Massachusetts moves to adopt low-carbon fuel standard

Yesterday, in a major step forward for biofuels policy, the Massachusetts governor, senate president, and speaker of the house jointly called for the adoption of a low-carbon fuel standard. The LCFS is a technology-neutral, performance based approach to reducing the greenhouse gas emissions from transportation energy. This a vast improvement over the technology specific, volume incentives and mandates that until recently dominated US biofuels policies.

The way a LCFS works is that the full lifecycle GHG emissions from the fuels each oil company is selling are added up and divided by all the energy in that fuel. This becomes the company's average fuel carbon intensity. Overtime under the LCFS, the oil companies have to reduce this average carbon intensity by mixing in sources of transportation energy with lower lifecycle GHG emissions. In California, which was the first to move towards a LCFS and is now in the process of developing the regulations, the goal of the LCFS is to require a 10% reduction in carbon intensity by 2020. In other words, a company could replace all of their current fuel with an alternative that has 10% lower lifecycle GHG emissions, or half with an 20% lower alternative, and so on. The LCFS rewards the sources of energy that have the lowest lifecycle GHG emissions. Just as importantly, it penalizes high carbon fuels such as liquid coal. (Check out this awesome short video if you don't know how bad liquid coal is.)

As I've written about before, this is stark contrast to the original RFS, which was a simply volume mandate that totally ignored how the biofuels were produced. Our current tax credits for ethanol and biodiesel and our import tariff on ethanol are similarly blunt, ignoring the impacts or benefits of the fuels' lifecycle. As I've written about before, the current RFS was the first step towards setting performance based requirements. It sets minimum lifecycle GHG emissions requirements for fuels from new facilities and establishes land-use safeguards.

But the new RFS is still a volume mandate for a specific set of fuels and these standards are floors--you have to be a biofuel and you have to be above the floor to qualify. If you're electricity or natural gas you can't compete and you don't get anything for being better than the floor.

While they are moving ahead in the state, they also invited the other states that are part of the Regional Green House Gas Initiative to join Massachusetts. This is exactly the type of leadership we need, and it should be mutually reinforcing with efforts already underway in the Northeast.

NESCAUM has been doing a study of a LCFS for the air regulators of the NE states, but this is should throw that effort into high gear and greatly increase the chances that the other governors will follow Massachusetts' lead.

The announcement builds on the findings of the Massachusetts' Advanced Biofuels Task Force, which were released yesterday. I testified before the Task Force, and my primary recommendation was that they adopt an LCFS, so that's extremely gratifying. Importantly they repeatedly in the press release and theTask Force report refer to the importance of addressing GHG emissions from direct and indirect land-use change.

Interestingly, the ABTF stuck to its recommendation that the state adopt a biodiesel and bioheat mandate, which I recommended against, but they appear to have amended these mandates to link them to the lifecycle GHG accounting that is central to a LCFS and made the mandates "as technology neutral as possible." I have yet to read the details, but this sounds workable to me and may be a good model for other places that eager to do a bioheat bill.

Here's a summary of the ABFT recommendations from the Executive Summary (PDF, 2MB):

• Prioritize efforts to achieve near-term implementation of a regional, technology-neutral and performance-based Low Carbon Fuel Standard (LCFS), with Massachusetts leading the way.
• While a Massachusetts LCFS is being developed, pass amended versions of the legislation you cosponsored, implementing targeted transitional biofuels mandates and exempting cellulosic biofuels from the state gasoline tax, with a sunset date. Both the transitional mandates and cellulosic fuel exemption should require significant greenhouse gas reductions and other environmental protections, including direct and indirect impacts such as those on land use. The mandates and cellulosic tax exemption should be as technology-neutral as possible, and should phase out as a Low Carbon Fuel Standard comes into existence.
• Support pilot deployment in the state fleet of plug-in hybrid and all-electric vehicle technology in light- and heavy-duty vehicles, as well as fuel-efficient flex-fuel vehicles.
• Develop infrastructure necessary for consumer use of biofuels and implement limited-cost investments in equipment for ethanol and biodiesel distribution, such as E85 stations along major state highway corridors, subject to budget constraints.
• Develop standards for full lifecycle evaluation of biofuels that consider their carbon and other environmental impacts, including direct and indirect land use impacts.
• Parallel to progress on biofuels, continue to explore policy options for vehicle efficiency and reducing vehicle miles traveled.