Almost 80% of California’s $4 billion clean transportation program went to subsidizing combustion fuels, rather than zero-emission vehicles and infrastructure last year — an imbalance that’s wildly out of step with the rest of California’s climate and environmental justice policy framework. In December, staff at the California Air Resources Board (CARB), which oversees the program, put out a proposed amendment to extend these practices decades into the future. It drew strong criticism in public comments from a wide range of organizations and experts, which has resulted in a delay in the CARB board’s vote on the staff proposal.
Perhaps most striking, Jim Duffy, a former staffer who oversaw the Low Carbon Fuel Standard (LCFS) program for more than a year, decried its “transition from an innovative regulation into a swag bag for venture capitalists, big oil, big agriculture, and big gas, increasingly coming at the expense of low- and moderate-income Californians.”
“Throughout these comments, I urge the Board to adopt many of the recommendations from the Environmental NGO and Environmental Justice Communities,” Duffy wrote. “Industrial stakeholders will lead you to believe that these recommendations are a radical departure from the history and philosophy of the LCFS. The truth is that most of the LCFS provisions and credit-generating opportunities that the environmental community wants to eliminate, phase out, or amend were not allowed in the original regulation.”
Under the original provisions, Duffy noted, “Dairy projects did not receive avoided methane credit and would have been assessed approximately the same carbon intensity as landfill gas.” Also, “Soy biodiesel and renewable diesel were only marginally better than fossil diesel and included a very large land use change penalty that more accurately reflected the likelihood that using soy oil to produce fuel indirectly contributes to tropical deforestation.”
As for the recommendations Duffy referenced, one comment letter — signed by 39 groups, including the Center for Biological Diversity, East Yard Communities for Environmental Justice, and the Center on Race, Poverty & the Environment — warned that “the LCFS proposed by staff is misaligned with electrification goals, worsens environmental injustices, and will continue to flounder from a glut of lipid-based biofuels and livestock biogas that will undercut the credit price.”
Another joint comment — signed by 30 groups, including Earthjustice, SEIU, 350.org and Communities for a Better Environment — warned that “In contrast to California’s groundbreaking regulations designed to accelerate zero emissions transportation options, the LCFS continues to favor combustion-based biofuels and biogas that contribute to pollution,” and that as a result, “CARB staff’s proposal passes regressive costs onto drivers for dubious benefit.” Its recommendations included an end to special treatment for biogas: “Direct CARB staff to initiate a rulemaking to directly regulate methane emissions from manure management to achieve the methane reductions required by Senate Bill 1383,” as well as “Capping the unrestricted use of lipid-based biofuels.”
Separately, Earthjustice wrote, “Unless major modifications are made, the Staff Proposal would further entrench LCFS subsidies for combustion fuel pathways that exacerbate climate and environmental injustices. … Major changes are needed in this rulemaking to ensure the LCFS supports rather than thwarts attainment of California’s climate, air quality, and equity goals.”
While the LCFS is complex, and the weightiest comments are as well, the basic choice was potentially simplified last August, when CARB’s Environmental Justice Advisory Committee approved an alternative proposal, two key elements of which were “reasonable and consistent with CARB priorities,” resulting in “faster and greater support for CARB EV policies,” according to a Stanford University study headed by Michael Wara. The EJAC alternative more than doubled electric vehicle subsidies through 2030, from $15 billion up to $34 billion. The two key elements are: first, a cap on crop-based biofuels and second an end to “avoided methane” credits for methane captured at dairy farms. The over-supply of these two fuels has decimated the program’s credit market, depriving the program of funds needed for electric vehicles and infrastructure.
The Bio-Fuel Mirage
Crop-based biofuels have exploded most dramatically — particularly renewable diesel (RD), made from fats and oils to be identical to fossil diesel, unlike the earlier product, bio-diesel, an additive like ethanol that can only be used when blended. Bio-diesel and RD are collectively known as bio-based diesel, and they now account for 59% of diesel in California — but much less nationwide. U.S. RD production increased 400% between 2019 and 2022, and it is set to double again this year, according to Jeremy Martin, director of fuels policy at the Union of Concerned Scientists. As with electric vehicles, California has led the way: bio-based diesel now accounts for almost 60% of diesel in the state. But there’s a difference: electric vehicle sales are booming across the U.S., but RD consumption — already low outside California — is actually decreasing nationwide outside California. It’s not a scalable long-term solution, but a mirage we could never get to.
To convert all U.S. diesel to RD in 2022 would have taken 10 times the total U.S. vegetable oil production or 80% of global production that year, Martin explains. And that says nothing about gasoline. In short, RD is a supplemental short-term energy source in the grand scheme of things.
Even in the short term, increasing supply puts pressure on food prices and agriculture, threatening deforestation that only makes the climate crisis worse. The models CARB uses to assess such systemic costs (known as ‘indirect land-use change’ — ILUC) are seriously out-of-date and produce outlier values, according to a recent survey by the Environmental Protection Agency, indicating that CARB’s ILUC estimates are “too low — and perhaps significantly too low,” Wara and his team wrote in their comments. What’s more, Wara’s team and others are still waiting for CARB staff to release data underlying CARB’s analysis. The uncertainty involved further supports the EJAC call for capping biofuel credits — at the very least until more trustworthy modeling data can be evaluated.
Dirty Dairy Gas
The situation with “avoided methane” credits for methane captured via digesters at large-scale dairy farms is even more at odds with California’s climate goals. At the same time, it gives favored treatment to the most polluting farms. Dairy digester methane is treated, unlike methane in any other sector. Instead of being directly regulated with a goal of reducing it to zero — which CARB is authorized to do this year, according to a 2016 law — the methane itself is treated as an inevitable product of milk production. So any methane captured by digesters is treated as a positive transportation good far exceeding that of wind- or solar-generated electricity.
By CARB’s metric of “carbon intensity” (CI), renewable electricity may have CI of zero, but digester methane is given a CI of a mind-boggling -245, the only fuel with a negative CI. As a result, Earthjustice noted in its comments, “Despite making up less than 1% of fuel energy used in the state, livestock methane is extremely negative, outlier CI scores has allowed it to receive almost 20% of the credits in the LCFS program to date. In other words, livestock methane significantly dilutes the supply of LCFS credits relative to the actual fossil fuel displaced.”
The lack of logic is staggering. “Nothing about livestock methane’s chemistry makes it better than landfill or wastewater methane at fighting climate change,” Earthjustice noted. “Instead, it receives extreme, outlier carbon intensity scores purely because CARB has neglected to treat agriculture the way it treats virtually every other major source of GHG emissions.”
The illogic is deepened by the fact that California has an alternative manure management program that provides financial assistance for implementing non-digester manure management practices, such as composting and conversion to or expansion of pasture-based systems.
“Transportation fuel regulations are not the right tool to reduce dairy methane pollution,” Martin argues in a mid-February article. “As a general rule, public policies are more effective when they directly address the problem they are trying to solve.” He goes on to illustrate the problems of the indirect LCFS approach, proposing “a Low Carbon Milk Standard that operated alongside the LCFS. This hypothetical Low Carbon Milk Standard [LCMS] would resemble the LCFS but focus on milk rather than gasoline and diesel. It would assign a carbon intensity score to milk sold in California and set a steadily decreasing standard for the industry.”
While opponents of directly regulating dairy methane argue that it would drive dairies out of California, Martin explains that an LCMS would apply to out-of-state milk as well as in-state milk — just as the LCFS applies to out-of-state energy. So there would be no escaping the regulatory requirements for those wishing to sell milk in California. And it would be equitable: It would not give special treatment to the largest farms, using the most environmentally damaging methods.
In its comments, Earthjustice noted that “virtually all” the CARB board members who spoke about livestock methane crediting raised concerns, and quoted from six of them, after which it stated, “The Board thus clearly indicated support for reducing avoided methane crediting practices relative to the initial proposal from September. Yet, Staff have swung wildly in the other direction in the Staff Proposal. To our knowledge, it is unprecedented for the Staff to advance a major policy change that runs directly counter to the stated concerns of many Board members.” [Emphasis in original.]
Other Problems And Opportunities
While capping crop-based biofuels and ending credits for dairy methane are the two most consequential changes advocated, there are other bad practices to eliminate. An example from the group comment by Earthjustice, SEIU, CBE and others is “Eliminating credits for Direct Air Capture (DAC).” It goes on to explain:
A DAC facility in Louisiana has no apparent bearing on the carbon intensity of California’s fuels, yet the CARB staff proposal would allow such projects to generate credits. Further, any project that aims to reduce atmospheric carbon by capturing carbon in the ambient air will fail to achieve net emissions reductions if those reductions are offset by further pollution from fossil fuels in California, the effective impact of including such projects in the LCFS.
That same comment also calls for prohibiting credit for projects that use enhanced oil recovery (injecting heat, water, chemicals, or gasses into the oil reservoir): “The Legislature and Governor have made clear with the passage of SB 1314 that enhanced oil recovery has no role to play in meeting California’s carbon neutrality goals. Accordingly, such projects should not generate LCFS credits.”
There are also positive changes to be made. The same letter cites two related to mass transit. First, “Adopt a credit multiplier for zero-emission mass transit vehicles, including school and transit buses.” The comment goes on to explain:
The Scoping Plan [adopted by CARB in 2022] calls for a massive reduction in vehicle miles traveled to meet State goals. The LCFS’ current methodology undervalues zero-emission mass transit vehicles’ contributions to reducing the carbon-intensity of California transportation fuels by ignoring their ability to help shift more Californians out of dirtier single-occupancy vehicles.
Second, the letter recommends, “Allow full credit-generation for fixed-guideway systems (e.g., light rail and trolley buses),” and explains:
Functioning, zero-emission transit agencies are vital for the mobility of low-income Californians and for reaching climate targets. Currently, the LCFS imposes a unique penalty on transit agencies by reducing their ability to generate credits for vehicles on fixed guideway systems installed before 2011.
There are many more technical points raised in different comment letters. But they all come down to one thing: whether to continue the current path with minor tweaks, as CARB staff proposes, or reorient and refocus on the LCFS’s original goal of a zero-emission future. In his letter, Duffy summed up:
At this point, the LCFS gravy train has gained so much momentum that the only recourse from the staff’s perspective is to quickly ramp up the targets, risking large costs to low-income gasoline consumers and public backlash. However, there is another option. Restoring many aspects of the original regulation would better focus the program on achieving California’s long-term zero-emission transportation goals and at a much lower cost to the California consumer.
CARB staff has promised a mid-April workshop “to discuss potential refinements to the proposed regulatory amendments.” But given the breadth and depth of comment letter criticism, a much more fundamental rethinking is called for.