California regulators should focus on more aggressive cuts to transportation fuel carbon, companies said during a month of comment as the state ponders its environmental goals.
Most respondents urged that the California Air Resources Board (CARB) mandate tougher Low Carbon Fuel Standard (LCFS) targets for 2030, with at least a third supporting a more than 50pc increase to reductions mandated by 2030.
But companies also warned that potential limits on credit generation could undermine investments in low-carbon technologies and impair the future of the program.
CARB staff have weighed options as LCFS program incentives shrink. The spot LCFS credit price has fallen by more than half over the past year as lower petroleum fuel demand and growing low-carbon alternatives flood the market with unused credits.
"The key concern now is whether the [carbon intensity] reduction targets remain ambitious enough to support LCFS credit prices, as the credit price has always been directly tied to the net deficit/credit generation," Oscar Garcia, west coast regulatory affairs manager for Finnish fuels producer Neste, said in comment submitted for the company.
LCFS programs reduce transportation fuel carbon intensity with maximum allowed levels that fall each year. Higher-carbon fuels that exceed the annual limit incur deficits that suppliers must offset with credits generated from the distribution of approved, low-carbon alternatives. CARB adopted a 20pc reduction target for 2030 back in 2018, doubling the target at the time.
Many of the filed comments urged CARB to go beyond a 30pc target for 2030 floated in a workshop last month.
But some also urged caution. CARB needed to provide more analysis supporting any new targets for 2030, the Western States Petroleum Association said in submitted comments. And Unica, the Brazilian Sugarcane and Bioenergy Industry Association, encouraged a slower process before the agency signaled changes to low-carbon fuels producers.
"CARB needs to allow for plenty of opportunities to discuss and exchange ideas, not chose winners and losers, and use the best science and data available to score carbon intensities that are a true reflection of their production processes," the association said.
Full credit
CARB staff last month also sought comment on whether to limit credit generation as it seeks to balance the program. Some credit generating technologies, such as electric forklifts, could be maturing beyond the need for incentives, staff suggested. Others, including fuels derived from crop-based feedstocks such as soy or corn, have drawn environmental concerns from some CARB board members.
Electric forklifts generated 6pc of all new credits produced in the first quarter of this year, according to the most recent CARB data. They were the sixth-largest source of new credits.
Soy-based renewable diesel made up 5.3pc of all new credits during the same period — less than half of the 11.3pc of credits generated from used cooking oil-derived renewable diesel.
A majority of comments on the topics warned against adding provisions to remove the ability of current fuels to generate credits.
"This is the wrong approach to take when the program achieves success in a sector like this," Don Gilstrap, Chevron's manager for fuels regulations, said in submitted comment echoed by a number of other companies. "If CARB sends the message that such credits will go away once investments have been made, it will discourage early technology adoption and investment in other sectors."
Agricultural groups urged CARB to continue regulating fuels by carbon intensity, rather than outright limits on feedstocks. CARB should also update their models to reflect the latest assessment of farming carbon intensity, and consider recognizing low-carbon practices with incrementally lower scores from specific farms, the groups said.
Several companies supporting using LCFS to encourage the installation of medium- and heavy-duty charging infrastructure with a capped volume of credits each quarter. But there was little consensus on a CARB question of whether to limit credits to publicly accessible stations.
CARB staff will hold another workshop Thursday to discuss the future of the program.
