California considers jet fuel carbon

  • Market: Biofuels, Emissions
  • 11/10/22

California's bid to boost greener jet fuel demand could line up a dogfight with airlines and federal regulators.

The state's rekindled interest in lifting sustainable aviation fuel (SAF) demand with its Low Carbon Fuel Standard (LCFS) has scrambled airline opposition. A trade association warned that assigning penalties to petroleum jet fuel would run afoul of federal regulators. But state leaders have directed the California Air Resources Board to consider it.

"It is clear that achieving carbon neutrality means looking at reductions across all sectors," the agency told Argus. "We would be remiss not to consider aviation, especially intrastate aviation fuels."

LCFS programs require steady reductions in transportation fuel carbon intensity. California targeted a 20pc carbon intensity reduction by 2030 expected to begin setting tougher future standards early next year.

Higher-carbon, conventional fuels that exceed the annual carbon intensity limit incur deficits that suppliers must offset with credits generated from the distribution of low-carbon alternatives.

CARB allowed SAF to generate LCFS credits starting in 2019. Regulators at the time considered but decided against imposing deficits on petroleum jet fuel use. Staff in 2018 cited federal preemption in explanations of the decision to allow only SAF credits.

Federal law grants the Federal Aviation Administration (FAA) top regulatory authority over US jet fuel. But while state regulators such as California's may develop detailed standards for gasoline components in their markets, FAA requires jet fuel to meet specifications tested and qualified by engine manufacturers. The agency also limits SAF to 50pc synthetic blends.

Sustainability does not figure into those regulations. SAF is often misunderstood to describe a unique finished fuel, said Gurhan Andac, engineering technical leader for aviation fuels and additives at General Electric Aviation and chair of an ASTM task force studying fully synthetic jet fuel.

Sustainable SAF instead refers to the non-petroleum feedstocks and processes that produce jet fuel qualified for use in aircraft engines. The end result must look the same as petroleum jet fuel.

"The standards are about flight safety — is this jet fuel that we can accept into an engine on an airframe and have a safe flight?" Andac said. "The sustainability part — carbon index or in whatever form it might come — it's a separate platform."

Federal authority allows SAF to earn LCFS credits but preempts any state regulations shifting the composition of jet fuel, industry group Airlines for America warned early this year. The comments followed a December 2021 CARB workshop seeking feedback on adding targets for petroleum jet fuel. The association declined to comment beyond its filed remarks.

The US transportation, environment and energy agencies last month issued a roadmap to increase SAF production to roughly 196,000 b/d by 2030 and 2.3mn b/d by 2050. California reported 1mn bl of SAF use in the first quarter — 270 b/d.

Federal policies offer production tax credits to make the emerging output more competitive with petroleum fuel, similar to support for renewable diesel. The agencies' roadmap even briefly contemplates a future, federal LCFS to further encourage jet fuel use. But federal policies stop short of a mandate for airlines to use synthetic blends.

Governor Gavin Newsom (D) last month vetoed legislation directing CARB to contemplate new strategies to increase California's SAF use.

"While my administration appreciates the intent of this bill," Newsom wrote in a message explaining his veto, "there are existing opportunities for credit generation from sustainable aviation fuel production under the state's Low Carbon Fuel Standard."

Sky-high credit supply

California's LCFS credit prices have fallen under a record glut of credits. Rising supplies of renewable diesel, renewable natural gas and other fuels have headed west to capture the combination of state and federal incentives. Sluggish demand for CARBOB, which generated nearly 80pc of all new LCFS deficits last year, has meant credit retirements have not kept pace. Total unused LCFS credits surpassed 10.3mn in the first quarter of this year — more than double the new deficits generated during the quarter. The credits do not expire. Without offsetting jet fuel deficits, California could face another new, heavily incentivized fuel adding more weight to LCFS credit generation.

CARB staff have repeatedly stated that an upcoming rulemaking will seek tougher targets. Staff floated a 30pc reduction by 2030 in a July workshop. The agency has also entertained changes to both credit and deficit sources.

"We are exploring our ability to regulate instate fuels for all sectors," the agency said.


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22/05/24

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22/05/24
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22/05/24

Q&A: Over 100 entities trading Australia's ACCUs

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