Comment Log Display

A2O Comments on LCFS Regulatory Amendments filed September 28, 2011
 using the comment submittal form located at: 
http://www.arb.ca.gov/fuels/lcfs/regamend/regamend.htm
with Courtesy Email copies to:
asideco@arb.ca.gov,  fvergara@arb.ca.gov,  hchowdhu@arb.ca.gov,
jcoutis@arb.ca.gov, jduffy@arb.ca.gov, wingram@arb.ca.gov,
rcorey@arb.ca.gov, mwaugh@arb.ca.gov     

Thank you for the opportunity to comment on the proposed amendments
to the Low Carbon Fuel Standard (LCFS).  The comment period is very
limited.  Therefore, I will focus on the changes to §95486 that
have the greatest potential to make it prohibitive or even create a
unintended trade barrier for biofuel producers that wish to supply
California with cleaner burning low carbon fuels.

A 2nd Opinion, Inc.'s client, Neste Oil Corporation (Neste) is the
world's leading producer of renewable diesel fuel.  California is a
key potential market for this cleaner burning, NOx reducing, low
carbon renewable diesel fuel.  Therefore, we all (A2O, California
and Neste) have a vested interest in making sure that changes to
the LCFS regulations do not make it prohibitive to improve
California air quality while lowering carbon emissions.  The
proposed changes to §95486 may create unintended trade barriers
that make it more difficult to satisfy California's desires for
cleaner air and lower carbon emissions and reduce the authority of
the Executive Officer.  Because things that were legal under the
existing regulations may not satisfy the proposed changes, there
may be a conflict with Clause 1 of Section 10, Article 1 of the US
Constitution.

The most problematic revision occurs in §95486(a)(2).  The phrase,
"all important respects" is not defined.  We will explain why that
is a problem and suggest a revision that will not restrict low
carbon fuels producers' ability to supply California any more than
the current regulations.  I will now recap the existing regulations
and how the proposed regulations may help or hurt.

The existing regulation §95486(b)(2)(B) requires the regulated
party to use the Carbon Intensity value in the Lookup Table that
most closely corresponds to the production process used subject to
approval by the Executive Officer.  §95486(a)(3) of the existing
regulation requires that if the Executive officer disagrees with
the regulated party's choice, the Executive Officer "shall choose a
carbon intensity value, in the Carbon Intensity Lookup Tables for
the fuel or blendstock, which the Executive Officer determines is
the one that most closely corresponds to the pathway for that fuel
or blendstock...."  Under the existing regulation, the Executive
Officer must choose a value and does not appear to have the option
to determine that Method 1 does not apply.

§95486(a)(2) of the existing regulation requires a regulated party
for any other fuel or blendstock to use Method 1  unless the
regulated party is approved for using either Method 2A or Method
2B, as provided in section 95486(c) or (d).  In §95486(c) and (d)
the regulated party proposes and demonstrates pathways subject to
the Executive Officer's approval.  If the regulated party does not
propose a 2A or 2B pathway, the Executive Officer cannot approve
the use of the 2A or 2B pathway.  If he does not propose a 2A or 2B
pathway the regulated party must use Method 1.
The proposed new language for §95486(b)(2)(B) that requires a
regulated party to determine if the Carbon Intensity Lookup Table
contains pathways that correspond to the regulated party's fuel
pathways and then use the CIs from the table subject to the
Executive officer's approval might be a good improvement if the
proposed §95486(a)(2) language is revised.  It provides a way to
deal with feedstocks and processes that are not in the Lookup
Tables.

The proposed language in §95486(a)(3) that requires the Executive
Officer to rule out the use of Method 1 also provides a way to deal
with feedstocks and processes that are not in the Lookup Tables. 
It does however, undermine the Executive Officer's authority to
choose the Carbon Intensity that most closely corresponds to the
pathway for the fuel or blendstock when the biomass feedstock and
conversion process are in the Lookup Tables and save staff
man-hours.  Let me illustrate by use of a couple of examples.

It is easy to determine that there is no catfish to ethanol pathway
in the Lookup Tables.  Having the flexibility to "rule out the use
of Method 1"  rather than having to "choose a carbon intensity
value, in the Carbon Intensity Lookup Tables" expands the Executive
Officer's authority to deal with feedstocks and processes that are
not in the Lookup Tables.

The existing pathways include renewable diesel from soy beans.  The
regulated party who converts soybeans to renewable diesel is going
to select the same carbon intensities whether he "must use" under
the current regulation or "must determine...shall use..." under the
revised §95486(b)(2)(B).  Without the escape hatch that allows the
Executive Officer to "rule out the use of Method 1" the Executive
Officer has the authority to observe that most of the carbon
intensity of a renewable diesel is determined by the renewable
biomass selection and the conversion process used to transform it
to a usable motor fuel.  He has the authority to observe that
because the same work has to be done to produce the biomass
regional differences will probably be small and because similar
transformations must occur regardless of the sources of the soy oil
the energy and carbon inputs required to pretreat and transform it
to motor fuel will be of similar magnitude.  Without the escape
hatch the Executive Officer has the authority and actually the
obligation to choose a carbon intensity from the lookup table that
corresponds to the feedstock and process.  Without the obligation
competitors could file lawsuits arguing that the Executive Officer
did not have the authority to choose a carbon intensity and that
the Executive Officer exceeded the Executive Officer's authority.
The proposed change in §95486(a)(3) should be revised as follows: 

	"If Carbon Intensity Lookup Tables do not contain a fuel pathway
with a feedstock and conversion process that closely corresponds
with the regulated party's fuel pathway, as specified in 95486
(a)(2), the Executive Officer shall rule out the use of Method 1
for determining the regulated party's fuel carbon intensity."

This change would provide the authority to deal with feedstocks and
processes not contained in the Lookup Tables while preserving the
Executive Officers authority to move the LCFS forward and keep
staff resources focused on substantial Type 2A pathways or Type 2B
pathways.

The main problem with the proposed §95486 language occurs in
§95486(a)(2) with the sentence:  

	"In order to closely correspond with a Carbon Intensity Lookup
Table pathway, a regulated party's pathway must be consistent in
all important respects with the technical supporting document
behind that Carbon Intensity Lookup Table pathway."

The key cause of the problem is "all important respects" is not
defined.  If it includes only feedstock selected and conversion
process, one can conclude that the practical application of the
regulation has not changed and that the language changes are for
clarification.  On the other hand, if "all important respects"
includes all the line items in the typical "Table A. Summary of
Energy Use and GHG Emissions for the ..." that occurs in many
pathways or in an even worse case , all the entries in the CA GREET
model, the revised regulation limits renewable fuel supplies to
only those fuels that precisely match Lookup Table fuels.  Until a
very large number of Type 2A and 2B pathways are completed and
approved, this could create a supply shortfall that could
significantly increase LCFS compliance and consumer fuel costs,
create an unintended trade barrier or make something that was legal
under the existing regulation illegal.  To avoid excessive staff
work load and these potential problems the troublesome sentence
should be changed to:
	
"In order to closely correspond with a Carbon Intensity Lookup
Table pathway, the feedstock and conversion process used in the
regulated party's pathway should be similar to the feedstock and
conversion process used in the technical supporting document behind
that Carbon Intensity Lookup Table pathway." 

This concludes our comments on  §95486.  We are examining the other
changes and considering missing elements and will file comments as
time permits.