Shereen D’Souza:

… by the development of the ZEV market strategy you see described on this slide. That was very much an interagency effort led by the governor’s office of business and economic development, GO-Biz, with engagement and input from many stakeholders, including several industry representatives.

Shereen D’Souza:

Coming back to ACC2, the executive order has also been followed by development of this regulation. And Carve has convened auto manufacturers, EJ groups, labor organizations and many other stakeholders to provide input into development of regulation in a robust and transparent manner, again, with an enterprise certainty for producers and consumers. These regulatory moves are coupled with what I mentioned earlier, a proposed $10 billion investment over six years in ZEVs and related mobility options. The ZEV package includes over $5 billion for zero-emission drayage trucks, transit buses, school buses and other heavy duty vehicles as well as charging and fueling infrastructure for these vehicles. It also includes $400 million for port electrification, which will make a positive impact on the air pollution in fence line communities, like West Dolan and Barrio Logan. There’s over $500 million for passenger vehicle rebates, over $650 million to support low-income consumer purchases of ZEVs, and 1.2 billion for charging and fueling infrastructure, again, with a special focus on equitable access to charging.

Shereen D’Souza:

This slide plays out just some of the incentive programs that California has through our zero-emission mobility budget, but we need to be clear. If we really want to advance transportation equity and address climate change, getting more people into cars, even if they’re clean cars, is not the full answer. We also need to increase mobility options with a special focus on communities that are bearing the front of vehicle pollution. And that’s why the governor has proposed over $400 million for community based transportation equity projects, to increase access to clean mobility in low-income communities for projects that rejuvenate walkable neighborhoods in South El Monte, connect neighborhoods by bike and transit to the waterfront and East Oakland and enhance public transit in San Bernardino.

Shereen D’Souza:

Let me speak for just a minute about our engagement with the private sector, which is definitely something that we think about quite a bit when we’re developing our budgets and our regulatory frameworks, of course. Sticking with a ZEV example for now, California includes automakers in the regulatory development process through partnerships, stakeholder engagement and collaboration. We’re investing $5 million in consumer awareness this year in partnership with automakers with a focus on reaching low-income and disadvantaged populations and connecting them to our various programs. In addition to formal agreements between automakers and the government around vehicle GHG emissions, the automotive industry is also included in our processes through advisory groups, such as the Lithium-Ion Car Battery Recycling Advisory Group established in 2019. This advisory group, whose members include Honda, Ford, Tesla, gives recommendations to the legislature on policies pertaining to the recovery and recycling of lithium-ion vehicle batteries sold in the state. As a result of our efforts to collaborate with automakers, create market certainty and encourage innovation, there are now 66 ZEV models available in California today. And incentive programs I mentioned earlier are helping more and more Californians to get into these vehicles.

Shereen D’Souza:

Let me also touch on one other area of the budget managed largely by Gobis that is directly focused on incentivizing private sector action in the mitigation space. Before I get to what’s in the ’22-’23 budget on these private sector incentives, I want to mention that at the beginning of this year, GO-Biz produced the California Comeback Guide you see pictured on the slide. It serves as a guide to help businesses and for-profit entities identify relevant, new and existing state funding resources for recovery.

Shereen D’Souza:

Okay. Coming back to the budget, one new program is the innovation headquarters credit. This program focuses on California-headquartered companies investing in mitigation activities and technologies. And the credit totals $250 million per year for three years. The proposed budget also includes $100 million per year for three years for a program called the Green Energy Technologies Credit. This is a deductible credit that will fund pre-development costs for technologies, such as geothermal, lithium extraction and battery manufacturing, addressing methane emissions and hydrogen technologies to reduce the use of natural gas. And so that Californians can share more broadly in the gains from these innovations, these credits will be structured so that if the business becomes profitable, a share of profits will be repaid to the state.

Shereen D’Souza:

Finally, I want to touch on Lithium Valley development. And you all probably are aware California has an abundant untapped lithium reserves near the Salton Sea. The state is really poised to become a mobile leader in the development of new environmentally sound technologies that can co-produce lithium with renewable electricity from geothermal power plants into Imperial Valley. Building out a world class battery manufacturing ecosystem in tandem with lithium production and processing would also increase economic opportunity in the Salton Sea area. So throughout the spring, the administration is working with the legislature, the Lithium Valley Commission and county and community partners to develop a model for revenue sharing and a fund that would benefit Californians by. Regulating lithium extraction, the state will work with industry community partners to provide high-paying jobs and expanded economic opportunity to the Salton Sea community. California will also work to oversee longterm environmental protection and community benefits. These are just a couple examples of the work the state is doing a partner with the private sector, including through the budget, in advancing our local-carbon, climate-resilient future. Thanks so much for the opportunity to be here and looking forward to the discussion.

Rosa Cucicea:

Thank you for a great presentation. Before we move on to Emily, I do have a question. You talked about CARB. Can you share a little bit more about what that entails and the timing on implementation of that program?

Shereen D’Souza:

Yeah. Can you hear me from here?

Rosa Cucicea:

Yeah.

Shereen D’Souza:

Okay, great. Yeah, I think you’re referring to CARB scoping plan.

Rosa Cucicea:

Yes.

Shereen D’Souza:

Yeah. So this is a two-year process. The scoping plan is basically California’s plan to hit our climate targets, our climate mitigation targets, greenhouse gas reductions. And it’s updated every five years. And it’s very much a high-level plan that takes into account inputs from an environmental justice advisory committee and many, many stakeholders through, essentially, almost two years of engagement. And this year’s scoping plan is really unique because we’re trying to hit carbon neutrality by 2045 at the latest. And so for the first time, it’s taking into account modeling of the natural and working land sector to see what kind of sources that sector is and also what kind of [inaudible 00:08:03] opportunities it provides. And so once that scoping plan is finalized at the end of this year, the first draft’s actually coming out in less than a month, early May, we’ll have a sense of what kind of regulations need to be tightened. So there’s a chance that the low-carbon fuel standards or cap and trade or any of the other regulations we have in place could need to be ratcheted up in order to be able to hit our targets. And, of course, then, funding decisions, future budgets, will be developed in line with the kind of needs that are identified for the scoping plan.

Rosa Cucicea:

Great. Thank you so much.

Shereen D’Souza:

Thank you.

Rosa Cucicea:

All right. Next up, I’ll introduce Emily as she gets set up at the podium. Emily Schwimmer is a member of ADCOM’s sustainable economics practice, and she works with public agencies and nonprofits. And she’s actually working on a project with The Climate Center that she’ll talk a little bit more about here. [inaudible 00:09:03].

Emily Schwimmer:

Thank you. Hi, everyone. And thanks, Shereen, for kicking us off. As Rosa said, my name’s Emily Schwimmer. I am with ADCOM’s sustainable economics team. Our tagline is that we work on projects that are at the intersection of the economy and the environment and learn more. So that also includes equity, so it’s the three Es. Everything we touch, of course, affects equity outcomes. Shereen about the governor’s budget. I’m going to pivot a little bit to talk about how much things will cost and how we could pay for them, if not for public investment, which I think we all agree, no matter what side of the aisle you on, public should not cover all of it.

Emily Schwimmer:

So this morning, also, I was drafting my notes this morning while trying to feed my two-year-old breakfast. So they look a little crazy. And then I was so inspired by all the talks this morning that I wrote more notes. So I’m not even sure what’s going to come out here, so bear with me. And anyway, I put the slide together thinking, of course, I’ll have to explain the 2030 and 2045 targets to this group, but that’s not true. And I’m sorry the coloring is a little off, but the big takeaway which Shereen already hit on, is that to reach carbon-neutral or to become net zero, whether that is 2045 or 2030, every sector of the economy will need to be activated. And that means every sector of the economy will have to switch to climate smart practices. And in order to do that, there will have to be an unprecedented scale and collaboration and alignment of public and private dollars. So the big point I’m just making is that every sector of the economy will be impacted.

Emily Schwimmer:

So The Climate Center hired us or partnered with us to think through, again, what will it take to become carbon-neutral specifically by 2030 in line with their Climate-Safe California agenda. And that’s a really big question to solve or to try to answer. And so we decided to take it apart a little bit and just focus on three specific action areas, and those are residential building decarbonization, particularly for low to moderate-income households, drayage truck electrification, which Shereen talked about a little bit, and then natural carbon sequestration on working lands. So we looked at those three action areas. We looked at the preexisting goals that are out there for what the GHG emission reductions or carbon sequestration, excuse me, goals are for each of these. And then we did our own research on how much money will it cost to reach those goals and then what are some potential funding pathways to hit those goals.

Emily Schwimmer:

Each of these could be their own conference and papers, but today, I’m just going to focus on the low to medium-income building decarbonization and share with you what we found in a few short minutes. And why did we focus on LMI building decarbonization? One is impact. In order for the state to be net zero, they are going to have to fully mitigate emissions from residential buildings. This says 13%. It’s actually 12%, but residential buildings account for 12% of the state’s emissions. Equity is a huge one. Right now, it is very expensive to electrify your home, and low to moderate-income households are, not surprisingly, going to have a harder time accessing those appliances and those investments. But more importantly, as those households are left behind, gas becomes more expensive.

Emily Schwimmer:

And so the people who would benefit the most from lower energy bills are also going to be the worst or most negatively impacted by being left behind. Third, of course, is just momentum. The timing is right. The governor has committed an unprecedented amount of money to equitable building decarbonization over the next two years, so we can build on that momentum. And also the California Public Utilities Commission, CPUC, is dedicating a lot of time through their clean energy financing proceedings on this question of how to decarbonize residential.

Emily Schwimmer:

All of these slides are so messed up. I imagine that these looked nice when I put it together. But, of course, to start with the bad news, there are major challenges to funding and financing, residential electrification or building decarbonization, particularly for low to moderate-income households. One, as I mentioned already, electric appliances do tend right now to be more expensive than their gas counterparts. Second, which is huge, is that even the electric appliances do not always result in lifecycle savings. So even though you will see reduced energy bills on your monthly or annual basis… That’s what these two top high charts are supposed to show, is that 100% of residential units, whether you’re in a single-family or in a multi-family building, you will see reduced energy bill, or you will see energy bill savings. But will those savings be enough to cover the increased cost of the electric appliance? In California, those studies are showing no.

Emily Schwimmer:

And the reason for that, and that’s what these two bottom high charts are supposed to show, is simply that electricity rates are very high in California. I don’t think that’s news to anyone here, but then, also, we have the benefit of a very temperate climate for the most part. And so whereas on the east coast, you have very cold winters and very hot and humid summers, AC is much more ubiquitous, on the west coast, it’s not true that everyone has AC or even has a need to turn on the heater, depending on which climate you live in. So it’s just the reality that you’re not going to see as much savings as you might other everywhere else or in other places. And then of course, it’s hard to make electric appliances ubiquitous when 60% of the population qualifies as low to moderate income. And then just how are you going to do that and convince them that it’s worth the investment?

Emily Schwimmer:

We did a little bit of back of the envelope math, I’ll call it. So how much will it cost to electrify low to moderate-income households by 2030? Specifically to meet The Climate Center’s goals by 2030 for residential buildings, we only have to electrify 70% of them. That’s only four million homes. That’s only 315,000 units per year. And if you take that and multiply it, of course, by the cost of installing those appliances, which range from $10 to $16,000, including labor, that gets us to $32 billion, which is about $4 billion per year. So even though the governor has dedicated $920 million over the next two years, you can already begin to do the math and see how we’re not quite there yet. But momentum. There’s momentum.

Emily Schwimmer:

So there will be many tools that are necessary to get $32 billion of money out into the world. Again, I think we all agree that should not just be public dollars. We’re going to need a lot of private dollars. And one tool that is not widely utilized in California is on-bill tariff financing. And while it may be used here, it’s not yet used to finance energy efficiency upgrades. So it’s really an untapped tool. And the way it works is that a utility will make investments or pay for the electrification of your appliances. And then you, the household, you receive the monthly savings or annual savings. But then the utility puts a tariff on your bill so that your bill is still less than it used to be, but that savings or what that cost or the payment is actually going to paying down the cost of your electric compliance. So it’s really quite elegant. And what we like about it are the reasons listed here, is that it draws private capital into the system.

Emily Schwimmer:

And I used to always think that private investor was your TPGs and your private equity firms making investments in these big funds, but really, it’s your money paying your utility bills. And that’s considered private investment. So anyway, you’re getting utility dollars and your own dollars into the pool of funding. It does not require large taxpayer funding, so California can continue to distribute its funds to other much necessary investments into climate mitigation and climate adaptation. And it creates access to the electric appliance benefits to every type of household owner or resident, whether you’re an owner or a renter, which is very important. And then last is the split incentive problem, which really relates to renters, where the landlord would have to make the investment in these electric appliances, but really, it’s the renter who benefits. So if you’re a landlord, why would you, if you will? I’m sure there are very well-meaning landlords out there, but it does create a split incentive problem.

Emily Schwimmer:

All in, our math shows that this on-bill tariff financing, OBTF, could account for $6.4 billion of that $32 billion. And that’s meeting that pricing happy point where it’s still less than the regular bill but enough to cover costs. And while that’s nowhere close to $32 billion, that is 20%, and that’s 800,000 homes. So that’s significant. And again, we don’t have to bring all the tools into the pool. I don’t know. That’s not a great analogy. You have to bring all the tools out there.

Emily Schwimmer:

So just to conclude, some recommendations and next steps, again, like we’ve said, we have to bring everything out there, put all of our money to work. One important way to expedite OBTF and to electrify more homes is to make sure, first and foremost, that OBTF is available to more households. And this is why the CPUC’s clean energy financing proceedings are so important right now. It is something that’s being discussed. We also just need to reduce the upfront costs of those appliances. That helps households. That also helps the utilities that might want to offer this type of financing. The third point, which is probably the most important point, is electricity rate reform. This map here on the right is showing just relative costs of electricity, and California is that dark blue, which is not a good thing. So if we want households to reap the benefits of lower bills, then we also have to make sure electricity is a little bit cheaper. And then last but not least is just about the mechanics of when you choose to replace your appliances. Usually, it’s in an emergency or you’re selling your home or whatever it might be. And if there could be incentives to ask people to break the lifecycle and make the investment not in an emergency, then we could make a bigger impact much sooner. And that’s it. Thanks for listening to me.

Rosa Cucicea:

I do have a follow-up question for you, but I’ll wait to you sit down. So I’m actually personally very interested in the work you mentioned you were doing with The Climate Center and especially about decarbonizing the dirty industry. I think you mentioned trucking. What are some of the challenges that you face in actually implementing those changes? And I think in particular, on the funding side as we’re talking about funding and budgets.

Emily Schwimmer:

Yeah. In our work, so I used to work in implementation. That’s not for the faint of heart, so now I just get to study it, which is a good cop out. But I think in this research we did with the Climate Center, some challenges that we found that were consistent across those three climate action areas that we looked at was, well, first of all, just the tensions. You want to do one thing, but then you are undercut by another existing system. And one example of that is with drayage trucks. So many drayage truck drivers are independent operators who make very, very little money, especially in California terms. So we want them to pay. And this is one of the great benefits of the governor’s proposal, is that we want them to buy electric trucks, which are 5X that of a diesel truck, but they also only make $35,000 to $50,000 a year. So how do you make that math work out? Is it about considering, should the independent car contractor system change? That’s not really the battle we’re trying to fight here. And it just becomes all very complicated. And someone this morning said the devil is in the details, and that is true for every sector of the economy. So even though we want this widespread change, the work is in really the minutia of every single one.

Rosa Cucicea:

Great. Well, I look forward to having offline conversations on that [inaudible 00:22:55] private financing that we about there. Great. Well, next up, we have Glyn Milburn from Ygrene Energy. Glyn has over two decades of governance, climate management [inaudible 00:23:15] experience. And he’s going to talk to us a little bit more about Ygrene and [inaudible 00:23:16].

Glyn Milburn:

Thank you, Rosa. Hello, everyone. Good afternoon. Thank you for allowing us to have the opportunity to present to you. Thank you to Shereen and to Emily for wonderful presentations. I’m mad that I have to go after you because you probably have a much more interesting presentation than I have. I’m here to represent the PACE industry and explain to you why what both Shereen and Emily have said is the need to have private capital to invest for public benefit in order for the state to reach its climate goal objectives.

Glyn Milburn:

Okay. So what is PACE? PACE is short for Property-Assessed Clean Energy. It is a state-enabled program that was started back in 2008 that allowed private property owners, both residential and commercial businesses and owners, to be able to make investments to upgrade their properties to make them more efficient, safer, more resilient. The way it works, the mechanism by which it works is states. And currently, there’s five states that have approved residential PACE, and there’s over 33 states that have approved commercial PACE financing. But what states do is they enable legislation that allows local jurisdictions to approve PACE financing to work in for their property owners within that jurisdiction. PACE is completely voluntary, by the way. So it’s only an assessment placed on those property owners that choose to access the PACE financing. They work with local businesses, approved and vetted contractors that will approach the customer and ask, “How would they like to finance these upgrades?” As we just heard in two previous presentations, many of these electrifications are very expensive. So how do consumers, residential and commercial property owners finance these?

Glyn Milburn:

Well, PACE is one of those ways they can make these investments with no money me down, making it affordable, making it with a fixed, fully-amortized payment. And so those are ways that property owners can do that. We at Ygrene are the financing piece of the puzzle. We allow the eligibility, according to the state rules and regulations. We vet to make sure customers are eligible to receive it, they have an adequate amount of equity in their property, they have the ability to pay, they have the proper disclosures necessary, they understand what the terms are. And then if they do qualify, we’re able to provide financing upfront to be able to execute the improvements. And then those improvements are paid for as an annual assessment on their tax role.

Glyn Milburn:

Our company is 12 years old. These are the impacts that we’ve made throughout the state of California since our inception. Over $5.7 billion have been invested and impacted. And over 231,000 PACE projects across the state. These are involving energy efficiency upgrades, renewable energy projects, water conservation, seismic safety, and recently, wildfire hardening is another additional improvement that has been approved through the state legislature for PACE. Again, you can see the job impacts, again, creating jobs and economic development, the impacts in terms of reducing over $385 million worth of carbon emissions.

Glyn Milburn:

PACE has also been a leader in supporting the state’s legislation toward climate action goals. We talked about the climate scoping plan. We talked about the pieces of legislation that have gone forth in the state to set aggressive targets to reduce carbon emissions in the state. PACE has been at the forefront of supporting any of these pieces of legislation and will continue to do so.

Glyn Milburn:

Apologies for the chart. Here is a bit of an iChart, but essentially what it says is in order for the state to reach its goals by the year 2045 or 2030, more has to be done than what is being currently done now. We saw with Secretary Crowfoot earlier this morning at his talk, he mentioned the fact that we need to find ways to accelerate California’s carbon reduction activities. PACE is one of those ways we can do it because according to our chart here, if the state reduces its greenhouse gas emissions by 5% every year, we will meet that goal by the year 2050. Well, that’s two later than our targeted date. We have nine million single-family homes in California, according to our data, they emit about 28 million metric tons of CO2 every year. And if we talk about the grant-only approach to the lower and middle-income property owners to decarbonize their buildings, we’ll still see in upwards of $72 to $150 billion of investment needed if we just approach it with a grant-only approach. That will, again, be costly, but in order for more homeowners in California, more businesses in California to be able to help us reach our goal, we have to have ways to finance it both from the private sector. So private investment leverage to create public benefit.

Glyn Milburn:

PACE is a highly-regulated industry. There have been no less than eight different pieces of legislation that have been passed in the state legislature to since 2018 to govern the PACE industry. These are some of the key areas in Ygrene that law and statute have been able to govern the PACE industry with: consumer disclosures, recorded calls on every PACE project. We have a know before you owe disclosure in plain English, multiple translations, underwriting enhancements financing safeguards. The ability to pay is something that’s been added, not just looking at equity in a person’s property, but their ability to pay as well factored into the equation. No prepayment penalty, so those that choose to pay off their PACE assessment early, there is no longer a prepayment penalty. So they’re able to make these upgrades and then be able to sell their properties with no [inaudible 00:30:15]. Any fraud measures, these are things that have been received from input from consumer groups to make sure that contractors are properly vetted, make sure that the customer understands what the PACE program is about and also ways to remedy issues that come about.

Glyn Milburn:

We have a seven day a week customer service hotline for customers if they have questions or escalations, those are written in statute, but also, they have been a practice of Ygrene and other PACE providers for several years now. And then contractor integrity, there is a contractor registry to make sure that contractors are acting in an ethical manner and not selling PACE but allowing the PACE providers to be able to disclose the rules and the guidelines behind the PACE program.

Glyn Milburn:

Again, consumer protections that are within PACE are often in excess of other financing options. Many of these are written in statutes, but a certificate of completion, pricing guidelines for contractors. They cannot have a PACE improvement that is over a reasonable rate based on other competition and other pricing. The terms are tied to the useful life of the improvement. You cannot finance a five-year improvement for 30 years because that would obviously not be within the rules. So we make sure that we are following very clear consumer protections to make sure that the property owners know exactly what the improvement is, how it’s going to impact their property, their costs, the value of their property, et cetera. Rigorous training and oversight by contractors and making sure the customer understands it.

Glyn Milburn:

Again, many consumer protections and laws now within the PACE industry. AB1284 back in 2018 allowed the back then the California Department of Business Oversight that is now the California Department of Financial Protection and Innovation to be the regulator of the PACE industry. In the gray circle, you can see the number of standard consumer protection principles that are in place for PACE. These have been highly inputted by the state regulator but also through a number of other stakeholders, such as other PACE providers and administrators, consumer protection stakeholders, civil rights groups and customers as well to create a national framework by which in every restate that Ygrene and other PACE providers operate these rules and principles that are really started in California are now implemented nationwide. In the green, you see our company and other residential PACE providers go above and beyond what is in state statute to ensure that there is no foreclosure possibilities within PACE, additional protections for low-income property owners as well as senior citizens. So they’re not being able to access PACE if they don’t qualify or they don’t have financing that is within a certain limited guideline.

Glyn Milburn:

PACE financing is safe. When we look at the data, we see that in Ygrene, the delinquency rate for PACE is lower than other forms of financing. We’ve found that nearly every PACE customer pays on time. In the event that there is a late payment, the majority of those are caught up on the tax role because, again, the PACE program is a special assessment on the property owner’s tax bill. In some cases, tax bill in California may not be able to come once a year. And in some cases, even though we send out information reminding customers, there is an education process in some cases where, if there is a late payment, there is counseling. We offer credit counseling and other services to ensure that customers are educated and aware of their assessment that is coming.

Glyn Milburn:

So we see that the foreclosure rate is almost zero in terms of the PACE industry. And in our 12-year history, we’ve never foreclosed on any property owner because of the PACE. PACE is accessible and equitable. That’s another thing that is important for addressing the low to middle-income investments that are needed. We look here. The thing I mentioned at the beginning, PACE has a fixed interest rate and fully amortized, meaning that we live in an environment now in our capital markets where interest rates could be fluctuating. A PACE assessment does not have to worry about their payment changing month to month, year to year. For whatever the term of the improvement is, they’re going to pay the same every month. One example, typical project size for a residential market is $20,000. The monthly payment over a 20-year life of that improvement at a 7.99% interest rate would be $183 a month. Then compare that to a $264-a-month payment with a 10-year personal loan at 10% interest. So there is an argument that is a more affordable option for many not tied to their credit score or any other means other than what they agree upon.

Glyn Milburn:

PACE complaints are rare. January of 2022, the DFPI, our regulator, issued their annual report that showed [inaudible 00:36:11] that the entire PACE industry open complaint rate is less 0.12%. That means that there are complaints, but those complaints are almost always resolved. I believe I read there were 10,129 PACE assessments in the year 2020. Only 12 of those by the reporting date were unresolved. So that is a very good track record of resolving complaints. And, again, we find that those are at the top of the consumer finance industry.

Glyn Milburn:

Looking forward, how do we address PACE, and how do we deal with the impacts of how PACE can contribute to helping the state reaching its climate action goals? One of the ways we’re doing is we’re supporting legislation to expand the use of PACE to wildfire resiliency. We’re helping to support a bill in the assembly right now that enables more property owners to use PACE financing for wildfire resiliency and wildlife urban interface areas. We are also coordinating with the CSLB to identify and make sure that contractors are acting with integrity. The Residential PACE Consumer Guide is something that all the residential PACE providers now give to every customer. This is something that not by a law, but this is something that we have gone ahead and made, a reference guide for every PACE customer to have a guide that they can reference for any questions or any concerns that they may have. They have with reference guide they can go to and contact information and some areas that they can better understand their product.

Glyn Milburn:

And then communicate with our JPA partners. Because it is a public-private partnership, we’re members of the Golden State Finance Authority. The other PACE JPA is under CSAC, which is the California Statewide Association of Counties. These are organizations that are made up of local county officials that authorize and approve our program to work in the counties they serve. So we believe that we are one option and a way to address the finance gap between where we are today and where we intend on meeting the goals of California. Thank you very much.

Rosa Cucicea:

Thanks so much. So we’ve got about, I’d say, 10 minutes or so for Q&A. And yes, sir. Thank you.

Speaker 5:

So trying to synthesize what we heard, the governor’s goals and directive have a broader base of activities than we heard total dollars for. [inaudible 00:39:12] $72 to $150 billion for just the low and moderate-income housing retrofit cost by 2045. Is that right?

Rosa Cucicea:

Correct.

Speaker 5:

And your number of $32 billion was to accelerate 70% of that by 2030. Is that right?

Emily Schwimmer:

I didn’t clarify this, but it was a blip on the slide. But that number is only for HVAC. It does not include cook tops or heat or hot water.

Speaker 5:

And perhaps the $72 to $150 billion did include those.

Glyn Milburn:

Correct, yes.

Speaker 5:

And so we don’t really have a price tag for the entire. That’s just a portion, the low and middle-income housing retrofit. Is there a total price tag out there right now for the 2045? You talked about a need for public and private financing, and we have what the governor’s got in the budget in the last couple of years. Do you know what that total price tag is?

Shereen D’Souza:

Well, one thing I can mention, and this is also related to CARB’s scoping plan, is that the economic impact modeling and health impact modeling associated with the various scenarios. So the modeling for the various scenarios that CARB has been considering in terms of at the end of this year adopting one of them as the final scoping plan for 2022, they all included costs. And so for one of the scenarios, and this was a carbon neutrality by 2035 scenario, for one sub-sector, this was just for passenger vehicles. We were doing some very quick back of the envelope calculations around the number of vehicles that we needed to be retired early beyond their useful life or before their useful life in order to hit some of the targets. And it was trillions of dollars just for that one tiny portion of it, not tiny. Obviously, transportation emissions are 40%, not considering upstream emissions. So I think if you looked at whatever scenario the state CARB eventually lands on, there would be some sort of a price tag associated with it, and it would be incredibly high. And that’s why, as I was saying, my assumption reading the tea leaves is that there’s going to be this ramp up of regulations in order to get there. Yeah. [inaudible 00:42:05]. Sure.

Rosa Cucicea:

Yes, sir.

Speaker 6:

Yeah. So what I heard is that there’s a large price tag to do these initiatives. There’s a desire to mobilize private funding in order to help some of this happen. But I wonder with the assumptions that are made, looking at the feasibility of that, if considerations being paid to utilities, where they’re getting their funding for the direct install programs. The largest utility has a very bad credit score because of wildfire and liabilities. Was that factored into the modeling for the finance package to actually make sure that is feasible for them to raise that capital in order to do those projects?

Emily Schwimmer:

That’s a great a question. Do you mean the cost capital?

Speaker 6:

Yeah, because they’re going to have to do bonds or something in order to get the money. And really, their investor-owned, but their credit score is not that great. I’m just using PG&E as an example.

Emily Schwimmer:

No, of course. And we did include the cost to capital based on PG&E’s prior borrowing record and a higher calculation for that $6.2 billion just for the on-bill tariff financing, OBTF as we like to say. But you talk about PGE. They’re too big to break. It’s a problem that would hit most people or most organizations, but it doesn’t seem to hurt them. But it’s a question that should be asked.

Speaker 6:

Yeah. Continuing on with that, with Ygrene and some of the PACE financing, and maybe, Glyn, you can confirm, but I heard that if you have a PACE loan encumbering the title that you can’t get a federally backed loan in order to purchase that home. That has to be cleared first. [inaudible 00:44:08]. So is it possible to do it at the scale that’s needed to really do all these improvements if… Homes sell all the time. People buy and sell. So unless you’re staying in a home for 30 years, at some point, someone has to pay that off in order to move on or sell that to another partner.

Glyn Milburn:

Sure. But there are ways to do that. There’s no prepayment penalty associated with that. So a property owner can easily pay it or have it paid before closing so that it doesn’t encumber the property. But another thing that I didn’t mention was the commercial aspect of it doesn’t have those same limitations. Commercial PACE has only been in existence for three years. We’ve done over $600 million in funding in just those three years. That’s a huge opportunity for the state to address some of the largest environmental impact issues that we have on the commercial side, the agricultural side, the industrial side. So that’s another way that could be a solution. But to your point, there is no prepayment penalty. That’s something that’s been eliminated to encourage people to not have that FHA rule that is in place for that.

Speaker 6:

Okay. Thank you.

Rosa Cucicea:

We have time for one final question. So if you have something burning, please speak up. We’d love to hear from you. All right. Going once, going twice. All right. Number two. All right.

Speaker 5:

So the work that you’re doing for the Climate Center, that’s ultimately going to be available through the Climate Center, so the drayage and the other sector plus any other pieces of analysis that you’ve done in the 2030 gap, so to speak?

Emily Schwimmer:

Yes. It’s going through peer review right now. We are economists, but we are not working land operators or appliance folks. So peer review will be good, but yes, it will offer the funding gap analysis that we identify for each of those action areas. And again, the funding gap, we focus on a very specific component of each of those action areas and then where we see based on research and conversations, where we see the challenges and one of the tools that could move the needle on those. I will say, just for the sake of filling time, natural carbon frustration I thought was incredibly interesting. But there’s a whole nother breakout session on that, so you should go to that. But it was different than drayage trucks. Our findings were different than drayage trucks and building decarbonization because, even though the science it’s there that supports the benefits of natural carbon sequestration, it’s a harder thing to invest in. You can’t buy an appliance, you can’t buy a truck like you can for natural carbon sequestration. So that one was the only one that we said, if anything, we need more public investment in it until it becomes something that is more marketable as an investment opportunity. That was the one [inaudible 00:47:26] asterisk thing.

Rosa Cucicea:

Did you have a question? I saw-

Speaker 7:

Yeah. I don’t know. Yeah. I don’t know if this is the right forum for this question, but I’ve heard a lot of conversation around the parallels between dealing in the climate crisis and dealing with COVID. And so, again, broad scope question. But I was just was wondering as an economist or to any of you [inaudible 00:47:51], do you find that that is true, that some of the financing that went into dealing with the pandemic could be useful in dealing with the climate crisis, or not really, they’re not really similar enough? So again, it might not be appropriate here but just curious.

Emily Schwimmer:

Great question. I don’t think [crosstalk 00:48:23].

Shereen D’Souza:

I don’t feel like I have a great answer to that. And I did not work on COVID at all, but my impression is that there was just this incredible mobilization of resources that’s completely unparalleled. I don’t have another example to put it in context. And in thinking about climate, it was everything. It was not on only the mobilization of public sector resources, but it was the messaging. It was the communications aspect. If we could do something similar on the climate side, it would be game changer. Right? And so yeah. Yeah. I don’t have a great answer.

Speaker 7:

That’s okay.

Shereen D’Souza:

Yeah, go ahead.

Speaker 7:

Thank you.

Rosa Cucicea:

That’s a great question to end the discussion. Thank you to our panelists, and thank you to the audience for great questions.