AMENDED IN ASSEMBLY JUNE 23, 2026

AMENDED IN ASSEMBLY JUNE 15, 2026

AMENDED IN SENATE MAY 18, 2026

AMENDED IN SENATE APRIL 28, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

93

CHAPTER 35

Statutes of 2026

[ Approved by Governor June 29, 2026. Filed with Secretary of State June 29, 2026. ]

URGENCY STATUTE

Introduced by Senator McNerney

(Coauthor: Senator Caballero)

February 20, 2026

An act to amend Section 25741 of the Public Resources Code, relating to energy, and declaring the urgency thereof, to take effect immediately.

Vote: 2/3   Appropriation: no   Fiscal committee: yes   Local program: yes

LEGISLATIVE COUNSEL’S DIGEST

Existing law defines a “renewable electrical generation facility” as a facility that uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells or linear generators that use specified fuels, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and that meets other specified requirements. Existing law incorporates that definition into various programs, including the California Renewables Portfolio Standard Program, which requires the Public Utilities Commission to establish a renewables portfolio standard requiring all retail sellers, as defined, to procure a minimum quantity of electricity products from electrical generating facilities that meet that definition of “renewable electrical generation facility,” and the net energy metering program, in which residential customers, small commercial customers, and commercial, industrial, or agricultural customers of an electrical utility, who use renewable electrical generation facilities, are eligible to participate, as specified.

This bill would expand the definition of “renewable electrical generation facility” to include a facility that converts hydrogen gas to electricity in a turbine and meets specified criteria, including that the hydrogen used in the turbine is solely derived from an eligible renewable resource, as specified, or through the electrolysis of water, and exclusively uses electricity generated from another renewable electrical generation facility, and that the manufacturing of the hydrogen does not result in resource shuffling or use unbundled renewable energy credits, as specified.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.

Because a violation of a commission action implementing this bill’s requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would declare that it is to take effect immediately as an urgency statute.

The people of the State of California do enact as follows:

SECTION 1.

Section 25741 of the Public Resources Code is amended to read:

25741.

As used in this chapter, all of the following definitions apply:

(a) “Renewable electrical generation facility” means a facility that meets all of the following criteria:

(1) The facility meets either of the following criteria:

(A) The facility uses biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells or linear generators using fuels described in this paragraph that otherwise meet the requirements of this subdivision, small hydroelectric generation of 30 megawatts or less, digester gas, municipal solid waste conversion, landfill gas, ocean wave, ocean thermal, or tidal current, and any additions or enhancements to the facility using that technology.

(B) The facility converts hydrogen gas to electricity in a turbine and meets all of the following criteria:

(i) The hydrogen used in the turbine is solely derived from an eligible renewable resource described in subparagraph (A) or through the electrolysis of water, and exclusively uses electricity generated from another renewable electrical generation facility. Any fraction of hydrogen produced through the use of nonrenewable fuels or nonrenewable electricity shall not be eligible to satisfy the requirements of this section.

(ii) The electricity used to derive the hydrogen is not also counted toward a compliance obligation pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code) or claimed as renewable generation for any other state program.

(iii) The facility provides the commission with confirmation from the air quality management district or air pollution control district that the facility’s turbine has the capacity to use a fuel for which hydrogen comprises a sufficient quantity of the blend by volume, but not below 20 percent by volume, to achieve a measurable reduction in greenhouse gas emissions.

(iv) The facility has submitted information on the hydrogen production process, as specified by the commission. For electrolytic production, the operator shall demonstrate, for the production process, hourly matching of hydrogen production with renewable energy generation starting January 1, 2030.

(v) The manufacturing of the hydrogen does not result in resource shuffling, as independently determined by the commission based on regional impacts of hydrogen production on zero-carbon generation, local air pollution, and fossil fuel generation.

(vi) The manufacturing of the hydrogen does not use unbundled renewable energy credits.

(vii) The facility provides the commission with confirmation from the air quality management district or air pollution control district that the combustion of hydrogen will result in a net decrease of air pollutants and of greenhouse gas emissions from the electrical sector and will not increase the oxides of nitrogen emissions rate from the turbine compared to natural gas.

(viii) The hydrogen is physically delivered to the turbine.

(2) The facility satisfies one of the following requirements:

(A) The facility is located in the state or near the border of the state with the first point of connection to the transmission network of a balancing authority area primarily located within the state. For purposes of this subparagraph, “balancing authority area” has the same meaning as defined in Section 399.12 of the Public Utilities Code.

(B) The facility has its first point of interconnection to the transmission network outside the state, within the Western Electricity Coordinating Council (WECC) service area, and satisfies all of the following requirements:

(i) It commences initial commercial operation after January 1, 2005.

(ii) It will not cause or contribute to a violation of a California environmental quality standard or requirement.

(iii) It participates in the accounting system to verify compliance with the renewables portfolio standard established by the commission pursuant to subdivision (b) of Section 399.25 of the Public Utilities Code.

(C) The facility meets the requirements of clauses (ii) and (iii) of subparagraph (B), but does not meet the requirements of clause (i) of subparagraph (B) because it commenced initial operation before January 1, 2005, if the facility satisfies either of the following requirements:

(i) The electricity is from incremental generation resulting from expansion or repowering of the facility.

(ii) Electricity generated by the facility was procured by a retail seller or local publicly owned electric utility as of January 1, 2010.

(3) If the facility is outside the United States, it is developed and operated in a manner that is as protective of the environment as a similar facility located in the state.

(4) If eligibility of the facility is based on the use of landfill gas, digester gas, or another renewable fuel delivered to the facility through a common carrier pipeline, the transaction for the procurement of that fuel, including the source of the fuel and delivery method, satisfies the requirements of Section 399.12.6 of the Public Utilities Code and is verified pursuant to the accounting system established by the commission pursuant to Section 399.25 of the Public Utilities Code, or a comparable system, as determined by the commission.

(b) “Municipal solid waste conversion” means a technology that uses a noncombustion thermal process to convert solid waste to a clean-burning fuel for the purpose of generating electricity, and that meets all of the following criteria:

(1) The technology does not use air or oxygen in the conversion process, except ambient air to maintain temperature control.

(2) The technology produces no discharges of air contaminants or emissions, including greenhouse gases as defined in Section 38505 of the Health and Safety Code.

(3) The technology produces no discharges to surface or groundwaters of the state.

(4) The technology produces no hazardous wastes.

(5) To the maximum extent feasible, the technology removes all recyclable materials and marketable green waste compostable materials from the solid waste stream before the conversion process and the owner or operator of the facility certifies that those materials will be recycled or composted.

(6) The facility at which the technology is used is in compliance with all applicable laws, regulations, and ordinances.

(7) The technology meets any other conditions established by the commission.

(8) The facility certifies that any local agency sending solid waste to the facility diverted at least 30 percent of all solid waste it collects through solid waste reduction, recycling, and composting. For purposes of this paragraph, “local agency” means any city, county, or special district, or subdivision thereof, that is authorized to provide solid waste handling services.

(c) “Renewable energy public goods charge” means that portion of the nonbypassable system benefits charge required to be collected to fund renewable energy pursuant to the Reliable Electric Service Investments Act (Article 15 (commencing with Section 399) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code).

(d) “Report” means the report entitled “Investing in Renewable Electricity Generation in California” (June 2001, Publication Number P500-00-022) submitted to the Governor and the Legislature by the commission.

(e) “Retail seller” has the same meaning as defined in Section 399.12 of the Public Utilities Code.

SEC. 2.

No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.

SEC. 3.

This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:

In order to ensure the continued safe harboring of over $675 million in tax credits that would materially benefit the state, to allow the State Energy Resources Conservation and Development Commission to begin working on implementation this year or by early 2027, and to provide a strong market signal for utilities to contract for procurement of renewable hydrogen before implementation, it is necessary for this act to take effect immediately.