Background Information Regarding the Air Quality Improvement Program

The Air Quality Improvement Program (AQIP), established by the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 (Assembly Bill (AB) 118, Statutes of 2007, Chapter 750), is a voluntary incentive program administered by the Air Resources Board (ARB or Board) to fund clean vehicle and equipment projects, research on biofuels production and the air quality impacts of alternative fuels, and workforce training. 

The AQIP expands ARB’s portfolio of air quality incentives, providing the opportunity to fund projects that do not fit within the statutory framework of existing incentive programs such as the Carl Moyer Air Quality Standards Attainment Program (Carl Moyer Program), Goods Movement Emission Reduction Program, and Lower-Emission School Bus Program.  These existing programs focus on near-term reductions to reduce ozone and particulate matter pollution and cut exposure to toxics.  Statute provides much broader flexibility for implementing the AQIP.

Each year, the Board will approve a funding plan that serves as the blueprint for expending the AQIP funds that are appropriated each year to ARB in the State budget.  The funding plan establishes ARB’s priorities for the funding cycle, describes the projects ARB intends to fund, and sets funding targets for each project.  The funding plan is paired with regulatory guidelines that direct ARB’s implementation of the AQIP.  The guidelines define the program’s structure and establish minimum administrative and implementation requirements, providing the overarching rules for how ARB will run this incentive program.  Each year staff will return to the Board for approval of the next fiscal year’s funding plan and will update the Board on the implementation of previous year’s projects.

On April 24, 2009, the Board adopted the AQIP Guidelines and approved the Funding Plan for Fiscal Year 2009-10, the second year of AQIP funding.  The first year of AQIP funding was directed to ARB’s new Truck Loan Program to assist truckers affected by the two ARB regulations adopted in December 2008 – the Statewide In-Use Truck and Bus Regulation and the Heavy-Duty Vehicle Greenhouse Gas Emission Reduction Measure.  Solicitations for the second year of AQIP funding will begin starting the summer of 2009 with the Hybrid Truck and Bus Voucher Incentive Project, which is the cornerstone of the fiscal year 2009-10 program. 

Assembly Bill (AB) 118: California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007

In October 2007, Governor Schwarzenegger signed AB 118 (Nunez, Statutes of 2007), into law. AB 118 provides approximately $200 million annually through 2015 for three new programs to fund air quality improvement projects and develop and deploy technology and alternative and renewable fuels. The bill creates a dedicated revenue stream for the programs via increases to the smog abatement, vehicle registration, and vessel registration fees. The three new programs are:

Air Quality Improvement Program will provide about $50 million per year for grants to fund clean vehicle and equipment projects which reduce criteria and toxic air pollutants as well as research on the air quality impacts of alternative fuels and advanced technology vehicles. The program will be administered by ARB. Statute lists eight broad project types which are eligible for funding: 

• On- and off-road equipment projects.
• Projects to mitigate off-road gasoline exhaust and evaporative emissions.
• Research on the air quality impact of alternative fuels.
• University California research to increase sustainable biofuels production and improve feedstock.
• Lawn and garden equipment replacement.
• Medium- and heavy-duty vehicle/equipment projects including lower emission school buses, electric or hybrid vehicles/equipment, regional air quality programs in the most impacted parts of California.
• Workforce training related to advanced technology to reduce air pollution.
• Projects to identify and reduce emissions from high-emitting light-duty vehicles.

Statute directs ARB to evaluate proposed projects based on potential reduction of criteria or toxic air pollutants, cost-effectiveness, contribution to regional air quality improvement, and ability to promote the use of clean alternative fuels and vehicle technologies.

Statute also directs ARB to develop guidelines for the Air Quality Improvement Program and Alternative and Renewable Fuel and Vehicle Technology Program to ensure that both programs complement efforts to meet the federal and state ambient air quality standards and to reduce air toxics. The guidelines must also ensure that projects funded under each program maintain or improve upon the emission reductions and air quality benefits in the State Implementation Plan for ozone and California’s gasoline and diesel fuel regulations.

Alternative and Renewable Fuel and Vehicle Technology Program will provide about $120 million in annual incentive funding to develop and deploy innovative technologies that transform California’s fuel and vehicle types to help attain California’s climate change policies. Funding may be in the form of grants, revolving loans, loan guarantees, loans, or other appropriate measures. The program will be administered by CEC. Additional information can be found at CEC’s AB 118 webpage.

Statute lists eleven broad project types which are eligible for funding:

• Alternative and renewable fuel projects to develop and improve low-carbon fuels, including feedstock projects.
• Demonstration and deployment projects that optimize alternative and renewable fuels for existing and development engine technologies.
• Projects to produce alternative and renewable low-carbon fuels in California.
• Projects to decrease impact of alternative and renewable fuels’ carbon footprint and increase sustainability.
• Alternative and renewable fuel infrastructure projects.
• Vehicle technology projects to improve fuel efficiency and lower greenhouse gas emissions.
• Projects to accelerate the commercialization of vehicles and alternative and renewable fuels.
• Retrofits for on- and off-road vehicles to improve fuel efficiencies.
• Infrastructure projects that promote alternative and renewable fuel infrastructure development.
• Workforce training related to alternative and renewable fuel and feedstock production.
• Block grants to not-for-profit technology consortia for education, promotion, and development of alternative and renewable fuels and vehicle technology centers.

Statute also directs CEC to create an advisory committee to help develop an investment plan for the Alternative and Renewable Fuel and Vehicle Technology Program. The advisory group will include representatives from fuel and vehicle technology consortia, labor organizations, environmental organizations, community-based justice and public health organizations, recreational boaters, consumer advocates, academic institutions, workforce training groups, and private industry.

Enhanced Fleet Modernization Program will provide about $30 million per year for voluntary retirement of high emitting passenger cars and light- and medium-duty trucks. The program will be administered by the Bureau of Automotive Repair, but statute directs ARB to adopt guidelines for the program.