Thank you for the opportunity to provide comments on the
recent summer 2022 CARB Workshop. As the largest developer of dairy
biogas projects supplying the California LCFS, Maas Energy Works is
grateful for the market opportunity presented by CARB’s LCFS
program.
We look forward to working with CARB to achieve the
methane mitigation goals laid out in CARB’s March 2022
“Analysis of Progress toward Achieving the 2030 Dairy and
Livestock Sector Methane Emissions Target.” As detailed
therein, the dairy digester industry has rapidly deployed
biomethane projects on a level that was unheard of five years
ago.
Until 2015, our company was almost exclusively focused on
building digesters that would combust their biogas onsite in a
lean-burn internal combustion engine to create electricity for
delivery to the power grid. As the LCFS program and other state
policies, such as SB-1383 and the California Department of Food and
Agriculture’s Dairy Digester Research and Development
Program, emerged and matured in the second half of the past decade,
the dairy digester business model changed. These state programs
encouraged developers to abandon the power generation business
model and instead switch to pipeline injection of biomethane. As
stated by many state agencies at the time, the switch to these new
injection projections would achieve a variety of air quality, short
lived climate pollutant, and other statewide goals.
As a business proposition, the switch to pipeline
injection looked daunting. Gaining access to the natural gas
pipeline is much more expensive and slower than power grid access.
The size and scale of digester projects had to increase 5-10 times
to make pipeline injection a reality. Our industry had to raise
large sums of money, prove out new technologies, and take
substantial other risks to build this new system. Furthermore, in
terms of simple commodity prices, natural gas has a lower market
value in California than electricity.
The digester industry’s switch to pipeline
injection made no sense but for one fact: the potential revenue
from pipeline injected biomethane was much higher due to the
premium created by supplying this gas into the LCFS market (RFS
values were much lower at the time). So at the request of the
state, we made the switch. Many other companies made similar
investments in dairy biomethane, such that Compressed Natural Gas
is now the first fuel in California to be net carbon negative.
I can happily report that CARB has largely maintained its
technology neutral approach to the LCFS and thus rewarded those
fuels that create the largest carbon intensity reductions. However,
changes in the overall fuels market have put in danger the
investments in low carbon fuels that we and others have made. If
the state wants to continue encouraging companies to grow the
biomethane industry and other low carbon fuels, we suggest two
changes to the program.
Lower LCFS Planned
Reductions from 20% to 30%.
First, we support
increasing the target reduction from 20% to at least 30% by
2030, implemented beginning in 2024. Technologies and investments
have proven that such reductions are achievable with existing
technology in the near term. Without such a change, LCFS runs the
risk of being a victim of its own success. That is, companies
respond to the CARB program by supplying so many low-carbon fuels
that the market becomes saturated. This kind of over-supply cycle
is common in renewable energy and low carbon incentive programs and
the resultant losses of businesses in these markets can serve as an
object lesson to others and create a chilling effect on future
businesses and investors. Thankfully, CARB does not have to allow
this to happen. The LCFS rulemaking process gives CARB the ability
to respond to real world developments such as the success of many
low carbon fuels businesses, and the drop in transportation fuel
consumption due to COVID and the growth of ZEVs. We encourage CARB
to use that authority now to prevent an oversupply situation, and
all the detrimental impacts that follow therefrom.
Limited Cultivated
Biofuels to Prevent Oversaturation
Second, on the topic of oversupply, we support a cap on
the quantity of lipid-based, non-waste feedstocks for biofuels
dispensed in the LCFS. We recommend a limit based on the amount of
biofuels supplied to California over a historic period prior to the
LCFS implementation. As a company dedicated to recovering
naturally-occurring gases from manure, we are very aware of the
difference between harvesting a waste product for beneficial use
and growing lipid-based feedstock simply for energy production. The
dairy biogas industry is routinely scrutinized to prove that our
LCFS benefits result from truly additional reductions in methane
emissions. We cannot increase the amount of manure in the country
simply to create more carbon-negative fuel and thus claim more LCFS
benefits. But some portions of the biofuels industry can perform
exactly that feedstock multiplication to increase their volume in
the program. Left unchecked, this practice will flood the LCFS
market with farmed energy crop fuels.
Thank you for your consideration of these comments.