California Poised to Modify Fuel Standard to Account for High-Carbon Feedstocks

By Carolyn Whetzel

LOS ANGELES—The California Air Resources Board on Dec. 16 will consider a series of amendments to the state's landmark low-carbon fuel standard, including a provision to better account for the use of crude oil derived from energy-intensive sources like Canada's oil sands.

The revisions, proposed by CARB in October, aim to refine and strengthen the regulation, the agency said.

Adopted in April 2009 and effective a year later, the low-carbon fuel standard is designed to reduce greenhouse gas emissions from transportation fuels 10 percent by 2020. (See related story; 77 WCCR, 4/24/09.)

The regulation establishes methodologies for calculating the lifecycle emissions of all vehicle fuels—specifically measuring the level of greenhouse gas emissions associated with the production, distribution, and consumption of gasoline and diesel fuels and their alternatives.

Accounting Approach Criticized

CARB's regulation set increasingly strict annual performance standards for the fuels, beginning in 2011 and continuing through 2020. Fuel producers, refiners, importers, and blenders must demonstrate that the mix of fuels they supply meets the annual standards by either selling compliant fuels or purchasing credits.

The new accounting approach for high-carbon fuels has drawn much of the criticism. A provision designating electric utilities as the regulated entity that will receive credits under the standard for electric vehicle charging equipment in homes and apartment buildings also has come under attack.

Western States Petroleum Association spokesman Tupper Hull criticized CARB's proposal to require fuel providers and others to account for changes in the carbon intensity of petroleum fuels due to an anticipated increase in use of high-carbon feedstocks.

“All crude should be treated the same,” he told BNA Nov. 22, adding that the methodology does not make environmental or economic sense.

It would encourage “crude shuffling,” he said, explaining that the crude oil supplies closest to California would go elsewhere, and low-carbon crude would be imported from far away “just to meet this low-carbon fuel standard.”

The carbon content of fuels also has been at the center of a disagreement between the European Union and Canada. The European Commission proposed in October that EU legislation consider fuel derived from oil sands such as Canada's to be 22.3 percent more emissions-intensive than fuel from conventional crude oil. Canadian officials have lodged protests. (See related story; 208 WCCR, 10/25/11.)

Electric Vehicle Service Companies Concerned

Newly established private companies that provide electric vehicle services and “smart” EV charging products are concerned that their ability to earn credits and ultimately their viability is jeopardized by CARB's proposal to designate electric utilities as the credit recipients.

They take issue with CARB's proposal, which would allow utilities to earn credits through electric vehicle infrastructure. The electric vehicle service companies want to be eligible for the credits themselves, and say they would use the proceeds to invest in modernizing the vehicle charging infrastructure.

Other proposed amendments would allow exempted fuel providers, including out-of-state firms, to opt into the program; streamline the certification of new methodologies, or fuel pathways, for calculating the carbon intensity of fuels; clarify CARB's process for tracking credits and deficits; simplify various reporting requirements; and revise the “energy economy ratios” for heavy-duty vehicles that burn compressed natural gas.

CARB's proposed changes, however, would not update the regulation to integrate new research on calculating the lifecycle emissions for corn-derived ethanol fuels.

The agency said it would be late 2012 before it could consider modifications involving the analysis of indirect land use change, which considers emissions arising from farmers converting forests to cropland to grow food grains for energy.

A year ago, CARB agreed to update the indirect land use change analysis to reflect new data that would eliminate a “penalty” on corn ethanol that the Renewable Fuels Associations said was unfair. (See related story; 225 WCCR, 11/19/10.)

CARB's governing board is expected to vote on the proposed amendments following the public hearing Dec. 16 in Los Angeles.