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LCFS, AB 118 Plan Win Approval in California

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  • LCFS, AB 118 Plan Win Approval in California

    LCFS, AB 118 Plan Win Approval.
    CALNGV News 5-4-09
    CARB adopts ground-breaking fuel standard; CEC approves investment plan for AB 118 funds.

    CARB’s April 23 adoption of the Low Carbon Fuel Standard (LCFS) and the CEC’s April 22 approval of the AB 118 investment plan open up significant opportunities for the NGV industry—thanks largely to the long-term engagement of the Coalition and its members with both agencies.

    LCFS: Pioneering move to cut carbon
    California is once again breaking new ground with the LCFS, which aims to reduce the carbon intensity of the state’s transportation fuel supply 10 percent by 2020. It requires fuel providers to begin cutting the overall carbon intensity of the fuels they sell in 2011. Providers of fuels that already meet the 2020 standard—like natural gas—may opt in to the regulation to generate marketable credits.

    The final regulatory documents address several issues raised in the Coalition’s final comments (see CalNGV News, 4.6.09), including:
    LNG fuel pathways CARB has committed to completing a carbon intensity calculation for LNG—from North American sources, biogas, or both—within the 15-day comment period. This is necessary for LNG to be considered a compliant fuel. The regulation authorizes CARB’s executive officer to add new fuel pathways to the regulation.

    Energy Economy Ratio (EER) The current EER for heavy-duty vehicles using CNG or LNG reduces natural gas’s previous 1:1 rating against diesel to 0.9:1, based on what the Coalition believes is an incomplete analysis. CARB has committed to re-evaluating the EER for natural gas as soon as it’s practical.

    Definition of biomethane The definition has been expanded to include thermochemical gasification and anaerobic decomposition.
    “This is a big, new, market-changing rule, and it was very complicated to develop,” says Coalition Executive Director Pete Price. “I credit the ARB staff and the governor for their commitment. The staff did a lot of hard work and forged new ground. There were lots of issues with all the fuels, and without us being engaged in a dialogue with them, natural gas would not have as big an opportunity as it has. That’s the key: you have to be at the table.”
    AB 118: Major funding, but grants linked to stimulus awards
    The approved investment plan for the Alternative and Renewable Fuel and Vehicle Technology Program created by AB 118 allots $43 million through fiscal year 2009–10 for NGV-related projects—about 25 percent of all AB 118 funding (see CalNGV News, 4.20.09).
    Price notes that the proposed allotment in the CEC’s initial draft was less than $2 million. “We got to work, and we improved that dramatically,” he says. “Again, we had support from staff who did a very good job in addressing some complex issues.”Obtaining AB 118 grants, however, is going to be more complicated than anyone anticipated. The CEC has decided that the most effective way to use AB 118 money is to initially try to co-fund federal stimulus grants. According to an April 27 CEC workshop, entities that want AB 118 funding
    must also apply for federal funding. They should apply to the CEC first; if the CEC is willing to grant the funding request, it will give the applicant a co-funding commitment letter to submit with the federal application. This assurance of co-funding should increase the chances of obtaining a federal grant. If an entity doesn’t win the federal grant, however, it won’t be eligible for AB 118 funding in this round.“The gist of it is, in a perfect world what they want to do is take all the AB 118 money and use it to help California come up with matching funds from the [federal government],” says Greg Roche, director of business development–
    ports for Clean Energy.
    Time is now to submit applications That means it’s scramble time. The application deadline for the Department of Energy’s Clean Cities Alternative Fuel and Alternative Fuel Vehicle Pilot Program—the most likely funding source for natural gas programs—is May 29 (see CalNGV News, 4.6.09). To take advantage of AB 118 funding, applicants must submit to the CEC, get approval, then submit to the DOE. The CEC has promised quick response.

    A larger issue is that many projects envisioned under AB 118 don’t have a federal counterpart, says Sean Turner, senior vice president at Gladstein, Neandross & Associates. A number of federal programs have not yet been released, and they could provide additional opportunities, but there’s no way to know today.

    If the CEC does not distribute all the 2009–10 AB 118 funding as federal co-funding, it plans to accept applications for AB 118–only funding. The agency will wait until all the federal money is granted to determine whether anything is left. “It’s a different program than people envisioned,” says Roche. “Hopefully, it helps California get a bigger piece of the DOE pie.” ◗
    AB 118 application materials are at