Low-carbon fuels in spotlight as California agencies set to review policies, update guidance

In proceedings before California energy and environmental agencies, the Engine Technology Forum called on policymakers to recognize the continued importance of advanced renewable biobased diesel fuels and maximize their roles and inclusion as essential decarbonization options.

The California Air Resources Board will consider major revisions Nov. 8 to its Low Carbon Fuel Standard. Separately, the California Energy Commission is revising its Renewable Portfolio Standard Guidebook, which establishes important guidance and credits toward achieving renewable energy goals in the electric-power sector. Both proceedings have significant implications for the future use of advanced renewable biofuels like biodiesel and renewable diesel.

“Both CARB and the CEC have important obligations in these proceedings this fall to promulgate effective and inclusive policies and guidance that will signal to the marketplace and to consumers that vehicle owners and businesses alike will have a full array of proven, available and affordable tools to reduce greenhouse-gas emissions without harming the economy,” said Allen Schaeffer, the executive director of the Engine Technology Forum.

As ETF noted in its comments to CARB, California’s goals for reducing greenhouse-gas emissions are ambitious and challenging for all sectors. It envisions near complete shifts from traditional internal-combustion engines (ICE) and liquid and gaseous fossil fuels to zero-emission vehicle (ZEV) technology.

Through gradually reducing carbon intensity of the fuel pool, low-carbon fuels such as biodiesel and renewable diesel have been a reliable success story in delivering near-term progress toward decarbonization. The proposed feedstock caps and “sustainability guardrails” on biofuel production proposed by CARB, however, impart a greater burden than benefit to Californians. Renewable fuel producers, petroleum suppliers and fleets that must rely on ICEs using low-carbon fuels to comply with the spirit of California’s ZEV/near-ZEV transition will be most impacted.

The use of low-carbon renewable fuels across this vast population of vehicles has contributed substantially to California’s progress and current success in reducing greenhouse-gas emissions. According to CARB’s own data (see Figure 1, LCFS Dashboard), the program in its present form is exceeding expectations in reducing carbon intensity from transportation fuels.    

These proposed amendments, however, seem certain to deter further progress from renewable fuel producers and their suppliers while undermining the viability of transportation fuel providers and driving up the cost of producing and supplying California’s unique transportation fuels.

The proposed amendments disrupt the predictable and orderly transition of the fuels industry in a way that unnecessarily increases costs to the economy and discourages investment in renewable low-carbon fuels. In its present form, it discourages improvements that could help California accelerate achievement of the continued progress toward the state’s climate goals, and through its leadership, the contribution of other states in helping to achieve national climate goals.

The proposed amendments’ increased stringency and diminished compliance tools will likely compromise technology neutrality by the elimination of pure market signals that incentivize the production of lower carbon-intensity fuels.

ICE-powered vehicles running on gasoline, diesel or natural gas are the dominant power behind California’s economy today. They are expected to continue to serve trucking and other sectors as the majority fuel type for decades to come, even as the state implements its policies that seek to transition only to ZEVs. As evidenced by consumer response, delaying or downgrading electric-vehicle investments and deferring introduction of new models announced by several vehicle manufacturers, the pace of electrification of the transportation sector (light-, medium- and heavy-duty vehicles) is proving to be uneven and uncertain. This elevates the importance and significance of having an effective and affordable low-carbon fuels policy available for all sectors.

As CEC updates its Renewable Energy Portfolio Standard Guidebook, as ETF noted in its comments, a significant deficiency in the current guidebook scope is that it is lacking appropriate recognition of hydrotreated vegetable oil (HVO), also known as renewable diesel, as a distinct qualifying renewable fuel in chapter 2.

While it can be produced using the same feedstocks as biodiesel, the chemical process to produce HVO is different and results in a far different fuel than biodiesel, which warrants its own specific and separate energy-resource listing in the guidebook. As a drop-in alternative to diesel fuel, HVO provides significant carbon reductions when compared to diesel fuel or lesser blends of biodiesel, and as such has a potentially significant role to play in the decarbonization of California’s electrical grid.

California’s ambitious climate goals demand a full range of solutions of fuels and technologies that are able to reduce carbon emissions. HVO is one of those solutions and should be included in the guidebook. Considering the sheer size of the diesel power-generation fleet in California, including HVO ensures that those utilizing diesel technologies will strive to maximize the use of renewable fuels, which has the potential for a significant reduction in greenhouse-gas emissions from the energy sector.