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Coalition Champions Fuel Neutrality as CARB, CEC Reshape Alt-Fuel Regulations

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March 5, 2018

As CARB and the CEC move to reshape the state’s alternative-fuel regulations, the Coalition is working to make sure they take a fuel- and technology-neutral approach to cleaning up California’s air. Most recently, the Coalition has countered proposed changes to the Low Carbon Fuel Standard, the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project, and the Innovative Clean Transit Regulation, providing recommendations that they include NGVs and promote developing markets for all clean transportation technologies.

Last month CARB released a preliminary draft proposal of changes to the LCFS regulations. Although the intent is to improve the LCFS by strengthening its carbon intensity goals through 2030, these changes may damage the market for clean internal combustion engines. CARB suggested lowering the carbon emissions reduction goal for transportation fuels to 7.5 percent by 2020 rather than the 10 percent in the existing regulation, and then boosting it to 20 percent by 2030. Signaling market uncertainty, LCFS credits immediately traded down to $105 per million metric tons, from $149/Mt; by the end of the day after CARB’s proposal, credits had bounced back to $124.5/Mt.

Uncertainty could stall biofuels development

“This market roller-coaster demonstrates the risk CARB is taking by lowering the CI threshold of carbon fuels,” said Coalition President Thomas Lawson. “If investors lose confidence in clean internal combustion engines now, it will send shockwaves through the biofuels industry—and development of the technology that can lower greenhouse gas emissions right now will stall.”

Lawson has been in talks with CARB staff and has submitted suggestions for improving the LCFS draft proposal to ensure that it remains a fuel-neutral program and doesn’t create a competitive advantage for any one engine technology.

Similarly, the Coalition continues to urge CARB to purse a performance-based standard in developing the ICT program, which provides incentive funding for fleets to replace heavy-duty vehicles with zero- and near-zero-emission vehicles and transition to renewable fuels. Lawson has encouraged CARB to allow transit fleets to choose the technology that best fits their needs as they switch to cleaner fuels.

HVIP voucher increase would motivate adoption

Finally, the Coalition continues to engage with CARB over the HVIP voucher amounts. The agency increased the voucher to $40,000 for trucks equipped with the Cummins Westport 11.9-liter low-NOx natural gas engine last year, but it has turned out to be too little to cover the cost—or to motivate market adoption.

To cover the costs of the engine plus the fuel system, taxes, and incremental changes to equipment, the voucher amount should be at least $70,000 to $80,000. The 2017–18 Funding Plan could raise the amount, and future funding plans could adjust it appropriately as incremental costs decrease.

“Sustaining a successful LCFS program and offering voucher amounts that allow truck buyers to afford making the move to ultralow-NOx heavy-duty trucks is the best way to support California’s freight businesses and meet state air quality goals right now,” Lawson said.

Photo ©Westport Innovations, used by permission

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