the the gap we see at the moment.
Speaker 1
Thank you very much. I did appreciate you asking a question because I had one other question, that is, could you give us the rationale? There's all kinds of things that need ZEV, you know, infrastructure, all of those things. What's the rationale for not doing charging stations? What's the rationale for for not doing medium and heavy duty trucks and, that?
Why why this?
Speaker 4
Well, I think, as I mentioned earlier, you know, there's a lot of needs that we have in order to support our clean transportation transition. Ultimately, when you are thinking about California breathers, we have to get to a 100 here. And so to see such a significant and unprecedented backslide in demand for these vehicles as a result of the federal actions
Speaker 1
That's that's the primary answer. And then you okay. I wanted to let somebody else yeah.
Speaker 26
Erin Carson, Department of Finance. Just to reiterate that the 2025 budget act in the fall appropriated $40,000,000 to the Energy Commission for medium and heavy duty ZEV charging infrastructure. So that funding is in the 2025 budget act. And then over the last seven or so years, the state has invested approximately $4,200,000,000 in medium and heavy duty zero emission vehicle related investments. So just reiterating the fact that Yeah.
Human heavy duty
Speaker 1
What what yeah. That's good. Why no why why no why why not funding again for medium and heavy duty in 2026?
Speaker 26
I think reiterating comments from our colleague from CARB, we've invested $132,000,000 in HVIP in the last budget, additional funding for medium and heavy duty charging at CEC, 25,000,000 GGRF to carve for clean cars for all. And, you know, we would we would say say that the administration is still prioritizing being heavy duty, but given the rescission of the the federal tax credit in the fall, this was the the highest priority for the 2026 budget.
Speaker 1
I I appreciate that. I I guess we were we're trying to keep momentum moving everywhere in spite of inappropriate federal government cuts. And that's all I'm really trying to focus on is making sure that we keep momentum going in in both areas. And so that's why I question, should we do 200,000,000 here or should we do some something some some portion of 200,000,000 going to medium and heavy duty because they're both. And I think from a technology standpoint, the medium and heavy duty feels like it's closer to a an inflection point in terms of adoption.
Whereas, the ZEV, we've moved past that initial inflection point. We've got we've got, we've got it out there. Now it's sort of like trying to keep the momentum going. So that's why I think, I still have questions in my mind as to why we didn't shouldn't make sure we have something in the 2026 budget, specifically designed for the for the medium, and heavy duty as as we go forward. But with that, thank you very much.
Speaker 18
Ask one quick question. Sure. It's very quick. Do we know what the average cost is for electric vehicle?
Speaker 4
Yeah. So, obviously, the cost of vehicles range wildly depending on whether it's an SUV or a light duty truck or a sedan. I would say, on average, it's in the 50,000 range is the average. I think importantly here though is the differential that you have between an internal combustion engine and its electric vehicle counterpart. Right?
Because right now, the cost of, ZEVS have come down quite dramatically, but they still the upfront cost is still somewhat higher than their internal combustion counterpart. We hope and anticipate with this investment that we will move towards parity or cheaper when you're talking about upfront cost, but that differential is in the couple thousand dollar range depending on the make or the model. And so that's why this money is so important because it helps bring down that upfront cost nudging consumers to choose a clean vehicle over a fossil fuel vehicle, and maintaining that market momentum.
Speaker 1
Clean Cars For All is going to run out of money this year, it's projected. There's no new funding for that but 200,000,000 here. Can you respond why we should let Clean Cars For All run out?
Speaker 4
So last year, 42,000,000 was provided to Clean Cars For All. Just get the menu. Last year, $442,000,000 was given to Clean Cars For All, and money is still flowing through that.
Speaker 4
For some regions. That's correct. It's it's administered through air districts. Obviously, is different and how they administer their program is different. And so that is the case.
There is also the statewide program that has money available that can be also a backslide to those regional programs. I think here, what we're seeing is a program that absolutely continues to support low income and disadvantaged communities plus. Right? Opening it up to more folks.
Speaker 1
Well, this proposal only does that if you have it's hard for me to say that it supports low income people plus when we when we're not looking for income requirements because we think that's too onerous, and we're only the only thing that's helping us realize this goes to low income people as first time buyers. There are a lot of high income people that are gonna be first time buyers that are gonna benefit from this program. Whereas Clean Cars For All would really be benefiting low income people. We'd be much more certain that it would benefit low income people. Am I correct that it
Speaker 4
Yeah. I appreciate, I appreciate your perspective and the the points that you're making. As I mentioned earlier, one of the things, you know, we have we have trade offs when you make program design. Right? The more requirements that you put on it, like income verification, the more onerous
Speaker 1
You gave me that. I know there's more requirements. I understand why we do, you know, we don't want to put too many requirements on. But because it's it has the challenge of we don't want to put too many requirements on, we're probably gonna let number of high income people get this subsidy because they're first time buyers. And if they're first time buyers and they're high income, they're they're they're gonna qualify for the subsidy.
If we go clean cars for all, we do do the income check. And so we're certain. So we're going from a pro we we for example, we'd be funding a program that could certainly benefit low income people to a program that may or may not benefit low income people. So I'll offer that and have my colleague, Semi Member Rogers.
Speaker 17
And just to piggyback off of that a little bit, can you talk a little bit about the difference in how long it would take to deploy the money if it was put into the Clean Cars For All program as opposed to creating a new program.
Speaker 4
Yeah. I appreciate that. The application processing time varies from region to region. But as I understand it, it takes months for folks to go through and benefit for that from that program. Here, we're talking about an on the hood incentive.
So it would literally be when you purchase the vehicle, you benefit from the program. Of course, there's, you know, the the likelihood when you have a very streamlined results oriented fast program that you may be incenting folks who, you know, you you're not is not your ideal target. But that come that is the cost of having a rapid results oriented program. And I think here because we are focused in the purposes market transformation, increasing that demand, rapidity, the speed at which we get this money out is a priority for us.
Speaker 1
Okay. Thank you very much. We are going to move on to item item number three. We don't anticipate those being long items, items three and four. But we know that staff has prepared some.
Mostly we are going to do questions from members and or comments from members about items three and four. Are you guys same you have the same folks here? Alright. Good. Item three, wanna give us the quick the very quick rationale for the
Speaker 24
change? Sure. And same with last item. I'm gonna hand it over to my colleague, Mckar, for this presentation.
Speaker 4
Great. Thanks so much, Brandon. So with this item, the California Air Resources Board is requesting $1,100,000 in fiscal years 2627 and 2728 from the Air Pollution Control Fund, and this is to be able to support four positions that will help us implement the initial requirements of proposed amendments to senate bill 59. So this would make CARB the lead agency for making a determination on beneficial use cases for bidirectional charging and adopting any vehicle requirements that may be appropriate, based on that evaluation.
Speaker 9
Helen Kerstein with the legislative analyst office. So we haven't raised any specific concerns with the pro proposal, but we would highlight, as your agenda notes, that this proposal would undo a change that was made during the the course of the policy process on the assembly side. And so to the extent that's a concern for the committee, we wanted to make sure
Speaker 1
it. And that's what I wanted to point out is that is, I think we take, serious that, the appropriations committee actually pushed this to be with the CEC, and you're undoing that. So it's not something we're going to, I I think, take lightly. It's something we're gonna look into. Your rationale here is that it avoids duplication of regulation, but give us a sixty second answer as to
Speaker 4
this. Sure. Happy to. So, yes, we are proposing for CARB to be the lead agency in it instead of the Energy Commission. And this is because the administration believes that our agency is the most appropriate agency to be able to not only evaluate vehicle technology, but if needed to develop vehicle standards.
Speaker 1
So so my question is why did the administration sign the bill last year if, they thought it should be in CARB instead of with CEC?
Speaker 1
That's I I shouldn't ask you to say that. But that's that that's that's what's going to be a question legislatively is that appropriations committee thought they had worked this out. The administration thought they had the administration's buy in with with the signature. And so now to have this be a change, it's it's no small thing. I just don't want it to be a small thing.
Oh, yeah. Well, we just can reverse legislation that that was done. So that will that will be the question that will will will remain, and that's gonna remain open. We're gonna jump on to issue number four, please. Again, let's keep this very brief and so we can open it up to questions of members if they have it.
Alright.
Speaker 24
Okay. Good morning. Brandon Merritt, Department of Finance, and I'll be presenting the overview of the Greenhouse Gas Reduction Fund budget as detailed in issue four. The governor's budget assumed revenues of $3,770,000,000 in twenty twenty six, twenty twenty seven. The governor's budget proposal for the twenty twenty six, twenty twenty seven cap and invest expenditure plan reflects the updated structure as reauthorized in 2025 by SBA forty.
The new structure includes three tiers of expenditures with tier one fully funded first, followed by tiers two and three. Tier one includes the manufacturing tax credit, the state responsibility area fee backfill, and the legislative council. Climate Bureau till tier two includes a $1,000,000,000 for the high speed rail authority and $1,000,000,000 for other discretionary items. Of the $1,000,000,000 in discretionary funding, dollars $250,000,000 is reserved for various investments identified in SBA forty. The remaining $750,000,000 from the $1,000,000,000 in discretionary funding supports the Cal Fire general fund backfill.
Tier three funds previously percentage based continuous appropriations will now be capped dollar amounts beginning in twenty six-twenty seven with proportionally related allocations that adjust downwards as necessary to ensure tiers one and two are fully funded in addition to state operations appropriated in the budget act. At the governor's budget, there is, 1,400,000,000.0 estimated for tier three. The governor's budget maintains the 2025 budget act agreement to support Cal Fire operation costs with 1,250,000,000.00 GGRF in '26, '27, 500,000,000 in '27, '28 and 500,000,000 in 2829. Finally, as discussed, in issue two, the budget includes a 115,000,000 onetime GGRF to support the 200,000,000 emission vehicle incentive proposal. That concludes my presentation.
Happy to answer any questions.
Speaker 9
Helen, Christine again. I just I wanna start with just a couple very quick, points that are to give a little bit of context, and then I'll provide some brief remarks. So the additional context I wanted to make sure that everyone had was that the legislature has committed some of this GGRF in past budgets. So particularly in the twenty twenty four, twenty five budget, as I think many members on this committee may may recall, the legislature actually adopted a multiyear expenditure plan for GGRF, and that included a whole variety of programs that are nicely detailed in your agenda. I won't go through all of them.
I wanted to highlight two specifically because they were related to legislation. One was the clean energy reliability investment plan program. That was related to the Diablo Canyon deal that the legislature made with the governor. And there was also funding that was provided for transit, and that was related to s b one twenty five. And there was money slated out in the out years for transit.
Also, last year, as the Department of Finance mentioned, there were two kind of, intent language pieces that were included. One was, in SB eight forty. That was $250,000,000 for a variety of programs, And then there was a money in the budget bill. There was intent language about this Cal Fire backfill, which is a general fund, basically to offset general fund costs. So in terms of our comments, we note that we think the proposal in general is consistent with legislative intent.
Includes that Cal Fire backfill. It includes that 250,000,000 from s b eight forty. But we think one way it's it's perhaps less consistent with intent is that the administration no longer plans to fund that GGRF expenditure plan from 2425. So it no longer plans to fund that transit money, which is SEERUP money, or any of the other programs that you see outlined in your agenda there. Instead, the administration is now proposing to use some of that money to partially fund that ZED, the new ZED program we just talked about.
So somehow they're funding that is the fund is funding here. So that's a policy choice. We also just think generally, given the general fund condition, the legislature's gonna wanna use, GGRF for its highest priorities across the budget. This is a flexible source. It's available to you.
Given the state's condition,
Speaker 9
could look back and think, those previous commitments still your high highest priorities or not, and really evaluate this as as a helpful tool in your budgeting.
Speaker 14
So so under the the tier one expenditures, what what is state operations?
Speaker 24
Brandon Merritt. So the state operations is, by and large, a result of previously, approved budget change proposals going back in time that the legislature has adopted for ongoing expenditures. And then as part of this proposal, there is $31,200,000 in additional, budget change proposals moving forward. But if you look on Page 29 of the agenda, you'll see kind of that white and brown chart. And so that breaks down the universe of the the departments who are involved with the state operations
Speaker 8
that you see on the on the, inter expenditure plan. And if I may just clarify, this is the administration's interpretation of state operations. SB eight forty, identifies state operations as appropriated in the Budget Act, which could which is a very broad term, which could include much more than just this $118,000,000 and I think we're going to discuss that in the next issue as far as what that interpretation is and best use of that.
Speaker 14
I'm sorry, the Elio, can you just want to make sure I understand the point that you made the fact that this proposal shifts some of our spending commitments, or what we understood to be our spending commitments from the '20 you said the 2526 period?
Speaker 9
Sorry. From the 2420 So '5 if you look at page 30 of your agenda, there's a really nice table that your staff have included, which includes the expenditure plan the out year expenditure plan that was agreed to in that year, and you can see all those programs that were slated to receive GGRF funding. So under the governor's proposal, none of these programs would receive funding. And, again, some of you know, there are a variety.
Speaker 9
the ones I mentioned just to highlight were the s v one twenty five related programs because those, again, were those transit programs and also the CERIP money, but there's other ones as well. I would also note that many of these, programs were ones that originally were funds proposed to be funded by the general fund in previous years. And then as part of our budget solutions, one of the things that the legislature and governor agreed to do was to, switch the funding source to DGREF and kind of move the funding into later years in some cases as well. And so, now these would not be funded under the governor's proposal.
Speaker 8
One one point of additional context is that this isn't new to this proposal. So as part of the mayor vision last year, and in in relation to the Cal Fire fund shift, the administration proposed to zero out that 2425 proposal. That was discussed in subcommittee. It was approved as part of the budget. So it's not new to this proposal as the LAO may be indicating as far as the administration making a new policy decision in the governor's budget to not fund these proposals.
It was a decision that was agreed to last year.
Speaker 14
Okay. So that is not so that's the shifts proposed do not go beyond what we already Exactly.
Speaker 8
Although the 2425 budget did lay out a multiyear plan, the decision to not fund that was last year. This is not a new decision that we are asking the legislature to make. We're continuing the agreement that was agreed to last year.
Speaker 9
Just if I might clarify just a little bit. I think I so think there may have been some lack of clarity perhaps at least among some some some of us staff. I don't know what the members understood about whether that was a one year budget action or a multiyear budget action. So there was that that mayor vision. There was a sort of letter, and that's your but because the budget bill is a one year, you know, one year action, that only reflected the 2526 amounts.
And so I think there there perhaps was some lack of clarity, or I think maybe perhaps a lack of shared understanding about what would happen to those future years. And in fact, if you still go, like, onto the website of the administration, you still see for the transit money, s b eight you know, s b one twenty five, that it still talks about this funding going out in '26, '27, '27, '28, and and future years. That's still reflected there. And so I think perhaps that was the understanding the administration had, but just wanted to make it just make that point that, you know, it wasn't a 100% crystal clear to us at least.
Speaker 1
Well, I I'd like to take that a little bit further. Wasn't 100% crystal clear. When did the administration propose, the multiyear cuts?
Speaker 8
So as part of the mayor vision and and it was discussed in subcommittee, if we am happy to have further conversations with staff. In the committee agendas last year, specifically noted that the administration is proposing to zero out the 2425 discretionary plan, and that was part of the discussions that we had last year.
Speaker 1
I guess we'll have to look into that. So you're saying that that happened at this at the committee hearing here. Yes. You guys proposed it. Right?
Speaker 8
Yes. It was discussed in the agenda, and we discussed it in the committee last year.
Speaker 8
The, our understanding of the action was that it approved that as part of the Cal Fire, general fund shift. So in order to to make room for the Cal Fire general fund shift that that there had to be that room to be made. Yeah.
Speaker 1
Okay. Well, I wanna make clear, you know, staff pointed it out in in, you know, in the report, but I just wanna read this into the record again and and and express concern about it. But the administration's proposing changing the structure to prioritize your funding proposals first when, I thought we had sort of a legislative, know, an agreement there. Right? And I think that that, you know, the legislature's intent was to direct, s b eight forty, you know, in the in the 2025 budget act, include setting the interest proceeds apart from the revenue so it can be set spent separately and shifting the state operations staffing cost to tier one instead of tier three.
And that results in the 101,250,000,000.00 Cal Fire operations fund shift being fully funded, regardless of GGRF. And we very clearly, I believe the intent was that the 750,000,000 was going to be funded and the 500,000,000, was was going to be if there are additional, you know, funds that are out there. Bottom line is, as as potential revenues are coming in better, I I think we should definitely consider reconsider that 500,000,000 should be funded by general fund because the the intent and at least my understanding from the legislative intent was that that would only be if there were, you know, we the the extra revenue and only because we were having a budget crisis. But we have significant increase in revenue between coming in the last few months. We we the the contention was we don't have the general fund to do that.
We we had enough general fund money to fund the 500,000,000 before if the auction revenues were not excessive. We ought to stick with that because as I look at many of these programs that we're not going to have because we theoretically have 1,250,000,000.00 in there for Cal Fire, That's that's not the intent, I think, any longer of the legislature to have the GGRF funding so much of it going to a general fund activity like CAL FIRE. And CAL FIRE, it should be and should return as a general fund activity. It is a basic fundamental service that needs to go on in perpetuity. GGR funding is by its nature designed to end as soon as we get to a a more carbon free economy.
You should not tie a ongoing rev an ongoing expense with a not an ongoing revenue source. And the I think the intention for most people when they thought of cap and and invest cap and trade at the time was that that would be essentially getting revenue from people who were putting extra carbon out into the atmosphere to try to decrease carbon going out into the atmosphere. And these these general fund activities like the motor vehicle account, etcetera, have very, very tenuous ties to this by comparison to investments specific investments in greenhouse gas reductions, particularly investments that could be made in new technologies that could dramatically increase our ability to do that. So I just want you to know that there's a big pretty strong interest on the legislative side of this, to try to deal with that, at least that 500,000,000 in terms of, in terms of the, Cal Fire funding. You've you've been sitting there patiently, but but I'm gonna ask the assembly member to go to join
Speaker 14
Just just to, again, have on the record, strong support for the chair's comments. I don't think we ever thought that funding Cal Fire out of GGRF was the right solution. It was the only solution before us last year, so we understood. So given that general fund revenues are are coming in stronger than anticipated, I agree with the chair that we need to reevaluate whether Cal Fire should be coming out of GGRF at all.
Speaker 8
Thank you. Appreciate that perspective. Just understanding that general fund revenues have been coming in higher the last few months. This is from the governor's budget and based on the governor's budget proposal where there is a general fund deficit, in budget year. And then just to highlight, so in the budget bill last year, there is intent language that noted the intent of the legislature and the governor to, fund 1,250,000,000.00 from general fund or from GGRF for Cal Fire in 2627, 05/2728, 500,000,000 in 2829.
So just clarifying that that was the way it's written is it's the intent of the legislature and the governor to do this. But if the if the general fund is not in a deficit, then only 500,000,000 in 2627 would be used. So then there would be potentially $750,000,000 additional GGRF that could be available if the general fund is not in a deficit, at least in in budget year based on the agreement last year.
Speaker 1
Well, so if it's a there there there's some interesting things in terms of what the definition of the deficit will be, I suppose, right, in in terms of that. But if we have any definition of a deficit, you will say that that is the case. I I certainly appreciate that that is that that's what you have in terms of the reading that was there. Certainly, in the conversations that we were having leading up to that. But, we have a strong interest in trying to say with improved revenue, we hope that there can be some some adjustments.
What we definitely want to also do is make sure that in future years, there's not a continuing creep, but actually a reduction in general fund things coming out of these GGRF revenues. But there would I hope my request is a a good faith effort on the part of the administration to decrease some of that funding going to Cal Fire this year because the the needs the the number of people coming in the door saying, this we need GGRF funding. It's the only revenue source. The final thing I'll say on this, that we don't fund climate change activities out of the general fund at all. We're the state of California.
We tout ourselves as the cleanest, greenest state, you know, in in the country, and yet we don't allocate any general fund, you know, ongoing. We don't we don't do ongoing funding. You know, we don't have a pot that this that goes to that. We have to do it through bonds and we have to do it through GGRF. And if that's how we have to do it, then we should make sure that we get maximum bang for our buck for that.
So appreciate, working with the administration on that. And we're gonna go to go we're gonna go to issue five. Alright? And that's the cleanup trailer bill. And we've probably repeated our
Speaker 8
Almost, last chance to say good morning. But, Andrew March with the Department of Finance. So this issue is for, what the administration is characterizing as GGRF cleanup trailer bill, based on our understanding of sort of, the agreement last year with SB eight forty and some additional technical clarifying changes. Additionally, there is a change related to housing, which is by my colleague, Megan Tokenaga Block is here to address, some of the, changes regarding the allocations for affordable housing and sustainable communities in tier three. So I'll turn it over
Speaker 9
So just a couple of comments. This is, as you know, the first year that we're seeing s b eight forty really in action and how it's working. And so, of course, as you heard, the administration has some trailer bill to to make some clarifications. A couple things I just wanted to highlight, one of which is, related to what you, mister chair, just mentioned about, interest income, also the interim fund balance. So they're proposing some some language that would clarify that those are not subject to the eight forty methodology.
So that's a really it seems like a technical thing. You know, no big deal. Actually, it has pretty significant implications because they're, in many years, hundreds of millions of dollars if, you know, potentially even more that could be the way that it could be treated is different. So in this case, for example, in this budget, the fact that they're treating those monies outside of SB eight forty means that they're allocating 615,000,000 outside of that process, which again, it may or may not be correct, but it's just that is a choice, and it means that there isn't enough money to fund to fully fund tier three. So tier three is now getting about 70% of the sort of stated amount, and, there's additional discretionary money.
So there's trade offs there. Also, again, just, providing state operations with that first priority. I think that was that was touched on previously, but I think that's an important thing as well, particularly if state operations is viewed expansively and then some other changes as you heard. So just very quickly, we, are recommending the legislature consider whether those changes are consistent with your intent. So this is recent legislation.
It's often it's common to need to clean up to make sure that the intent is is really helped with fidelity, and so we think this is your opportunity to do that and also to make sure that this formula is working the way you want it to work. And that includes thinking about state operations. It includes the interest earnings that we talked about. And then also, just one other little point I wanted to make is is really thinking about what you want that state operations to include. And we mentioned that you could think about guiding principles, like, what do you wanna be in there?
Because if it's particularly if it's in tier one, it's gonna start potentially crowding out funding in the later tiers, including tier three. So you you might wanna be really mindful of providing direction and how much discretion you want the administration to have over what to put in that pot.
Speaker 1
Thank you. I we have concerns. I'm here by myself to get to express that to you, but we we definitely have concerns about that. I would also point out that you just read language to us in terms of what was actually in statute, you know, last year. And now, certainly, we made lots of hard bargains and compromises on everybody's side, and we created statutory language.
And now this is an attempt to try to change that statutory language. So I we're a long ways away from saying, yes, we think that this is either consistent with the intent of the legislature or that legislature is comfortable with these changes. So, we we we don't have the time and we won't get into all the details about that, but I think we have some vigorous conversations that we're going to have to have about this moving forward. Go ahead.
Speaker 8
Thank you, chair. Appreciate that. Two notes. So historically, interest in the beginning fund balance haven't been included in sort of how the continuous appropriations are structured. So we are proposing to continue that practice.
There is some ambiguity in the language of s b eight forty where it refers to monies in the fund, but then for the tier three calculations, it refers to the proceeds. I would note, contrary to what the LAO is saying about the state operations potentially crowding out tier three under the the administration's proposal, that's actually how SB eight forty is written where, what's left over after tier one and tier two funds tier three minus state operations. So it is already envisioned in SB eight forty to be taken away from tier three appropriations.
Speaker 1
Okay. Thank you. I think we'll we'll continue to have some, like I said, vigorous conversations about that as as we move forward. With that, we're gonna go to issue six, and thank you very much. Because of the of of the time, I'm gonna ask you to do about a ninety second overview.
Speaker 4
Alright, chair. Good morning. Courtney Smith, California Air Resources Board. I'm here to give a quick overview of CARB. CARB's statutory mission is to promote and protect public health, welfare, and ecological resources through the effective reduction of air pollutants while recognizing and considering effects on our economy.
We have unique authority to set emission standards for a weight range of statewide pollution sources, including vehicles, fuels, and consumer products that are stricter than that of federal government due to our extraordinary air quality challenges our state faces. Additionally, a b 32 signed by governor Schwarzenegger charged CARB with the role of monitoring and reducing greenhouse gas emissions that cause climate change. From requirements to for clean cars and fuels to adopting innovative solutions to reducing greenhouse gas emissions, we have pioneered a range of effective approaches that have set standards for effective clean air programs for the nation and for the world. Importantly, while most of people associate our work with climate, really over 80% of the work that we do actually deals with tackling air pollution and protecting California breathers. In doing that, we work closely with the 35 local air districts, which regulate emissions from businesses and stationary facilities ranging from oil refineries to auto body shops to drying cleaners.
Our work cutting air pollution over the past half century now serves as the state's foundation for the next fifty years to be able to continue our legacy protecting public health, ensuring all Californians benefit from these efforts. Thank you. And that concludes my overview.
Speaker 1
Thank you very much. We're going to I'm I'm we're gonna take a sixty second break, and then when I come back in, we're going to do public comments. So if you I know you guys are gonna race to the thing, so go ahead and I'll be right back.
Speaker 22
Alright. Here we go. Thank you, chair. Name is thank you, chair. My name is Brian Chaube, I'm with the California Climate and Agriculture Network.
First, I wanna appreciate your comments on protecting the purpose of GGRF to reduce greenhouse gases. Fossil fuel based fertilizer prices shot up 25% last week in response to the war in Iran just as farmers across the state are beginning to plant for their spring crops. Meanwhile, dairies in California have excess manure that they have to figure out a way to transport off-site to comply with new water quality regulations, but they don't have the capital to invest in infrastructure and equipment to do that. The alternative manure management program or AMP helps dairies convert manure into organic compost that can help our state's farmers reduce their reliance on fossil based fertilizer and realize that collective right to clean water. AMP is the fourth most cost effective GGRF program, and we're gonna need it to achieve our state's methane, clean water, and healthy soils targets.
Ask you to fund the program. Thank you.
Speaker 1
Thank you. Everybody gets a gold star if they go less than sixty seconds. Right?
Speaker 29
Thank you, chair. Mark Newberger, California City Association of Counties registering our opposition to this, the SAF trailer bill language. Just wanna just point out some quick things. Cities and counties are responsible for 85% of the state's road and half the state's bridges. SB one provides critical state funding to the local streets and roads program.
Any reduction, that would be problematic, especially considering that county road projects and cities have been dealing with increasing inflation from cost of for the cost of construction. So any reduction is significant. So we urge the, you know, committee to reject the trailer bill language and stay in line with the voters' wishes, which they've reiterated time and again that fuel excise taxes should go to maintaining roads.
Speaker 30
Hi, mister Member Betta. Ryan Kenny with Clean Energy. Appreciate the the discussion this morning. I wanted just to highlight the fact that it was mentioned this morning that there are zero emission funds available in the heavy duty space, especially over a carb. But I did wanna highlight a LA Times article back in February that mentioned that while there's a 165,000,000 dedicated to Tesla for their heavy duty semi, those funds have not been spent.
So just because they've been allocated with vouchers doesn't mean that they've been, spent and used. And I think that highlights a problem that in the near term, low NOx trucks actually are available and ready now. And, we do support zero emission trucks, but more in the longer term. So we have a short term plan and a longer term plan, and we would encourage the subcommittee to look at allocations for both, zero emission and, near zero as well.
Speaker 31
Good afternoon. Steve Wallach here on behalf of several clients, AC Transit, Foothill Transit, the Golden Gate Bridge District, Napa Valley Transportation Authority, and the California Association for Coordinated Transportation. We really want to encourage you to maintain the commitment made in SB one twenty five for the transit zero emission transit capital program that was previously made in prior prior budgets and prior years several times also to fully fund tier three of the the SBA 40 expenditure plan. We also urge your consideration to extend the COVID nineteen relief provisions that have been in place for transit operators to for another few years, the 2029 fiscal year. You know, the first two items could be fully funded with the the the interest income and the carryover funds that are currently in the GGRF fund, unless instead of siphoning them off for other programs, we need to put those monies back to where those priorities were originally intended.
So thank you.
Speaker 32
Brendan Tuig on behalf of the California Air Pollution Control Officers Association. We appreciate that money is tight this year, and it's in that, context that we make the some recommendations. We know we need to make dollars go as far as we can, and so there's a couple of things I wanted to point out. There's the farmer program, ag diesel replacements. That's, one of the most cost effective mobile source incentive programs both for greenhouse gas reductions and public, health benefits because of criteria pollutants.
The other thing about that is because, emissions are real, quantifiable, and permanent, you get, credit for state implementation plans for meeting both state and federal standards. And especially now with the federal actions, that's even more important that we can get some, towards that as well. And then the other thing we'd say is that if you're looking at heavy duty, which we think is a good idea, you should make sure that projects fulfill Karl Moyer guidelines. Because then, again, like the farmer program, you will get, SIP. It's SIP creditable.
So thank you for your time.
Speaker 33
Afternoon, sir Bennett. Paul Mason with Pacific Forest Trust. With regards to the trailer bill cleanup, for the GGRF trailer bill cleanup, we object to eliminating any subcategories from the $200,000,000 to Cal Fire. In particular, when SB nine zero one was passed and created that $200,000,000 annual allocation, the identification of $35,000,000 to prescribed fire crews and implementation of beneficial fire was a really landmark move for the legislature, and it has only become more clear since then that for landscape resilience, for dealing with the enormous liabilities we have across California in the fire adapted ecosystems, we absolutely need to maintain that sort of commitment. If there are gonna be changes, I would point to the bill that Connolly has that maintains a smaller but more flexible commitment to prescribed fire.
On a related note, I find it hard to understand. Historically, the GGRF to CalFire for fire wildfire mitigation has come off the top of GGRF. And as part of the eight forty changes, it went to the lowest, the third tier, and that's just it's hard to reconcile with our fire challenges.
Speaker 34
Good afternoon. I'm Anna Larson with here on behalf of CalCan commenting on the affordable housing sustainable communities item. And so the sustainable agricultural lands conservation program has received 2% of GGR funding, but it's responsible for 15% of the emissions reductions. And, the program has historically received 10% of the affordable housing sustainable communities 20% continuous allocation to meet ASIC's statutory goal of protecting agricultural land, to support infill development. And so the program's continuous appropriation has enabled land trust, farmers, and program staff to plan around consistent program timelines and availability, which is critical for developing viable projects.
And demand has increased over the years to a 167,000,000 in the latest round. And so for these reasons, we urge the legislature to maintain SALC's continuous cap and invest funding and request 90,000,000 continuously to meet the ongoing and increasing demands of the program. Thank you.
Speaker 9
Good afternoon. Jamie Finneas with the Community Alliance with Family Farmers representing 8,000 family scale farms across the state of California. Here to comment on item number four with GGRF. The California underserved and small producer program, better known as CUSP, provides direct relief to farmers impacted by climate disaster. It has demonstrated remarkable responsiveness, allocating over $24,500,000 in emergency relief to over 2,000 small scale farmers across the state of California.
Most of those farmers have no other safety net when they are impacted by climate disaster. These dollars have kept them afloat and kept them in business. Small farmers are climate solutions, but they bear the brunt of climate change. The state has a responsibility to support them in times of need and desperation. We're requesting this year that $15,000,000 is allocated from GGRF to CDFA's CUSP program for the fiscal year of '27 2627.
Thank you.
Speaker 28
Sorry. I'm a farm owner, and I'm also a business adviser at Kitchen Table Advisors, which is a nonprofit that works one on one with small under resourced farmers throughout Northern California. Right now, over half of my clients I I serve have received CUSP grants, and I already have a list of farmers that are waiting for the grants to open again. But today, I wanna give my personal experience with CUSP. So in 2021, I made my childhood dream of owning a farm a reality, and I was able to purchase a farm in Wilton, California, which is just south of Elk Grove.
And it's a small rural town. Everyone there farms. I have over 200 animals on my farm, and I also produce small specialty crops. And I'm sorry. In 2022, in December, a large storm came through, and it flooded the town.
It resulted in my farm.
Speaker 38
Hello. My name is Kellen Belcher, and I'm commenting on behalf of Earth Justice. We urge you to reject the proposed tax credit for sustainable aviation fuel. Expert analyses show that the greenhouse gas emissions reductions from these fuels are meager at best. This tax credit would benefit out of state fuel producers at the direct expense of urgently needed state and local transportation funding.
Instead, California should cut pollution from the dirtiest vehicles on our roads, heavy duty diesel trucks. We support an investment of at least 350,000,000 in zero emission trucks through the Clean Truck and Bus Voucher Incentive Project, known as HVIP, and at least 75,000,000 for truck charging infrastructure. These investments will protect public health while supporting California's growing zero emission manufacturing economy. Thank you.
Speaker 39
Good afternoon. Natalia with Greenberg Charik on behalf of Kia. We appreciate the opportunity to express our support for the governor's proposal on EV initiatives item number two. Kia is committed to the continued development of its electric vehicle fleet and is focused on helping advance electrification by making EVs available across a broad range of vehicle segments. The governor's proposal plays an important role in helping make electric vehicles a more accessible option for Californians at a variety of income levels while also supporting the state's broader clean transportation goals.
Thank you for your time.
Speaker 40
Good afternoon, chair. Nick Chappie with the California Trucking Association. Here to comment on item one. So the state is already facing a transportation cliff, funding cliff with transportation projects heavily funded by diesel s I excise tax paid largely by trucking. According to the Berkeley Haas Energy Institute, analysis, the proposal could cut diesel ex excise tax revenue for transportation funding by up to 75% within, the next few years.
Diverging these funds could reduce investment in road construction and maintenance affecting highway safety and reliability for the millions of Californians who utilize the roadways for their livelihood. For these reasons, we urge the committee to reject the proposal. Thank you. Thank you.
Speaker 41
Good afternoon Mr. Chair. Nicole Rice, California Renewable Transportation Alliance. Since heavy, clean heavy duty truck adoption is lagging well behind what is needed to intensify air quality improvements, We're here today on items two and four to encourage the committee to allocate $100,000,000 from GGRF to cover the differential to accelerate deployment of heavy duty low NOx trucks operated on renewable fuels in severe nonattainment regions. This represents half of the investment of the governor's light duty proposal and targets those vehicles that produce nearly 50% of the transportation related NOx emissions.
Those are the smog forming pollutants that jeopardize public health outcomes. If we do not continue our progress in reducing these emissions, CARB has indicated that we could see a 175 tons per day increase in NOx emissions by 2,037. So to the extent that the committee wants to fund medium and heavy duty alongside light duty, we ask that this proposal be included. Thank you.
Speaker 42
On items two and four, Bill McGavin with the Coalition for Clean Air, also speaking for the Green Lightning Institute. We need to continue investing in zero emission transportation. California has the worst air pollution in the country, and about 80% of that comes from mobile sources. So we need to clean up our buses, trucks, and off road engines because those are the ones spewing toxic diesel exhaust into our communities. When it comes to light duty, we agree with comments that the chair and others have made that we should be focusing the support on low and moderate income Californians and prevent Clean Cars For All from running out of money.
It's a valuable program that we should preserve. Thank you.
Speaker 39
Good afternoon, chair. Kayla Robinson with Californians Against Waste. I commenting on item number four, I first wanna start by thanking you, for highlighting the importance of using GGRF for its intended purposes. And then we also know that, obviously, GGRF is gonna be in high demand this year, so I wanted to highlight a few of our priorities. First being the edible food recovery grant program and the community composting for green spaces, which have proven highly effective.
They fund small under resourced community based nonprofits like food recovery organizations and community compost facilities that have no other funding source right now. And our third priority is the broader organics grant program, which has been instrumental in minimizing ratepayer impacts, trying to meet thirteen eighty three targets. And I also just wanted to highlight that all three of these programs have proven more cost effective than the incentives discussed today. So I think it's really important to consider funding these programs. Thank you.
Speaker 43
Good afternoon, Chair Bennett. Megan Cleveland with The Nature Conservancy, here to provide comments on item four. TNC appreciates the legislature and administration for recognizing the importance of nature based solutions, and enriching our climate goals in the cap and investor authorization legislation, particularly adding MBS as a priority for GGRF funding. As such, we respectfully request the legislature appropriate $250,000,000 in GGRF, Tier two discretionary funding to the California Natural Resources Agency to support the achievement of the nature based solutions climate targets. Additionally, we really appreciate your comments, this morning regarding the CAL FIRE operations funding.
TNC urges the legislature to restore and protect the $200,000,000 in GGRF funding that has been traditionally invested in wildfire resilience. We believe that GGRF should be prioritized for critical climate resilience investments, while the general fund is a more appropriate source of funding for critical public services, such as CAL FIRE operations. We recommend reducing the backfill of CAL FIRE operations to the extent, additional revenues allow to support the critical climate resilience investments. Thank you.
Speaker 44
Mister chair and members, Beverly, on behalf of Hyundai, we are in strong support of the incentive trailer bill language and appreciate the discussion today. We would also like to thank leadership for the administration for their leadership bring this proposal forward, particularly given the federal rollback of EV tax incentives and vehicle emission standards. We're already seeing an impact on the market. California sales earlier this year dropped 45% compared to this time last year, and research shows that for every thousand dollars incentives, it can increase battery electric vehicle sales by about 8%. Programs like these, especially with the OEM match, can move the needle to getting more first time buyers into EV vehicles and help California meet our climate goals.
We look forward to continuing our work with you. And mister chair, we are looking to do the right thing by hanging on strong just like you are right now. Thank you so much.
Speaker 45
Good afternoon, chair Rebecca Marcus. On behalf of the Union of Concerned Scientists, we are in support of issue number two, Continued investment in clean cars is crucial to protecting public health, reducing global warming emissions, and ensuring all Californians can breathe clean air. The proposal is a crucial step to a zero emission transportation future and will help California from falling behind the rest of the world. We do ask that you include funds to support zero emission heavy duty vehicles. Also, on behalf of the California organic certified organic farmers, I'd like to echo the comments made by CAP in support of a $15,000,000 GGRF investment to the California underserved and small producer program at CDFA.
This is a crucial safety net program for farmers facing extreme weather conditions due to climate change. Thank you.
Speaker 46
Good afternoon. Juanita Martinez on behalf of World Energy and GIVO. We strongly support the governor's, climate goals and expansion of sustainable aviation fuel. However, we respectfully urge that the committee consider amendments that would allow for transferability, in order for in the current proposal to ensure that all market participants are able to compete in a on an equal footing. As currently drafted, the proposal risks limiting participation in the market.
When policies unintentionally exclude producers, the result can reducing be a reduction in competition, constrained supply, and market signals that encourage companies to direct the production to other states where credit structures allow for broader participation. If that occurs, California could actually see less SAF consumed in the state, which would work against the very emission reduction goals the policy is set to protect. California should be creating a framework that encourages investment, expand supplies, and welcomes all qualified market entrants. A more inclusive structure will ensure the market increase staff availability and ultimately deliver greater emission reductions in the state. For these reasons, we respectfully ask for the committee to consider amendments that would allow for transferability.
Thank you.
Speaker 47
Good afternoon. My name is Abigail Ramsden. I'm senior director of policy for Rivian. I'm speaking in support of the proposed incentive for light duty zero emission vehicles. With manufacturers matching the state's investment one to one, this is a $400,000,000 program that will boost electric vehicle sales.
Rivian is an all electric, all American vehicle manufacturer headquartered in Irvine. We employ 4,000 Californians with dozens of service and sales locations across the state and over 30,000 vehicles registered to California residents. This crucial funding will accelerate electric vehicle adoption for first time buyers, reduce air pollution, and keep California on track to meet its climate goals. It sends a clear market signal nationally and globally that California remains committed to climate leadership. Our new vehicle, the r two, will be announced tomorrow.
It will start at $45,000. This is a turning point for our company. We are looking to our home state to support us and our California customers as we strive toward a clean transportation future. We respectfully urge your support. Thank you.
Speaker 48
Courtney Brown, cofounder of the California Alliance for Community Composting, here to comment on agenda item number four. We have been collaborating with Cal Recycle since 2020 to implement what is affectionately known as community composting for green spaces. Although the amount of our awards is tiny in comparison to the other California climate investments, the $4,500,000 that we have received have been quite impactful. We have launched and expanded 217 community compost hubs across The States at schools, community gardens, and even eight of of California state prisons. The collective effort has diverted 12,500,000 pounds of organics from landfills, and they recover this as a valuable resource for low income and historically disadvantaged communities to improve their food sovereignty.
These hubs are also centers where we host public education so that we can offer tangible opportunities for residents of California to learn how to compost and the benefits of compost. The program supported two twenty five part time jobs, 5,225 cubic yards of high quality compost
Speaker 49
Good afternoon. Papia Gamblin, managing director of state and local government affairs at United Airlines. I'm speaking on item number one. United Airlines has been a longtime investor in SAF Technologies and is a strong advocate for sustainable aviation fuel. We support the SAF tax credit for SAF produced in California.
It's critical step to keep SAF in California. Without this credit, we will continue to see other states benefiting from the SAF that we have produced here. So and those air qualities are leaving the state. Appreciate it. Thank you.
Speaker 50
Mister chairman, Kathy Van Austin. I represent United Airlines, but I'm also here to testify on behalf of air Airlines for America. Alberto Torico could not be here today. Just wanna speak to the fact that with for industry, frankly, military, general aviation, commercial airlines, SAF is our only means of really reducing emissions. And and there's been some question about efficacy of SAF in reducing emissions.
Current technologies get you to 80% carbon emission reductions with 50% particulate matter reduction, almost a 100% sulfur reduction. New technologies coming down the pipeline promise up to 99% emission reduction. So I would counter those claims that this is not effective. We also do support limiting this to in state production, obviously, the the cost the cost outplay for the budget. There are ways to, limit a tax credit to in state production, and we're happy to work with you on that.
Thank you. Thank you.
Speaker 51
Good afternoon, mister chair. Evan Gayorkas on behalf of the Boeing company in support of agenda item number one, the SAF tax, SAF tax incentive proposal. First up, we echo the sentiments of our airline partners, and we appreciate the administration's effort to provide an incentive to produce more SAF in California. While Boeing is hard at work developing alternative technologies and each generation of planes is more fuel efficient than prior generations, SAF is the only pathway to a zero emissions aviation sector at least until 2050. Additionally, no replacement technologies currently exist to carry 150 passengers, 1,000 miles or more.
We look forward to contributing to the CARB, and A for A working group to develop other efforts to expand the production and use of SAF in California to help reach our industry's goal of net zero by 2050.
Speaker 37
Mister chair, Greg Hayes here. I'm, with Brownstein on behalf of the Barry Council. We're here to support the emission, reduction goals of investing in sustainable aviation fuels. But most importantly for the economy, we would need to make sure, given refinery closures that, we shore up California supply first before we make investments outside of the state, critical to the Bay Area economy and beyond. Thank you.
Speaker 52
Good afternoon. My name is Chelsea Gizzillo, and I'm the senior California policy manager with American Farmland Trust. I'm also speaking on behalf of California Farmland Trust and California Council of Land Trust in support of funding for the sustainable ags land conservation program, one of the state's most effective climate investments. Historically funded through the affordable housing and sustainable communities account, SALC also is a critical ag viability tool. When farmers sell development rights, the the funds are often reinvested back into their operation.
Help helping keep farms productive and resilient salt projects leverage significant local, federal, and private conservation funding, stretching the state's investment even further. So protecting our agricultural land base supports climate goals. It supports California's agricultural economy and long term food security. Just as importantly, it prevents costly sprawl development. So for those reasons,
Speaker 53
Hi. Good afternoon. Lauren Wesche here with two hats today. The first is on behalf of the California Airports Council in, support of the proposed tax credit for sustainable aviation fuel. California is not a competitive market at this time, for the allocation of modest amounts of SAF that are being produced, and we urge that more in state production is going to change that.
Second, on behalf of the Bay Area Rapid Transit, we are here legislature to appropriate the planned 230,000,000 in GGRF funding for the zero emission transit capital program and establish a funding certainty for the transit and intercity rail capital program and the low carbon transit operations program in the GGRF. Thank you.
Speaker 54
Julie Malinowski Ball on three items. Item number one, I'm here on behalf of the Southwest Airlines in support of the SAF tax credit. Know, Southwest Airlines has electrified 80% of its ground support equipment. It is invested in more fuel efficient air air craft. So the SAF is really the next step we need to take, you know, to meet our climate goals.
An issue number two, on behalf of the California Electric Transportation Coalition, we're here to support the light duty ZEV incentive. You've already heard all the wonderful reasons why this is a good program. I won't repeat them. Item number four, on behalf of CalETC also, we sat up here last year and supported SB eight forty with the understanding that there would be $750,000,000 available this year for the legislature for discretionary dollars. We wanna continue to support that process and zero emission vehicles, light duty, medium duty, equity, and infrastructure should be a part of that investment.
Thank you.
Speaker 55
Good afternoon, chair. Natalie Spivak with Housing California commenting on item five, the affordable housing in sustainable communities program. The administration's proposal to split the housing and sustainable communities components at AISC is promising. Moving housing dollars to the new California Housing and Homelessness Agency is a key ingredient in streamlining the application and award process for housing funding programs so developers no longer face costly delays while waiting for multiple awards from multiple agencies. Additionally, while ASIC's track record of producing integrated affordable housing and transportation infrastructure is impressive, this integration has led to lengthy delays and additional costs as affordable housing developers meet complex requirements to provide transportation improvements in partnership with local governments.
However, it's critical that the ASIC housing allocation retain its focus on climate and equity. All affordable housing reduces GHGs because residents use transit more, but AISC should continue prioritizing the projects that most reduce GHGs. It should also continue to utilize regional set aside so all parts of the state benefit from climate change.
Speaker 56
Chairman Bennett, Philippe Efuentes here on behalf of the Associated General Contractors of California, aligning our concerns and opposition to item number one, with all of the previous speakers, but in particular, draw your attention to that of the lead California cities, noteworthy comments about, this going in the opposite direction of what the voters have instructed the legislature. In 2018, they supported constitutional protections for transportation costs and impacts as well as repealed an effort to rather as opposed the repeal, an effort to repeal, proposition, SB one. So for those issues, we want you to oppose the governor's proposal. Thank you.
Speaker 57
Morning. I'm Kurt Augustine. I'm senior director of state affairs for the Alliance for Automotive Innovation. I'm here in support of the administration's proposal for zero emission vehicle purchase rebates. I would also like to echo the chairs, Marcin, how important it is to maintain the momentum of these sales.
Unfortunately, we're gonna be in the second quarter of declining sales after the release stoppage of the federal rebate program. So we we really think this proposal is critical to maintaining that. And it's important to note, this is would be the only program for middle income purchasers of zero emission vehicles. And we think that's critical to really ultimately achieve the goal we're all here for, is to try to increase zero emission vehicle sales. We ask for your support.
I also am here in support of item number three too. Thank you.
Speaker 58
Hello, chair and staff. Ryan McCarthy on behalf of Lucid Motors in support of item two. Lucid is a California based EV automaker with headquarters in the Bay Area, employing about 3,000 people in the state. They produce the Lucid Air Sedan and the seven seat Lucid Gravity SUV, both of which have the longest range and leading efficiency in their class. These are exactly the types of vehicles that we need to get on the road to increase access to EVs and meet the state's goals.
The best way to do that is through an incentive for new EVs that supports leases that can help to seed the market with the fully function fully functional EVs that we all need. Indeed, if you go to Lucid's website today, you can find lightly used twenty twenty four Airs that have over 400 miles of range for under $40,000. This is probably the only place in America that you can go to find an EV with 400 miles of range for less than $40,000 So we strongly support the program. We want something that's easily to easy to implement, available on the hood. Do you want to appreciate the MSRP cap item and the analysis and support that.
Speaker 60
Benjamin Liu, on behalf of American Lung Association. The American Lung Lung Association agrees with speakers who have called for increased investment in zero emission transportation incentives to address the pollution in our most impacted communities. We appreciate the governor's 200,000,000 proposal and believe that should be the starting point for ongoing investment in heavy duty vehicle incentives and for light duty programs that support low and moderate income consumers with greater access to clean vehicles, and we appreciate the chair's comments to that effect today. The Lung Association also supports investments in programs that clean up off road equipment to reduce the burdens of diesel exhaust, including agricultural programs like farmer, that are not included in the investment proposal today. Thank you for considering the importance of the budget consider budget investments in preserving cleaner progress for all Californians.
Speaker 61
Good afternoon, chair Bennett. Chris Lee on behalf of the Sacramento Area Council of Governments. First, on the GGRF expenditure plan, share the concerns of transit operators regarding zero emission transit capital funding via $23,000,000 hit to the Sacramento region. And second, on the affordable housing and sustainable communities program, very supportive of the governor's plan to modernize the AHSC and focus that remaining funding for sustainable communities on catalytic infrastructure projects that help achieve regional goals. MPOs are where we weave together the greenhouse gas reduction goals from housing, from land use, and from transportation.
We'd actually like to strengthen that relationship with the sustainable community strategies, But, again, I think it's a very good starting point and appreciative of it. Thank you.
Speaker 36
Good afternoon, chairman. Ross Buckley on behalf of the city of Sacramento. We'd like to echo the comments of our colleague from SACOG. We're supportive of the proposal to modernize the affordable housing sustainable communities program. This will help support critical
Speaker 62
I'm Matt Roman on behalf of Ag Council here today. In support of four programs for the GGRF discussions, including sustainable ag waste management, farmer, and, the livestock reduct methane livestock reduction program. It's been incredibly important for their members, but most importantly, the food and production improvement program or FFIP, which has really allowed their membership to, improve their, technology and bring on more sustainable technology if they start to go through the transition. Thank you.
Speaker 63
Mister chair, Damon Conklin with League of California Cities. We are opposed to the proposal, of the sustainable aviation tax credit as it is, you know, proposed to be routed from SB $1, which our members use to maintain our local streets and roads. Separately, the item related to $100,000,000 from GGRF funds to maintain medium to heavy duty zero emission and low NOx vehicles as well as $100,000,000 for protecting our critical infrastructure from the effects of climate change. And then just lastly, 29,000,000 from GGRF funds for organic waste diversion. Thank you.
Speaker 64
Chair, I'm Tom Knox of Valley Clean Air now coming commenting on item two. We appreciate the legislature's ongoing support for Clean Cars for All. As the staff report notes, this has been a proven solution for both ZEV equity as well as moving the increasing inventory of used EVs for ten years now. We hope there's a solution here that would enable the governor's proposed new EV incentive as well as the medium and heavy duty needs as well as continuing the operation of Clean Cars For All. Absent additional funding, we expect to see Clean Cars For All start to wind down in the foreseeable future as was noted in the staff report.
Thank you very much.
Speaker 65
Good afternoon. Rocky Fernandez with the Center for Sustainable Energy, in support of item number two. As the longtime administrator of the Clean Vehicle Rebate Project, with CARB as well as administrator for a few of the air district programs, for Clean Cars For All. We also administer used EV programs for, the low carbon fuel standard, and we believe these really drive adoption of electric vehicles and decarbonized transportation. So we look forward to working with CARB and trying to work out all the details.
Also, on a medium duty, heavy duty, I'll point out respectfully that the, public utilities commission, almost two years ago paused a billion dollar transformative behind the meter, charging program for ports and for fleets. Yeah. We're coming up on two years now. Still hasn't been unpaused, but really gives us an opportunity to electrify those segments as well. Thank you.
Speaker 66
Good afternoon, mister chairman. Timothy Jeffries, the international brother of boilermakers representing the, boilermakers the thousands of boilermakers that service the, facility of refineries in our in this state here. And on not only one particular item, but all of the items that that involve labor. I appreciate the comments that have been head that had on the diocese that are interested in protecting those jobs and protecting their economics in this area here and of those and having those conversations with the workforce and with the industry, I think, is very important. I appreciate
Speaker 67
Good morning, chairman Mark Watts representing San Diego, Metropolitan Transit System as well as the Riverside County Transportation Commission. We urge you as you go forward with your deliberations to appropriate the planned amount of $230,000,000 in GGRF for the zero emission transit program as well as establish funding certainty for both or for all the TI RCP, LCT, OP programs in the GGRF. And that'll be it. Thank you.
Speaker 68
Good afternoon. Sarah Brennan on behalf of two organizations. First, on behalf of BYD RIDE, we urge the committee and the legislature to protect the SB eight forty deal, which funds Cal Fire in tier one and separately gives the legislature discretionary dollars to spend on other priorities. Among the highest priorities for the that funding should be zero emission vehicles and infrastructure, including support for electric transit and school buses due to the outsized impact transportation has on emissions in the state. Support for ZEV incentives and infrastructure is an investment in jobs, communities, and public health.
Secondly, for NextGen California in support of fully restored greenhouse gas reduction fund allocations to not backfill general fund obligations and also the passage of the 200,000,000 incentive program and expansion of funds that also support medium and heavy duty zero emission vehicles. GGRF revenues are always oversubscribed with various climate program demands. We must urge you to the extent feasible to refrain from using GGR funds to backfill general fund obligations.
Speaker 69
you. Good afternoon. Sylvia Solis Shah here on behalf of the San Joaquin Valley Air Pollution Control District. I wanna echo the comments of the representative from Kapcoa regarding the farmer program. It is wildly popular in the district and leads to immediate emissions reductions in the valley.
Secondly, we also want to voice support for the Clean Cars for All program. We hope to see additional funding if at all possible for that program, which is an equity focused program and also, has is oversubscribed in the valley. I would also like to, make comments on behalf of the San Francisco Municipal Transportation Agency as well as the city of Santa Monica Big Blue Bus Department of Transportation in strong support of, asking the legislature to appropriate the 230,000,000 in funding for the zero emission transit capital program, establish funding certainty for the TIRCP and LC top, and finally, reinstitute the partial sales and use tax exemption for zero emission buses purchased by transit agencies. Thank you.
Speaker 70
Good afternoon. Kirk Blackburn here on behalf of the San Diego Association of Governments or SANDAG, which offers the following comments on several GGRF funding items. First, SANDAG supports efforts to modernize affordable housing and sustainable communities program, including dedicated flexible funds to support infrastructure investments aligned with regional priorities. COGS like SANDAG are well positioned to use this funding to help the state deliver on its ambitious climate, housing, and transportation infrastructure goals. Next, SANDAG supports SB eight forty's proposed a 125,000,000 allocation for transit passes and encourages the legislature to distribute the funds through a formula based on population so that the money can get quickly to the riders that need it without creating unnecessary bureaucratic processes.
SANDAC has seen great success with its youth opportunity pass program, which provides free transit rides for those 18 and under, which has provided more than 32,000,000 rides since its launch in 2022. And finally, San Diego supports a restoration of 75,000,000 for the highways to boulevards reconnecting communities pilot program, which will allow our region to follow through on our commitments to the reconnect in Southeastern San Diego and national city projects. Thank you.
Speaker 71
Melissa Kosachuk with Western Growers. I'm so happy to hear all the, outpouring, and appreciation for the farmer program. So I'm here to also appreciate that and request funding for that. But essentially, Western Growers, we support and advocate on behalf of California's agricultural industry. They're farmers, shippers, processors.
And there are two programs that we feel are really important with farmer. And then second of that is the organic waste management program as well. So there's various programs that support that. But essentially, historically, there's been GGR funding allocated for these programs. There's not right now.
We'd love to see that back in there. So thank you.
Speaker 72
Mister chairman and members, it's been a long hearing. Congratulations on a very thorough staff report to accompany the conversation today. Very good job framing the issues. Andrew Antwee here today on a number of items for a number of clients. Item four for the Los Angeles County Metropolitan Transportation Authority.
As discussed today, we would, encourage the subcommittee to make room for a decision that keeps faith with the zero emission transit capital appropriations that have been planned and the TIRCP and LC Top as well. We are part of the state's strategy towards emission reduction and congestion relief, and it's an investment that, brings very concrete, returns, as far as public transportation and, emissions in the state. Also, the Port Of Los Angeles, investments that have been committed in prior budget years relative to zero emission heavy duty trucks and zero emission port handling equipment, we encourage that to continue to be part of the consideration. And lastly, for the office of Cat Taylor, for the SALC, we ask for predictable ongoing funding. Thank you.
Speaker 73
Excuse me. Good afternoon, chair. Vincenzo Caparelli here on behalf of the California Association of Council of Governments. Wanna make two very brief comments on item one and item number five. So first, we are opposed to the governor's proposal to establish the sustainable aviation fuel tax credit.
Similar to other groups, our concerns are centered around what the impact will be to transportation funding programs that our members rely on. It's particularly problematic as the analysis notes, particularly problematic as we are facing major transportation funding shortfall over the next decade. Second, turning to the governor's proposal related to ASIC program. We would like to express appreciation that the governor's proposal included requirements to incorporate regional priorities in the sustainable communities allocation of the program. As you've seen success of two regional governments and sustainable strategies they produce are key to making progress towards the state's climate and infrastructure goals.
CalCOLA looks forward to working with both administration and legislature to better align regional governments and our plans with state funding programs. Thank you.
Speaker 74
Good afternoon, assembly member Betten. Richard Filgas with California Farm Bureau. Look. Following last year's negotiations over the extension of cap and invest, ag, unfortunately, didn't receive any money, from GGRF. Ag plays a tremendous role in helping the state meet its climate goals, and many of the Ag programs that provide meaningful, durable emission reductions, are consistently oversubscribed.
A broad coalition of Ag organizations have come together over the past few months to identify a short list of programs that deliver some of the highest value climate investments available to the state, especially during a time when difficult financial decisions have to be made. With that said, we respectfully request ongoing funding for farmer, FPIP, sustainable ag waste management, and livestock methane reduction programs. These programs provide immediate, large scale, and quantifiable emission benefits, which ultimately is what GGRF is for. Lastly, just wanted to put in a plug that fully funding the Williamson Act is still the best ag land preservation ROI that the state could make. We look forward to working with you all through the budget process, and thank you for your time.
Speaker 75
Good afternoon. Melissa Werner here today on behalf of Honda in support of the governor's proposal to allocate $200,000,000 to the light duty, ZEV incentive program. Thank you so much.
Speaker 76
Hi. Good afternoon. Rashina Mojaveen with California Environmental Voters. Regarding item two, I would like to express our support for the proposed light duty incentive dollars. We recognize the gap left by the lost federal tax credit and the real need to keep moving on the EV transition.
With that in mind, we would like to see some form of additional equity consideration so these incentives are reaching the families and households who could benefit the most from this assistance. Additionally, funding for our existing light duty and heavy duty incentive programs remain imperative. These standing programs, such as Clean Cars For All on the light duty side and HFIP on the heavy duty side, to name a few, are all in high demand and, in some cases, oversubscribed. And these are acting as a backstop when we are working without some of our key, landmark transportation regulations. Thank you.
Speaker 77
Maria Lerato with Leadership Council for Justice and Accountability. We know it's a difficult, budget year, but we believe that overall, the it's critical to invest in programs that provide the tangible difference in communities' everyday everyday life and improve public health and economic security on issue four. We encourage the the legislature to backfill the safer, affordable drinking water program and the six one seven program. These programs provide, critical public health and well-being in disadvantaged communities by supporting the reduction of air and water pollution through investments, including, pollution reducing technologies and infrastructure. Regarding the AISC program, we encourage, we want to share initial recommendations.
We urge you to maintain the existing funding of at least, 50% for AISC funding directed to, the disadvantaged communities for affordable housing and sustainable sustainable communities as it is proposed, proposed change. And then, lastly, I just wanna
Speaker 78
Thank you. On behalf of Via Transportation, we partner with more than 80 communities across California to expand equitable and clean mobility options. As you consider the cap and invest expenditure plan, we we urge the legislature to invest g g r GGRF revenues in carbs sustainable community strategies programs. These programs were previously scheduled to, receive $279,000,000 over three years until they were cut last year. These are programs making an impact in disadvantaged communities across our state.
We also echo others in asking the legislature to restore the promised 230,000,000 for the zero emission transit capital program. Thank you.
Speaker 79
Mister chair, good to be with you this afternoon. Michael Pimtel here on behalf of the California Transit Association representing 220 member organizations. We've submitted a detailed budget letter, so I'm just gonna give you the highlights today and calling for the legislature to appropriate the plan $230,000,000 for the zero emission transit capital program. What I will note on this regard is many of the agencies are using these monies to get to self help measures on the twenty twenty six and twenty twenty eight ballots. So in the absence of those dollars, we will find ourselves facing facing Vessel Cliff without the ability to get to long term support.
We are asking for some certainty on the TRCP and LC top funding, recognizing we've been placed into tier three. Then finally, we're asking for the reinstitution of partial sales and use tax exemption for zero emission buses. A lot of discourse today around light duty vehicles. I wanna just punctuate the same challenges exist at the medium and heavy duty level. We are seeing funds rescinded from the federal government for zero emission bus purchases.
You're seeing grants that were awarded pulled from the agencies, and the state, unfortunately, has found itself in a similar regard, also pulling money and resources from the agencies. Thank you.
Speaker 80
Mister chair, Mike Monaghan. On behalf of the state building and construction trades, we, strongly support the governor's proposal on tax credits for SAF, keeps well paying jobs in California and will keep refineries open. Second of all, Julian Malnowski Ball, on behalf of the Alaska Air Group, asked me to express their support for this item. Thank you. Thank you.
Speaker 81
Chair members, Nick Rumoh on behalf of the Southern California Association of Governments. We appreciate the governor starting a conversation on the AISC program. You know, the state's climate goals and ambitions start at the local and regional level, and we look forward to continuing that conversation. Thank you so much.
Speaker 35
Good morning, mister chairman and members. Scott Cox, on behalf of the Electric Vehicle Charging Association and Industrious Labs, to urge the legislature to maintain its discretion over the greenhouse gas reduction fund as intended in s b eight forty and to continue to fund the programs that drive a more affordable and better managed clean energy transition for all of California. Thank you.
Speaker 82
Good afternoon, chair. Darrell Little here on behalf of CalSTART, here today to urge the legislature to protect California's climate investments. The legislature recently extended the cap and invest program, established a clear framework for how revenues through GGRF should be invested. Amending that framework risks undermining confidence in California's long term climate and commitments. The legislature has built a strong portfolio of clean transportation programs that are already delivering results, such as HFIP core, energized community in charge, and clean mobility options.
The discretionary funds properly allocated, these programs can immediately support California businesses, improve air quality, and reduce costs. We respectfully ask the legislature to preserve the integrity of GGRF and and restore discretionary dollars for proven programs. Thank you for your time.
Speaker 2
Mister chair, Rob Johnson. I live in Martinez, California. I'm here in support of the staff and senate and hope you'll support as well. Incentivizing the production of any sustainable energy in the state of California will go a long way to, reaching the state's environmental goals as well as keeping industry and the jobs it brings in the state. Thank you.
Speaker 40
Good afternoon, sir. My name is Fernando Blanco. I'm with the United Steel Orders Local three two six. I'm here to support agenda item number one, the sustainable aviation fuel tax credit. This policy helps reduce emissions while protecting good union jobs in California.
It also supports the development of cleaner fuels by utilizing the infrastructure and skilled workforce we already have. Thank you.
Speaker 59
Cheers, our members. Good afternoon. My name is Joseph Kumbal, and I I support the support the use of sustainable aviation field as a member of local three two six. Some represent an important step towards reducing emission while putting good union job in aviation. I believe supporting SAF have built a greater, stronger future for our industry and our members.
Thank you.
Speaker 83
Good afternoon, chair. My name is April Hamilton. I'm a proud member of the local USW three twenty six, and I'm in support of the governor's incentive of SAF, and I hope you will be too. Thank you.
Speaker 11
Good afternoon, members. Forgive me for reading, but, public speaking is my forte. Members, my name is Felix Luna, a proud local three twenty six United Steelworker, Joint Health and Safety Committee chair and Vacaville resident. Supporting the California staff incentive keeps California economy strong and positions the state as a leader in green energy innovation. By keeping well paying jobs in our state and keeping well trained and experienced operators, technicians, and tradespersons employed.
I thank you all for your favorably considering the staff incentive and for your time.
Speaker 84
Good afternoon. Dear chair, and members, my name is Todd Welch. I'm a proud member of five forty nine USW, and I respectfully request your approval and support for the achievement of sustainable aviation field. Within California, SAF offers a significant opportunity to reduce aviation related greenhouse gas emissions while maintaining the strength of our transportation and economic systems. Supporting policies and expanding the product production of use of sap will help California continue leading clean energy and innovations, create jobs, and promise a more sustainable aviation industry.
Thank you for your time. Have a good day. Thank you.
Speaker 85
Good afternoon, chair members. My name is Margaret Salas, and I live in Vacaville. I'm here today in support of the governor's staff incentive. This program helps support good jobs and California's clean fuel future. I respectfully ask for your support.
Thank you.
Speaker 86
Alright. Members, my name is Franklin Gordine. I live in Vacaville. I'm a proud member of USW Local three twenty six. I'm here today to support the the staff incentive in the budget ask that you support it too.
Thank you for your time.
Speaker 87
Good afternoon, mister chair and, committee members. My name is Tony Manenko. I'm a resident of, Concord, California, and I'm here, to express support for the governor's, SAP incentive. For years, we have been working on decarbonizing California, working our way towards net zero carbon emissions. As of now, SAP is the only way to, reliably reduce the emissions of, aviation fuel.
It's not some technology ten, twenty years of future is available right now. And so I would like you to, support, this incentive and provide well paying jobs to California and this community. Thank you. Thank you.
Speaker 15
Dear chair and members, my name is Robert Koeth. I live in El Dorado County, and there are no refineries there, but there is a lot of awareness and support for sustainable aviation fuel, and I'm here to show my support. Thank you.
Speaker 3
Chair Bennett and members oops. Sorry. My name is Theresa Lang representing A New Climate as well as VERA, the Verified Emission Reductions Association, and CFCC, the California Forest Carbon Coalition. I'm commenting in strong support of item number eight and urge you to fully fund CARB's budget request to implement the provisions of last year's a b 12 o seven and s b eight forty, particularly as it relates to the offset program. We are strong supporters of the program overall, and we're very pleased to see it reauthorized through 2045 with these bills last year.
We're also pleased that these bills recognize the important role of carbon offsets in the program through 2045 and the importance of regular updates and reassessment of the existing compliance offset protocols currently included in the program as well as consideration of new protocols, project types, and additional studies. That said, these additional requirements for regular protocol updates, etcetera, are going to take a significant amount of staff time and effort, and it's imperative that that the budget request for CARB is granted in full so that they can meet the legislative direction. Thank you.
Speaker 88
Board members, my name is David. I live in Concord. I'm a member of the USW. I would just like to say that Phillips sixty six has done an outstanding job of building this renewable energy complex. They've done they've gone above and beyond what California wanted, and California should be proud to know that they have the best renewable energy complex.
Thank you.
Speaker 11
Good afternoon, chair. My name is Jim Hill. I'm a resident of Solano County. I'm here in support of the staff incentive. I ask that you support it too.
Speaker 89
afternoon, chair. My name is Sanjay Prasad. I live in Hercules, California, which is in Contra Costa County. I'm here to support our governor's, staff incentive initiative. Please join me and my family to support that.
Our family's future depends on your decision. Thank you.
Speaker 90
Good afternoon, chair. Eric Thromson here on behalf of, Sacramento Regional Transit District. Thank you very much for being here. Thank you, staff for that really great, staff report. Awesome today.
I'm here to echo the concerns and requests of the other speakers related to the transit funding, from the GGRF. I will not belabor all those points. But I also wanted to share that we here at SACRT are working very hard to create an opportunity for state employees to create an, to use to ride for free with nothing but their state badges. And, transit funding that was, discussed in SB eight forty would be very helpful, for us to be able to do that and help, state workers be able to get to work, in a more effective and efficient way. So thank you very much.
Speaker 76
Good afternoon, chair and members. My name is Ingrid Otto, and I'm a resident of Walnut Creek here today to support, the governor's staff incentive included in the budget. This program helps support good livable wage jobs and upholds to California's clean future goals. I'm respectfully asking for your support.
Speaker 26
is Zena Thomas, and I'm a resident of Martinez. I'm here today in support of the governor's sustainable aviation fuel incentive included in the budget. SAF is the only scalable path to decarbonizing aviation. This program helps support good jobs in California's clean fuel future. I respectfully ask for your support as well.
Thank you.
Speaker 91
Good afternoon, mister chair. My name is John Carroll, and I'm a resident of Concord. Commenting on item number one, I'm urging you to please support the governor's staff incentive in the budget. California has been a leader in decarbonization efforts within The United States and the world, And I support this incentive because it continues our state's efforts to reduce emissions while protecting families supporting jobs within our state. I hope you please support this staff incentive too.
Thank you very much. Thank you.
Speaker 26
Hello Chair and members. I'm Catherine Tate and I live in Pleasant Hill. I'm here in support of the staff incentive included in the budget.
Speaker 43
I believe it will help reduce emissions and keep jobs in California. I kindly ask that you support it too. Thank you.
Speaker 26
Good afternoon, chair and members. My name is Grace Gregg, and I live in Walnut Creek. I'm here today in support of the governor's sustainable aviation fuel incentive that's included in the budget. This program helps support good jobs in California's clean fuel future, and I'd like to mention that this transition is exactly what the state asked our industry to do. It also keeps jobs and investments in California.
Respectfully ask for your support as well. Thank you.
Speaker 92
Good afternoon, mister chair and members. My name is Michael Miller. I live in Benicia. I'm here in support of the governor's sustainable aviation fuel incentive package. This supports good paying jobs, and furthers clean energy investment in our state while advancing California's nation leading climate goals.
In my experience, increased fuel supply in
Speaker 22
the market provides more competition and downward pressure on cost, also helping with affordability for Californians. I ask for your support as well. Thank you. Thank you.
Speaker 93
Good afternoon, shared members. My name is Quinn Reyes. I live in Martinez, and I am also here in support of the sustainable aviation fuel incentive in the budget. Systematically reducing carbon emissions has always felt like such a large daunting goal, but I truly believe that sustainable aviation fuel can make a difference. So I want to support all the people and workers in here in California producing SAF.
So I ask for your support.
Speaker 94
Hi. Good afternoon, chair of members. My name is Sean Gibson. I'm coming from Alamo, California. I'll keep it short and sweet.
I'm here today in support of governor's sustainable aviation fuel incentive, other known as SAF, included in this budget. This program helps support good jobs in California's clean fuel future. I respectfully ask for your support. Thank you.
Speaker 95
Good afternoon, chair. My name is Amy Henry, and I live in Fairfield, which is part of Solano County. I'm here today in support of item number one, governor's sustainable aviation fuel tax credit. I'm gonna tell you why. Because sustainable aviation fuel is one of the most immediate and effective ways we can reduce emissions from aviation.
The technology exist, and our facility is making it right now today with these real emissions happening right now. The incentive will help ensure California continues leading the transition to lower carbon fuels while supporting good jobs and energy reliability. I respectfully ask for your support, and I thank you for your time.
Speaker 15
Hey. Good afternoon, chair. My name is Reginald Byrd. I am a Fairfield native. I'm here today in support of the governor's staff, included into the budget.
Sorry. Nervous. Hope you guys
Speaker 22
Good afternoon, chair. Noah Melroy speaking on item number four on behalf of the, California Association of Local Conservation Corps, the California Compost Coalition, Mid Peninsula Regional Open Space District, and Rethink Waste, urging the legislature to maintain 750,000,000 in discretionary GGRF dollars that was the understood intent of a b eight forty. Thank you for your advocacy on this.
Speaker 96
Good afternoon, chair Bennett. Tiffany Fan on behalf of the California Efficiency and Demand Management Council or SEDMEC. Regarding issue two, the ZEV, trailer bill, we agree with many of the points and questions staff raised in the agenda, particularly, the comment that CARB should hold a workshop, building out the proposal before the legislature approves the funding. And we're glad to hear that CARB is now planning to do so. That workshop can work through many of the questions you raised, the other committee members raised, and also an opportunity for stakeholders to have input as well.
So thank you.
Speaker 97
Good afternoon, chair and member. My name is Derek Henry. I am a USW Local three twenty six AMEN member. I'm also AMEN. Oh my goodness.
A proud veteran for twenty four years of service and a Fairfield resident. After serving my country for over two decades, I now work to support my family and my community through a good paying union job. This is why I strongly support the governor's staff incentive package It projects union job protects union jobs like mine, strengthens American energy production, and ensures renewable fuel manufacturing stays in California instead of moving it out of state. I respectfully ask for your support.
Speaker 98
Good afternoon, mister chair and, members. My name is Chuck Leonard. I represent thousands of, union members out of Plumbers and Steamfitters Local three forty two. We strongly support governor Newsom's proposal to incentivize sustainable aviation fuel. This policy protects high wage union jobs and accelerates real emissions reductions.
For generations, the oil and gas industry has provided high wage union careers that sustain families and communities across our state. These jobs with health care, pensions, and the dignity of a secure retirement. Today, these shops face real pressure. Refineries are closing. Production is shifting to states offering stronger incentives and fewer barriers.
If we do nothing, we'll not we'll lose not only facilities, but the skilled workforce that built California's middle class. Sustainable aviation fuel gives us a path forward. The choice before us is simple. We can build a new industry here using our existing infrastructure, union workforce, or we can watch other states and countries seize the opportunity. The government Thank
Speaker 99
Chris Nielsen with the American EV Jobs Alliance. Thank you, chair, for your comments about bringing forward electrical infrastructure for charging. You know, we agree and we look forward to working with you generally. We're supportive of the Governor's $200,000,000 proposed for passenger vehicles. We think with the absence of federal EV incentive, it's crucial to expand access to the EV market here and maintain momentum.
Lastly, we'll just notice, we've definitely heard your comments today, and we look forward to working with you and committee staff on what this proposal is gonna look like. Thank you very much.
Speaker 100
Mister chair and members, Don Gilbert, on behalf of San Francisco International Airport, which supports item one, the staff tax credit, Just want to also note that we think the state would be better served by limiting this production tax credit to in state production. Thank you.
Speaker 99
Good afternoon, Chair and members. My name is Jared Witcher. I am a resident of Benicia. I am in strong support of the governor's staff incentive package. It keeps production and jobs in California.
I hope you support it too.
Speaker 101
Good afternoon, mister chair. Zach Leary on behalf of the Western States Petroleum Association.
Speaker 101
to urge caution on the sustainable aviation fuel proposal. I represent the remaining, petroleum refineries here in California. My refineries produce the bulk of fuels that your constituents use every day and supply the airports with the bulk of the jet fuel in California. This year, the state is losing roughly 20 of the in state gasoline and jet fuel refinery capacity. As you consider proposals like this, we would encourage the administration and the legislature to focus on preserving and protecting the remaining petroleum refineries that provide the bulk of the fuel that your folks use every day.
Thanks.
Speaker 75
Good afternoon, Chair Bennett. I'm Marissa Hagerman with Tratton Price Consulting. On behalf of Environmental Defense Fund, we wanted to express our strong support for the 200,000,000 light duty ZEV incentive proposal. In addition to all of the health, climate, and affordability benefits of ZEVS, we see this as an important down payment on new partnerships with auto manufacturers so we can develop the next generation of durable clean car standards. We also want to highlight the need for more investments in heavy duty subs as well.
For example, HFIP has been a successful program and is oversubscribed. We'd like to express a need to continue progress, cleaning up heavy duty transportation for climate and local air quality benefits. Thank you.
Speaker 19
Good afternoon, mister chair. Jack Yannis. We have the California Fuels Convenience Alliance representing fuel retailers and markets across the state. CFC supports reducing transportation emissions. However, their proposed SAF tax credit is the wrong policy at the wrong time.
Because SAF, renewable diesel, and other low carbon fuels rely on the same limited feedstocks, this credit would not expand the clean fuel supply. It would simply shift it away from on road transportation. That means higher gasoline and diesel prices with estimates showing increases of 10 to 15¢ per gallon and billions in added annual cost for Californians. At the same time, the proposal diverts diesel excise tax revenue that funds road maintenance, potentially reducing critical infrastructure funding while delivering relatively small emissions reductions at very high cost. The credit directs substantial public subsidies towards a narrow set of market participants while increasing fuel costs and shifting financial burdens on the millions of California consumers.
We respectfully urge you to respect to reject the proposal. Thank you.
Speaker 37
Good afternoon. Mitch Weiss with Corey Consulting. We represent, numerous metropolitan planning organizations and regional transportation planning agencies in the Central Valley and in the Central Coast. I'd like to echo the comments of many of my predecessors who, stress the need to fulfill our funding commitments for SB 125 funding for transit. These funds are needed to help us meet our mobility and air quality goals, particularly in the less densely populated regions of our state.
I'd also like to echo the need to, provide funding for the farmer program. Thank you. Thank you, Mitch.
Speaker 20
Mister chair and staff, Doug Houston representing Sierra Business Council and the Sierra Consortium. And two quick items. So first, our client organizations, respectfully request the legislature uphold the statutory commitments contained in senator Dodd's s b nine zero one and fully fund the $200,000,000 pursuant to tier three in s b eight forty. And then second, in the interest of preserving and protecting California's agricultural heritage and legacy, we ask the legislature codify in trailer bill language a a robust investment through the affordable housing sustainable communities program toward the sustainable agricultural lands conservation program. So thank you.
Thank you, Doug.
Speaker 102
Chair members, Christina Skarinj with the Center for Biological Diversity. We oppose the SAF credit. The legislature should first max out, funding cost effective GHD reduction programs and that must include fully funding and accelerating equitable clean transportation. The state's been struggling with how to deal with its mid transition, how to stabilize an increasingly volatile transportation fuels market, and CEC made clear that demand reductions are a critical stabilization strategy. ZEV's reduced pollution for everyone.
ZEV's also reduced utility costs for everyone, whether or not you own ZEV. So we definitely support the ZEV incentives and bidirectional charging. But yes, also, we need to look at clean trucks in transit, VMT reductions and equity focused programs like Clean Cars for All. So thank you.
Speaker 103
Good afternoon, chair and members. My name is Lindsey Epperly, and I'm here in support of agenda item number one. I live in Martinez in Contra Costa County, but I've been a lifelong California resident. I went to k through 12 schools, and I proudly graduated from UC Davis. I have long been proud too of this state and the fact that we're looked at as a leader on so many different fronts.
And today, I'm here to support the union of two of those fronts, our domestic California fuels production with our ambitious California climate goals so we can have clean air, clean skies, and sustainable green jobs that can go on for generations. And with everything going on right now in this nation, I think it's more important now than ever that we support these jobs, and we hold the most as a success. So I hope you support the staff initiative, Bill.
Speaker 27
Good afternoon, chair and members. My name is Leot Carlisle, and I'm here representing the Cascadia Sustainable Aviation Accelerator, a regional nonprofit based in Seattle, Washington. I traveled here today to give comments in strong support of, agenda item one because SAF is really the only way to abate emissions in the aviation sector. SAF can reduce life cycle carbon intensity by up to 80% while also reducing sulfur oxides and critical particulate matter for our most vulnerable communities. As an example, a 150,000,000 gallons of SAF at SFO would abate jet fuel emissions by about 13%, and that does not even begin to capture the state's production capacity.
That would abate the equivalent of 3,200,000,000 vehicle miles traveled. I urge you to join Washington state in adopting this tax credit so that our two states can continue to lead the region and the world in climate action as we begin to look at linking our carbon markets together.
Speaker 23
Nate Solov on behalf of Zeam Solutions, supporting, funding for zero emission trucks and charging infrastructure. We are in an inflection point to your comments earlier. The investments that were made last year as a result of the Hino settlement resulted in the largest number of zero emission truck orders in state history. And so we definitely want to keep that momentum going because technology is improving and so truck prices are coming down, the ranges are increasing and the charge times are decreasing. So there's a lot of fleets who are now wanting to make that transition to zero emission trucks even though with the federal dynamics and the the state mandate is not in place.
So it's a critical time to be able to keep those investments going so fleets can purchase their emission trucks because they are a lot more expensive. The HVIP program has been hugely successful in that. And the Cummins settlement in 2024, finance took that money, and so what we're asking for a portion of that common settlement money to come back into the budget this year to fund HFIP. Appreciate your support. Thank you.
Thank you, Nate.
Speaker 104
Hello. My name is Ted Wickers. I stand in support of our staff, incentive for the governor's office. As an employee of that facility for forty three years, I can tell you there has never been a more homegrown organic labor workforce that delivered the largest renewable plant in the country, and we'd like to continue doing that. When you talk about jobs, it's not daily jobs.
These are generational jobs. When I started in early eighty three, the fathers and sons and daughters and mothers now, I'm working with grandchildren. So it's not a daily job. It's a generational job. Thank you.
Speaker 105
Chair and members, thank you for the opportunity to speak. I'm Bobby Thomas, the Vice President of the Rodale Renewable Energy Complex. At Rodale, we did exactly what California asked. We converted a petroleum refinery into a renewables facility. Last year at the end of the session, we had the honor of hosting a tour of facility for 14 of your colleagues from the legislature.
They got to see state of the art facility that diverts waste products from landfills and turns it into renewable fuels. And because we use waste products diverted from landfills instead of crude oil, Rodeo's sustainable aviation fuel production isn't impacted by the events that are taking place in The Middle East. We are a proud union shop providing about 600 livable wage jobs, including contractors and skilled labor or skilled trades. Sorry about that. The SAF incentive is not just climate policy.
It is about California jobs and California's future, Replacing traditional jet fuel with sustainable aviation fuel provides a benefit the entire state and communities near airports see. SAF can reduce hazardous exhaust particulates by 62%. Thank you. Hope you support the Sabbath Center.
Speaker 106
Good afternoon, chair, member, staff. Griselda Chavez here on behalf of the conservation fund, save the Redwoods League, and 26 other organizations spanning conservation, waste, decarbonization, and more, all included in the letter submitted to this committee. We urge the legislature to maintain its $750,000,000 in discretionary GGRF dollars for budget year 2026 to 2027. This was the understood intent of SB 40 last year and should be preserved. Thank you.
Speaker 107
Good afternoon, chair and members. Appreciate the opportunity to speak today, first off. My name is Joe Jawad, the United Steelworkers Local three twenty six president. We represent about 250, skilled craft, union jobs, at the Rodeo Renewable Energy Complex. Our local has been serving that facility for ninety two years.
I'll just put a preface on that. Our members, make up the operations department, maintenance department, and lab technicians who show up every day to one of the largest renewable fuels facilities in the world. We do that safely and responsibly. When the state of California asked for cleaner fuels, our facility answered. We transformed a traditional refinery into a renewable fuels operation producing renewable diesel and sustainable aviation fuel.
Our members made that transition happen. These are not abstract policy discussions for us. These are real jobs, mortgage paying, benefit earning, family sustaining union jobs in our community. The staff incentive is about keeping those jobs here in California while continuing to reduce emissions. If we want this industry and these skilled union careers to remain here, We need policies that provide sustainability and certainty.
Appreciate your support.
Speaker 1
Thank you. Thank you. Any final comments? We appreciate, assembly member Rogers coming back for the final, and this adjourn this meeting is adjourned.
Ask anything about this video — I analyse its transcript to answer.