Delays in California's LCFS Revisions Are an Opportunity to Improve

June 05, 2024

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by Nikita Pavelnko (International Council on Clean Transportation) Earlier this year, the California Air Resources Board (CARB) postponed a hearing and vote to finalize revisions to its Low Carbon Fuel Standard (LCFS) until the Friday after the 2024 U.S. elections in November. The vote had been expected in March and it’s a good sign that CARB is taking more time. This delay is another opportunity to adjust the regulation so it can do more to achieve California’s climate goals.

The LCFS revisions were riven from the outset by temporally competing priorities. A quick, simple update that raises ambitions and greenhouse gas (GHG) reduction targets would be relatively straightforward. It would also lift the LCFS’s sagging credit market, which has fallen from pre-pandemic heights of $200 per tonne of carbon dioxide (CO2) to less than $75 per tonne in early 2024. Addressing several other issues that have cropped up over the last 5 years, including the program’s growing reliance on virgin vegetable oils and credits from avoided methane emissions at large dairy farms, would take much more time. The risk with spending that time is that it could prolong the slump in credit prices and thus erode the program’s near-term value to credit-generators such as electric vehicle charging stations and alternative fuel producers.

Under any circumstances, balancing these priorities would be a challenging. But now that there’s more time, let’s focus on the two largest issues—the risk that the LCFS is shuffling around or diverting resources and that it’s crediting GHG reductions from unrelated agriculture-sector projects. There are available policy levers to tackle both.

The resource-diversion issue is about the impact on vegetable oil markets.

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Look at the data—there’s an uptick in idled biodiesel capacity in the last 3 years, as conventional biodiesel consumed nationwide is giving way to renewable diesel production intended for the West Coast that can exceed FAME biodiesel blending constraints and be used for LCFS compliance.

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Solution: An energy- or volume-based cap on the quantity of lipids (fats and oils) credited in the LCFS would reduce the program’s impact on biofuels linked to deforestation and minimize the risk of imported waste oil fraud.

The crediting issue is about avoided methane emissions.

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Ultimately, the concern is that the current design of the LCFS conflates its transport-sector goals with a nationwide carbon-offset system for farms.

Solution: Phase out avoided methane crediting for new pathway applications to the LCFS and implement deliverability requirements to demonstrate that new projects are producing fuel for the transport market.

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Similarly, deliverability constraints—which could help limit the inflow of credits from farms as far away as Indiana and New York—would only be implemented starting in 2030 for renewable natural gas. As proposed, the deliverability requirements kick in starting in 2045 for hydrogen made from renewable natural gas, despite it being fossil-derived gray hydrogen paired with a tradeable credit for upstream biomethane production.

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Recent data suggests that renewable diesel production is poised to continue growing beyond CARB’s expectations.

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It’s more likely that a higher target would exacerbate current trends and potentially push lipid consumption up by another billion gallons and approach a 100% renewable diesel blend.

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Moving ahead without any additional safeguards may influence other states with fuels policies to do the same and could even create more pressure on the Environmental Protection Agency to increase the federal mandate. READ MORE

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CARB Denies Petition To Regulate Dairy Methane Emissions (Biomass Magazine)

Excerpt from Biomass Magazine: The California Air Resources Board on May 30 declined a request to immediately initiate rulemaking proceedings that would require all dairies within the state to adopt some form of methane mitigation and adopt enteric emissions reduction measures.

Climate Action California in March filed a petition with CARB urging the agency to take action to reduce the state’s methane emissions by regulating methane produced by certain types of livestock operations. According to CAC, the rulemaking should be required under SB 1383, which established a state law to reduce emissions of short-lived climate pollutants via the reduction of organic waste disposal. The petition specifically asked CARB to require all dairies adopt methane mitigation measures; adopt a system of measuring emissions on all farms; establish funding resources to help dairies exceed the minimum standard, using digester and other measures; over the next 20 years, reduce or eliminate wet or lagoon style management and replace it with “dry” management; regulate aspects of dairy greenhouse gas (GHG) emissions that have special impacts, including nitrous oxide and fugitive emissions from digesters; provide technical assistance to dairies in ways of managing manure and the ammonia, N20, hydrogen sulfide and methane it produces; and regulate enteric emissions for all livestock if initial short-term pilot incentive programs to not produce a 20% reduction in enteric emissions by 2030 and 40% by 2040.

The Coalition for Renewable Natural Gas is among the groups that filed public comments on the petition, calling it “doubtlessly well meaning,” but stressing that the petition errs in several critical ways and misrepresents the success of CARB’s existing strategy to reduce methane from dairies. According to the RNG Coalition, CAC reaches incorrect conclusions on multiple issues and would ultimately delay progress and harm the state’s efforts to reduce methane from dairies prior to 2030.

Within its comments, the RNG Coalition also states that it agrees with the petition’s statements that anaerobic digestion (AD) of dairy manure is a proven method to reduce methane emissions and that CARB’s model-based estimates of methane emissions and reductions from digesters are likely underestimates.

CARB on May 30 issued its response to the petition, denying the CAC's request to immediately initiate rulemaking proceedings that would require all California dairies to adopt some form of methane mitigation and adopt enteritic emissions reduction measures. The agency also denied the petition’s request to establish funding to help dairies reduce methane, citing the fact that CARB and the California Department of Food and Agriculture do not appropriate state funding.

CARB granted portions of the petition, indicating that it will continue to implement efforts to reduce methane and other pollutant emissions from livestock and dairy operations, consistent with state law. This includes public engagement to assess whether statutory requirements are met and other considerations for initiating a regulatory designs process pursuant to SB 1383, including evaluating data to better inform methane emission estimates and whether mandatory reporting requirements are appropriate; continuing CDFA incentives and technical assistance programs for alternative manure management methods and digester projects; researching and analyzing nitrogenous emissions from dairy operations; and researching enteric emissions reduction options.

Additional information, including full copies of the March 2024 petition, the RNG Coalition’s comments, and CARB’s May 2024 response to the petition, are available on the CARB website. READ MORE