Flash Report – SRIA Release: CARB’s First Salvo of Proposed 2023 LCFS Amendments

September 22, 2023

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(Stillwater Associates) On September 8, 2023, the California Air Resources Board (CARB) released the Standardized Regulatory Impact Assessment (SRIA) for the 2023 Low Carbon Fuel Standard (LCFS) Amendments. An SRIA is required when a proposed regulation has an economic impact exceeding $50 million. The SRIA must meet requirements of the Department of Finance and lay out the comparison of the proposed regulatory alternatives such that analytical decisions can be made to choose the action that is most cost effective among other objectives. The SRIA must be included in the Initial Statement of Reasons (ISOR) that, when filed, begins the formal rulemaking process.

Except for the specific reduction schedule, including the step change in 2025, all of the proposed amendment items were discussed at an August 16, 2023 public workshop concerning LCFS modeling updates – including the California Transportation Supply (CATS) Model used to develop the LCFS scenarios analyzed in the SRIA. Although the SRIA does not contain the regulatory text, it does contain an overview of the proposed amendments, including:

Annual Carbon Intensity (CI) Benchmarks – Increase stringency through 2030 and extend to 2045

The SRIA contained a percentage reduction in the benchmark by year through 2045. The highlights are a 5% step-up in reduction in 2025 from the current regulation with 30% in 2030 and 52.5% in 2035. In the table below we highlight key years with the periods between key years declining linearly.

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2. Addition of an Automatic Acceleration Mechanism
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Eliminate Exemption for Intrastate Fossil Jet Fuel
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Phase out of Methane Crediting
Avoided methane crediting will be phased out for dairy and swine manure pathways, and landfill-diversion pathways (i.e., food waste) by 2040. Pathway applications made through 2029 will allow one ten-year methane crediting period, and a five-year crediting period for pathways recertified from 2030 through 2034.

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Biomethane Deliverability Requirements
The current LCFS regulation allows book-and-claim crediting of biomethane that is injected into the North American natural gas pipeline system. The proposed change is to align biomethane deliverability requirements with the requirements currently in effect for other fuels. This would limit the geographic area for renewable natural gas (RNG) book-and-claim crediting.

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Expand ZEV Infrastructure Crediting to Medium- and Heavy-Duty Sector
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Allow Book-and-Claim for Low-CI Hydrogen
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Project-Based Crediting Draws to a Close
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Electric Forklift Crediting Modification
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Other
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Concerning timeline for amendment adoption, CARB Staff have indicated that the LCFS Amendments will be a non-voting agenda item at the September 28-29 Board Meeting with the ISOR package, including the proposed regulatory text, to be filed subsequently. Accordingly, the amendments are set to be considered for adoption in early 2024. READ MORE

Are biofuels a climate bust? (Politico)

Excerpt from Politico: ... But, California is about to double down on promoting them.

The California Air Resources Board is getting ready to amend its low-carbon fuel standard, which sets an emissions limit for transportation fuels. It lets fuel producers generate and sell credits for making low-carbon fuels.

It’s been a huge boon, alongside federal incentives, for biofuels like renewable diesel, biodiesel and ethanol, which can be made from corn, soy, agricultural waste and other crops, and for biomethane produced from dairy manure gas.

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A key rulemaking document that CARB put out last month showed its preferred policies would maintain credits for manure through 2040 and would allow unlimited use of crop-based fuels.

Some board members are asking questions. “With all of these different strategies, have you seen actual data to support them being successful?” board member Susan Shaheen asked of crop-based fuels at a Sept. 28 board meeting.

Others point out that electric vehicles have taken off since the LCFS began in 2009, reducing the need for combustion-based fuels. That’s partly due to CARB’s other policies, including its emissions standards and purchasing mandates for zero-emission passenger vehicles and trucks.

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Even if EVs displace all internal-combustion cars as California envisions, the agency still sees a role for biofuels in planes and other heavy-duty, hard-to-decarbonize transportation sectors.

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CARB plans to release draft amendments in the next few weeks, with a public comment period and more potential changes to follow, spokesperson Lys Mendez said in an email. The agency expects to vote in the first quarter of next year. READ MORE