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AB-1550 Renewable hydrogen.(2023-2024)



Current Version: 01/18/24 - Amended Assembly

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AB1550:v95#DOCUMENT

Amended  IN  Assembly  January 18, 2024
Amended  IN  Assembly  May 22, 2023
Amended  IN  Assembly  April 18, 2023
Amended  IN  Assembly  April 17, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 1550

Introduced by Assembly Member Bennett

February 17, 2023

An act to add Section 43869.5 to the Health and Safety Code, to amend Section 25741 of the Public Resources Code, and to add Section 399.12.3 to the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


AB 1550, as amended, Bennett. Green hydrogen. Renewable hydrogen.
Existing law requires the State Air Resources Board to develop and adopt hydrogen fuel regulations to ensure that state funding for the production and use of hydrogen fuel contributes to the reduction of greenhouse gas emissions, criteria air pollutant emissions, and toxic air contaminant emissions, including by requiring that, on a statewide basis, no less than 33.3% of the hydrogen produced for, or dispensed by, fueling stations that receive state funds be made from eligible renewable energy resources, as specified. Under existing law, a violation of those regulations, and other provisions pertaining to motor vehicle fuels, is a crime.
This bill would require, on and after January 1, 2045, that all hydrogen produced and or used in California for the generation of electricity or fueling of vehicles be green hydrogen, renewable hydrogen of nonbiological origin, as defined, or renewable hydrogen of biological origin, as defined, in furtherance of the state’s policy to achieve net zero greenhouse gas emissions as soon as possible, but no later than 2045. The bill would require the state board, in consultation with the Public Utilities Commission (PUC) and the State Energy Resources Conservation and Development Commission, Commission (Energy Commission), to develop interim targets to ensure the state achieves that requirement. Because a violation of a state board regulation implementing this requirement would be a crime, the bill would impose a state-mandated local program.
The California Renewables Portfolio Standard Program requires the Public Utilities Commission (PUC) PUC to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from eligible renewable energy resources, as defined, so that the total kilowatthours of those products sold to their retail end-use customers achieves 25% of retail sales by December 31, 2016, 33% by December 31, 2020, 44% by December 31, 2024, 52% by December 31, 2027, and 60% by December 31, 2030.
This bill would prohibit green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin used by a generating facility from qualifying as an eligible renewable energy resource for purposes of that requirement unless it satisfies all applicable requirements established by the State Energy Resources Conservation and Development Commission (Energy Commission) Energy Commission and meets specified requirements. For all electricity generated using green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin that is credited toward the renewables portfolio standard procurement obligations, the bill would require that sufficient renewable and environmental green attributes, as defined, of green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin production and capture be transferred to the retail seller or local publicly owned electric utility that uses that green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin to ensure that there are zero net emissions associated with the production of electricity from the generating facility using the green hydrogen. renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin. The bill would require all sellers and purchasers of green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin to comply with a system for tracking and verifying the use of green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin established by the Energy Commission, as specified.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because certain of the above provisions would be part of the act and a violation of a PUC action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

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

43869.5.
 (a) (1) On and after January 1, 2045, all hydrogen produced and or used in California for the generation of electricity or fueling of vehicles shall be green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin in furtherance of the state’s policy to achieve net zero greenhouse gas emissions as soon as possible, but no later than 2045, pursuant to Section 38562.2.
(2) The state board, in consultation with the Public Utilities Commission and the State Energy Resources Conservation and Development Commission, shall develop interim targets to ensure the state achieves the requirement of paragraph (1).
(b) (1) For purposes of the requirement in subdivision (a) that all hydrogen produced and used in California for the generation of electricity be green hydrogen, “green hydrogen” (a),“renewable hydrogen of nonbiological origin” means hydrogen gas produced through electrolysis and consistent with all of the following:

(A)The production process uses both electricity that is eligible under the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code) and a material feedstock that is water.

(A) Any electricity used in the production process is generated by a solar thermal, photovoltaic, wind, geothermal, or small hydroelectric generation facility that is an eligible renewable energy resource, as defined in Section 399.12 of the Public Utilities Code, using a material feedstock that is water.
(B) The facility generating the electricity used for the production of the green hydrogen renewable hydrogen of nonbiological origin does not use tradable renewable energy credits to demonstrate reliance on renewable electricity.
(C) The facility generating the electricity used for the production of the green hydrogen renewable hydrogen of nonbiological origin demonstrates that the electricity it uses comes from a new renewable generation resource developed specifically to serve the green hydrogen production process, resource, curtailed energy, or energy from a repowered energy facility, and is consistent with prohibitions of resource shuffling in subdivision (a) of Section 454.53 of the Public Utilities Code, and that the new renewable generation resource resource, curtailed energy, or energy from a repowered energy facility has a first point of interconnection to the California balancing authority in which the electrolytic hydrogen production facility is sited.
(D) Beginning on January 1, 2028, the facility producing the renewable hydrogen of nonbiological origin uses the renewable electricity in the same hour that it is delivered onto the grid.
(2) For purposes of the requirement in subdivision (a), “renewable hydrogen of biological origin” means hydrogen derived from water using eligible renewable energy resources, as defined in Section 399.12 of the Public Utilities Code, or hydrogen produced directly from eligible renewable energy resources, as defined in that section, consistent with all of the following:
(A) The facility producing the renewable hydrogen of biological origin does not use a biomethane feedstock from a dairy digester facility.
(B) Forest biomass used to produce the renewable hydrogen of biological origin is limited to the “byproducts of sustainable forestry,” as defined by the Public Utilities Commission pursuant to Section 399.20 of the Public Utilities Code.
(C) Agricultural biomass used for the production of the renewable hydrogen of biological origin is limited to agricultural residues and excludes purpose-grown crops for energy production.
(D) The production of the renewable hydrogen of biological origin does not result in resource shuffling.
(E) The production of the renewable hydrogen of biological origin does not use unbundled renewable energy credits.
(F) For any renewable hydrogen of biological origin the production process of which uses both electricity that is eligible under the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code) and a material feedstock that is water, the facility generating the electricity used for the production of the renewable hydrogen of biological origin demonstrates that the electricity it uses comes from a new renewable generation resource, curtailed energy, or energy from a repowered energy facility, and is consistent with the prohibition against resource shuffling set forth in Section 454.53 of the Public Utilities Code.
(G) Starting January 1, 2028, for any electricity used to power the production of renewable hydrogen of biological origin, the facility uses the renewable electricity in the same hour that it is delivered onto the grid.
(3) If a facility, including a facility that includes a linear generator or a turbine, uses renewable hydrogen of biological origin, all of the following shall apply:
(A) The facility producing the renewable hydrogen of biological origin does not use a biomethane feedstock from a dairy digester facility.
(B) The use of the renewable hydrogen of biological origin results in a net decrease in emissions of oxides of nitrogen or other air pollutants and greenhouse gases from the electrical sector.
(C) The procurement and use of the renewable hydrogen of biological origin aligns with best practices regarding hydrogen production, distribution, storage, and use, including minimizing leakage risk, that are available at the time a facility applies for certification as an eligible renewable energy resource.
(D) Any renewable energy certificates or other environmental attributes associated with the feedstock and energy used to produce the renewable hydrogen of biological origin are not produced, or are retired and not claimed under any program, with the exception of the federal Renewable Fuel Standard program, and the market-based compliance mechanism set forth in Article 5 (commencing with Section 95801) of Subchapter 10 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations.

(2)

(4) For purposes of the requirement in subdivision (a) that all hydrogen produced and used in California for the generation of electricity be green hydrogen, “green hydrogen” (a), “renewable hydrogen of nonbiological origin” or “renewable hydrogen of biological origin” does not include hydrogen gas manufactured using steam reforming or any other conversion technology that produces hydrogen or produced from a fossil fuel feedstock.

SEC. 2.

 Section 25741 of the Public Resources Code is amended to read:

25741.
 As used in this chapter, the following terms have the following meanings:
(a) “Renewable electrical generation facility” means a facility that meets all of the following criteria:
(1) The facility uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, green hydrogen, as defined in subdivision (b) of Section 43869.5 of the Health and Safety Code, renewable hydrogen of nonbiological origin, as defined in Section 43869.5 of the Health and Safety Code, or renewable hydrogen of biological origin, as defined in Section 43869.5 of the Health and Safety Code, or tidal current, and any additions or enhancements to the facility using that technology.
(2) The facility satisfies one of the following requirements:
(A) The facility is located in the state or near the border of the state with the first point of connection to the transmission network of a balancing authority area primarily located within the state. For purposes of this subparagraph, “balancing authority area” has the same meaning as defined in Section 399.12 of the Public Utilities Code.
(B) The facility has its first point of interconnection to the transmission network outside the state, within the Western Electricity Coordinating Council (WECC) service area, and satisfies all of the following requirements:
(i) It commences initial commercial operation after January 1, 2005.
(ii) It will not cause or contribute to any violation of a California environmental quality standard or requirement.
(iii) It participates in the accounting system to verify compliance with the renewables portfolio standard once established by the commission pursuant to subdivision (b) of Section 399.25 of the Public Utilities Code.
(C) The facility meets the requirements of clauses (ii) and (iii) of subparagraph (B), but does not meet the requirements of clause (i) of subparagraph (B) because it commenced initial operation before January 1, 2005, if the facility satisfies either of the following requirements:
(i) The electricity is from incremental generation resulting from expansion or repowering of the facility.
(ii) Electricity generated by the facility was procured by a retail seller or local publicly owned electric utility as of January 1, 2010.
(3) If the facility is outside the United States, it is developed and operated in a manner that is as protective of the environment as a similar facility located in the state.
(4) If eligibility of the facility is based on the use of landfill gas, digester gas, or another renewable fuel delivered to the facility through a common carrier pipeline, the transaction for the procurement of that fuel, including the source of the fuel and delivery method, satisfies the requirements of Section 399.12.6 of the Public Utilities Code and is verified pursuant to the accounting system established by the commission pursuant to Section 399.25 of the Public Utilities Code, or a comparable system, as determined by the commission.
(5) If eligibility of the facility is based on the use of green hydrogen renewable hydrogen of nonbiological origin delivered to the facility through a pipeline, the transaction for the procurement of that fuel, including the source of the fuel and delivery method, satisfies the requirements of Section 399.12.3 of the Public Utilities Code and is verified pursuant to the accounting system established by the commission pursuant to Section 399.25 of the Public Utilities Code, or a comparable system, as determined by the commission.
(b) “Municipal solid waste conversion,” as used in subdivision (a), means a technology that uses a noncombustion thermal process to convert solid waste to a clean-burning fuel for the purpose of generating electricity, and that meets all of the following criteria:
(1) The technology does not use air or oxygen in the conversion process, except ambient air to maintain temperature control.
(2) The technology produces no discharges of air contaminants or emissions, including greenhouse gases gases, as defined in Section 38505 of the Health and Safety Code.
(3) The technology produces no discharges to surface or groundwaters of the state.
(4) The technology produces no hazardous wastes.
(5) To the maximum extent feasible, the technology removes all recyclable materials and marketable green waste compostable materials from the solid waste stream before the conversion process and the owner or operator of the facility certifies that those materials will be recycled or composted.
(6) The facility at which the technology is used is in compliance with all applicable laws, regulations, and ordinances.
(7) The technology meets any other conditions established by the commission.
(8) The facility certifies that any local agency sending solid waste to the facility diverted at least 30 percent of all solid waste it collects through solid waste reduction, recycling, and composting. For purposes of this paragraph, “local agency” means any city, county, or special district, or subdivision thereof, that is authorized to provide solid waste handling services.
(c) “Renewable energy public goods charge” means that portion of the nonbypassable system benefits charge required to be collected to fund renewable energy pursuant to the Reliable Electric Service Investments Act (Article 15 (commencing with Section 399) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code).
(d) “Report” means the report entitled “Investing in Renewable Electricity Generation in California” (June 2001, Publication Number P500-00-022) submitted to the Governor and the Legislature by the commission.
(e) “Retail seller” means a “retail seller” seller,” as defined in Section 399.12 of the Public Utilities Code.

SEC. 3.

 Section 399.12.3 is added to the Public Utilities Code, to read:

399.12.3.
 (a) For purposes of this section, “green hydrogen” has “renewable hydrogen of nonbiological origin” and “renewable hydrogen of biological origin” have the same meaning meanings as defined in subdivision (b) of Section 43869.5 of the Health and Safety Code.
(b) Green hydrogen Renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin used by a generating facility shall not qualify as an eligible renewable energy resource unless it satisfies all applicable requirements established by the Energy Commission and meets any of the following requirements:
(1) The green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin is used by an onsite generating facility within California or that has a first point of interconnection to a California balancing authority.
(2) The green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin is used by an offsite generating facility within California or that has a first point of interconnection to a California balancing authority and is delivered to the generating facility by truck or rail, or through a dedicated pipeline.
(3) The green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin is delivered to a generating facility through a common carrier pipeline and the green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin physically flows within California or toward the generating facility for which the green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin was procured under the original contract.
(c) For all electricity generated using green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin that is credited toward the renewables portfolio standard procurement obligations established pursuant to this article, sufficient renewable and environmental green attributes of green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin production and capture shall be transferred to the retail seller or local publicly owned electric utility that uses that green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin to ensure that there are zero net emissions associated with the production of electricity from the generating facility using the green hydrogen. renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin. This subdivision shall be applied in a manner consistent with the definition of “green attributes” as specified by the commission in Decision 08-08-028 (August 21, 2008), Decision on Definition and Attributes of Renewable Energy Credits for Compliance with the California Renewables Portfolio Standard, as may be modified by a subsequent decision of the commission.
(d) All sellers and purchasers of green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin shall comply with a system for tracking and verifying the use of green hydrogen, renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin, as established by the Energy Commission, that is equivalent to the system required by subdivision (c) of Section 399.25.
(e) The use of green hydrogen renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin shall be assigned to the appropriate portfolio content category based on the application of the criteria in subdivision (b) of Section 399.16 to the procurement of electricity by the retail seller or local publicly owned electric utility from the generating facility using the green hydrogen. renewable hydrogen of nonbiological origin or renewable hydrogen of biological origin.

SEC. 4.

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