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Proposed Changes to LCFS Regulation Threaten Program’s Fuel Neutrality

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Photo courtesy Clean Energy.

October 23, 2017

CARB has proposed a set of amendments to the Low Carbon Fuel Standard regulation, including increases in the carbon intensity values for CNG and RNG, updates to the energy economy ration values for electric vehicle and fuel cell applications, and the creation of an LCFS credit buffer account.

CARB describes the amendments as an effort to more effectively meet California’s 2030 greenhouse gas reduction goals, but the changes threaten the program’s long-standing fuel neutrality and may impede the growth of RNG production in California, Coalition leaders say.

“The draft amendments appear to provide inequitable regulatory advantages to electric vehicle applications at the expense of other low-carbon fuels, especially RNG. Such built-in inequalities could affect the integrity of the LCFS program,” said Todd Campbell, vice president of public policy and regulatory affairs at Clean Energy Fuels, in his comment letter to CARB.

“We believe ARB’s new provisions in the draft LCFS regulatory amendment language will impede the growth of the NGV industry,” he added.

Changes disadvantage NGV fuels
CARB proposes increasing the CI values for fossil CNG and RNG based on the latest CA-GREET full fuel life-cycle model—but not the values for other fossil fuels, including conventional diesel. The CI for fossil CNG would rise from 79.46 grams per megajoule under CA-GREET 2.0 to 86.57 g/MJ under CA-GREET 3.0, an increase of nearly 10 percent.

The agency also suggests making changes to EER values, which affect the credits generated within the LCFS program, that Clean Energy and the Coalition believe would give an unfair advantage to EVs. The draft proposes amending the EER values only for EV applications, and grouping electric trucks and buses together under one EER—effectively giving EVs a competitive advantage by increasing the number of credits generated by EV trucks.

“Classifying all EVs under a single EER means that the previous EER for EV trucks nearly doubles, even though there has been no substantive truck data to support this,” said Campbell. “Truck and transit duty cycles are very different, with different weights and driving patterns—they should not be grouped into one category.”

Finally, CARB wants to create a buffer account that would allow the agency to hold on to LCFS credits even after a biofuel producer has verified that a fuel has a lower CI than the default pathway.

“It is unjustifiable for CARB to hold LCFS credits after a pathway has been verified, but if this is going to be done, it should apply to all fuels in the program. The fact that this only applies to biofuel pathway holders demonstrates how these proposed changes are putting in jeopardy the fuel neutrality of this program,” said Coalition President Thomas Lawson.

Working with CARB
Lawson and Campbell met with Sam Wade, CARB’s chief of the transportation fuel branch, industrial strategies division, and head of the LCFS committee, on Oct. 13 to discuss these concerns. Wade agreed to revisit the new CI values for RNG and CNG, revisit each fuel technology’s EER value, and consider refining the buffer account.

According to Lawson, Wade acknowledged that the new CI values for CNG are incorrect and said that the next draft of the proposal would include a more realistic value for CNG.

Wade also recognized that the draft proposal should include an EER on new near-zero-NOx natural gas trucks. Lawson asked CARB to compare the efficiency of these low-emission natural gas trucks to that of diesel and EV trucks.

CARB agreed to keep working on the buffer account proposal. Wade clarified that it is not intended as a punitive measure. The account would be used to recover credits from a producer only if they were mistakenly generated.

Rule-making timeline
CARB has released a rough rule-making timeline: staff will hold a public workshop on Nov. 6 to discuss the development of the amendments and will take the final proposed changes to the board in February or March 2018. CARB is planning for changes to the LCFS program to take effect Jan. 1, 2019.

“We appreciate CARB’s willingness to work with us to make fair and equitable changes to the LCFS program that protect its fuel neutrality,” said Lawson. “We would like to get this right the first time around, which will require more time, discussion, and review of the data used to support these changes.”

Photo ©Westport Innovations, used by permission

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