What Renewable Fuel Producers Need to Know
On November 8, 2024, the California Air Resources Board (CARB) approved significant amendments to the state’s Low Carbon Fuel Standard (LCFS). These changes introduce new compliance requirements and opportunities, significantly impacting renewable fuel producers operating in California’s low-carbon fuel market. Below, we break down the key amendments and their implications for the industry.
Key Changes to the LCFS
Sustainability Requirements
- Third-Party Certification: Crop-based feedstocks will have to secure third-party sustainability certification from the point of origin to the first gathering point.
- Land Use Restrictions: Feedstocks can only come from land cultivated prior to 2008, ensuring no recent land conversions.
- Broad Criteria for Audits: Feedstocks will be subject to environmental, social and economic sustainability criteria during certification.
These requirements pose challenges for biofuel producers relying on crop-based feedstocks, as they may face additional compliance burdens and risks, including invalidation of credits for non-compliance.
The amendments introduce phased sustainability certification for biomass:
- 2026: Initial attestation required for non-waste biomass fuels.
- 2028: Partial certification of no deforestation.
- 2031: Full certification with chain-of-custody documentation.
These stringent requirements could discourage participation from some farmers and elevators, potentially reducing feedstock availability for biofuels.
The sustainability requirements are expansive, encompassing biodiversity, soil quality, water quality and pollution management. Additionally, new obligations for geographical data (e.g., shapefiles) and compliance audits could impose operational and financial burdens, particularly for smaller producers.
Addition of Specified Source Feedstocks (SSFS)
Corn stover and forest waste have been added as SSFS, expanding the range of feedstocks eligible for credits. However, attestation letters will now be required for all SSFS.
Land Use Change (LUC) Adjustments
CARB has gained the authority to revise LUC values upward.
Caps on Biomass-Based Diesel Credits
- Biomass-based diesel from soybean, canola and sunflower oil will be capped at 20% of total credits per producer.
- Credits exceeding this threshold will be assigned default carbon intensity (CI) scores starting in 2025 for new pathways and 2028 for existing pathways.
Less Intensive Verification for Electric Reporting
CARB has introduced less intensive verification, allowing site visits once every 3 years instead of annually, for electric reporting but has not extended this approach to renewable fuels, raising concerns about the program’s “technology-neutral” mandate.
Carbon Intensity Benchmarks
CARB has adjusted CI benchmarks to increase stringency:
- 2025: A 9% reduction from 2018 levels, resulting in a 22.75% CI reduction.
- 2030: The target increases from 20% to 30% decarbonization, intensifying the program’s goals.
- Automatic Acceleration Mechanism: Starting May 2027, CARB will announce quarterly whether the mechanism has been triggered to accelerate CI reductions further.
GREET4.0 Model Adoption
- 2024 Reports: Existing pathways must transition to the CA-GREET4.0 model or associated Tier 1 calculators.
- New Applications: Pathways certified after January 1, 2025, must use the GREET4.0 model.
- Land Use Change Values: CARB may assign more conservative LUC values based on empirical data, impacting feedstocks not listed in the standard table.
Verification and Reporting Updates
- Site visits for quarterly fuel transaction reports must now occur at the central records location, adding logistical considerations.
- Updated sampling plans and sustainable biomass certificates will be required to verify compliance.
Looking Ahead
The finalized LCFS amendments underscore California’s commitment to aggressive decarbonization. While these changes aim to enhance sustainability and market efficiency, they impose significant new compliance challenges for renewable fuel producers.
Action Steps for Producers
- Review and update your compliance strategies to meet sustainability certification requirements.
- Transition to the GREET4.0 model for reporting by the specified deadlines.
- Engage with suppliers and stakeholders to align on the new attestation and documentation requirements.
For detailed guidance on navigating these changes and ensuring compliance, our team at Christianson is here to help. Contact us today to discuss how we can support your compliance needs under the updated LCFS program.
