End-of-Year News Wrap-up: Low Carbon Fuel Standards

As 2014 draws to a close, the following are some recent stories that have caught my attention, relating to several renewable fuel policy issues that I’ve followed from time to time in this blog. This entry will focus on issues relating to Low Carbon Fuel Standards in individual U.S. states and the Canadian province of British Columbia.

California Low Carbon Fuel Standard

Updates on California LCFS regulations. The staff of the California Air Resources Board (ARB, or CARB) has been working since early in 2014 on a series of potential amendments to the state’s Low Carbon Fuel Standard. This is being undertaken partially to address a court ruling directing ARB to take steps to cure some administrative deficiencies that the court found in the regulations. According to an ARB staff document, ARB staff is proposing that the Board re-adopt the LCFS regulation along with a proposed “suite of amendments [intended] to provide a stronger signal for investments in and production of the cleanest fuels, offer additional flexibility, update critical technical information, and provide for improved efficiency and enforcement of the regulation”. Among these proposed new regulations is a revised procedure for ARB review of applications to certify new fuel pathways under the LCFS. I have previously reported on the staff’s original (April 2014) proposal in a post earlier this year: aimed at reducing the substantial backlog of Method 2A and 2B applications, the April proposal would have classified first-generation biofuels (e.g. corn ethanol, renewable biodiesel) as Tier 1 fuels and advanced biofuels as Tier 2 fuels, and further would have created “bins” for the Tier 1 fuels– for example, assigning all Tier 1 fuels with carbon intensities of 80-90 in one bin with an assigned credit at the midpoint of 85. However, this proposal attracted some controversy because it might have accomplished a reduction in the number of petitions at the cost of losing the incremental advantage afforded to fuel developers by small improvements in carbon intensity.

ARB staff went back to the drawing board, and unveiled a revised proposal at a May 30 public meeting. In the May proposal, the staff was still proposing to distinguish between Tier 1 (1st Gen) fuels and Tier 2 (2nd Gen) fuels, but the “bin” concept for Tier 1 fuels was no longer being considered. Instead, all new Tier 1 fuels would use a proposed new “Tier 1 Calculator” spreadsheet under the CA-GREET 2.0 model to establish a carbon intensity value, with no need for filing a formal petition. Second generation (Tier 2) fuels would follow much the same procedures for submission of Method 2A or 2B applications as is currently the case. The proposal would also streamline the process by consolidating pathway application with the procedures needed for registration of fuel producers. I discussed this May 2014 proposal in a little more detail in my talk at the 2014 BIO Pacific Rim Summit on Industrial Biotechnology: you can find the slides from that presentation here.

At this writing, this remains only a proposal, which presumably would be adopted only as part of the larger regulatory overhaul that staff has been orchestrating. Those regulatory revisions were intended to be completed during 2014, which does not appear likely at this time, so the possible timing of the implementation of new procedures for fuel pathway approvals is not clear. More details on the various components proposed for the regulatory re-adoption can be found on the ARB website.

Low Carbon Fuel Standards in Other States and Provinces

Washington State Clean Fuel Standard
. On December 17, 2014, Governor Jay Inslee of Washington announced a number of legislative and regulatory proposals designed to “transition Washington to increased energy independence through use of clean energy, to reduce carbon pollution in Washington and to meet the statutory greenhouse gas limits adopted by the state Legislature in 2008”. Most prominent among these is a proposed cap-and-trade program to limit carbon emissions. Also among the proposals, Gov. Inslee has directed the state’s Department of Ecology to draft proposed regulations for a Clean Fuel Standard that would require a transition to cleaner fuels over time. Input will be sought from legislators, affected and interested parties and the public before formal rulemaking begins. The proposal for a Clean Fuel Standard follows on a revised analysis of the impact of a potential Clean Fuel Standard, prepared for the state by Life Cycle Associates LLC, Jack Faucett Associates and the Center for Climate Strategies, which was issued on December 12. This report analyzes several scenarios to achieve a 10% reduction in transportation fuel carbon intensity by 2026 relative to 2012 levels.

Oregon Clean Fuel Standard. Environmentalists are hopeful that, with Democratic gains in the State Senate, a favorable vote can be achieved to keep the Oregon Clean Fuel Standard in operation. As previously reported in Biofuel Policy Watch, the state has had such a program on the books since 2009, but it has not been fully implemented and is scheduled to “sunset” in December 2015. A bill in the Senate that would have extended the program failed to pass in 2014, but according to a recent press report, Senate Democrats plan to reintroduce such a bill when the new legislature convenes in January. According to this report, the state’s Department of Environmental Quality has proposed new rules for this program, which are expected to be approved by the Environmental Quality Commission on January 7-8, 2015. This proposal has continued to be controversial, in particular attracting opposition from oil industry groups and their allies.

British Columbia Renewable and Low Carbon Fuel Regulations. I briefly described this program of the Canadian province of British Columbia in a February 6, 2013 posting on my Advanced Biotechnology blog. According to the website of the province’s Ministry of Energy and Mines, this regulation led to the use of renewable and low carbon fuel in 2012 that “saved 904,868 tonnes of greenhouse gas emissions from being released into the environment, the equivalent of about 190,499 cars being removed from the road”. According to a recent editorial in The Globe and Mail, current Energy Minister Bill Bennett is reviewing this low-carbon-fuel regulation, with his report expected soon. The editorial writer expressed concern that, since former B.C. Premier Gordon Campbell left the provincial government, there may be less enthusiasm within the present government for environmental causes. In the meantime, the Low Carbon Regulation continues to be in effect, with the California company Trestle Energy being the latest firm to obtain a carbon intensity rating for its fuel under the British Columbia regulations. The company’s fuel is reported to be a a corn ethanol product with a very favorable carbon intensity compared to other corn-derived ethanols.

Previous Blog posts on Low Carbon Fuel Standards:

D. Glass Associates, Inc. is a consulting company specializing in government and regulatory support for renewable fuels and industrial biotechnology. David Glass, Ph.D. is a veteran of over thirty years in the biotechnology industry, with expertise in industrial biotechnology regulatory affairs, U.S. and international renewable fuels regulation, patents, technology licensing, and market and technology assessments. Dr. Glass previously served as director of regulatory affairs for Joule Unlimited Technologies, Inc. More information on D. Glass Associates’ government and regulatory consulting capabilities, and copies of some of Dr. Glass’s prior presentations on biofuels and biotechnology regulation, are available at www.slideshare.net/djglass99 and at www.dglassassociates.com. The views expressed in this blog are those of Dr. Glass and D. Glass Associates and do not represent the views of any other organization with which Dr. Glass is affiliated. Please visit our other blog, Advanced Biotechnology for Biofuels