A surprise proposal to limit California incentives for diesel-alternatives brewed from soybean or canola oils found few supporters as public comment on proposals for the state's Low Carbon Fuel Standard (LCFS) wrapped up today.
Fuel producers warned the idea violated state administrative procedure and would upend North American supply chains while environmental detractors said the proposal fell short of accomplishing the state's goals of transitioning to zero-emissions vehicles.
"We would like to see a more rigorous and science-based approach employed here," requested one comment from the anti-petroleum fuel group Sunflower Alliance. "One that more effectively discourages, and not just somewhat reduces, the use of virgin oils in renewable diesel production."
The California Air Resources Board (CARB) earlier this month proposed limiting suppliers of diesel alternatives made from the crop-based feedstocks to generating LCFS credits from no more than 20pc of the volume a company supplied each year. Staff said that the proposal reflected California's efforts to switch away from combustion engines entirely, and to avoid creating any incentives to convert protected land to grow biofuel feedstock crops.
CARB has scheduled an 8 November public hearing on the rulemaking proposal and targeted full adoption of the changes by the second quarter of 2025.
LCFS programs require yearly reductions in transportation fuel carbon intensity. Higher-carbon fuels that exceed the annual limit incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives.
The combination of these incentives and US biofuel blending mandates helped spur a build out of renewable diesel capacity that grew more swiftly than regulators or some companies imagined. The fuels now inundate west coast LCFS programs, swelling credit banks in California and Oregon that have in turn sent credit prices plummeting.
Soybean-based renewable diesel made up about 15pc of the physical fuel supplied in California during the first quarter, according to state data. But the feedstocks generate relatively few credits compared to tallow — 19pc of all new credits in the first quarter — or used cooking oil, at 8.1pc of new credits. Soy-based renewable diesel generated 3.5pc of new credits in the first quarter.
The rapid replacement of petroleum-based diesel and opportunity for crop-based fuels raised criticism that the LCFS may smother opportunities for zero-emissions vehicle adoption, a key California goal for in-state transportation. Environmental groups have warned that the programs could extend, not hasten the end, of combustion drive trains, and risk encouraging the continued use of petroleum fuels.
Suppliers meanwhile described a blindsiding. The proposal included a three-year grace period for companies already supplying fuels primarily from those feedstocks, allowing time to convert to new sources. But the allowance would not apply to companies that had not supplied fuels in 2023. That excluded a producer such as Braya Renewables, which said that after beginning to send fuels from its Come-by-Chance facility to California earlier this year it would have little opportunity to make the supply chain changes CARB proposed.
Other suppliers with recently certified pathways using the feedstocks included large producers already drawing from a diversified portfolio of feedstocks; Chevron-owned REG, PBF Energy joint venture St Bernard Renewables and Valero joint-venture giant Diamond Green Diesel all had facilities approved alongside tallow, used cooking oil and other sources this year. US independent refiner CVR Energy, which has since ramped up a pre-treatment unit supporting its 7,500 b/d renewable diesel plant in Wynnewood, Oklahoma, also received approval for soybean oil renewable diesel this year.
A pair of Iowa biodiesel plants also received their approval in the first half of this year.
"None of this is necessary to achieve CARB's environmental goals because a sophisticated and technology-neutral mechanism is already in place," said Todd O'Malley, chief executive of Canadian renewable diesel producer Braya Renewable Fuels.
