The California Air Resources Board has drafted a regulatory proposal that rejects environmentalist calls to drop dairy digesters from the Low Carbon Fuel Standard. Yet market uncertainly still lingers for the rapidly growing technology.
CARB's plan would also set new standards for sustainable aviation fuel and add rules to protect Amazon rainforests amid an expansion of crop-based fuels.
Gov. Gavin Newsom has directed CARB to aggressively ramp up its climate goals and the proposed LCFS changes reflect the governor’s push for clean energy and zero-emission vehicles as well as the significant progress the state has already made in combatting emissions.
The current goal is to reduce the carbon intensity (CI) of gasoline and diesel fuels by 20% below 2010 levels. A boom in biomass-based diesel has led staff to bump that CI target to 30% by 2030 and to 90% by 2045, when the administration plans to achieve statewide carbon neutrality.
The agency calculates that the new LCFS amendments alone would cut greenhouse gas emissions by an additional 558 million metric tons and save $5 billion in annual healthcare costs by cleaning the air. The total net cost for administering the LCFS program would be $32 billion. Staff also reason that the transition away from less-efficient fossil fuels and into more energy efficient ZEVs and low-carbon fuel alternatives would save Californians more than $20 billion in fuel costs by 2045.
The proposed changes would add an LCFS tax to fossil-based aviation fuels starting in 2028, specifically for flights taking off and landing within the state.
The staff report notes that several airlines have set goals for investing in low-carbon sustainable aviation fuels and have released plans to reach carbon neutrality by 2050, while multiple refineries in California are in the process of transitioning facilities to produce bio-based alternative jet fuels.
CARB is also establishing new LCFS guardrails for crop-based renewable diesel. According to the report, the fuel generated 36% of the LCFS credits in 2022, followed by electricity at 24%, biomethane at 16% and ethanol at 14%. The state will continue to limit the portion of ethanol used in gasoline to just 10%, since changing the fuel regulations is beyond the scope of the LCFS rulemaking—adding further delays on a decision to adopt the higher ethanol E15 blend.
Michael Boccadoro, Dairy CaresYet board and staff worry that a rapidly rising demand for renewable diesel could drive global land use changes, converting forests for agricultural production. The amendments would require those fuel producers to track their feedstocks to the point of origin and certify they are not harming forests.
Paul Winters, a spokesman for Clean Fuels Alliance America, which represents renewable diesel producers, said the group would "evaluate the traceability proposal to ensure that producers can meet the requirements. For a number of years now, the state has implemented traceability and reporting requirements for used cooking oil. So, many producers in our industry are already used to meeting those requirements."
The draft regulation takes a more delicate approach to dairy digesters.
Throughout the two-year process for updating the LCFS standards, environmental justice groups have criticized the role of the dairy industry in the program. Advocates have pushed the board to drop its credits for digesters, calling the incentives a subsidy for industrial farms that allow them to grow larger and pollute disadvantaged communities.
The dairy industry denies the allegations, and CARB has found no evidence to back the claims. But several board members have heeded the calls and placed more scrutiny on digesters in LCFS.
Dairy Cares Executive Director Michael Boccadoro was relieved to see staff have “stuck to their guns” on science-based solutions.
He told Agri-Pulse that eliminating digester credits would have little effect on the overall LCFS program, but it would set the state far behind in its goal of slashing methane emissions 40% by 2030, a key component to its overall climate strategy. He was not surprised with CARB’s projection that doing so would nearly triple the overall LCFS cost, raising it to $85 billion, while also increasing emissions in socially disadvantaged communities.
Despite the agency support for digesters, the industry is apprehensive that LCFS prices will be high enough to fund additional digester projects going forward.
“While the general direction is positive, in terms of recognizing the importance of dairy and livestock continuing to participate in the LCFS,” said Boccadoro, “there's still some concern over whether or not it's sufficient to incentivize the projects and the investments that need to be made to achieve the state's goals.”
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He worried about excess credits that have accumulated in the system and whether CARB’s new LCFS mechanisms will work quickly enough to drive more certainty for marketplace investments.
Last year CARB passed its Advanced Clean Fleets rule, banning the sale of diesel-powered trucks by 2036. That led staff to adjust the LCFS rules to phase out biomethane crediting for natural gas vehicles after 2040. Instead, the LCFS amendments would incentivize through 2045 the use of biomethane to generate hydrogen as well as electricity to power homes and buildings.
Yet Boccadoro noted the steep challenge in developing the technology and infrastructure to replace all trucks with ZEV models, indicating compressed natural gas will continue to be a critical bridge fuel.
Sam Wade, who directs public policy at the Coalition for Renewable Natural Gas, stressed to Agri-Pulse that maintaining near-term incentives for continued investment in renewable gas “is critical if California is serious about achieving its overall climate goals.”
But the coalition opposes restrictions in the draft regulation on where and how renewable natural gas (RNG) is used, arguing it picks winners and losers and ignores the difficulties that come with decarbonizing California without RNG. Wade called it bad policy to sunset methane credits without a suitable replacement, reasoning it does not align with the established climate science. He urged CARB to take bolder actions to “unlock the full potential” of the LCFS in delivering climate benefits.
Sen. Ben Allen, D-Santa MonicaThe nonpartisan Legislative Analyst’s Office has found digesters to be the most cost-effective program in the state’s broad suite of climate initiatives, and UC Davis researchers project the state is on trajectory to more than meet its methane goal, owing to digesters.
The value of digesters has been further bolstered by CARB’s latest greenhouse gas inventory. The agency reported last month that overall emissions increased in 2021 but dropped more than 2% in agriculture, driven by methane reductions at dairies. Boccadoro pointed out that the number of digesters has doubled since then, meaning data for 2022 will reflect much more significant reductions.
Yet he warned that environmental justice interests could stall that progress. Last year Senator Ben Allen of Santa Monica urged the Legislature to cap LCFS credits and cut guarantees for digesters.
“We need to take a careful look at the program to ensure that we're not perversely encouraging the production of greater amounts of pollution for financial gain and that we're not unwittingly disincentivizing better, cleaner alternatives,” said Allen during a policy committee hearing on his Senate Bill 709.
Facing heavy industry opposition, Allen shelved the proposal. But Boccadoro expects Allen will revive the measure this month and add modest amendments to garner enough Democratic support to pass out of committee. If enacted into law, SB 709 could trigger yet another two-year LCFS rulemaking process and potentially undermine the proposed updates underway, according to Boccadoro.
“With that kind of uncertainty, there'd be no investment,” he said.
CARB is taking public comments on the proposed amendments until Feb. 20 and plans to vote on the regulation in late March.
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