Policy Tracking Report
Updated – June 3, 2019
Executive Director’s Update:
The LCFC will be hosting an invitation-only Multi-State Legislative Strategy Session RE: Passage of Low Carbon Fuel Standards (LCFS) at the BIO World Congress in Des Moines, Iowa with a tentative date and time of July 9th from 5-6:30 pm. We will be discussing the successful establishment and defense of LCFS programs in California and Oregon, the pending bills in Washington and New York, the regulatory program proposed by the Puget Sound Clean Air District, and the possibility of getting bills introduced and passed in the Midwest and the RGGI states. The goal of the session is to enhance industry coordination, to identify key messages and issues, and to discuss resource issues. Please advise if you can join or have any recommended invitees.
The Puget Sound Clean Air Agency proposal is moving forward, with an anticipated regulatory proposal in November 2019, and Board action in December 2019. The LCFC is actively involved on this regulatory proposal to establish a Clean Fuel Standard in the Puget Sound region of Washington.
It appears highly unlikely the New York bill will move forward this session. The New York Legislature is scheduled to adjourn at the end of June, and reconvene in January 2020.
The LCFC’s website has been updated to reflect our new Board, and other recent developments, see https://www.lcfcoalition.com/leadership
We are completing the production of a short video from our Global Climate Action Summit event. We plan to introduce it shortly, along with informational videos regarding the California and Oregon programs. I met with CARB’s director of international outreach last week, and we agreed to work together in communicating with international jurisdictions regarding the LCFS program structure.
Portal Log-In Information:
Regulatory Tracking Portal: http://eq-research.com/lcfc-regulatory-tracking/
Legislative Tracking Portal: http://eq-research.com/lcfc-legislative-tracking/
Legislative:
California (Funding; AB 1406; Passed Assembly, to Senate)
This bill requires the California Energy Commission (CEC) to allocate no less than 10% of all Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP) funds to alternative fuel and advanced technology vehicles. Prior to amendment in April, this bill also required the CEC to allocate no less than 20% of all ARFVTP funds for alternative fuel production.
California (Funding; AB 753; Amended)
The ARFVTP provides funding to certain entities for the development and deployment of innovative technologies that transform California's fuel and vehicle types to help attain the state's climate change policies. As amended, this bill requires the CEC to make ARFVTP funding available to certain projects, as follows:
· At least 20% for projects to produce alternative and renewable low-carbon fuels in the state.
· At least 10% for projects to research, develop, produce and deploy innovative and emerging fuels.
The bill specifies that priority for funding will be given to projects that can demonstrate a minimum of three of the following:
· Maximizes local workforce and economic benefits.
· Provides multiple environmental and public health co-benefits, including significant emissions of methane, criteria air pollutants, and toxic air contaminants.
· Leverages additional public or private funding.
· Utilizes feedstocks derived from in-state-sources waste streams.
· Distributes innovative and emerging fuel capable of achieving cost-effective reductions in emissions of GHG and criteria air pollutants on a dollar per metric ton basis when considering fuel production, vehicle acquisition, and fueling infrastructure costs.
California (LCFS; AB 1195; Passed Assembly, to Senate)
As amended, this bill authorizes a credit under the Low-Carbon Fuel Standard to be generated for crude oil that has been produced or transported using innovative methods, as defined, and delivered for processing to refineries located in the state. “Innovative methods” include:
· Solar steam generation or generated steam of 45% quality or greater.
· Carbon capture and sequestration.
· Solar or wind generation. To qualify, electricity must be produced and consumed onsite or be provided directly to the crude oil production or transport facility from a third-party generators and not through a utility-owned transmission or distribution network.
· Solar heat generation, including, but not limited to, boiler water preheating and solar steam generation with steam quality of less than 45%.
· Renewable natural gas or biogas energy.
New York (Low Carbon Fuel Standard; A 5262/S 4003; Introduced)
This bill establishes a low carbon fuel standard intended to reduce greenhouse gas emissions from the transportation sector by 20% by 2030. The standard will apply to all providers of transportation fuels in the state and may be met through market-based methods which allow for the generation of tradeable low carbon fuel credits.
Within 24 months following adoption of the low carbon fuel standard, the Commissioner of Environmental Conservation, in consultation with the New York State Energy Research and Development Authority (NYSERDA), must promulgate regulations establishing a low carbon fuel standard with performance objectives to implement the 2030 greenhouse gas emissions reduction goal.
In developing the New York standard, administrators must take the California LCFS into consideration and may rely on the carbon intensity values established by California. Additionally, administrators must coordinate with other Northeastern states to promote regional reductions in greenhouse gas emissions.
Regulatory:
California (Air Resources Board; Low Carbon Fuel Standard)
The Monthly LCFS Credit Transfer Activity Report for April 2019 was released on May 14. Prices ranged from $131- $199 per credit, with an average price of $180 per credit during the month. A total of 1,299,000 MT CO2e was traded during April.
On May 15, California Air Resources Board (CARB) released information on 2018 LCFS Compliance and the Credit Clearance Market (CCM). Staff state that the program had a 100% compliance rate for 2018. Of the 312 reporting parties, 52 reported credit deficits. In total, high-carbon fuels generated 12,366,497 deficits during the year, while low-carbon fuels generated a total of 11,182,369 credits. Since parties met their compliance obligation, a CCM will not be held in 2019 and all credits pledged for sale in the CCM will be released back to parties.
Additionally, on May 21, CARB issued Draft Guidance Document 19-06 for public comment. The purpose of this document is to provide technical guidance on how the Tier 1 calculator for biomethane can be modified to determine the Carbon Intensity (CI) of biogas-derived electricity as part of a Tier 2 application. As a reminder, under the LCFS, electricity produced from renewable or low-CI sources can be matched to electricity that is used either as a transportation fuel or used in electrolysis to produce hydrogen for transportation purposes using book-and-claim accounting. Additionally, the LCFS fuel pathway classification system requires a Tier 2 application for low-CI electricity.
Staff states that, in particular, dairy and swine manure operations have expressed interest in providing biogas-derived electricity but these groups do not have access to the natural gas common-carrier pipelines for which the Tier 1 Simplified CI Calculators for Biomethane are designed. This guidance document therefore provides an example of how the Tier 1 Simplified CI Calculator for Biomethane from Anaerobic Digestion of Dairy and Swine Manure can be modified to determine the CI of biogas-derived electricity. Comments are due via email (to LCFSworkhop@arb.ca.gov) by June 4.
California (Air Resources Board; Air Quality Improvement Program and Low Carbon Transportation Funding)
On May 17, CARB Staff announced a June 13 workshop on the Fiscal Year 2019-20 Funding Plan for Clean Transportation Incentives from Low Carbon Transportation Investments and the Air Quality Improvement Program (AQIP). As a reminder, this plan describes CARB's proposed investments for $48 M in AQIP funding and $447 M in Low Carbon Transportation Program funding. This will be the second in a series of public workshops to discuss and seek input on the Funding Plan which CARB staff will release in June 2019 (with Board consideration in October 2019).
For reference, the Governor's proposed FY 2019-20 state budget divides the $447 M in Low Carbon Transportation investments as follows:
· Clean Vehicle Rebate Project - $200 M;
· Clean Vehicle Equity Projects - $65 M; and
· Heavy-Duty Vehicles and Equipment - $132 M.
Oregon (Department of Environmental Quality, Clean Fuels Program)
On June 1, the Oregon Department of Environmental Quality announced via email that it will hold a Credit Clearance Market beginning June 1 for Clean Fuels Program participants to achieve compliance with the 2018 program year. Staff states that there are currently more credits pledged to the Market than what are needed to meet outstanding compliance obligations and any leftover credits will be returned to the parties that pledged them after the Market closes.
Blake Elder | Policy Research Analyst
(919) 825-3339
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