Presentation and Recording Posted: Could We See a Midwest LCFS?

Brendan Jordan of the Great Plains Institute spoke today about the Midwestern Clean Fuels Policy Initiative. The presentation is available at this link. The webinar recording is available at this link.

Background

Biofuels, EV, auto, agriculture, NGOs and other advocates have been meeting for the last couple of years on the potential for a Midwest Clean Fuels Standard (CFS). This article details those discussions and notes that CFS legislation could be introduced in Midwest states in 2021 legislative sessions. Minnesota has a governor-appointed biofuels council exploring how to expand biofuels use while increasing carbon efficiency. The article notes that the Great Plains Institute, which facilitated the discussions, released a paper recently on the CFS. Principles for the CFS included the following:

  • Market-Based Approach: Design a market-based approach while remaining fuel and technology neutral, relying on a portfolio of clean fuels including biodiesel, ethanol, renewable natural gas, electricity as a transportation fuel, hydrogen, and other renewable and low-carbon fuels. Design the policy based on the lifecycle assessment (LCA) of fuels using the GREET model.
  • Regional Factors: Consider regional factors in the Midwest, including the impact of renewable electricity development on the electric grid, current production practices at biofuel facilities, adoption of farming practices that impact soil organic carbon and nitrous oxide emissions, and current and aspirational biofuel blending levels.
  • Point of Regulation: A point of regulation should be selected that avoids placing a burden on small fuel retailers and simplifies compliance as much as possible.
  • Regional Coordination: States that move forward with a clean fuels policy should work together to achieve a coordinated approach in the Midwest and beyond.
  • Benefits for clean fuel producers. The focus of a clean fuels policy is on supporting development and use of clean fuels, and clean fuels producers should be the credit-generating entities under the program in most cases.
  • Renewability: States should consider a minimum renewability requirement (e.g., 30 percent renewable) for clean fuels participating in the program.
  • Administrative Efficiency: Because of the importance of operating an administratively lean program and ensuring collaboration with programs in other regions of the country, Midwestern states should consider a surgical approach to approving fuel pathways that starts with pathways approved in other states and then makes changes to specific emissions factors where it is justified.
  • Consistent Approach: Midwestern policies should take a consistent approach across all clean fuel types.
  • Indirect Accounting: Indirect accounting (or book and claim) has unique potential for incentivizing decarbonization of electricity and natural gas in the Midwest due to abundant but distributed wind, solar, and biogas generation.

Highlights from the Presentation/Discussion:

  • Economic modeling is still ongoing, but early results show a net positive impact for the Midwest region.
  • Policy design work remains with respect to EV credit generation, farm-level carbon accounting and point of obligation.
  • Brendan noted the challenges with respect to lifecycle analysis right down to the farm-level for issues such as soil carbon, but believes Midwestern states will figure out an approach both to achieve GHG reduction and to support farmers. It is not clear whether states like California will do this.
  • In the Q&A session, Brendan noted that no state has introduced CFS legislation yet and that states will probably enact legislation to put into place a program in a sequential manner (rather than all Midwest states doing this jointly). I would guess that Minnesota and perhaps Iowa would be among the first states to consider legislation.  Brendan noted these states will probably coordinate on such issues as pathways to make compliance easier for obligated parties. When a participant asked who the obligated parties are likely to be, he deferred.
  • Interactions between a potential Midwest CFS and other state programs such as the California LCFS were not modeled.
  • Though the emphasis was on different biofuel types (e.g. renewable diesel, ethanol, RNG and biodiesel) and electric vehicles, other advanced fuels such as hydrogen would not be precluded in a CFS. It is just that there is not a lot of activity in the region on hydrogen at this time.

 

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