Senate Committee Considers National Clean Fuel Standard

February 16, 2023

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by Mike Lee (E&E News Climatewire) A federal standard has "enormous potential" if it improves on state-level programs, industry and trade officials told the Environment and Public Works Committee. -- Senators debated the merits of a national clean fuel standard Wednesday, with Democrats emphasizing the need to reduce reliance on fossil fuels and Republicans railing against the idea of a "regulatory scheme."

The Senate Environment and Public Works Committee hearing focused on how the federal government could pattern a national standard on state-level programs already in place in California and other states.

Such programs set a steadily declining emissions baseline for the transportation sector and allow companies that produce low-carbon fuels or electric vehicles to sell credits to companies that make high-polluting fuels.

But before the witnesses testified, the committee's top Republican characterized the idea as a bid to "import the West Coast’s policies."

“I am very concerned by the concept of empowering bureaucrats to decide what fuel sources qualify, how, and what associated phaseouts may look like," said Sen. Shelley Moore Capito (R-W.Va.), the panel's ranking member. “It sounds like a combination of the social cost of carbon and centralized economic planning." READ MORE

Padilla Highlights Successful California Model to Reduce Carbon Emissions Nationally (Office of Senator Alex Padilla (D-CA))

Cooper testifies in Senate committee hearing on national CFP (Ethanol Producer Magazine)

RFA Testifies at Low Carbon, Clean Fuels Hearing (Energy.AgWired.com)

Is Setting National LCFS Feasible? RFA's Cooper Tells Senate Committee Ethanol Has Concerns About eRINs Proposal (DTN Progressive Farmer)

Ethanol touted at U.S. Senate hearing for possible national clean fuels standard (Iowa Capital Dispatch)

Utah senator seeks allies in push to keep EVs out of U.S. biofuel program (Reuters)

Democrats consider national clean fuel standard (Houston Chronicle)

Ricketts highlights benefit of ethanol-blended fuels (North Platte Post)

Excerpts from Office of Senator Alex Padilla (D-CA): Today, during a hearing held by the Senate’s Environment and Public Works Committee, U.S. Senator Alex Padilla (D-Calif.) highlighted the effectiveness of California’s Low-Carbon Fuel Standards (LCFS) program in lowering greenhouse gas emissions and the need to implement a similar national program to reduce emissions.

During the hearing, titled “Low Carbon Transportation Fuels and Considerations for a National Clean Fuels Program,” Padilla questioned Michael Graff, Chairman & CEO, American Air Liquide Holdings, Inc. and Geoff Cooper, President & CEO, Renewable Fuels Association.

While speaking with Mr. Graff, they discussed California’s LCFS program and how it was integral to Air Liquide’s decision to invest in clean hydrogen production for zero-emissions vehicles. In Padilla’s conversation with Mr. Cooper, they spoke about Renewable Fuels Association’s pledge to reach a zero-carbon footprint by 2050 and how California’s LCFS program drove their transition. Mr. Cooper emphasized how a similar program at the national level would reduce emissions from the transportation sector.

Key Excerpts:

PADILLA: The Chairman proud to represent not only a great laboratory of democracy but most populous in diverse state in the nation, largest electorate of any state in the nation and the fourth largest economy in the world. With that being said, let me brag a little bit about California’s low carbon fuel standard. It’s helping to advance a wide range of clean fuels, while at the same time keeping consumer costs low and fostering clean fuel investments. California continues to grow its economy and reduce its emissions.
GRAFF: There is no question that California’s LCFS program drove the introduction of zero emission vehicles, and in the recognition that in order to go ahead and fuel those vehicles, it recognized that the real point was carbon intensity.
PADILLA: So if I heard you correctly, the California’s program was paramount in your decision, not just whether or not to make the investment, but were to invest in clean hydrogen production, is that correct?
GRAFF: It clearly enabled the introduction of the zero emission vehicles, we needed to demonstrate what that could mean, not just for the state of California, but for the country in the world. We wanted to find that opportunity to demonstrate what could happen. And we wanted to locate those things logistically as close to the market as possible. It’s good to minimize logistics, it also creates value creating jobs in those communities in which you’re going to use that product.
PADILLA: Mr. Cooper, could you elaborate on the RFAs pledged to achieve a net zero carbon footprint by 2050? And talk about how low carbon fuel standards not just in California, but at Oregon, to the conversation may have contributed to innovation in the biofuels sector?
COOPER: With the adoption of technologies like carbon capture and sequestration, with the adoption of lower carbon farming practices upstream of our facilities, you know, replacing fossil natural gas with renewable natural gas at our facilities, all of those practices and technologies will continue to drive the carbon intensity lower for corn ethanol. And we absolutely think we can get there by 2050 or sooner. And a lot of those investments are happening today and they’re being driven by the California LCFS. […] And so they are making investments and that was the purpose of the program. And that’s why we think a similar program at the national level would be a great way to rapidly reduce emissions from the transportation sector. READ MORE

Excerpt from DTN Progressive Farmer: The RFS recently has become a battle ground for electric vehicles and liquid biofuels. Two senators on the committee including Pete Ricketts, R-Neb., and Cynthia Lummis, R-Wyo., said caution should be taken on moving to electric vehicles too quickly.

"I'm concerned that a national program could prioritize electric vehicles over liquid fuel vehicles, biofuels, and make us more dependent on our foreign adversaries that control a majority of the worldwide production of several key components," Ricketts said during the hearing.

"For example, the CCP, Chinese Communist Party, controls 60% of the raw lithium mines in the world, 50% of lithium processing and refining and 75% of lithium-ion battery mega factories. How can you ensure that a new national low-carbon fuel standard will not falsely prop up EVs and do significant damage to liquid fuels for biofuels and process?"

Geoff Cooper, president and CEO of the Renewable Fuels Association, said while the ethanol industry supports a national LCFS there are concerns about the EPA's latest multi-year Renewable Fuel Standard and its approach to eRINs.

"We're not opposed to the inclusion of electricity in the RFS," Cooper told the committee.

"But it's got to be done right and we share your concern that in the case of these eRINS the generator of those credits would be the automaker like Tesla. That's completely different, completely inconsistent with how RIN credit generation is done across any other fuel that is regulated under the RFS and so that gives us some concern." READ MORE

Excerpt from Houston Chronicle:

While discussions are in the early stages and face an uncertain political path in a divided Congress, a national clean fuel standard would likely increase motorists' defection from traditional gasoline and diesel-powered vehicles, putting Texas' oil refineries on increasingly shaky ground.

The American Fuel and Petrochemical Manufacturers, a trade group representing refineries, has been critical of California's low-carbon fuel standard, saying that along with the state's cap-and-trade program, it added an additional 50 cents to the cost of a gallon of gasoline, helping drive the nation's highest fuel prices.

A spokesman for the trade group said it would evaluate any fuel standard on a number of factors, including whether it is "feasible and cost-effective" and "smart without unhelpfully inflating the cost of other liquid fuel products."

The discussions come as Congress is already pumping billions of dollars into new clean transportation industries such as hydrogen fuel and electric vehicles in a bid to meet President Joe Biden's goal of getting the country to net-zero greenhouse emissions by 2050.

For clean fuel producers such as Air Liquide, which operates its American operations out of Houston, a national standard would likely expedite plans to convert trucks and other heavy-duty transport to hydrogen fuel.

It could also help Houston city leaders' efforts to use the region's oil and gas infrastructure and expertise to make it a hub for a new clean hydrogen industry.

"The key is to build out the infrastructure and build out the need for the vehicles," CEO Mike Graff of American Air Liquide Holdings told the Senate on Wednesday. "The Inflation Reduction Act clearly provides the capability to produce hydrogen under a variety of pathways. The key now is to go ahead and further incentivize the use of the vehicles."

A clean fuel standard is likely to face considerable opposition from Republicans, with Sen. Shelley Capito, R-W.Va., calling the proposal a "combination of social cost of carbon and centralized economic planning."

...

"The challenges with the Renewable Fuel Standard do not stop at hydrogen," he ( Sen. Tom Carper, D-Del., chairman of the Senate Environment and Public Works Committee) said. "There are challenges across clean fuel stakeholders, including biofuels, which we can address by moving toward a more technology-neutral approach." READ MORE