The California Air Resources Board is proposing to cap the amount of renewable diesel made from soybean or canola oil that would qualify for the state’s low carbon fuel standard.
CARB’s proposed amendments to rules for the California LCFS also would require feedstocks such as soybeans to be certified as meeting sustainability criteria.
CARB also is proposing to continue an exemption from LCFS requirements for jet fuel; removing the exemption as the board had originally proposed could encourage the use of sustainable aviation fuel.
Under CARB’s proposals, released Monday, companies would be eligible for LCFS credits for no more than 20% of their biomass-based diesel that comes from soybean or canola oil.
Scott Gerlt, an economist for the American Soybean Association, said the 20% cap on credit eligibility “could be quite restrictive.”
During the first quarter of this year, biofuel sourced from soybean and canola oil accounted for about 30% of the renewable diesel that qualified for credits, he said.
The proposal also would likely increase credit prices and boost fuel costs in the state, he said. The cap “will lower the amount of credits that can be generated, which will pull back the supply somewhat and increase the credit price,” he said.
CARB will take comments on the proposed amendments through Aug. 27.
The proposals come as the industry is struggling with a collapse in prices for credits under both the California LCFS and the federal Renewable Fuel Standard at a time when production capacity continues to grow.
Paul Winters, director of public affairs for the Clean Fuels Alliance America, which represents biomass-based diesel producers, said large-scale renewable diesel refineries in California would have to rely on waste feedstocks, such as used cooking oil, under the CARB plan. Small, out-of-state producers that depend on vegetable oils will be put at a disadvantage, he said.
He said imported renewable diesel from Singapore that is made with used cooking oil would benefit from the LCFS.
Gerlt said it’s not clear how the sustainability certification requirement would be implemented but that it could favor producers that buy soybeans or canola from a fixed group of farmers. The requirement, which would be phased in starting in 2026, is aimed at ensuring that the crops aren’t grown on land that has been converted from forest or grassland.
The requirement would apply from the “point-of-origin up to the first gathering point,” under the proposal. “First gathering points may typically manage data for multiple farms or plots and staff proposes to focus on first gathering points as the point of regulation to make data collection and certification more feasible,” the proposal says.
Biofuel producers would also have to attest that “feedstocks have not been sourced from lands that were converted after 2008.”
Soybean oil would benefit from a CARB proposal to update the way that indirect land use change, or ILUC, is calculated for determining the carbon intensity scores of agricultural feedstocks.
Existing rules give U.S. soybeans the same ILUC score as soybeans sourced from Brazil or Argentina. Gerlt said the change could cut the carbon score for U.S. soybeans by more than a third.
