State low carbon fuel programs are currently in place in California, Oregon, and Washington, each in various stages of development and undergoing significant rulemaking amendments. These amendments have direct implications for biofuel producers, especially with new sustainability requirements and changes in carbon intensity (CI) targets.
Detailed below are some of the key changes to each state’s low carbon fuel program. Please note, none of these amendments are finalized. Our team has been participating in the rulemaking process through calls, participation on rulemaking committees, and in the submission of public comments in hopes that some of the proposed changes include our suggestions.
California
California is expected to finalize amendments to its Low Carbon Fuel Standard (LCFS) as early as November 8, during a public hearing held by the California Air Resources Board (CARB). If approved, these changes are anticipated to take effect in early 2025.
Key proposed amendments:
- Feedstock Caps: The proposed amendment would impose a 20% cap on LCFS credits for soy, canola and sunflower-based biodiesel and renewable diesel.
- Sustainability Requirements: New sustainability requirements for biomass feedstocks. All biomass, “from the point of origin to the first gathering point” used in pathways, except Specified Source Feedstocks (SSFS), fall under a continuous third-party sustainability certification from an approved system. CARB will review other certification systems, but the EU RED certification system will be approved in the rules.
- Carbon Intensity Benchmarks: Raising the 2025 CI benchmark reduction from 5% to 9%.
- Expanded Specified Source Feedstocks: Inclusion of forest waste and corn stover as a specified source feedstocks (SSFS).
- Biomethane Book-and-Claim: CARB proposes to allow book-and-claim accounting of biomethane to produce electricity for EV charging.
- Changing the determination for triggering the Automated Acceleration Mechanism: Under the proposed updates, staff will consider the most recent four quarters of reporting and make a quarterly announcement regarding whether the Automated Acceleration Mechanism (AAM) was triggered, rather than an annual announcement.
- Less Intensive Verification: Less intensive verification allowed for electricity reporting only, reducing the verification burden of site visits on electricity-based fuels.
- Fossil Fuel Exemptions: Restoration of the existing exemption for fossil jet fuel.
- Phasing Out Fossil-Fuel-Based Hydrogen: By the end of 2035, LCFS credits for hydrogen produced from fossil fuels will be phased out, encouraging a shift toward renewable hydrogen production.
- Attestation System: Creation of an attestation system for specified source feedstocks.
Oregon
Oregon released its latest draft rulemaking changes in early August 2024 and held two rulemaking meetings to discuss the updates. The proposed amendments are designed to align Oregon’s Clean Fuels Program more closely with California’s LCFS, while introducing several state-specific provisions. Finalization could be by the end of 2024 or early 2025.
Key updates include:
- OR-GREET Model Updates: The Oregon GREET model (OR-GREET 4.0) will be updated effective January 1, 2026. This model is used to calculate CI scores, ensuring that Oregon’s CI calculations are in sync with California’s updated methodologies.
- Third-Party Verification: Electricity reporting entities and fuel pathway applicants will be subject to third-party verification.
- Carbon Capture and Sequestration (CCS) Projects: Additional requirements for CCS projects will include a reserve account, where Oregon’s Department of Environmental Quality (DEQ) will permanently hold between 8-16.5% of credits attributed to CCS projects.
Washington
Washington’s Department of Ecology released its latest draft rule at the end of August, with two public workshops held in early September. This round of amendments is focused on aligning the program with recent state legislation promoting sustainable aviation fuels, streamlining compliance procedures, and introducing additional third-party verification measures. Rule finalization is expected to take place in early 2025.
Key amendments include:
- Requiring Verification and Validation: Adding a third-party verification requirement which establishes Sept. 15 as the verification statement due date.
- Less Intensive Verification: All transactions will be eligible for less intensive verification, which allows for site visits once every three years, rather than annually.
- Attestation System: Creation of an attestation system for specified source feedstocks.
- Verification Body Rotation: As in California and Oregon, Washington will mandate verification body rotation every six years.
- CI Pathway Development: Part 6 of the rules, focused on obtaining CI values for fuel pathways, is still under development. Draft language is expected soon, which will have implications for producers needing clarity on how CI will be assessed for new fuel types.
- Sustainable Aviation Fuel Support: New provisions to align the program with legislation promoting sustainable aviation fuels (SAF), opening new opportunities for biofuel producers targeting the aviation sector.
Please contact us if you have questions on any of the state programs or would like to view our public comment letters.
