Could the RFS Move Toward a Low Carbon Program Like LCFS?

by Jeff Barber (OPIS) The idea of revising the Renewable Fuel Standard (RFS) to operate more like the Low Carbon Fuel Standard (LCFS) appears to be getting a fresh look.

The rise in prices for California’s LCFS credits may be a motivating factor. More about that in a minute....

Hillary Clinton’s presidential campaign had to do some damage control after reports emerged that her aides met with California officials. The reported discussions involved whether – should she win the White House – the Renewable Fuel Standard ought to be replaced with something that looked a lot like the state’s Low Carbon Fuel Standard.

But two-and-a-half years later, the idea of making the RFS look more like an LCFS program seems to be getting a reprise, including from some in the biofuels industry.

Though it would be easy to overstate the level of interest in the idea, it’s clear that LCFS-type programs are expanding at a time when the RFS appears to be increasingly embattled.

The Transportation & Climate Initiative, a coalition of nine Northeast and Mid-Atlantic states and the District of Columbia in December said it plans to design by the end of this year a regional low-carbon transportation policy. Exactly what the program will look like is still unclear, but state officials have said they will be looking closely at California’s LCFS as they work on the proposal.

More surprising was the announcement in December that the Great Plains Institute had joined with two Midwest states, including Iowa, (which, it’s worth noting, produces more corn-based ethanol than any other state in the U.S.) to explore decarbonization of the region’s transportation through electrification and the use of low- or negative-carbon biofuels.

But LCFS-like programs aren’t triumphing everywhere. Washington state lawmakers surprised some in April when they failed to approve a bill that would have required the use of lower carbon transportation fuels starting in January 2021. The reason? Key members of the state Senate expressed concern over the program’s impact on pump prices and the fact that the program as designed would not have increased revenue for the state.

While the advanced biofuels industry is only beginning to emerge from an extended infancy, it’s at least arguable that LCFS-related demand – mostly from California – has emerged as a key driver of that development.