CARB Issues New Aggressive Climate Action Plan

CARB Issues New Aggressive Climate Action Plan

Every five years, the California Air Resources Board creates a plan to achieve targets for carbon neutrality and reduce anthropogenic greenhouse gas emissions by 85 percent below 1990 levels no later than 2045, as directed by Assembly Bill 1279. This acceleration would require California emissions to drop to 226 million MT CO2 equivalents by 2030 compared to the prior goal of 258 million MT. This requires an additional emissions abatement to close the gap and then even more steps to hit the 2045 goal. These were the main challenges the plan had to address.

The plan is the product of a multi-agency process that involves the CEC and CPUC among others. The latest proposed version was released on November 16. It is up for adoption at CARB’s December 15-16 meetings.

This is a hugely important document for building a cleantech business in California. It will lead to bucket loads of incentives and grants being made available, and will cause some significant new regulations to be adopted or old ones made more stringent. All of this spells opportunity for those who can master what this document offers.

Since 2008, this is the fourth plan published to address California’s climate goals as they have evolved with Executive Orders and legislation (AB 1279 being the latest) now requiring carbon neutrality by 2045. The plan continues to emphasize a transition to a zero-emission transportation sector while phasing out fossil fuels and building renewable sources for clean electrical generation.

The Plan is a complicated document. Cap-and Trade and the Low Carbon Fuel Standards remain the market-based cornerstones of the plan, but there is much more. Here are the basics:

  • The main goal is to reduce fossil fuel use since that is the source of the greatest amount of the GHG emissions. The plan calls for an 84% reduction in all fossil fuel demand.
  • The reductions come from a wide variety of sources, and the plan specifies what should be done to achieve these reductions in each of the sectors.
    Bar chart showing 82% Drop in GHGs from Direct Source Reductions
Direct Source Reductions

Direct Source Reductions

  • The plan includes a substantial boost in actions that can be taken with natural and cultivated lands to increase the potential to capture and store carbon dioxide. This includes better forest and shrubland management and tree-planting, as well as changes to farming practices.
  • For the first time, the proposed plan includes direct air capture of carbon dioxide and sequestration through deep underground injection or mineralization. The plan leans on the increased tax credit incentives in the Inflation Reduction Act amounting to $9 billion as a way to make this happen, but notes California will need to do even more.
  • The cost of making these adjustments compared to the current plan is estimated as $32 billion/year by 2030 and $44 billion/year by 2045. These are offset by reductions in costs for buying fuels and energy of $11 billion per year in 2035 and $24 billion/year in 2045. The net cost is about $21 billion per year through 2045.
  • The proposed plan would have a slight negative effect on jobs. The analysis in the plan says it would reduce employment in the state by 0.3% in 2035 and 0.4% in 2045, while creating 4 million new jobs to replace those lost by the transformation of the energy system. The impacts on personal income, household income, and Gross State Product are estimated to be negligible.
  • The big immediate gain from the plan is an estimated $200 billion/year reduction in health costs due to the reduction in NOx and fine particulate emissions. There are unspecified gains from contributing to mitigating climate change, but those are hard to claim when others are not taking actions that are equally serious.
  • There are hundreds of proposed actions or “strategies” in the report. Nothing in the report implements any of them. For the plan to succeed, multiple agencies and the legislature must all work to adopt those strategies through rule changes and new laws. That is going to be a monumental amount of work, and potentially some of the strategies could be derailed.

The biggest target and the most controversial one in the proposal is the weaning of California drivers from cars, trucks, and offroad vehicles that run on conventional gasoline and diesel. The plan makes this happen not by outlawing use of conventional vehicles, but by using market tools to accelerate the transition. The plan does this in three ways:

  1. Offering substantial subsidies to switch to electric vehicles
  2. Continuing to clamp down on the number of cap-and-trade emission allowances, driving up the price which will make conventional fuels more expensive to make
  3. Increasing the value of low carbon fuel credits given to makers of alternate fuels in order to price them more attractively

People will be allowed to hold on to their existing conventional vehicles, but will pay increasingly steep prices for the conventional fuels to use in them. In contrast, by the subsidies given for low carbon-intensity fuels, people will be encouraged to use these new fuels in their old cars.

The plan makes it very clear that it supports the use of “drop-in” renewable low-carbon liquid fuels to create a path that will not force people to give up their current vehicles. These “drop-in” fuels are largely indistinguishable from their conventional counterparts and in many cases can be added to the existing volumes of gasoline and diesel in gradually increasing amounts as they become available. No modifications of engines, service stations, or distribution facilities are necessarily required to accommodate this switch. (See Scoping Report pages 190-191).

Refineries are not mandated to be shut down, but to adapt to processing and blending the new non-fossil low-carbon alternatives into a steady stream of supply for those vehicles that still need. Clearly the volume of fuels to the non-electric vehicles will shrink.

The new CARB plan is of course linked to all the other actions the Governor has proposed in his budgets last year and this year. Overall, it’s a $54 billion dollar commitment to battle climate change (see the chart below). It includes:

  • $10 billion for ZEVs including $1.5 billion for electric school buses and $3 billion to build an accessible charging network.
  • $2.1 billion for clean energy investments including long-duration storage, offshore wind, green hydrogen and industrial decarbonization.
  • $13.8 billion for reducing emissions in the transportation sector including improving public transportation
  • $720 million for research into new climate innovations in the state’s institutions of higher learning.
  • $1 billion for sustainable, affordable housing
  • $1 billion to help low-income households realize energy cost savings through decarbonization
  • $9 billion for wildfire risk reduction, drought mitigation, extreme heart resilience, and nature-based solutions.
California Climate Commitment

California Climate Commitment

Keep in mind that all these funds are in addition to the Federal money created by the Inflation Reduction Act and the Infrastructure Act. It is a “Green Wave” in more than one sense. Please join us for our January 26 MeetUp on the topic “Show Me the Money” where we will discuss more about what opportunities all this money may be creating.

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStart's Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.

CleanStart Sponsors

Weintraub | TobinBlueTech Valley, Revrnt, River City Bank

Moss AdamsPowerSoft.biz, Greenberg Traurig, California Mobility Center

Charging Meetup

Charging Meetup

This week our Cleantech Meetup was Spooky popular.  Hosted at The Workshop Sacramento incubator and co-working space near McKinley Park, the meetup filled the place with entrepreneurs, policy makers, scientists and Investors all there to hear about the state of current charging and Zero Emissions Vehicle (ZEV) policy.  It was the best-attended MeetUp so far.

Guy Hall from the Electric Auto Association, a group that has been around for over 100 years kicked off the event by summarizing charging. Then CleanStart welcomed local business success story Clipper Creek. Will Barnett, Director of Sales shared their story of becoming a top charging hardware provider in the US and world. They have shipped over 75,000 charging systems and supplied the internals for another 500,000 convenience chargers for the major EV manufacturers.  They have now grown to 50 employees. They talked about all the different models of chargers they offer, including fast chargers. They clearly are specializing in the Level 2 systems, though, the ones that operate at 220v. Check out our blog from when we visited Clipper Creek this year. Throughout the first presentations we had lively discussion that almost turned into a panel discussion that included all 4 presenters,

Educating the audience on local actions around charging, Dwight MacCurdy of SMUD, discussed all the work SMUD has been doing around promoting the adoption of ZEVs by building EV charging infrastructure. Through rebates, charging locations, and education SMUD has a whole host of programs.

Dr. Elise Keddie introduced the hot topic of Volkswagen’s (VW) Cycle 2 ZEV investment plan as part of the settlement of the fraudulent emissions testing case. She also introduced Tony Gonzalez of Electrify America (a wholly-owned subsidiary through which VW is investing in charging).  With the work SMUD, other utilities, the CEC, CARB, and Electrify America are doing, Dr Keddie said California is leading the way in charging investment but has yet to reach half of what is needed to accommodate the growth of EVs.

This was a great meetup and if you missed out, don’t worry, we still have one left this year on November 27th.  And if you can’t wait till then Check out Green Drinks early November and our Calendar for other events!

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, Moss Adams GreenbergTraurig

BlueTech Valley, PowerSoft.biz, Revrnt, Synbyo, Califronia Mobility Center

New ARB rules to Promote Charging Infrastructure.

New ARB rules to Promote Charging Infrastructure.

The new proposed rules for AB 32 and carbon credits are being finalized for 2019 and there is a big change.  Currently, the carbon credits and trading apply to raw material and energy producers with high Greenhouse Gas Emissions.  The new rules allow for companies who are putting in ZEV (Zero Emissions Vehicle) infrastructure to earn carbon credits they can then sell on the carbon market.  This will hopefully incentivize private investment in ZEV infrastructure.

The carbon credits are earned when either a hydrogen fuel cell filling station or a level 3 charging station is installed. Level 3 Chargers are also known as DC Fast chargers, can charge an EV at ten times the speed of Level 2 chargers, but they can cost up to $100,000 per charger.  Hydrogen Fuel Stations face similar problems with stations costing in over $2 Million. With more consumers demanding faster charging and more Hydrogen stations, the hope is the carbon credits will incentivize investment.

While those cost may seem high, they are still competitive to the cost to build a Gas Station. The stumbling block has been a chicken and egg problem. For mass adoption consumers demand more fueling and changing station and for mass investment in those stations, investors demand more ZEV adoption. With increasing numbers of ZEVs on the market, and exponential EV growth, stimulating investment in infrastructure seems like a smart choice.

To learn more about Charging and the future of fueling EVs come to our next meet up on the 30th.  We will have presenters form CARB (California Air Resources Board), SMUD and local success story Clipper Creek talking about what is happening in Charging.

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, Moss Adams GreenbergTraurig

BlueTech Valley, PowerSoft.biz, Revrnt, Synbyo, Califronia Mobility Center

Recap: Grant Workshop Highlights New Funding Opportunities

Recap: Grant Workshop Highlights New Funding Opportunities

To date, nearly $3.4 billion has been appropriated by the Legislature to State agencies to implement Greenhouse Gas reduction programs and projects. Much of this is allocated in the form of various grants. Agencies are inviting proposals from teams and companies to use these funds, you can see some at California Climate Investments homepage. Recently, CleanStart had presenters from California Air Resources Board (CARB), The Grant Farm, and Terzo Power Systems talk about the process and potential of using grants to finance a startup.

 

Attendees learned that through AB 32 over $1.6 billion had been allocated to fight global climate change. Ryan Huft, an engineer at CARB, outlined all of the agencies receiving funding available for 2018 and 2019. He shared California Climate Investments  as the location of many opportunities. These investments support a variety of state interest but all have common goals: supporting the reduction of greenhouse gases, helping underserved and disadvantaged communities, and helping all of California take the lead in creating a sustainable future. Ethan Hanohano shared his and The Grant Farm’s considerable experience in forming partnerships to win grants and how companies should approach the grants. He recommended starting by building a solid team, creating a purpose, and connecting with grants that are in your companies field.

All the speakers emphasized two things: write exactly what the grant says it wants and connect with disadvantaged communities. Huft’s and Hanohano’s presentations kept going back to one major point, “Grants explicitly lay out what they want. Have your proposal follow that.” There may seem like there is duplication in grants, but everything is there for a reason. So even if you have said it before, say it the same way again. It is important to keep it simple and connect to each requirement.

Connecting with disadvantaged or underserved communities is important and is a good practice for any growing company. Connecting can mean creating jobs, improving quality of life, or connecting a community to more resources. When creating a clean tech or sustainable solution, understanding connections and benefits to communities is not only important for grants but also the general company development. These communities are potentially future customers and partners in new tech development.

Mike Terzo of Terzo Power Systems won $4 million in CEC grants in 2016. He took the application and wrote exactly to it. Terzo is now working on those grants and learning a few extra lessons along the way. The big one was giving yourself time and flexibility to reach milestones and deliverables. Setting a realistic timeline is more important then setting an aggressive one. Realistic time management is important in controlling your business and connecting with investors. With grants it is no exception. Agencies administering the grants have goals they want you to achieve; make sure a proposal has a reasonable timeline for you to do that.

Terzo highlighted understanding a grants reimbursement and your incurred liabilities is important while building a successful grant proposal. Grants pay in arrears, meaning you are reimbursed for costs you have already paid. Vendors, contractors, employees and leases may be due before you receive reimbursement. You will need a way to finance the time difference between incurring the cost, invoicing the agency, and getting a check. It would be common for the grant reimbursement cycle to take 4-5 months. You likely will need a bank, an SBA loan guarantee or alternative financing to make a grant workable for you.

All of the work done for a grant not only benefits a startup if they get the grant, but also pushes them to better understand how their technology connects to the larger ecosystem and how they can be effectively managed. Actively applying for grants can have more benefits than funding for a company.

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, Moss Adams GreenbergTraurig

BlueTech Valley, PowerSoft.biz, Revrnt, Synbyo, Califronia Mobility Center

Cleantech Grants Power California Entrepreneurs

Cleantech Grants Power California Entrepreneurs

With CleanStart’s up and coming Leveraging Grant Class we wanted to look at why grant’s and public funds are important in the cleantech space. With bootstrapping only able to take a company so far, and venture capital funding difficult to obtain, where else can you look for support? Grant funding is another viable option for working capital to boost your company’s growth.

VC’s are hesitant to look at cleantech solutions and self-funding  a clean tech startup is difficult.  This is related to the economics of building hardware solutions, competing with mature solutions, and research and design.  The demand for sustainable solutions hasn’t slowed, just the ROI equation is not conducive for VC’s to invest early.  

California recognizes this problem and is investing aggressively in sustainability, offering grants through the California Energy Commision (CEC) and California Air Resources Board (CARB). Opportunities range from research and development to implementation. Many companies are intimidated by grants but they shouldn’t be. Grants may come with more scrutiny but they also afford greater support and later flexibility.  Take Terzo Power Systems, winner of 4 million in CEC grants.  While they have to work within the grant framework, they don’t have to leverage personal finances or give up portions of their company.

Opportunities like these continue to grow in California. CARB  is charged with protecting the public from the harmful effects of air pollution and developing programs and actions to fight climate change.  The Global Warming Solutions Act, AB 32, requires CARB  to develop and implement measures to reduce greenhouse gas emissions. One of these measures, the Cap and Trade program, generates revenue that must be used on projects to further reduce GHGs. At this event you will hear more about the California Climate Investments program, the Triennial Investment Plan, the application process, and how to have input into the type of projects to be funded over the next 3 years. Although the Legislature makes the final decision, CARB actively engages California businesses and communities to have a voice in how this money is spent.  Getting involved now supports future development in the state.

There are also grants like the recent CalSEED for CalCEF. Up to 600,000 dollar grants, these help with getting entrepreneur ideas from concept to reality and provide acceleration and incubation options. Sacramento based company Lucent Optics is a recipient of last years CalSEED Grant and has leveraged it to develop a new solution for lighting. The 2018 CalSEED Grants are selecting 25% of recipients from each CEC Innovations Cluster Region, and by doing so are attempting to put all regions on equal footing. The Sacramento area is included in the BlueTech Valley Cluster.  

Check out the CleanStart Grant Talk on March 1st with Mike Terzo, founder of Terzo Power, Ethan Hanohano of Grant Farm, and Ryan Huft of CARB.

ABOUT THE AUTHOR

Thomas is the Executive Director of CleanStart. Thomas has a strong background in supporting small businesses, leadership, financial management and is proficient in working with nonprofits. He has a BS in Finance and a BA in Economics from California State University, Chico. Thomas has a passion for sustainability and a commitment to supporting non-profits in the region.

CleanStart Sponsors

Weintraub | Tobin, Moss Adams GreenbergTraurig

BlueTech Valley, PowerSoft.biz, Revrnt, Synbyo, Califronia Mobility Center


Contact Us

  • This field is for validation purposes and should be left unchanged.
Website developed by Ryan McBride for Ellington Marketing Solutions