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SB-18 Green hydrogen.(2021-2022)

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Date Published: 12/07/2020 09:00 PM
SB18:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 18


Introduced by Senator Skinner

December 07, 2020


An act to add Section 38561.7 to the Health and Safety Code, to add and repeal Section 25327.5 of the Public Resources Code, and to amend Sections 400.2 and 400.3 of, and to add Sections 380.1 and 380.6 to, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 18, as introduced, Skinner. Green hydrogen.
The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The state board is required to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. The act requires the state board to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions and to update the scoping plan at least once every 5 years.
This bill would require the state board, by December 31, 2022, as a part of the scoping plan and the state’s goal for carbon neutrality, to prepare a strategic plan for accelerating the production and use of green hydrogen, as defined, in California and an analysis of how curtailed power could be better utilized to help meet the state’s greenhouse gas emissions reduction goals.
Existing law establishes the State Energy Resources Conservation and Development Commission (Energy Commission) and requires the Energy Commission, on a biennial basis, to adopt an integrated energy policy report containing an overview of major energy trends and issues facing the state. Existing law requires the Energy Commission, as a part of the report, to conduct transportation forecasting and assessment activities that include, among other things, an assessment of trends in transportation fuels, technologies, and infrastructure supply and demand.
This bill would require the Energy Commission, by June 1, 2022, to submit to the Legislature a report studying and modeling green hydrogen and its role in decarbonizing the power and transportation sectors, and helping to achieve, state’s clean energy and climate change goals.
Existing law requires the Public Utilities Commission (PUC) and the Energy Commission to undertake specified actions to advance the state’s clean energy and pollution reduction objectives, including, where feasible, cost effective, and consistent with other state policy objectives, increasing the use of large- and small-scale energy storage with a variety of technologies. Existing law specifies that green electrolytic hydrogen, as defined, is one of these energy storage technologies to be targeted for increased use and requires the PUC, state board, and Energy Commission to consider green electrolytic hydrogen an eligible form of energy storage, and to consider other potential uses of green electrolytic hydrogen.
Existing law requires the PUC to identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner. Existing law requires that the portfolio rely upon zero carbon-emitting resources to the maximum extent reasonable and be designed to achieve any statewide limit on emissions of greenhouse gases established by the state board pursuant to the California Global Warming Solutions Act of 2006.
This bill would require the PUC to consider both green hydrogen and green electrolytic hydrogen to be a zero carbon-emitting resource for purposes of identifying a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner.
Existing law requires the PUC to adopt a process for each load-serving entity to file an integrated resources plan to meet various requirements.
This bill would require the PUC to work to advance green hydrogen within the integrated resources plan.
Existing law establishes a policy of the state that eligible renewable energy resources and zero-carbon resources supply 100% of retail sales of electricity to California end-use customers and 100% of electricity procured to serve all state agencies by December 31, 2045. Existing law requires the PUC, Energy Commission, and state board to utilize programs authorized under existing statutes to achieve this policy.
This bill would require that the PUC, state board, and Energy Commission consider green hydrogen to be a zero-carbon resource for these purposes.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities to ensure reliability of electrical services in California while advancing, to the extent feasible, the state’s goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases.
This bill would require the PUC to modify the resource adequacy requirements and accounting rules to provide equal consideration for dispatchable local and system resource adequacy resources made from green hydrogen. The bill would require the PUC, in a rulemaking proceeding related to energy storage, to consider green hydrogen as part of encouraging portfolio diversity.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 (a) The Legislature finds and declares all of the following:
(1) Climate change and air pollution threaten the health and prosperity of all Californians. Historic droughts, devastating wildfires, storms, extreme heat, and the death of millions of trees are creating billions of dollars in property damage and threatening human health and food supplies.
(2) California has set ambitious targets to reduce the effects of climate change by reducing carbon emissions 40 percent below 1990 levels by 2030 and 80 percent below 1990 levels by 2050.
(3) In 2018, Governor Brown issued Executive Order No. B-55-18, creating a state goal to reach greenhouse gas neutrality by no later than 2045 and to maintain net negative greenhouse gas emissions thereafter, and directing the State Air Resources Board to work with relevant state agencies to develop a framework for implementation and accounting that tracks progress toward these goals.
(4) California’s leadership in driving aggressive emissions reductions has helped bring to market many new forms of renewable energy and fuels, including supporting a rapid decline in prices for renewable power such as solar, wind, and battery storage, and has accelerated adoption and price reduction of zero-emission vehicles. The cost of utility-scale solar power dropped by 50 percent in just four years between 2011 and 2015, and electric vehicle battery prices dropped 87 percent in real terms from 2010 to 2019.
(5) Multiple studies show that renewable hydrogen, particularly green electrolytic hydrogen produced by splitting water, is poised to experience similar cost declines over the next decade.
(6) Achieving these cost reductions and deploying green hydrogen at scale would help decarbonize many difficult-to-decarbonize sectors, including buildings, industry, thermal power plants, and the transportation sector, including light-, medium- and heavy-duty vehicles, goods movement, and air travel, and accelerate progress towards the state’s climate, clean air, and clean energy goals.
(7) Green hydrogen offers many climate and energy cobenefits, including better utilizing curtailed power and better integrating renewable resources into the electrical grid to achieve greater than 100 percent zero-carbon energy and put renewable electricity to use to decarbonize many other sectors of the economy.
(8) Green hydrogen is a flexible resource that can be used for many things, including oil refining, ammonia and fertilizer production, and other industrial and chemical processes; storing renewable and zero-carbon electricity for multiple days and seasons; powering a variety of on-road, off-road, rail, aviation, and maritime transport and materials handling applications; providing dispatchable electricity production including enhancing resiliency for behind-the-meter emergency backup generation and islanded microgrids; displacing coking coal used in the production of steel; fueling industrial thermal applications; and decarbonizing the existing natural gas pipeline.
(b) It is the intent of the Legislature to develop a leading green hydrogen industry in California in order to provide accelerated clean air, climate, and energy benefits, better integrate existing renewable resources into the electrical grid, create jobs, and provide new clean technology to decarbonize challenging sectors.

SEC. 2.

 Section 38561.7 is added to the Health and Safety Code, to read:

38561.7.
 Not later than December 31, 2022, as part of the scoping plan prepared pursuant to Section 38561 and the state’s goal for carbon neutrality, the state board shall prepare both of the following:
(a) A strategic plan for accelerating the production and use of green hydrogen, as defined in subdivision (a) of Section 400.2 of the Public Utilities Code, in California to help meet the goals set forth in this division. The plan shall include all of the following.
(1) A strategic plan for utilizing green hydrogen industry in the state to help achieve the state’s climate, clean energy, and clean air objectives.
(2) An estimate of the amount of greenhouse gas emissions reduction and air quality benefits the state could achieve through deploying green hydrogen through a variety of scenarios.
(3) A review of similar efforts to deploy green hydrogen internationally, including opportunities to collaborate with other jurisdictions to accelerate market scale, cost reductions, and global climate benefits.
(4) Recommendations to the Legislature for legislative or agency actions to implement the strategic plan. The recommendations shall include both of the following:
(A) Recommendations on how to overcome market barriers and accelerate progress in green hydrogen production and use, including through demonstration projects, incentives, financing mechanisms, or other policies, and recommendations to maximize economic, environmental, and equity benefits resulting from increased utilization of green hydrogen.
(B) An analysis of how curtailed power could be better utilized to help meet the goals set forth in this division, including, but not limited to, whether curtailed power could be made available for the production of green hydrogen. The state board shall consult with the Independent System Operator in the preparation of the analysis.
(b) An analysis of how curtailed power could be better utilized to help meet the goals set forth in this division, including, but not limited to, whether curtailed power could be made available for the production of green hydrogen. The state board shall consult with the Independent System Operator in the preparation of the analysis.

SEC. 3.

 Section 25327.5 is added to the Public Resources Code, to read:

25327.5.
 (a) By June 1, 2022, the commission shall, in accordance with Section 9795 of the Government Code, submit a report to the Legislature studying and modeling green hydrogen, as defined in subdivision (a) of Section 400.2 of the Public Utilities Code, and its role in decarbonizing the power and transportation sectors, and helping to achieve goals set forth in The 100 percent Clean Energy Act of 2018 (Chapter 312 of the Statutes of 2018), the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500 of the Health and Safety Code)), and the Clean Energy and Pollution Reduction Act of 2015 (Chapter 547 of the Statutes of 2015).
(b) Pursuant to Section 10231.5 of the Government Code, this section becomes inoperative on June 1, 2026, and is repealed on January 1, 2027.

SEC. 4.

 Section 380.1 is added to the Public Utilities Code, to read:

380.1.
 The commission shall modify the resource adequacy requirements established pursuant to Section 380 and accounting rules to provide equal consideration for dispatchable local and system resource adequacy resources made from green hydrogen, as defined in subdivision (a) of Section 400.2.

SEC. 5.

 Section 380.6 is added to the Public Utilities Code, to read:

380.6.
 In a new rulemaking proceeding related to energy storage, the commission shall consider green hydrogen, as defined in subdivision (a) of Section 400.2, as part of encouraging portfolio diversity.

SEC. 6.

 Section 400.2 of the Public Utilities Code is amended to read:

400.2.
 For the purposes of this article, “ green the following definitions apply:
(a) “Green hydrogen” means hydrogen gas that is not produced from fossil fuel feedstock sources and does not produce incremental carbon emissions during its primary production process.
(b) “Green electrolytic hydrogen” means hydrogen gas produced through electrolysis and does not include hydrogen gas manufactured using steam reforming or any other conversion technology that produces hydrogen from a fossil fuel feedstock.

SEC. 7.

 Section 400.3 of the Public Utilities Code is amended to read:

400.3.
 The commission, State Air Resources Board, and Energy Commission shall consider green electrolytic hydrogen an eligible form of energy storage, both green hydrogen and green electrolytic hydrogen as a zero carbon-emitting resource pursuant to Section 454.51, and a zero-carbon resource pursuant to Section 454.53, shall work to advance the green hydrogen in the integrated resource plan required pursuant to Section 454.52, and shall consider other potential uses of green electrolytic hydrogen. hydrogen in all of their decarbonization strategies.