Dear Chairwoman Nichols,

The Renewable Fuels Association (RFA) appreciates the opportunity to comment on proposed regulatory changes associated with the

re-adoption of the Low Carbon Fuels Standard (LCFS)

(Second Notice of Public Availability of Modified Text, June 23, 2015).

We are encouraged that the Air Resources Board (ARB) is revising several problematic

elements of the first 15-day notice (released June 4, 2015) based on feedback from RFA and

other interested stakeholders. A number of provisions in the first 15-day notice regarding

establishment of fuel pathways were simply unworkable and we commend ARB for taking steps

to address stakeholder concerns.

However, while the second 15-day notice represents a marked improvement over the initial

proposed modified text, RFA believes ARB must make additional changes to ensure the

pathway approval process is efficient and presents minimal administrative burden for both low

carbon fuel producers and ARB staff. In addition,

RFA again urges ARB to revise its indirect land use change (ILUC) analysis to reflect the best available science and data. Our comments

and concerns on the second 15-day notice are detailed below.

1. We support the new language added to section 95488(a)(2) allowing fuel producers to request re-certification of “legacy pathways” that were certified under prior versions of the LCFS.

Under the first 15-day notice, the requirement that all low carbon fuel producers with existing certified pathways must entirely re-apply for those pathways was unnecessarily burdensome and duplicative. Thus, we welcome ARB’s proposed modifications to section 95488 to streamline the re-certification process by allowing fuel producers to request re-certification of existing pathways by ARB staff using CA-GREET 2.0. We agree that, in most cases, ARB staff “already has all of the information needed to conduct recertification without any submission of additional data by the applicant…”, and we support the use of a simple, straightforward electronic form through the LRT system to request re-certification. We assume that the key variables that influenced an individual ethanol producer’s existing pathway carbon intensity (CI) score (e.g., natural gas use, transportation distances, ethanol yield, etc.) will be retained by ARB staff for the re-certification using CA-GREET 2.0. However, it is somewhat unclear how

ARB will handle producer-specific inputs in CA-GREET 2.0 that were not included in approved pathway petitions based on CA-GREET 1.8 (e.g., yeast and enzymes). We encourage CARB to include fields for any additional information needed for re-certification on the online form.

2. RFA supports the proposed prioritization of fuel pathway re-certifications for “batch processing.”

Based on the volumes of distinct renewable fuels delivered to the California market, and the different roles certain fuels have played in helping regulated parties achieve compliance, we agree with ARB’s proposed prioritization of fuel types for “batch processing” of re-certification requests.

3. The description of “Tier 1” fuels in section 95488(b)(1) remains somewhat confusing and ambiguous. ARB should clarify that the “Tier 1” classification applies to specific fuels not specific facilities or individual pathways.

ARB describes Tier 1 fuels as being “[c]onventionally-produced alternative fuels of a type that has been in full commercial production, excluding start-up or ramp-up phase, for at least three years, and for which certified LCFS pathways have existed for at least three years shall be classified into Tier 1.” This language has caused much confusion amongst conventional ethanol producers. Many producers have interpreted this description as applying to individual facilities or specific Method 2 pathways; and some producers who have had an approved Method 2 pathway for fewer than three years have interpreted this language as meaning their fuel cannot be classified as “Tier 1.” ARB should clarify that the “Tier 1” classification applies to specific fuels—not specific facilities—that have existed commercially for at least three years. In other words, ARB should clarify that all starch-based ethanol produced using conventional methods is “Tier 1” fuel.

4. “Tier 1” fuels should be excluded from the “Provisional Pathways” requirements described in section 95488(d)(2).

For unexplained reasons, the second 15-day notice inserted Tier 1 fuels into the section governing provisional pathways. Because ARB is highly familiar with the feedstocks and production technologies associated with Tier 1 fuels, it is completely unnecessary to apply the same provisional pathway conditions to new Tier 1 fuel producers that are applied to new Tier 2 fuels. New facilities producing Tier 1 fuels should receive final approval of their CI scores by the Executive Officer based on one quarter of operational records, as facility operations and the fuel CI would not be expected to change following start-up.

5. Investment in the development of new “Tier 2” fuels is discouraged by the “Provisional Pathway” requirements described in 95488(d)(2). ARB should allow provisional CI scores to be based on pilot-scale data, rather than requiring operational data for a full quarter of commercial production.

Developers of new and innovative low-carbon fuels will likely find it difficult to attract financing for scale-up due to ARB’s requirement that new “Tier 2” facilities must have operational data for one full quarter of commercial production before even submitting a new pathway petition.

Developers of “Tier 2” fuel facilities are unlikely to raise the necessary capital for construction of commercial-scale facilities without the ability to show potential investors or lenders a provisional CI score that has been approved by ARB.

We agree that ARB can and should verify provisional CI scores using actual operational data once the Tier 2 facility is up and running. Further, if actual operational data indicates that the actual CI of the fuel is higher than the provisional CI score, we agree that the Executive Officer should “adjust the number of credits or reverse any provisional credit in the producer’s account without a hearing.” However, we strongly believe provisional CI scores should be approved on the basis of pilot-scale data provided by Tier 2 fuel developers so that the LCFS regulation encourages—rather than discourages—investment in new and innovative low-carbon fuels.

6. RFA again urges ARB to revise its indirect land use change (ILUC) analysis to reflect the best available science and data.

RFA continues to strongly dispute the analyses underlying the ILUC values in ARB’s re- adoption proposal (Table 5). We have commented numerous times on ARB’s most recent ILUC analysis and provided volumes of new information and data from independent sources that support much lower ILUC values for corn ethanol. To that end, we are re-attaching our recent comments to ARB on the staff’s flawed ILUC analysis.

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Thank you again for the opportunity to comment and please do not hesitate to contact me with any questions.

Sincerely,

Geoff Cooper
Senior Vice President

July 8, 2015

Mary Nichols
Chairwoman
California Air Resources Board 1001 “I” Street
Sacramento, CA 95812