Background Information Regarding AQIP and Low Carbon Transportation Investments

This page last reviewed April 29, 2015

This page provides background information on the Air Quality Improvement Program (AQIP) and Low Carbon Transportation Investments.

Air Quality Improvement Program

AQIP is a voluntary, mobile source incentive program that focuses on reducing criteria pollutant and diesel particulate emissions with concurrent reductions in greenhouse gas (GHG) emissions.  AQIP is administered by the Air Resources Board (ARB) and was created in 2007 by Assembly Bill (AB) 118, the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 (Núñez, Chapter 750, Statutes of 2007).  AB 8 (Perea, Chapter 401, Statutes of 2013) reauthorized the fees that support AQIP through 2023.  In addition to AQIP, AB 118 also created the Alternative and Renewable Fuel and Vehicle Technology Program (administered by the California Energy Commission) and the Enhanced Fleet Modernization Program (administered by the Bureau of Automotive Repair).

ARB adopted the AB 118 Air Quality Guidelines and AB 118 AQIP Guidelines in 2008 and 2009 that established the administrative procedures for implementing AQIP in order to ensure that the program is run efficiently, with transparency and public input, and complements California’s existing air quality programs.  Central to these program guidelines is the requirement for a Board-approved annual funding plan developed with public input.  The funding plan is each year’s blueprint for expending AQIP funds appropriated to ARB in the annual State Budget describing the projects ARB intends to fund, establishing funding targets for each project, and providing the justification for these decisions.  AQIP guidelines also establish the rules and requirements for soliciting projects and awarding funds.

Funding for AQIP comes primarily from the smog abatement fee assessed annually by the Department of Motor Vehicles (DMV) during a vehicle’s first six registration years in lieu of providing a biennial smog certification.  In addition, a small portion of AQIP funding comes from two additional sources: an initial registration fee for new watercraft and a special equipment identification plate fee for certain types of equipment.  Annual funding for AQIP projects is generally $20-25 million, depending on the revenues generated from these fees and is appropriated by the State Budget. 

ARB has focused AQIP investments on technology advancing projects that support California’s long-term air quality and climate change goals in addition to providing immediate emission benefits. AQIP investments have concentrated on three main categories: commercial deployment of clean vehicles, precommercial advanced technology demonstrations, and finance assistance to small trucking fleets.

Low Carbon Transportation

Cap-and-Trade Auction Proceeds provide an additional funding source for ARB’s advanced technology, clean transportation incentive programs, expanding the types of projects ARB has funded through AQIP.  In 2012, the Legislature passed and Governor Brown signed into law 3 bills – AB 1532 (Pérez, Chapter 807), Senate Bill (SB) 535 (de León, Chapter 830), and SB 1018 (Budget and Fiscal Review Committee, Chapter 39) – that established the Greenhouse Gas Reduction Fund (GGRF) to receive Cap-and-Trade auction proceeds and to provide the framework for how the auction proceeds will be administered to further the purposes of AB 32 (Núñez, Chapter 488, Statutes of 2006).

The legislation establishes broad categories of GHG emission reducing projects that may be funded with these proceeds, including investments in: clean and efficient energy; low carbon transportation; natural resource conservation and management, and solid waste diversion; and sustainable infrastructure and strategic planning.  This legislation also establishes complementary goals for auction proceeds investments in addition to the goal of reducing GHG emissions in California including maximizing economic, environmental, and public health benefits to the state, among others.

SB 535, one of the implementing statutes for auction proceeds, directs that at least 25 percent of funding from GGRF be allocated toward projects that benefit California’s most disadvantaged communities and at least 10 percent be allocated toward projects located in these disadvantaged communities in order to provide economic benefits as well as health benefits through additional emission reductions.  Under the provisions of SB 535, the California Environmental Protection Agency (Cal/EPA) identified disadvantaged communities that are disproportionately burdened by multiple sources of pollution for the purposes of implementing SB 535.  Cal/EPA identified the census tracts in the top 25th percentile of scores using the California Communities Environmental Health Screening Tool (CalEnviroScreen2.0) as disadvantages. More information on the CalEnviroScreen model and the identification of disadvantaged communities is available at: .

In 2014, ARB approved Investments to Benefit Disadvantaged Communities: Interim Guidance to Agencies Administering Greenhouse Gas Reduction Funding Monies that establish the criteria for determining whether projects qualify as being located in or benefiting a disadvantaged community.  The guidance also identifies approaches for implementing State agencies maximize the funding to benefit disadvantaged communities and identifies common needs identified by disadvantaged communities in addition to reducing GHG emissions that State agencies should strive to achieve with their investments.  These include reducing health harms and exposure to toxic air contaminants among other needs.  This direction to achieve air quality and health cobenefits factors into ARB’s investment decisions and provides additional rationale to consider AQIP and Low Carbon Transportation investments together.

Additional Legislation 

SB 1275 (De León, Chapter 530, Statutes of 2014) establishes the Charge Ahead California Initiative with the goals of placing one million zero-emission and near-zero emission vehicles in California by 2023 and increasing access to these vehicles for lower-income consumers and consumers in disadvantaged communities.  SB 1275 directs ARB to make a number of changes to CVRP including limiting consumer eligibility based on income, ensuring that rebate levels can be phased down, and conducting various planning and technology assessment activities, among other provisions. 

SB 1204 (Lara, Chapter 524, Statutes of 2014) creates the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program, funded with auction proceeds from GGRF, to support the development, demonstration, precommercial pilot, and early commercial deployment of zero- and near-zero emission technologies with priority given to projects that benefit disadvantaged communities.  SB 1204 establishes specific requirements related to how ARB prioritizes project categories and selects projects.