The Biden and Newsom administrations are taking different approaches to building out the hydrogen infrastructure needed to fuel a rapid transition to clean energy. Environmental justice advocates are driving a wedge into that gap, arguing the state is supporting factory farms and industrial pollution by carving its own path. Yet energy producers are assuring lawmakers that California is already ahead of the curve with hydrogen and worry that the federal standards would only stall that progress.
The issue has come to dominate hydrogen discussions in the Legislature. Competing bills have sought to ban dairy biogas from the production process and to welcome biomethane into the state’s clean energy portfolio.
The approach that lawmakers choose could define the Central Valley’s role—or lack thereof—in the state’s energy future.
Those arguments played out yet again in two hearings last week. One was an informational hearing to dig into the debate, the other a committee hearing on a bill to streamline permitting and expedite lawsuits to speed up the hydrogen buildout and tap into fleeting federal investments.
Last summer Gov. Gavin Newsom pushed a series of bills through the Legislature to fast-track construction projects and demonstrate to federal partners that the state is able to spend infrastructure dollars in a timely manner. Newsom then struck a deal with lawmakers to allow the state to invest in pricey offshore wind energy projects in place of utilities.
As part of the deals, lawmakers filed several exemptions. All the bills eventually signed into law barred biomethane-derived hydrogen from tapping into the benefits. That rankled Senator Anna Caballero of Merced, who worried the proposals would not lead to high-road jobs for oil and agricultural workers in the Central Valley.
“What you're saying is S.O.L.,” Caballero told one of the bill authors last year. “The workers in the interior part of the state are just not going to have the opportunity to be able to participate in being lifted up because we're going to put all our eggs in one basket.”
The moderate Democrat called it exclusionary to just go for the policies that more progressive lawmakers would back.
“We've got all this agricultural waste—we've got dead trees that have burned up—and we need to take them down and we need to get rid of them,” she said. “I have people who tell me they want good jobs. I’m going to have to tell them to go to the coast. That's where we're going to create all these jobs.”
That frustration led Caballero to file Senate Bill 1420 this session. It would add biomethane-based hydrogen to the governor’s infrastructure package and make it eligible for energy credits through the state’s Renewable Portfolio Standard (RPS), among other provisions. Caballero reasons that California cannot meets its climate goals without expanding hydrogen production and at the same time the state “desperately needs to get rid of waste”—from dairy methane to agricultural byproducts like almond hulls and shells, forest debris and solid waste heading to landfills.
During the committee hearing, Caballero warned that industrial solar has moved into her district, displacing farms, reducing jobs in small communities and dropping local tax revenue.
She borrowed Newsom’s argument that the state must act quickly to tap into federal infrastructure spending. The Biden administration plans to send California $1.2 billion to help it rapidly scale up hydrogen production to make it competitive with diesel and to unlock $10 billion in potential private investment.
Sen. Anna Caballero, D-MercedYet the bill’s environmental critics disagree with defining renewable and clean hydrogen to include dairy methane. The stance gained traction among lawmakers after the U.S. Treasury Department issued its proposed rules last December for clean hydrogen tax credits.
The rules, known as the “three pillars,” along with the subsequent guidance, did not incorporate dairy methane in the definition for clean hydrogen. Following the European Union’s approach, the department instead favored electrolytic hydrogen produced from renewable energy like solar and wind power. It acted on recommendations from U.S. EPA to consider the indirect emissions from such sources.
The federal EPA has similarly contradicted CalEPA and sided with environmentalists over the state’s approach to a major water plan for the Sacramento-San Joaquin Delta.
Environmental groups view the three pillars as essential guardrails to prevent hydrogen producers from creating more local pollution or using fossil fuels in the process.
“We struggled to understand why California would aim for the bottom of the federal government standards rather than race to the top,” said Mark Fenstermaker, a lobbyist for Earthjustice, in opposing SB 1420 at the hearing.
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Kayla Karimi, a staff attorney at the Center on Race, Poverty & the Environment, argued that biomass facilities are some of the worst sources for particulate matter in the San Joaquin Valley. The environmental advocates also claimed the bill would eliminate the need to consider local impacts through California Environmental Quality Act reviews.
“We can't afford to waste billions of dollars and decades of development on climate distractions that will subsidize utilities, fossil fuel companies, the dairy industry and others looking to expand their profits at the expense of frontline communities and environmental justice communities,” said Karimi.
Committee Chair Sen. Ben Allen of Santa Monica, who failed to cap carbon credits for digesters earlier this year, said Caballero’s bill “really gave us pause” and called the language incredibly broad.
“This is a big, technical, multifaceted bill—I mean, five bills in one,” said Allen, who expected the “long and winding road” through the Legislature to bring additional amendments.
“I'm not opposed to the three pillars,” responded Caballero. “They just don't work in California. They don't work in the state of Washington. They don't work in the state of Oregon.”
She pointed out that those states have told Treasury they already have higher standards than the three pillars, noting that several California agencies endorsed that reasoning in a letter to the department.
“The three pillars are one way to achieve the environmental outcome,” explained Jack Brouwer, director of the UC Irvine Clean Energy Institute. “We can achieve the same environmental outcome with lower costs.”
Brouwer noted that the U.S. Department of Energy has acknowledged that California has more advanced carbon modeling than the rest of the country and has been “far out ahead of this for decades.” He said the EU’s implementation of the three pillars, meanwhile, has led to the lowest rate of financial investment into hydrogen in the world.
The explanations did not deter two lawmakers from voting against the bill, though it still passed out of the committee. Sen. Lena Gonzalez of Long Beach urged Caballero to strike a compromise that allows for the three pillars.
That sentiment was echoed by Assemblymember Steve Bennett of Ventura in his informational hearing. Like Allen, Bennett failed to convince his colleagues to pass a ban on digester-derived methane earlier this year. A day after AB 1550 died, Assembly Speaker Robert Rivas established a new select committee dedicated to building a zero-carbon hydrogen economy, and he chose Bennett to chair it. Bennett has used two of the committee hearings as a platform for publicly airing the many debates he had fostered in his office over the past year as he worked on AB 1550.
Industry lobbyists remarked that the hearing last week provided a rare opportunity in the Legislature for a deep dive into the issues.
Julia Levin, Bioenergy Association of CaliforniaJulia Levin, executive director of the Bioenergy Association of California, began the discussion by seeking to correct the record on renewable hydrogen. She pointed out that it does not involve biomass combustion and that the largest source of air pollution in the San Joaquin Valley is not dairies, but diesel particulates blown in from trucks in Southern California.
Sam Wade, director of public policy at the Coalition for Renewable Natural Gas, referred to hydrogen as “a fantastic option” for the gas that is already captured by digesters.
“The investment community is looking at that type of project as an example,” said Wade. “If we abandon the good work that's already been done there, don't be surprised if you have trouble motivating capital to be deployed to produce hydrogen from some of these other feedstocks.”
Yet Jamie Katz, a staff attorney at the Leadership Counsel for Justice & Accountability, asserted that significant methane emissions still emanate from dairies with digesters. That prompted Levin to remark that digesters only deal with manure, and enteric emissions from cow digestion make up the other half the methane problem.
Janice Lin, president of the Green Hydrogen Coalition, assured the committee that the state is far along in decarbonizing the grid through the RPS and SB 100, which set its clean energy goal. She argued the federal government should recognize that many of the three pillars principles are already embodied in such state policies.
“Treasury should support first movers and not punish them,” said Lin.
Later in the hearing, Dairy Cares Executive Director Michael Boccadoro shot down the alternatives to digesters proposed by environmental advocates. He called it “virtually impossible” to achieve the same results strictly through dry manure handling methods, stressing that it would dramatically worsen air quality and increase truck traffic to export the manure.
Boccadoro explained that pasture-based dairy farming “works wonderfully” in the wetter and greener climate of the North Coast, but in the San Joaquin Valley it would lead to more land and water use and require more cows to produce the same amount of milk, while the grass diet would significantly increase enteric emissions. He charged that directly regulating methane emissions on dairies would harm small dairies and lead to even more of the industry consolidation that environmentalists have opposed.
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