AB1280 - Energy.

Assembly Bill No. 1280 CHAPTER 395 An act to amend Section 63048.93 of the Government Code, and to amend Sections 25640, 25641, 25642, 25645, 25662, 25662.2, and 25662.4 of, and to amend the heading of Article 2 (commencing with Section 25662) of Chapter 7.6 of Division 15 of, the Public Resources Code, relating to energy. [ Approved by Governor October 06, 2025. Filed with Secretary of State October 06, 2025. ] LEGISLATIVE COUNSEL'S DIGEST AB 1280, Garcia. Energy. (1) The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development, governed by a board of directors. The act, among other things, authorizes the I-Bank to make loans, issue bonds, and provide financial assistance for various types of projects that qualify as economic development or public development facilities. The Climate Catalyst Revolving Fund Act of 2020 authorizes the I-bank, under the Climate Catalyst Revolving Fund Program, to provide financial assistance to any eligible sponsor or participating party in connection with the financing or refinancing of a climate catalyst project, either directly to the sponsor or participating party or to a lending or financial institution, as provided. The act requires the I-Bank to adopt climate catalyst financing plans for specified categories of climate catalyst projects, as specified, after meeting and conferring with the appropriate consulting agencies for those specified categories of climate catalyst projects. This bill would authorize the I-bank to provide financial assistance in connection with the financing or refinancing of a new category of climate catalyst projects, those that enable the decarbonization of industrial facilities’ use of heat and power, including, but not limited to, industrial heat pump and thermal energy storage projects, as specified, with the State Energy Resources Conservation and Development Commission and the State Air Resources Board as consulting agencies. The bill would specify conditions to be satisfied regarding these projects. The bill would make implementation of the financial assistance for this new category of climate catalyst projects contingent upon an appropriation by the Legislature. (2) Existing law requires the commission to establish and implement the Long-Duration Energy Storage Program to provide financial incentives for eligible projects, including thermal storage, that have power ratings of at least one megawatt and are capable of reaching a target of at least 8 hours of continuous discharge of electricity in order to deploy innovative energy storage systems to the electrical grid for purposes of providing critical capacity and grid services. Existing law requires the commission to give preference to eligible projects that have certain impacts, including those that increase the use of renewable energy. This bill would establish and implement an Industrial Facilities Thermal Energy Storage Program within the Long-Duration Energy Storage Program to provide financial incentives for eligible projects to decarbonize industrial facilities’ use of heat and power, as specified. The bill would include thermal energy storage, as defined, rather than thermal storage, as an eligible project. The bill would require the commission to give preference to eligible projects that increase the use of renewable energy through reducing curtailment and shifting power usage from peak to off-peak times, rather than to all projects that increase the use of renewable energy. The bill would prohibit, after January 1, 2027, the commission from providing these financial incentives to projects that involve the performance of work by contractors in the construction industry unless that work is performed under a project labor agreement, as provided. (3) Existing law requires the commission to establish and administer the Industrial Grid Support and Decarbonization Program to provide financial incentives for the implementation of eligible projects at eligible industrial facilities to provide significant benefits to the electrical grid, reduce emissions of greenhouse gases, achieve the state’s clean energy goals, and exceed compliance requirements. Existing law subjects projects to certain conditions of eligibility for these financial incentives. Existing law requires the commission, in providing financial incentives, to give preference to certain types of projects. This bill would rename the program the Industrial Decarbonization and Improvement of Grid Operations Program and would add, among its purposes, reducing emissions of health-harming pollutants. The bill would revise some of the conditions for eligible projects. The bill would make, after January 1, 2027, projects that involve the performance of work by contractors in the construction industry ineligible for these financial incentives unless the work is performed under a project labor agreement, as provided. The bill would require, after January 1, 2027, an eligible project for a facility that has a record of air permit violations to separately develop a plan for pollution remediation, including for ecological and public health harms. The bill would require the commission to also give preference, in providing financial incentives, to an eligible project that is located in an under-resourced community, as defined, and an eligible project that develops a community benefit fund or agrees to pursue a community benefits agreement with the surrounding community and other affected stakeholders. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 63048.93 of the Government Code is amended to read: 63048.93. (a) The bank is hereby authorized and empowered to provide financial assistance under the Climate Catalyst Revolving Fund Program to any eligible sponsor or participating party either directly or to a lending or financial institution, in connection with the financing or refinancing of a climate catalyst project, in accordance with an agreement or agreements, between the bank and the sponsor or participating party, including, but not limited to, tribes, either as a sole lender or in participation or syndication with other lenders. (b) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 does not apply to any climate catalyst financing plan or any criteria, priorities, and guidelines adopted by the bank in connection with the Climate Catalyst Revolving Fund Program or any other program of the bank. However, any climate catalyst financing plan shall be posted on the bank’s internet website in a conspicuous location at least 30 calendar days before a bank board meeting at which the climate catalyst financing plan will be considered for approval. (c) (1) Repayments of financing made under the Climate Catalyst Revolving Fund Program shall be deposited into the appropriate account created within the Climate Catalyst Revolving Fund. (2) The bank shall establish a separate account for each category of climate catalyst projects identified by each paragraph of subdivision (f). For purposes of paragraph (3) of subdivision (f), the Clean Energy Transmission Financing Account is hereby created in the Climate Catalyst Revolving Fund. (d) (1) (A) The bank shall meet and confer with the appropriate consulting agencies for each category of climate catalyst projects identified in subdivision (f). Thereafter, the bank board shall adopt, by majority vote of the bank board, a climate catalyst financing plan for each category of climate catalyst projects identified in subdivision (f). Before the bank board meeting in which the bank board will first consider adoption of a financing plan, each consulting agency shall submit a letter to the bank board discussing any areas of support and any areas of disagreement with the financing plan under consideration. (B) Adoption of a climate catalyst financing plan by the bank board shall authorize the bank to provide financial assistance and to use all financing authorities provided under this division in its implementation of the climate catalyst financing plan. (2) Following bank board approval, the climate catalyst financing plan shall be posted on the bank’s internet website. (3) A climate catalyst financing plan shall not be in effect until approved by the bank board. (e) (1) A climate catalyst financing plan shall remain in effect until superseded by a revised climate catalyst financing plan or repealed by the bank. Commencing the first fiscal year following adoption of an initial climate catalyst financing plan, and in each fiscal year thereafter, the bank shall contact each consulting agency to discuss potential revisions to the climate catalyst financing plan last approved by the bank board. If the consultation results in proposed revisions to the climate catalyst financing plan, the bank board may consider adopting, by majority vote, a revised climate catalyst financing plan. (2) Any revisions to, or repeals of, a climate catalyst financing plan shall take effect 30 days after the bank provides written notification to the Joint Legislative Budget Committee, or not sooner than whatever lesser time after that notification the chairperson of the joint committee, or the chairperson’s designee, may determine. (f) The categories of climate catalyst projects and the consulting agencies for the respective climate catalyst financing plans shall be as follows: (1) This paragraph shall be known as the “Forest Biomass Management and Utilization” climate catalyst category. The Natural Resources Agency shall be the consulting agency for the climate catalyst financing plan adopted for this category. This category includes climate catalyst projects that relate to sustainable vegetation management, forestry practices, and timber harvesting products. Eligible climate catalyst project subcategories include, but are not limited to, all of the following: (A) Clean energy production, except combustion biomass conversion. (B) Advanced construction materials. (C) Forestry equipment needed to achieve the state’s goals for forest and vegetation management treatments. (2) This paragraph shall be known as the “Climate-Smart Agriculture” climate catalyst category. The Department of Food and Agriculture shall be the consulting agency for the climate catalyst financing plan for this category. This category includes climate catalyst projects that relate to agricultural improvements that enhance the climate or lessen impacts to the climate resulting from in-force agricultural practices. Eligible climate catalyst project subcategories include, but are not limited to, all of the following: (A) Onfarm and food processing renewable energy, including both electricity and fuels, and bioenergy, to be used or distributed onsite. (B) Energy, water, and materials efficiency. (C) Methane reduction projects, using best practice approaches consistent with state policy goals, excluding dairy digesters and biogas unless used or distributed onsite. (D) Energy storage or microgrids. (E) Equipment replacement. (3) (A) This paragraph shall be known as the “Clean Energy Transmission” climate catalyst category. The State Energy Resources Conservation and Development Commission and the Public Utilities Commission shall be the consulting agencies for the climate catalyst financing plan for this category. This category includes climate catalyst projects that are clean energy transmission projects. If multiple projects seek funding, the consulting agencies shall prioritize, based on state policy, potential projects that meet the conditions in subparagraph (B), and on financial considerations as determined by the bank. Eligible climate catalyst project subcategories in this paragraph shall comply with the conditions set forth in this paragraph, and include, but are not limited to, both of the following: (i) Clean energy transmission project infrastructure that is necessary to connect the transmission project into the applicable California balancing authority area. (ii) Other necessary technical elements of transmission infrastructure, including, but not limited to, environmental planning, permitting, and preconstruction costs for a project. (B) Eligible projects shall meet all of the following conditions: (i) Have at least one interconnection point within a California balancing authority area. (ii) The applicant or its affiliates have previously completed a transmission project in California. (iii) Will primarily deliver electricity to the Independent System Operator balancing authority area from clean resources located in identified resource areas that do not have adequate deliverability to a California balancing authority area. (iv) Support new high voltage, defined as 200 kilovolts or higher, transmission projects or upgrades of existing transmission lines and substations to high voltage that are consistent with the state’s reliability and greenhouse gas policy objectives. (v) Priority shall be given to transmission projects that have not already been approved through the Independent System Operator’s transmission planning process or projects that have not been recently studied in the Independent System Operator’s transmission planning process and found to be unneeded or uneconomical. (vi) Financial considerations as determined by the bank. (vii) Consistency with state policy as determined by the consulting agencies. (C) The bank shall not finance a project unless the entity completing the transmission project has entered into a project labor agreement that, at a minimum, meets the requirements of Section 2500 of the Public Contract Code and includes all of the following: (i) Provisions requiring payment of prevailing wages, in accordance with Article 1 (commencing with Section 1720) of Chapter 1 of Part 7 of Division 2 of the Labor Code, to all construction workers employed in the construction of the project and for enforcement of that obligation through an arbitration procedure. (ii) Targeted hiring provisions, including a targeted hiring plan, on a craft-by-craft basis to address job access for local, disadvantaged, or underrepresented workers, as defined by a relevant local agency. (iii) Apprenticeship utilization provisions that commit all parties to increasing the share of work performed by state-registered apprentices above the state-mandated minimum ratio required in Section 1777.5 of the Labor Code. (iv) Apprenticeship utilization provisions that commit all parties to hiring and retaining a certain percentage of state-registered apprentices that have completed the Multi-Craft Core preapprenticeship training curriculum referenced in subdivision (t) of Section 14005 of the Unemployment Insurance Code. (D) Consultation on a potential transmission project does not const [Text truncated for display. Full text available on Congress.gov.]