CARB’s opportunity on low-carbon fuels

The California Air Resources Board (CARB) will soon initiate a series of regulatory proceedings on different programs to cement the ambitions of the 2022 Scoping Plan into state policy. One of the first – and perhaps the most consequential – will be the Low Carbon Fuel Standard (LCFS).

The LCFS is one of the state’s most important climate programs. It generates billions of dollars each year to incentivize the uptake of alternative fuels to replace gasoline and diesel. The program’s existing goal is to reduce the carbon intensity of the state’s transportation fuel pool by 20% by 2030.

A net-zero by 2045 target creates a new challenge for CARB leadership, who will need to balance a two-part policy agenda. On one track, they will need to continue to deliver mature low-carbon fuels into the market to achieve near-term emissions reductions. As a market-based mechanism, the LCFS is suited to this task. On a separate track, they will need to speed the adoption of newer zero-carbon and carbon-negative fuels, such as green hydrogen, synthetic fuels and advanced biofuels sourced from waste biomass. These fuels are essential to decarbonize hard-to-electrify sources in transportation and industry as well as (in the case of carbon-negative fuels) compensate for any residual emissions that may be left in the economy at 2045.

The LCFS currently provides some incentives for these technologies, but they are limited and unlikely to stimulate a level of deployment that would put the state’s net-zero target within reach. Put another way, there is a risk that the state’s emissions reduction trajectory plateaus in the 2030s – at the very point we need emissions reductions to be accelerating.

It is crucial that this policy gap is addressed in the upcoming LCFS rulemaking. The Board should direct staff to explore policy changes needed to speed key zero-carbon and carbon-negative fuel pathways such as synthetic fuels derived from direct air capture (DAC-fuels) and advanced biofuels with carbon capture and storage (BECCS). It is important that this direction is provided as soon as possible, given the current pre-rulemaking process already underway.

Pre-rulemaking raises concerns

As part of an LCFS pre-rulemaking, CARB staff are currently modeling scenarios that could deliver substantial transportation sector emissions reductions out to 2045. This modeling is expected to inform the official LCFS rulemaking (anticipated to commence early 2023) – where similar to the Scoping Plan the scenarios are used to inform potential new policy changes.

The current modeling is problematic as it places little to no emphasis on the need to speed the deployment of newer technologies required for economywide net-zero emissions by 2045. For example, the model projects zero fuels production from woody forest and agricultural residues as well as zero BECCS. This is not only misaligned with the Scoping Plan, but numerous other state policies at sister agencies as well as direction from Governor Newsom to CARB Chair Randolph. Meanwhile, the model considers scenarios with ongoing dependence on crop-based fuels, creating multiple challenges from an environmental protection perspective.

We recommend that staff substantially revise this modeling prior to the rulemaking to more accurately reflect the portfolio of technologies that will be needed to make the push for net-zero by 2045. In the interim, we encourage parties to engage in this important pre-rulemaking process.

To view Conservation Strategy Group’s feedback letter to CARB, click here. For those interested in submitting comments, visit the webpage (comments due December 9th).

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