Transcript: Perspectives on Updating the Low Carbon Fuel Standard (CA Climate Policy Summit 2024)

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Jerilyn Lopez Mendoza (02:24:24):
Good afternoon folks, so we can stay on time. We’re going to get started.

My name is Gerald Lopez Mendoza. I’m the Los Angeles regional organizer for the climate center. I want to welcome you all to our panel discussion about the low carbon fuel standard, otherwise known as LCFS. We have a great lineup of folks talking with you this afternoon. And then we’re going to go till five o’clock and then we’re going to have a reception downstairs. No, I don’t remember in the ballroom where we were earlier today. So hopefully you’ll be able to stick with us. We only have one microphone in this room, so when we get to q and a, you’ll have to ask your question and then one of the panelists or our moderator will repeat it and then they’ll be able to respond to your questions. So with that said, I’d like to introduce you to our moderator, Michael URA of Stanford University.

Michael Wara (02:25:25):
Thank you, Jerilyn. Thank you all for hanging in here for the last panel of the day. I’m Michael Wara from Stanford’s Climate and Energy Policy Program at the Woods Institute for the Environment. And we have a pretty spectacular panel, so it’s going to be worth it that you stuck around. We have Sasan Sadat, who is a senior research and policy analyst at Earth Justice. Cheryl Leskowski, who is an environmental consultant and until recently was the director of the LCFS program within the Air Resources Board. And Phoebe Seton who is the co-director and an attorney at the Leadership Council for Justice and Accountability. I’m going to just speak for two minutes about the LCFS and then let our panelists take it away.

I just note that this program, when I think about this program, it’s really the first of California’s climate programs that was created after AB 32 as an early action measure. And it goes to the way back to a time when we thought cellulosic biofuels were going to be the way out of the transportation challenges that we faced when EVs were being retired because they relied on lead acid batteries. And it has evolved tremendously over time and one could think of that as sort of a lesson in adaptive management and responding to change circumstances. I’ve heard other people say it reminds them of a TOMA theory of physics where you’re just adding epicycles and complications to something to try to make it work better. I think it really depends on your perspective and we’re going to really try to have a conversation about the current stage of evolution that we’re in right now. The amendments process to the LCFS, which was recently put on hold. We’re not totally clear until when, but it’s an opportunity right now to really have a conversation about where we are in the program, the rapid evolution in the fuels markets that supply the program and how to think about the trajectory for the next few years and maybe even for the next few decades. So we’re going to lead off with Cheryl and then we’ll just get this party started. Please stick around and ask good questions.

Cheryl Laskowski, PhD. (02:28:01):
Alright. Hello everyone. I also thank you for sticking around this late. So I had my whole slideshow prepared and then I heard chair Randolph speak, the CARB Board chair speak this morning and I thought I wanted just to reframe things a little bit. So just bear with me on following my slides closely. When the chair talked this morning, she talked about a few things. She said, we need rapid zero emission vehicle deployments. We need unprecedented renewables on the grid and we need to minimize costs. I agree with all of that and I think that CARB with the LCFS update right now has an opportunity to do that. And so I think that the proposal that’s out there right now kind of gets at part of it but not the full amount of it. So where I was going to head is to talk about the key policy proposals and talk about both sides of the issue since we’ve got a pretty EJ focused side here is going to try to balance that with what CARB is going to be considering as they delve into these policies and the comments that they’ve gotten on their proposal.

But what I want to do is actually back up and say the reason that we need to talk about these policy proposals is because limiting the credit generation narrowly looking at the specific credit generation opportunities is really needed. And that’s not what the proposal has today. So I’ll walk through a little bit about that. So learning the LCFS in 30 seconds or less is not possible, but I will try my best. So the basic of LCFS is it’s designed to reduce the carbon intensity or the GH HG emissions of California’s transportation fuels over time. We do this by putting forth a declining benchmark. So that’s in that black and gray line that’s in the current regulation. So every year the stringency becomes increasingly stringent. The fuels that are dirty that are above that benchmark incur deficits, fuels that are cleaner and are below that benchmark generate credits and the credit generators sell their credits to the deficit generators and the deficit generators have to retire credits equal to their deficits every year. So it’s an annual compliance, but the credits, unless they’re retired, they never expire so they can hold onto ’em.

In the green. You can see that’s the historic compliance. The 2023 compliance should be out from CARB in the next six weeks or so, and it shows that we’re really over complying with the program. So the impact of the credits and deficits is in an effective market, you want to have a balance of credits and deficits or supply and demand. Right now, for the past few years we’ve had an oversupply of credits relative to deficit generation over performance of a regulation is a good thing. But the counter to that is that the price of those credits has been declining. And I’m going to go through why that’s important and that speaks to the two ways credits are generated. First, we have the alternative fuel producers, the traditional ones like ethanol, renewable diesel, hydrogen, RNG, they make a business case to produce fuels and based on the credit price and their revenue, they decide whether they want to continue to produce fuels.

They sell those credits to fossil fuel producers or the deficit generators, and that lowers their cost of producing that fuel or brings them some profit. On the other hand, if you have an EV and you charge it at home, you’re also generating, you’re using low carbon fuel, but you’re not just going to the store or wherever and buying it, you’re using at home. So the utilities are supplying low carbon transportation fuel in the form of electricity. So they are not making a business case for it. They have to supply it. And so carb gives these what are called base credits to utilities for that residential electricity charging. They’re the same types of credits as the other credits. They sell them into the market for deficit generators. But the difference here is that that funding that the utilities generate has to be used to further transportation electrification.

So while the other alternative fuels are a business case, the transportation electrification is almost forward thinking and reducing future costs because using it on transportation, electrification can be used for things like purchasing electric drainage trucks, transit buses, school buses. It can be used for public charging infrastructure worker retraining. And even in the proposal carb has proposed that it could also be used for grid side distribution infrastructure. So that speaks to some of Leanne’s points of we need to get to Zev deployment faster. We need infrastructure, we need the grid to become cleaner and we need to upgrade the grid. And so that part of the funding is really important for that. Transportation, electrification, all of them matter of what the credit price is. And so that declining the credit price is really impactful to all of them. So we want to be able to balance the market.

I’m going to switch ahead here. So there’s many ways to balance the credit market. So you could increase demand, you could decrease supply. By changing the benchmark you’re doing both. You are going to incur more deficits and you’re going to lower the credits. But the amount of credits lowered is going to be uniform across all of the credit generating opportunities. So it’s not targeted to, this fuel is going to generate fewer credits, it’s just proportional. They’re all going to generate fewer credits. So this is kind of a broad approach to changing the stringency or rebalancing the market. And in green is the current proposal that staff put out in December, it looks really aggressive. And so I think we can say, well, it looks like we’re on the way to making this program more robust, but by academics and even industry, everyone is saying that this is not even aggressive enough. So the step down in 2025, a 2030 target of 30% reduction and a 90% reduction in 2045 seems to be not going to keep pace with the amount electrification and renewable diesel production that we’re expecting.

What is the option? We could further increase the stringency of that benchmark, but again, that would lower the credit opportunities for all fuels. Or we could look at the different credit generating opportunities limiting some of those credit generating opportunities has never been done before in LCFS, but we’ve never been in this situation of such oversupply either. So no one who is a credit generator will want to have this proposal out there. And in fact, CARB has put forward a proposal for electric forklift crediting to be reigned in a little bit, and even that has caused just absolute chaos in the stakeholder world. So proposing additional targeted credit limiting policies would be very new for the program. But as Michael Waro said, the landscape is fundamentally changing. The whole transportation system in California is changing and we really have an opportunity for LCFS 2.0. So I know I’m getting close on time, so I just want to go through some of the reasons to consider focused credit reductions.

We have ZEV goals here in California that are unique, and so we have landmark regulations. And so we want to optimize where we are focusing this funding. So how much funding needs to go toward that transportation electrification versus how much should go to these other transitional fuels. The second is where are these fuels most needed? In the scoping plan itself, it says some of these fuels need to be used in other sectors like M methane. Well, unless CARB sends that signal directly and strongly in this regulation, people aren’t just going to leave the LCFS. It’s a lucrative incentive program. And so it needs to come from carb. And so we need to make sure that we’re sending the right signal for our own policies that we created in the scoping plan. I’m not saying that we closed by our refineries or we abandoned the infrastructure that we’ve already invested in.

I’m saying that we should look at return on investment, we should look at how much fuels are needed. And then also there’s other ways to incentivize those fuels in other industries and even other LCFS markets like New Mexico incentives shouldn’t be forever. And so I think it’s also an opportunity to look at who needs what incentives and for how long and how much avoided methane crediting is one thing that comes to mind. So what is the return on investment for infrastructure and how long do they need that? I’m not saying that they don’t need it at all, which might be different from others, but what does that timing look like? There’s certainly still a need for subsidies for alternative fuels. I’m not saying cut off all their subsidies. I’m saying we need to look at what that investment needs to look like for California and then the cost to consumer.

So there’s been a few articles recently, one talking about the pass through costs and how it’s going to be completely disruptive to gasoline buyers. And then there’s other narratives that say there’s no cost impacts at all. Well, I would rather talk about where we want to focus this money, and I think that that means targeted credit generation and not simply extending a benchmark schedule. I think that’s fine. I think that there’s other opportunities as well. So I know I’m over time, but on the rulemaking, we’re still in the early phase. CARB has been in the early concept phase for a few years now. That doesn’t mean that we’re any closer to being done. In fact, we’re still early on. So they put out their proposal in December. As Michael said they were going to go to the board in March, but they’ve delayed that. They’re going to have another workshop in April hopefully, to talk about the major changes that have happened since what they said in their workshops and the new concepts that were never workshopped and then there’s still more public process to go on. So I encourage you to continue to be part of that public process. There’s still a lot of potential for change and I’ll leave it at that.

Sasan Saadat (02:39:56):
Alright, thank you Michael. Thanks Cheryl. That was terrific and thank you everyone for staying late. I really appreciate it. I’m Sasan. I’m a senior research and policy analyst with Earth Justice. And because I’ve been given the very great privilege to stand in front of a microphone, I do feel an obligation to speak to you all today about the importance of the historic massacres happening in Gaza and the conflict in the Middle East. And as a group of people who I know, we believe in climate justice, I think we all owe it to insist on international solidarity for peace at every opportunity. And so I encourage you all to do that in whatever form or way that makes sense for you to call for a lasting ceasefire in Gaza.

So now I somewhat clumsily have to transition to talking about the low carbon fuel standard. Our question, it really piggybacks really well off what Cheryl said. Why does this 4 billion annual program fund combustion fuels given California’s commitment to transition to a zero emission future? Nearly 80% of the lc S’S credits in 2022 went to non Zev pathways. So the ethanol, renewable diesel biodiesel, RNG and refinery projects, even though this same agency that runs the program has roundly supported and honestly pioneered a transition to zero emission vehicles through the A CC two, the A CF, the ACT rule. And so it really is time for us to question why we continue to subsidize these legacy combustion fuels that work against carb zone priorities, especially given that this program does not need to be legislated and is not on the chopping block during a really grim budget year. I’m not sure how to advance my slide. Oh, thanks.

Alright. So Cheryl brought up that it may be time to take a harder look at restricting the oversupply of credits and the environmental and public health and climate justice communities have really coalesced around a couple of key ways that we can do that, that we can curtail what we view as really bogus crediting over crediting certain pathways that no longer serve California. And as you’ll hopefully hear from Phoebe actually may actively harm Californians. And the first one I want to talk about is avoided methane crediting. So avoided methane crediting is the credit that polluters receive that industrial dairy operators typically receive for the methane that they prevent from going into the atmosphere. That obviously is not carbon removal, but it is treated in the lifecycle assessment as a carbon negative fuel, which generates very lavish credits under the low carbon fuel standard. And in our view, this signal from the avoided methane credits and just the whole practice of trying to use transportation subsidies to entice CAFOs to capture their methane has major problems.

First, it rewards poor environmental management, it harms communities and it distorts the market signal for zero emission pathways. Next slide please. So how does it do that? Basically on the right you’ll see a slide showing the carbon intensity of various fuel pathways. The green one, the green line shows electricity over time and the orange one shows ETH from livestock. Well, bio methane in general dominated by livestock methane, the avoided methane credits creates this fiction that this is a carbon negative fuel and it gets an average across all the pathways about an average CI score around negative 150. It’s actually lower now. And that has created a situation where A CNG vehicle powered by livestock methane can generate more credits than an electric truck powered purely by solar electricity. The best that electric pathway that’s end-to-end zero emission could do is get a CI score of zero.

By contrast, A CNG vehicle could get a negative CI score of around negative 222. Even steeper negative CI scores have been certified under the LCFS and it creates a situation where a fleet with one natural gas truck and three diesel trucks could be generating more credits under the program than a fleet of four electric trucks. This is obviously the wrong signal for our program to be sending and it’s the same situation with hydrogen. So California has stated this very big interest in pursuing the hydrogen economy here in California. And we talk a lot about how yeah, California really wants to focus on green hydrogen. We are committed to green hydrogen. Well take the example of two actually certified hydrogen pathways under the low carbon fuel standard. On the right is electrolysis powered by local solar photovoltaics in Alameda County that received a carbon intensity score of zero.

And using carbs LCFS credit calculator based on the current credit prices, it would get an implied subsidy about a dollar 40 per kilogram of hydrogen. Not bad, pretty good actually. But steam methane reforming of fossil gas in Wilmington, California, which is a disadvantaged community with multiple points sources of pollution including a major refinery. That facility which uses run of the mill standard fossil fuel derived hydrogen producing technology, it’s not an innovation, it’s the way that most hydrogen today, 99% of it is produced using regular fossil gas, but pairing it with credits from a dairy in Indiana, they’re able to claim that their hydrogen has a carbon intensity of negative 287 and accordingly it receives a credit calculator estimate of $3 and 80 cents per kilogram of hydrogen. That’s a higher subsidy than you can receive from the highest tier, the most environmentally superior hydrogen that can be credited under the White house’s inflation reduction Act 45 E tax credit.

So we are almost affording triple the subsidy for the more polluting legacy technology. Clearly a problem. The fix we think is simple. The problem is that unregulated polluters are rewarded with extravagant, avoided methane credits and that has caused many problematic distortions and perverse outcomes. And the solution is to discontinue that credit for avoided meth, inventing and new pathways. So like Cheryl said, for the people who built their digesters already, we wouldn’t be ripping them out and taking away their credits. We are just asking that going forward, all new pathways conform to the same expectation that is made of landfills, of wastewater treatment, plants of oil and gas, and that we end the exceptionalism. We apply only to large dairies because doing that in this transportation system has created really distorted market signals and warped the program.

So the other major opportunity for restricting the oversupply of bogus credits that don’t serve California is on crop biofuels. So historically carb has had a supply of liquid biofuels in the program. Obviously this program is a legacy of the ethanol era. It was passed in the Schwarzenegger administration and at that time there was like, as Michael and Cheryl said, there was less certainty about what was going to be done about decarbonizing transportation. Now we know much better of course, that the best way to clean up the transportation system is not by incrementally lowering the carbon intensity of fuel, but by spinning up and mass producing an entire new industry of zero emission vehicles to overhaul the transportation sector. Unfortunately, the crop biofuels have been a huge cudgel against that transformation in the LCFS. Most of you probably know, and it shouldn’t be a surprise that unrestricted growth of crop biofuel consumption is exacerbating deforestation.

It’s pushing two very sensitive ecosystems in Latin America, the Amazon and the Serato closer to the brink of irreversible collapse and it’s doing so as well. In Indonesia, they just recorded their first increase in deforestation after a decade of decline, primarily driven by soy and palm oil deforestation in those two communities respectively. They also don’t really do a lot for our climate. Actually, they may be actively harmful when you consider the indirect land use change impacts. They exacerbate global hunger by raising food prices. And most acutely in this context, they have led to the glut of credits that Cheryl talked about, the credits that are sloshing around in the credit bank that have depressed the credit price in the low carbon fuel standard and therefore dampen the program support for zero emissions.

I’ll just speed through this because I’m going low on time, but basically, as you can see, although crop based oils used to be a small portion of the program because of the land use change adder that CARB had, it’s clearly no longer sufficient because crop based feed stocks are now surging, primarily driven by soy and soybean oil. You can see that line. It’s actually continued to go up at an even faster rate since that third quarter of 2022 are now making up a massive portion of the program’s fuels skipping through this. But you know the drill increased food prices. And so the fix again is to set a cap. We think this is a very modest proposal. In other contexts, Belgium has banned the use of soy and palm. Other places in EU jurisdictions have low caps on food-based feedstocks. So we think a very sensible and imminently achievable limit would be to just place a cap on the use of lipid-based biofuels in the program now so that they can no longer increase their use or their credit generating potential in the program.

And finally, once you do that, once you curtail the over generation of bogus credits, we get to look at all the opportunities to do dope things with the LCFS because this is a 4 billion program that should be reoriented to be a huge tailwind for our zero emission transportation system and the grim budget cuts that we’re facing, especially to electric vehicles and clean energy, make this a really important time to ask how are we prudently allocating the lc S’S potential? Restricting the bogus credits lifts the credit price without needing to increase stringency as rapidly. So basically it would make the program more effective and less expensive. And we think one of the cool things you could do is add new credit generating opportunities for transit. First of all, by appropriately factoring in their energy efficiency for things like light rail, which deserve much more credit than they’re currently given for their energy efficiency and adding a multiplier for zero emission school buses or transit buses. This is the way that most low income folks will ever access a zero emission vehicle. They punch way above their weight in terms of eroding oil demand and they deserve to be credited for that value. So this is sort of our big picture. The path forward is to stop subsidizing the bad and enhance the support for the good. We think it’s a really straightforward proposal and we hope you’ll join us in advocating for it this year.

Phoebe Seaton (02:51:45):
Okay. Many very, very hard acts to follow, but I will do my best. I’m Phoebe Seton with Leadership Council for Justice and Accountability. We’re a community-based organization, advocacy organization based in the San Joaquin Valley and the Coachella Valleys. What the work that I’ll talk about today is really focused in the San Joaquin Valley and especially, I’m going to follow up on the presentations before me, especially Sasan, with a special focus on the role of the LCFS and its interactions with the dairy industry and the San Joaquin Valley Sasan talked a lot about avoided methane emissions and how the perverse impacts those have on the transportation sector and on our climate goals as well. There is nothing just to reinforce, there is nothing low carbon about livestock gas. It burns just like conventional gas. It is not a low carbon fuel. No carbon is removed in its production. No carbon is removed in its deployment, yet somehow it enjoys these incredibly, incredibly negative low carbon scores which then generate. But

Speaker 13 (02:53:05):
Are methane emissions reduced?

Phoebe Seaton (02:53:08):
Not in the fuel,

Speaker 13 (02:53:10):
No, but in the production,

Phoebe Seaton (02:53:12):
Not in the production. Not in the production of the fuel.

It sets up the conversation though. Well, and I appreciate the question, is the reason we have these negative avoided methane emissions is because we are basing these assumptions and these faulty calculations on faulty assumptions based on our policy decisions to date. So there is an assumption that livestock methane will not be regulated when in fact carb has the authority to regulate livestock methane as of two months ago, three months ago. But who’s counting liquid manure management systems are necessary component of dairies. This is another faulty assumption. There are other ways of managing manure that do not create methane in the first place. And finally, the only option other than converting methane from wet manure into fuel is to allow it to vent into the atmosphere. Again, there are several other mechanisms for capturing and destroying methane other than creating these lucrative incentives.

We talk a lot, this is, don’t believe me these, the incentives and the subsidies produced by the low carbon fuel standard are extremely profitable. This is the quotes from industry and academic representatives talking about the perverse incentives that the LCFS provides encouraging the production of manure, the collection of wet manure and the conversion of that wet manure into fuels and environmental credits. So this is an environmental justice disaster. Why am I here talking as an environmental justice advocate about this kind of wonky mechanics, wonky accounting, large dairies and the concentration of wet manure creates severe and real impacts to air and water quality. And not to mention odors nitrate pollution is a significant problem in the San Joaquin Valley, and we’re actually learning that digestion increases nitrate pollution in leaching to groundwater. What’s more, several people talk about that digesters require lined lagoons. The vast, vast majority of nitrate pollution happens in the application of manure to fields. It does not matter whether that manure is digested or raw.

Air pollution is of course a huge, huge issue in the San Joaquin Valley, and we’re learning that digestion actually increases ammonia emissions. And finally, people talk about the odor benefits of digesters. From what we hear from our clients and community partners, digesters do nothing to address or mitigate the odor. Not only is it a climate disaster and an environmental justice disaster, it’s a worsening environmental justice disaster. This is data from primarily from the latest census AG census put out by USDA. Dairies in California are big and getting bigger, especially in the San Joaquin Valley. The population of cows on dairies with 2,500 or more cows went up almost 27%. And the population of cows on dairies with a thousand or fewer cows dropped by 52%. We are losing our small dairies. Average herd size in California jumped from 13% from 2012 to 2017, which is when the low carbon fuel standard changed its rules.

In the five years since that average herd size has jumped 43%. So while we saw a trend in expanding herd sizes and increasing herd sizes, that increase is now on steroids in California. Credit Sasan for sending this information to me saw the biggest growth of large CAFOs with adding 57 additional large CAFOs to its stock in between 2017 and 2022. Now, a lot of people speak to the number of cows is reducing in California. That is true. The number of cows in the San Joaquin Valley is actually going up the San Joaquin Valley. Now, as of this census or as of the data in the census is now home to over 90% of dairy cows in California and the majorities of cows in California are now on very large CAFOs. Finally, the average herd size in the San Joaquin Valley grew to over 2000 cows.

And I’ll talk a little bit about the link with the low carbon fuel standard, the seven San Joaquin Valley counties, the Southern seven have 99.3% of CDFA funded dairy digesters and 86% of livestock manure LCFS pathways In California. Our work, we do a lot of local work as well. To the extent that we possibly can, we track and comment on expansions and the environmental documents. Unfortunately, the majority of counties in the San Joaquin Valley do not require environmental review for dairy expansions. The last two that we were able to comment on, one in Fresno, one in Merced, were both associated with dairy digesters and dairy gas infrastructure. Oh, I think I ruined it.

There are very, very real impacts to humans, to human beings. Pixley is the largest dairy biogas cluster probably in the, I imagine in the country, certainly in the state and where we work with a lot of folks. Maria, several of you have probably heard her speak. Please help us because we are poor farm workers. You have forgotten us. You have forgotten about justice and laws. We also deserve clean air and clean water. Merc said there’s been a significant build out of biogas infrastructure, biogas pathways, and we’ve seen or in the midst of 10 recent current dairy expansions. Of course Merced folks are lucky because Merced is the county that requires environmental review for expansions. So we do see when those happen. I just want to highlight David, who if you listen to the or participate in the EJA hearing the other day, David Rodriguez from Planada spoke. He also feels that we need clean air, clean water and no one is listening. I appreciate Sasan appreciate what you said about the links. Where I see a lot of the links where we work and the global geopolitics is that we don’t see enough humanity and respect for human life and wellbeing in the LCFS. To put it mildly, people say when they think the mic is off until you have capital in the game, you don’t get a say.

It might sound trite and overly simple, but I think with more humanity and with more understanding of where different humans are living and where people are coming from, we can solve not just this problem, the problems as vast and as deep and as complex as those in the Middle East. And with that, I’ll say with respect to the parochial low carbon fuel standard, we are on the wrong path, but it’s not too late to turn back. Thanks so much.

Michael Wara (03:02:20):
Well that was a pretty awesome set of presentations. Wow, thank you all. We have just 20 minutes and my preference would be to allow time, all of that time for audience questions, but I just want to give very quickly the panelists the chance to, if there’s anything you’d like to respond to in the other presentations, I’d be very interested to hear your perspectives. We had somewhat diverse set of perspectives. I think there’s a lot of alignment, but there’re also differences. And I’d be curious if you want to share any reflections based on what you just heard. Does anyone want to do that?

Phoebe Seaton (03:03:09):
You talked a little bit about the depth of subsidies and the way that, certainly the way that we look, I think, I won’t speak for sasan, but the way that we look at the issue of avoided methane crediting it’s binary, it’s on or it’s off. You talked about looking at the depth of subsidies. Do you see a mechanism where that could get ratcheted down or is it an on-off switch? Is the only way of addressing that those vast subsidies and on-off switch?

Yeah, I don’t think that it just has to be an on-off switch. CARB has a lot of authority in LCFS. They don’t have to go through the legislative process to do updates on their benchmark schedules. And they get to kind of determine policy signals and base it on science and where they want those signals to happen. And so in my mind, we need this transitional, we need the transitional fuels. We’ve been on one path for the past 10, 12, 13 years. But if we’re going to set targets to 2045 to show that we need investments for the longterm, we also need to be very clear in what those investments should be. And so I don’t think it’s a shut off the switch today on every single subsidy. I think it is mindful and it is a path. And I think that there are options. So on the avoided methane in particular, I think looking at that return on investment, it costs a lot to put in digesters.

It might not be the only solution, but that’s the solution that’s in the LCFS. So is there a need for that for a certain period of time for 10 years and then you take off the avoided methane crediting and you still get some operational costs, you can’t shut off all of that subsidy or else the digesters are going to be turned off. And I don’t think that that’s a solution that many of us want, but there is a way to signal long-term investments, how long those investments should be there and you can down ramp it in various ways. You can do a hard cutoff but send that signal early enough so that investors know we’ve got 10 years to recover our money and then we’re going to have some operational costs funding come in or send a signal of we need hydrogen now and SMR might be the option right now, but that incentive can’t last forever if we want electrolyzers. So we need to be sending that signal now to be able to get those investments through 2045. So I think there’s a variety of ways to do that. I mean the benchmark is on in itself a subtle over time approach. Avoided methane. People have been talking about it as on or off, but there’s obviously different ways to approach every policy.

Speaker 13 (03:06:21):
I worked on methane reduction for a long time as a way to produce a low carbon fuel in large part because reducing methane has so much greater of a climate forcing nature than D two. So that was where I thought the benefit was coming from producing a fuel from avoided methane emissions. I don’t quite understand why that’s wrong now, even though I heard you make a presentation, tell me it is wrong. So I need to study that a bit more.

Vanessa Carter Fahnestock (03:06:54):
I’ll take a first crack at it. I might have a different view than you. So the idea is that in these lagoons there is methane being emitted. And so how do we capture that methane that is a very bad climate pollutant. And so how do we capture that? How do we incentivize that capture? So the LCFS gives crediting to that for a large crediting for it because the baseline for the dairies is basically do nothing, don’t capture it. But in landfills for example, you have to capture that methane. So their avoided methane crediting is much lower than a dairy. So there’s a big discrepancy between the two. And I think part of it is let’s put things on an even playing field maybe. But that requires regulating that dairy industry, right? It requires saying that that base standard, that minimum standard that we are trying to impose is the same as landfills.

It’s capture your methane, don’t just release it so that the difference between the base case and what the project cases is different. So that’s one of the big issues people want to see that regulation happen, that carb is allowed to start in 2024. I think that that’s one option. I would also caution that that doesn’t necessarily mean it has to be commanded and control. So you might not get exactly the result that you might think that you’re going to get through a regulation. But ag has not been regulated in the same way that other industries have and now they’re getting that benefit. They

Speaker 13 (03:08:35):
Should have been regulated all along, so you shouldn’t be getting the credit for doing it now I get that. Yeah. But are you suggesting landfills are going to lose the credit from producing a fuel from capture methane gas?

Cheryl Laskowski, PhD. (03:08:45):
No, they get credit. It’s just how much credit should be given and what is that baseline. So do we need the avoided methane forever? What should that baseline be? So landfills don’t really need the LCFS to be honest, a nice advantage. So that’s a different conversation. I mean they don’t cost that much to operate unlike the digesters. So they get the RFS money, they get other subsidies as well. So I think that that’s part of the conversation. What level of incentive is needed for operating these different types of technologies. This

Speaker 13 (03:09:23):
Is all going to be sorted out in the pending rulemaking that the card is going to get into this year. It’ll be all sorted out. Alright, thank you very much.

Speaker 14 (03:09:37):
Tony Serna from Citizens Climate Lobby. And so I’m convinced that this needs to be fixed. And so what can advocates do to address this problem? How do we make the pressure on carb or if carb doesn’t respond, how do we get them to do the rulemaking on regulating ag? Or is there a legislative play as well if carbon doesn’t continue to put caps on crop based tools or I’m just wondering what are our options as advocates to try and change this? Convinced me that it’s a real problem.

Sasan Saadat (03:10:13):
Yeah. Tony’s question was how can advocates who are bought into our vision of reforming the program help support the calls for reform And so glad to hear that. Yeah, so I think some of the opportunities would be attending regulatory meetings, including there’s supposed to be a workshop in April this month. The date and time haven’t been set for it yet. So we’re all still kind of waiting with bated breath to see if it materializes. But attending those workshops and voicing your concerns is a really good way for the carb staff. And often carb board members as well will listen into those meetings to know that Californians are concerned about the current trajectory and want to see a course correct. In addition, you can, we’ll definitely attend cardboard meetings, but you can request meetings with cardboard members. That is your right. You get to talk to these public officials about what’s important to you and you can request meetings.

They’re very busy and it’s very hard to get on their calendars, but you’re allowed to request meetings best if you coordinate and get a couple of you together and have a pitch, have a short message with very concise specific asks. And Phoebe and I are both part of a coalition that has tried to boil down our asks to very specific and we think imminently feasible actions that the more we repeat those messages from the more voices, the better the chance that card board members will direct the staff to make those changes. And the last thing I would say is reach out to your legislative representatives, to your member in the assembly and in the Senate and ask them if they’ve heard about this, express that you’re very concerned about it and ask them to sign on to legislative efforts to, sometimes the legislature will send letters to car board members or carb leadership saying, we’ve heard about this from a lot of our constituents. We’re concerned we’d like to see these fixes. And that can be very influential in the direction the board ultimately takes.

Phoebe Seaton (03:12:14):
I was just going to more directly pitch joining our coalition. You might get more invite to calls and feedback than you ever wanted, but we would really, really love for you to participate. And yes, and there will be a legislative effort, but I don’t know if I’m allowed to talk about it. So more on that later.

Speaker 20 (03:12:42):
So Climate Action California has formally petitioned car to regulate agricultural methane and we have a formal petition that was drafted by Will Brier who used to be a senior attorney at car. We’ve sent it to the board members and we are in the process of meeting with them. We figure when we have four or five of them that are in favor. And so far the response has been good. Then we’ll then take it to Dr. Cliff and just see if we can get the board to ask CARB to regulate agricultural methane. This is a little different from the low carbon fuel standard, but it’s really all part of the same package. And if anybody would like to join with us, talk to me.

Cheryl Laskowski, PhD. (03:13:42):
I just want to say yes, that’s a great approach, but again, I don’t think you should lose sight of the provisions in the LCFS because yeah. Okay, great.

Great, because it is sending the signal to other jurisdictions and depending on what that regulation does when it gets implemented, you just don’t know how much that would affect the LCFS.

Michael Wara (03:14:13):
I’m just going to take moderator’s prerogative here and just make one additional point. Something that is fundamentally broken right now about the LCFS is how it calculates indirect land use change. It’s likely that if the indirect land use change number reflected the current state of the science as opposed to the science. When CARB took action as a leader in 2013 to put that number into the LCFS calculation that a lot of these fuels that are currently getting rewarded, the renewable diesel in particular would not look great, might not be generating credits or would be generating a far smaller number of credits, but that takes time. And so one thing that I think is important to emphasize is we can be a climate leader and protector of forests and of global climate by pushing carb to update that number. Eventually it’s going to take another process. It can’t be a part of this amendment, but it should be something that is kicked off as a part of this amendment because of its potential significance for global emissions associated with biofuels because people will look at the carb number and they will copy it, right? And that’s another way that California can be a climate leader is by folks emulating our policies and taking advantage of the incredible capacity that we have within the agency. Next question.

Speaker 20 (03:15:40):
Bay Area, and I came in late so I apologize covered this, but my understanding is board members and certainly Jack, have been highly supportive of these modifications proposal. So I guess my question is in follow up to the previous, are there yes we can comment what can be done. There are reasonable staff of CAR who have been amenable to coalition. Some are gone though. Can you talk a little bit about any ideas about what might be done?

Cheryl Laskowski, PhD. (03:16:37):
Yeah, I think that being engaged in these types of programs, even when they’re not in a regulatory update is really important because then you can build those relationships, you can understand where they’re coming from, you can understand what industry is talking about. Once staff provide their proposal, which they have done, that’s where they think things should go. That’s where the staff leadership has landed. I think that there is more opportunity to talk to staff about changes. I mean, they’ve hinted at that by suggesting that they’re going to be doing a workshop, but I do think at this point it really will need to come from leadership. I think that emphasizing that the board did direct staff at an August September meeting to look at the crop issue, crop feedstock issue and they were pretty clear that they supported some restrictions on the M methane. The avoided methane crediting staff went in the opposite direction, which is very unusual.

And their proposal for the addressing the board’s comments on the crop, I haven’t even heard industry think that that’s a useful approach. So I think at this point engaging with the board is really important. That’s where things are going to the direction is going to come from. But again, going to those public meetings, providing the public comments that is in the record, CARB has to respond to every comment that they get eventually. And so I think that at this point in the process, it’s still early, but the direction is likely to come from the board.

Speaker 20 (03:18:32):
Hi Cynthia Mahoney. I’m with Health Now and voting for Climate Health, but my comment is about this presentation. Thank you very much. And the earlier one about seems like so unintended cons of not keeping up with the changes that have come from well proposals. And I was very interested in what you said ya about changing the procedure so that more frequent updates in terms the policies and the standards that the land use. And I’m wondering what we can do about that.

Cheryl Laskowski, PhD. (03:19:14):
So the last LCFS update was in 2018 after the 2017 scoping plan, and that came three years after the previous update. So the LCFS has historically, and there were updates four years before that and a year before that. So there are generally frequent updates. It’s been six years now and there’s been a pandemic and an unexpected surge in RD and an unexpected uptick in EV adoption. So very much the landscape has changed and so any agency needs to be nimble to that. I think this process has just dragged on a little bit longer. It does take a long time to develop regulations, especially given the number of stakeholders on very different sides on very many issues. This is a pivot point for this program. So there’s a lot at stake for a lot of people. So that’s one of the reasons I think that it’s been taking so long.

But as we get further and further along, then it only becomes harder and harder to do. So I think that on the scoping plan, they update it every five years. They try to align their other climate programs after they update their scoping plan. This has just taken a little bit longer and there’s a number of reasons for that from political to resources to stakeholder engagement. The crop based issue really came up to carb maybe a couple of years ago where we just started to see that major uptick in soy as a feed stock again. So these things happen, but they can change really rapidly. So yeah, I think CARB needs to figure out their resource availability and then these just can take a long time to get done. This one has been especially long.

Sasan Saadat (03:21:13):
Yeah, I like that question and I wanted to make a more macro point about both Andrade and I guess the one I’m more familiar with, LCS. For me, these feel like such a relic of an earlier time of climate policy, not just in the fuels that genuinely that they subsidize or the technologies that they focus on, but just in their approach where they hold the market at arm’s length and they introduce these little things like a carbon intensity benchmark and they say go forth. It’s just these market-based mechanisms that are a relic of kind of like a hangover from the neoliberal era that I think we’re finally waking up from and saying, we need to take a much more muscular approach to industrial policy if we’re going to succeed in the energy transition, we know what we need to do. We need to rapidly decarbonize the power sector with a huge ramp up of renewable energy and we need to electrify as many end uses as possible.

This isn’t really confusing to people, like most people agree, this is the plan, let’s do it. And California to its credit has been a leader on both of those. And the vast majority of our success has come from those mandates, from those muscular interventions. A renewable portfolio standard Zev mandates on clean cars and clean trucks. And yet here we still have this old program that really esteems itself on being technology neutral and ignores the ways that private equity firms will find how to make the lowest possible cost credit, how to seek ways to reduce climate pollution in the ways that are lowest cost, which does not always equal ways that are actually most durable or most effective. And certainly in ways that acknowledge anything beyond carbon like local harm. And so I think we don’t believe that we need to get rid of the LCFS Earth Justice believes there is an opportunity to renovate the program so that it provides tailwinds for our Zev transition. But overall, that’s going to require rethinking the role the state has in governing these markets and require California to really take the reins back over the program and not let it just stay at the whims of one benchmark.

Michael Wara (03:23:58):
Let’s wrap up this conversation. Thank you to the panelists for fabulous presentations. Great question and answer and to the audience for hanging in there and asking great questions. Thank you.