The California Global Warming Solutions Act of 2006 establishes the State Air Resources Board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act requires the state board to adopt rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions to ensure that the statewide greenhouse gas emissions are reduced to at least 40% below the statewide greenhouse gas emissions limit, as defined, no later than December 31, 2030. Pursuant to the act, the state board has adopted the Low-Carbon Low Carbon Fuel Standard regulations. Existing law requires the state board to provide guidance on credits generated pursuant to the Low-Carbon Low Carbon Fuel Standard regulations adopted pursuant to the act from the methane reduction protocols described in the comprehensive strategy for short-lived climate pollutants.

This bill would prohibit the state board from including avoided methane emissions in the calculation of carbon intensity for purposes of the state boards evaluation or reevaluation of a fuel pathway, and would prohibit a fuel pathway holder from including avoided methane emissions in the calculation of carbon intensity in the fuel pathway holders annual Fuel Pathway Report, as provided. The bill would define avoided methane emissions to mean any captured methane from livestock manure management.

The Low-Carbon Low Carbon Fuel Standard regulations authorize a fuel pathway that uses biomethane from dairy cattle or swine manure digestion to be certified with a carbon intensity that reflects the reduction of greenhouse gas emissions achieved by the voluntary capture of methane, subject to meeting specified requirements. The regulations also require the carbon intensities that reflect avoided methane emissions from dairy and swine manure projects to meet certain requirements in order to be eligible for credit generation.

This bill would provide that the Low-Carbon Low Carbon Fuel Standard regulations described above are null and void as applied to fuels derived from livestock manure.

Existing law requires the State Air Resources Board to approve and begin implementing a comprehensive strategy to reduce emissions of short-lived climate pollutants in the state, including to achieve a reduction in methane emissions of 40% below 2013 levels by 2030. Existing law requires the state board, in consultation with the Department of Food and Agriculture, to adopt regulations to reduce methane emissions from livestock manure management operations and dairy manure management operations consistent with the strategy, as specified.

This bill would make nonsubstantive changes to those provisions.

Date of Hearing: April 24, 2024

ASSEMBLY COMMITTEE ON AGRICULTURE

Esmeralda Soria, Chair

ABPCA Bill Id:AB 2870

Author:Muratsuchi – As Amended Ver:April 15, 2024

SUBJECT: Low Carbon Fuel Standard regulations: carbon intensity calculation: avoided methane emissions from livestock manure: prohibition

SUMMARY: This bill would prohibit the State Air Resources Board (CARB) from including avoided methane emissions (AME) in the calculation of carbon intensity for purposes of the state board’s evaluation or reevaluation of a fuel pathway, as specified. Specifically, this bill:

1. Requires CARB to not include avoided methane emissions in the calculation of carbon intensity for purposes of the state board’s evaluation or reevaluation of a fuel pathway, pursuant to the Low Carbon Fuel Standard (LCFS) regulations.
2. Defines “AME” to mean any captured methane from livestock manure management.
3. Provides that the Low-Carbon Fuel Standard (LCFS) regulations are null and void when applied to fuels derived from livestock manure.

EXISTING LAW:

1. Establishes CARB as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. (Health and Safety Code (HSC) 39000 et al.)
2. Requires the state board to adopt rules and regulations to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions to ensure that the statewide greenhouse gas emissions are reduced to at least 40% below the statewide greenhouse gas emissions limit, as defined, by December 31, 2030. (HSC 39730.5)
3. Requires CARB to provide guidance on credits generated pursuant to LCFS regulations adopted pursuant to the act from the methane reduction protocols described in the comprehensive strategy for short-lived climate pollutants. (HSC 39730.7 (b))
4. Authorizes, by regulations, a fuel pathway that uses biomethane from dairy cattle or swine manure digestion to be certified with a carbon intensity that reflects the reduction of greenhouse gas emissions achieved by the voluntary capture of methane, subject to meeting specified requirements. (17 CCR 95488.9 et al)
5. Requires, by regulation, the carbon intensities that reflect AME from dairy and swine manure projects to meet certain requirements in order to be eligible for credit generation. (17 CCR 95488.9 et al)

FISCAL EFFECT: Unknown.

COMMENTS: Dairy digesters are a renewable technology that uses livestock manure to produce methane, which is a renewable source of electrical energy generation and transportation fuel. The technology has many environmental and social benefits. In 2016, SB 1383 (Lara) established a statewide goal of reducing methane reductions by 40 percent below 2013 levels by 2030.

In total, California has 227 dairy digester projects, capturing methane from 255 dairy farms, and creating either renewable electricity, renewable natural gas, or hydrogen fuel. About 120 of the digesters are currently in operation, with the rest in development. According to California Climate Investments 2023 Annual Report, Greenhouse Gas Reduction Fund (GGRF) used for dairy digesters cost $9 per metric tons of carbon dioxide equivalent. Diary digesters are usually in the top three cost efficient uses of GGRF.

Dairy and livestock methane emissions originate from two primary sources, manure management, and enteric fermentation. Manure methane emissions can be reduced through two primary methods – installation of an anaerobic digester and alternative manure management practices. Dairy and livestock are responsible for over half of California’s methane emissions. Improved dairy manure management offers significant, near-term potential to achieve reductions in the state’s methane emissions, and potential dairy and livestock enteric emissions reduction technologies offer longer-term potential for additional GHG emission reductions.

SB 1383 (Lara), Chapter 395, Statutes of 2016, requires CARB to approve and implement the comprehensive short-lived climate pollutant (SLCP) strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in HFCs, and a 50% reduction in anthropogenic black carbon, by 2030. SB 1383 establishes specific procedures to regulate dairy sources of methane.

SB 1383 aimed to create a path for regulation of dairy methane sources, as long as it wasn’t before 2024. To date, CARB has not implemented such regulations. The existing LCFS regulation provides a “soft landing” in the event methane emissions become regulated, at least in California. Once any law, regulation, or legally binding mandate requiring greenhouse gas emission reductions from manure methane emissions from livestock and dairy projects is adopted, a methane capture project would be eligible to continue receiving LCFS credits the remainder of the project’s current (10-year) crediting period. CARB is currently updating its LCFS regulations.

According to the Author, CARB’s approach of incorporating avoided methane crediting for livestock methane as part of the LCFS undermines the state’s efforts to decarbonize the transportation sector, impedes our ability to reach climate goals, and entrenches and intensifies environmental injustice. This practice gives livestock methane an extremely negative carbon intensity score even though livestock gas is substantially identical to conventional gas. This has several implications: it creates lavish subsidies and incentives for the production and concentration of liquid manure which has significant environmental impacts particularly for lower income communities of color near industrial dairy and swine operations, it makes livestock gas more profitable than clean energy transportation fuel such as electric vehicles and electric vehicle charging infrastructure, and it transfers agricultural pollution to the transportation sector.

Supporters state this bill aims to rebalance CARB’s approach to reducing methane emissions from the dairy and livestock sector and decarbonizing the transportation sector by properly accounting for the carbon intensity of fuel derived from livestock manure. They believe that the state can only transition to clean, zero carbon energy and maintain our commitment to climate justice if LCFS accurately and fairly assesses the greenhouse gas emissions of the fuels in the program. Unfortunately, CARB misclassifies gas derived from livestock manure as carbon negative through an accounting trick known as avoided methane crediting, whereby CARB subtracts methane captured from massive manure pits in the production of factory farm gas from the overall carbon profile of the fuel. This bill would end that nonsensical and harmful practice.

Furthermore, supporters state that factory farm gas is indistinguishable from conventional gas and burns just as dirty. Digesters capture methane from landfills just as they do from liquid manure pits, yet gas from landfills does not enjoy the boost of avoided methane crediting and landfill gas is therefore considered carbon positive. To illustrate how nonsensical CARB’s methodology is, factory farm methane gas is considered far, far more climate-friendly than electricity developed entirely from true zero carbon sources like solar and wind.

Farming groups oppose the bill stating this measure will eliminate the dairy sector’s ability to continue reducing methane emissions as well as undermines the state’s short-lived climate pollutant reduction strategy. Reducing methane emissions is a key short-term climate policy priority for California and other jurisdictions. Unfortunately, this bill will:

• Eviscerate the SB 1383 dairy methane reduction programs.
• Eliminate the state’s most effective climate program.
• Undermine the state’s (SLCP) strategy.
• Interfere with the state’s ability to achieve recently adopted 2030 and 2045 climate goals.
• Strands more than $2 billion in dairy digester methane reduction project assets, including more than $700 million in state climate, utility ratepayer, and taxpayer funding.
• Eliminate more than 2.2 million metric tons of GHG (CO2e) reductions annually.
  

California’s dairy sector accounts for roughly 45 percent of all anthropogenic methane emissions in California. SB 1383 (2016) sought to reduce all SLCP emissions, including dairy manure methane emissions, by 40 percent by 2030. SB 1383 also created important incentive-based programs to achieve these reductions while avoiding methane leakage to other states.

Opponents from the renewable energy sector state this will dramatically reduce important LCFS market value that enables methane capture and beneficial use projects. Without that revenue stream, projects such as dairy digesters will not be able to be financed or implemented. The development of dairy digesters is widely recognized by CARB and the Legislative Analyst Office as the most productive and cost-effective climate investment currently being implemented. Without avoided methane crediting under the LCFS, new projects will not be developed, and existing projects will not remain economical and will cease operating.

Also opponents state that existing statute (SB 1383) requires dairy crediting to biomethane in the LCFS for at least ten years (even if a mandatory rule is ever developed for manure management methane). Climate investors will likely cease investments if a legislatively guaranteed ten-year security credit is arbitrarily cut short without any substantive justification for such a change in policy. The LCFS must be fuel-neutral, driven by CARB’s science-based analysis, capable of incentivizing real-world investment, and focused on performance-based GHG outcomes. This includes any potential amendments that would circumvent the CARB LCFS process, delay methane reduction efforts, harm California’s family dairies or change carbon intensity pathways which would substantially curb private investment. As CARB expressed in December 2023, Ending (dairy) avoided methane crediting in 2025 could stop the development of new anaerobic digestor projects and also cause operating digestors to shut down if the operational expense is greater than the value of the gas and other incentives received by the dairies. Without anaerobic digesters, California would not be able to meet its SB 1383 methane reduction goals.”

The committee may wish to consider that this bill should become a study that examines the impact of AME from livestock manure on air and water quality and the impact on California Dairies removing AME from livestock manure from LCFS.

REGISTERED SUPPORT / OPPOSITION:

Support

350 Bay Area Action

350 Humboldt

350 Sacramento

350 Ventura County Climate Hub

Activesgv

Animal Legal Defense Fund

Arkansas Ozarks Waterkeeper

Asian Pacific Environmental Network

California Coastkeeper Alliance

California Environmental Voters

CAUSE

CCAEJ

Ceja Action

Center for Biological Diversity

Center for Food Safety; the

Center on Race, Poverty & the Environment

Central California Asthma Collaborative

Central California Environmental Justice Network

Central Valley Air Quality Coalition (CVAQ)

Clean Earth 4 Kids

Clean Water Action

Climate Action California

Communities for a Better Environment

Community Water Center

Defensores Del Valle Central Para

El Agua Y Aire Limpio

Dolores Huerta Foundation

Earthjustice

Environmental Health Coalition

Environmental Law Foundation

Food & Water Watch

Fresno Building Healthy Communities

Glendale Environmental Coaltion

Leadership Counsel Action, a Project of Tides Advocacy

Leadership Counsel for Justice and Accountability

People's Collective for Environmental Justice

Pink Panthers

Planning and Conservation League

Psr-la

San Francisco Physicians for Social Responsibility

San Joaquin Valley Democratic Club

Santa Cruz Climate Action Network

Scope LA

Sierra Club California

Socially Responsible Agriculture Project

The Climate Center

Union of Concerned Scientists

Valley Improvement Projects (VIP)

Opposition

3degrees INC.

3g Cng

Aemetis

Agricultural Council of California

Agricultural Energy Consumers Association

American Biogas Council

Amp Americas

Anew Climate LLC

Athens Services

Berq Rng

Bioenergy Association of California

Bridge to Renewables

Brightmark

Calchamber

Calgren Dairy Fuels, LLC

California Bioenergy LLC

California Cattlemen’s Association

California Dairies INC.

California Dairy Campaign

California Farm Bureau

California Hydrogen Business Council

California Hydrogen Coalition

California Renewable Transportation Alliance

California Teamsters Public Affairs Council

California Waste & Recycling Association

Clean Energy

Cleanfuture, INC.

Coalition for Renewable Natural Gas

Dairy Farmers of America

Dairy Institute of California

Digester Doc LLC

Dominion Energy

E.J. Harrison and Sons, INC.

EFI USA

Envitec Biogas

GEVO

Gladstein Neandross & Associates

Hexagon Agility

Host Bioenergy Systems North America

Land O'lakes, INC.

Lf Bioenergy

Low Carbon Fuels Coalition

Maas Energy Works

Mead & Hunt

Milk Producers Council

Modern Hydrogen

Monarch Bio Energy, LLC

Napa Recycling and Waste Services

National Milk Producers Federation

National Pork Producers Council

National Ready Mixed Concrete Company

Newtrient LLC

NLC Energy

Northern Biogas

Northern Recycling, LLC

Oberon Fuels

Outagamie Clean Energy Partners LLC

Planet Biogas

Raven SR

Republic Services INC.

REV

Roeslein Alternative Energy

Rush Enterprises

Seaboard Foods Rng, LLC

Smart Policy Group

South San Francisco Scavenger Company

Southern California Gas Company

Swinerton Energy, INC.

The Transport Project

Truck and Engine Manufacturers Association

U.S. Energy

Ugi Energy Services, LLC

US Renewable Energy Development Capital, INC.

Valkyrie Analytics, INC.

Valley Milk

Vespene Energy

Waste Connections

Western Propane Gas Association

Western United Dairies

WM

Analysis Prepared by: Victor Francovich / AGRI. / (916) 319-2084

Date of Hearing: April 22, 2024

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Isaac G. Bryan, Chair

ABPCA Bill Id:AB 2870 (

Author:Muratsuchi) – As Amended Ver:April 15, 2024

SUBJECT: Low Carbon Fuel Standard regulations: carbon intensity calculation: avoided methane emissions from livestock manure: prohibition

SUMMARY: Prohibits the Air Resources Board (ARB) from including avoided methane emissions (i.e., any captured methane from livestock manure management) in the calculation of carbon intensity for purposes of evaluation of a fuel pathway in the Low Carbon Fuel Standard (LCFS) regulation.

EXISTING LAW:

1. Pursuant to Governor Schwarzenegger's Executive Order S-01-07, sets a statewide goal to reduce the carbon intensity (CI) of California's transportation fuels by at least 10% by 2020. The order required ARB to consider adopting a LCFS to implement this goal. In 2009, ARB adopted the LCFS as a regulation. The LCFS attributes CI values to a variety of fuels based on direct and indirect greenhouse gas (GHG) emissions. The LCFS permits producers of certain low CI fuels to opt in to LCFS regulation for the purpose of generating credits, which can be banked and used for compliance, sold to regulated parties, and purchased and retired by regulated parties. In addition, LCFS credits can be exported to other GHG emission reduction programs. (17 CCR 95840 et seq.)
2. Requires ARB to approve and implement the comprehensive short-lived climate pollutant (SLCP) strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in hydrofluorocarbon gases (HFCs), and a 50% reduction in anthropogenic black carbon, by 2030. (Health and Safety Code (HSC) 39730.5)
3. Requires ARB to adopt and implement regulations on or after January 1, 2024 to reduce methane emissions from dairy and livestock manure management operations, subject to a variety of conditions and requirements, including requiring ARB and the Public Utilities Commission (PUC) to establish energy infrastructure development and procurement policies for dairy biomethane projects, as specified. (HSC 39730.7(b))
4. Requires ARB, no later than January 1, 2018, to provide guidance on credits generated pursuant to the LCFS and cap-and-trade regulations from the methane reduction protocols described in the SLCP strategy and ensure that projects developed before the implementation of any dairy methane regulations receive credit for at least 10 years. (HSC 39730.7(e))
5. The LCFS regulation includes the following provision regarding avoided methane:

95488.9(f) Carbon Intensities that Reflect Avoided Methane Emissions from Dairy and Swine Manure or Organic Waste Diverted from Landfill Disposal.

(1) A fuel pathway that utilizes biomethane from dairy cattle or swine manure digestion may be certified with a CI that reflects the reduction of greenhouse gas emissions achieved by the voluntary capture of methane, provided that:

(A) A biogas control system, or digester, is used to capture biomethane from manure management on dairy cattle and swine farms that would otherwise be vented to the atmosphere as a result of livestock operations from those farms.

(B) The baseline quantity of avoided methane reflected in the CI calculation is additional to any legal requirement for the capture and destruction of biomethane.

(2) A fuel pathway that utilizes an organic material may be certified with a CI that reflects the reduction of greenhouse gas emissions achieved by the voluntary diversion from decomposition in a landfill and the associated fugitive methane emissions, provided that:

(A) The organic material that is used as a feedstock would otherwise have been disposed of by landfilling, and the diversion is additional to any legal requirement for the diversion of organics from landfill disposal.

(B) Any degradable carbon that is not converted to fuel is subsequently treated in an aerobic system or otherwise is prevented from release as fugitive methane. Upon request, the applicant must demonstrate that emissions are not significant beyond the system boundary of the fuel pathway.

(C) The baseline quantity of avoided methane reflected in the CI calculation is additional to any legal requirement for the avoidance or capture and destruction of biomethane.

(3) Carbon intensities that reflect avoided methane emissions from dairy and swine manure or organic waste projects are subject to the following requirements for credit generation:

(A) Crediting Periods. Avoided methane crediting for dairy and swine manure pathways as described in (f)(1) above, and for landfill diversion pathways as described in (f)(2) above, is limited to three consecutive 10 years crediting periods, counting from the quarter following Executive Officer approval of the application. The pathway holder must formally request each subsequent crediting period for the project through the LRT-CBTS.

(B) Notwithstanding (A) above, in the event that any law, regulation, or legally binding mandate requiring either greenhouse gas emission reductions from manure methane emissions from livestock and dairy projects or diversion of organic material from landfill disposal, comes into effect in California during a project’s crediting period, then the project is only eligible to continue to receive LCFS credits for those greenhouse gas emission reductions for the remainder of the project’s current crediting period. The project may not request any subsequent crediting periods.

(C) Notwithstanding (A) above, projects that have generated CARB Compliance Offset Credits under the market-based compliance mechanism set forth in title 17, California Code of Regulations Chapter 1, Subchapter 10, article 5 (commencing with section 95800) may apply to receive credits under the LCFS. However, the LCFS crediting period for such projects is aligned with the crediting period for Compliance Offset Credits, and does not reset when the project is certified under the LCFS.

(17 CCR 95488.9(f))

THIS BILL:

1. Prohibits ARB from including avoided methane emissions in the CI calculation for purposes of its evaluation or reevaluation of a LCFS fuel pathway.
2. Defines “avoided methane emissions” as any captured methane from livestock manure management.
3. Declares that Section 95488.9(f) of the LCFS regulation is null and void as it applies to fuels derived from livestock manure.

FISCAL EFFECT: Unknown

COMMENTS:

1. Background. SB 1383 (Lara), Chapter 395, Statutes of 2016, requires ARB to approve and implement the comprehensive SLCP strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in HFCs, and a 50% reduction in anthropogenic black carbon, by 2030. SB 1383 establishes specific procedures to regulate dairy sources of methane. Specifically, regulations to reduce methane emissions from dairy and livestock manure management operations are subject to the following conditions:
   • 1. Reductions are limited to 40% below 2013 levels by 2030;
     2. Requires emission reduction regulations to be implemented on or after 2024;
     3. ARB must first complete specified steps, including stakeholder consultation, public meetings, and research;
     4. ARB must determine the regulations are technologically feasible, economically feasible, cost-effective, and minimize and mitigate potential leakage;
     5. Requires ARB to analyze progress toward the targets and authorizes ARB to reduce the 40% by 2030 goal if the analysis determines that progress has not been made due to insufficient funding, technical or market barriers;
     6. Requires ARB and PUC to establish energy infrastructure development and procurement policies for dairy biomethane projects, including directing gas utilities to implement at least five dairy biomethane pilot projects; and
     7. Enteric emission reductions shall be achieved only through incentive-based mechanisms until ARB determines that a cost-effective, considering the impact on animal productivity, scientifically proven means of reducing enteric emissions is available and that adoption of the enteric emissions reduction method would not damage animal health, public health, or consumer acceptance.

Dairy and livestock methane emissions originate from two primary sources, manure management, and enteric fermentation. Manure methane emissions can be reduced through two primary methods – installation of an anaerobic digester and alternative manure management practices.

Dairy and livestock are responsible for over half of California’s methane emissions. Improved dairy manure management offers significant, near-term potential to achieve reductions in the state’s methane emissions, and potential dairy and livestock enteric emissions reduction technologies offer longer-term potential for additional GHG emission reductions. 

To date, methane emissions from dairies remain unregulated in California, as well as in other states and provinces throughout North America, which are or may be sources of LCFS credits. As a result, avoiding dairy methane emissions through capture and/or destruction is considered by ARB, in the LCFS regulation, to be “additional” to existing legal requirements.

1. Author’s statement:

The State of California should not be incentivizing the production of methane. Massive dairy methane farms are the biggest polluters in the San Joaquin Valley, which has the worst air quality in the nation. Aside from methane, these industrial dairy farms produce nitrous oxide, ammonia, and particulate pollution, as well as poisoning the water and land for low income and immigrant Valley residents. AB 2870 will end the state's practice of incentivizing dairy farms to increase their pollution and will end our misguided practice of offloading agricultural pollution to the transportation sector.

1. Why does capturing methane from dairy sources count for so much in the LCFS? As noted above, the relatively high value of capturing methane from dairy sources is a direct consequence of the absence of legal controls on these sources. Passed in 2016, SB 1383 aimed to create a path for regulation of dairy methane sources, as long as it wasn’t before 2024. To date, ARB has not implemented such regulations. So both the sides of the avoided methane credit ledger are a result of ARB regulatory decisions.

The existing LCFS regulation provides a “soft landing” in the event methane emissions become regulated, at least in California. Once “any law, regulation, or legally binding mandate requiring…greenhouse gas emission reductions from manure methane emissions from livestock and dairy projects” is adopted, a methane capture project would be eligible to continue receiving LCFS credits the remainder of the project’s current (10-year) crediting period.

In the current rulemaking updating the LCFS, ARB staff proposes the following provision to eventually deny avoided methane credit for new projects:

For projects that break ground after December 31, 2029, staff is proposing that pathways for avoided methane crediting be available through 2040 for biomethane used as a transportation fuel, and through 2045 for biomethane used to produce hydrogen.

1. Not just a California issue. As the ARB table below shows, 84% of LCFS biomethane credits originate from sources outside California. The 16% from in-state in 2022 represents a significant increase, surpassing 10% for the first time based on several new in-state projects commencing. Notwithstanding the recent growth in in-state projects, which observers attribute to the avoided methane credit rules, the trend of out of state biomethane sources dominating the LCFS is likely to continue based on lower costs, weaker regulations, and less stringent pipeline injection standards in other states, combined with ARB’s approach of indiscriminately allowing sources located anywhere in North America.

1. Devaluing existing credits. In contrast to ARB’s “soft landing” and proposed 2040/2045 cutoff for new projects, this bill would terminate avoided methane credit on day one. The author may wish to consider providing a transition period for existing LCFS credits, rather than immediately eliminating all avoided methane credit the day the bill goes into effect.
2. Double referral. This bill has been double referred to the Agriculture Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

350 Bay Area Action
350 Humboldt
350 Sacramento
350 Ventura County Climate Hub
Action Asian Pacific Environmental Network
ActiveSGV
Animal Legal Defense Fund
Arkansas Ozarks Waterkeeper
Asian Pacific Environmental Network
California Coastkeeper Alliance
California Environmental Voters
California Food and Farming Network
CAUSE
CCAEJ
CEJA Action
Center for Biological Diversity
Center for Food Safety
Center on Race, Poverty & the Environment
Central California Asthma Collaborative
Central California Environmental Justice Network
Central Valley Air Quality Coalition
Clean Earth 4 Kids
Clean Water Action
Climate Action California
Communities for A Better Environment
Community Water Center
Defensores Del Valle Central Para El Agua Y Aire Limpio
Dolores Huerta Foundation
Earthjustice
Environmental Health Coalition
Environmental Law Foundation
Food & Water Watch
Fresno Building Healthy Communities
Glendale Environmental Coalition
Leadership Counsel Action, a Project of Tides Advocacy
Leadership Counsel for Justice and Accountability
People’s Collective for Environmental Justice
Physicians for Social Responsibility - Los Angeles
Pink Panthers
Planning and Conservation League
San Francisco Bay Area Physicians for Social Responsibility
San Francisco Physicians for Social Responsibility
San Joaquin Valley Democratic Club
Santa Cruz Climate Action Network
Scope
Scope LA
Sierra Club California
Socially Responsible Agriculture Project
The Climate Center
Union of Concerned Scientists
Valley Improvement Projects

Opposition

3degrees
3g CNG
Aemetis
Agricultural Council of California
Agricultural Energy Consumers Association
American Biogas Council
Amp Americas
Anew Climate
Athens Services
Berq RNG
Bioenergy Association of California
Bridge to Renewables
Brightmark
CalChamber
Calgren Dairy Fuels
California Bioenergy
California Dairies
California Dairy Campaign
California Farm Bureau
California Hydrogen Business Council
California Hydrogen Coalition
California Renewable Transportation Alliance
California Waste & Recycling Association
Clean Energy
Cleanfuture
Coalition for Renewable Natural Gas
Dairy Farmers of America
Dairy Institute of California
Digester Doc
Dominion Energy
E.J. Harrison and Sons
Efi USA
Envitec Biogas
Gevo
Gladstein Neandross & Associates
Hexagon Agility
Host Bioenergy Systems North America
Land O'Lakes
LF Bioenergy
Low Carbon Fuels Coalition
Maas Energy Works
Mead & Hunt
Milk Producers Council
Modern Hydrogen
Monarch Bio Energy
Napa Recycling and Waste Services
National Milk Producers Federation
National Pork Producers Council
National Ready Mixed Concrete Company
Newtrient
NLC Energy
Northern Recycling
Oberon Fuels
Outagamie Clean Energy Partners
Planet Biogas
Raven SR
Republic Services
Rev
Roeslein Alternative Energy
Rush Enterprises
Seaboard Foods RNG
Smart Policy Group
South San Francisco Scavenger Company
Southern California Gas Company
Swinerton Energy
The Transport Project
Truck and Engine Manufacturers Association
U.S. Energy
UGI Energy Services
US Renewable Energy Development Capital
Valkyrie Analytics
Valley Milk
Vespene Energy
Western Propane Gas Association
Western United Dairies
WM

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /

Date of Hearing: April 22, 2024

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Isaac G. Bryan, Chair

ABPCA Bill Id:AB 2870 (

Author:Muratsuchi) – As Amended Ver:April 15, 2024

SUBJECT: Low Carbon Fuel Standard regulations: carbon intensity calculation: avoided methane emissions from livestock manure: prohibition

SUMMARY: Prohibits the Air Resources Board (ARB) from including avoided methane emissions (i.e., any captured methane from livestock manure management) in the calculation of carbon intensity for purposes of evaluation of a fuel pathway in the Low Carbon Fuel Standard (LCFS) regulation.

EXISTING LAW:

1. Pursuant to Governor Schwarzenegger's Executive Order S-01-07, sets a statewide goal to reduce the carbon intensity (CI) of California's transportation fuels by at least 10% by 2020. The order required ARB to consider adopting a LCFS to implement this goal. In 2009, ARB adopted the LCFS as a regulation. The LCFS attributes CI values to a variety of fuels based on direct and indirect greenhouse gas (GHG) emissions. The LCFS permits producers of certain low CI fuels to opt in to LCFS regulation for the purpose of generating credits, which can be banked and used for compliance, sold to regulated parties, and purchased and retired by regulated parties. In addition, LCFS credits can be exported to other GHG emission reduction programs. (17 CCR 95840 et seq.)
2. Requires ARB to approve and implement the comprehensive short-lived climate pollutant (SLCP) strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in hydrofluorocarbon gases (HFCs), and a 50% reduction in anthropogenic black carbon, by 2030. (Health and Safety Code (HSC) 39730.5)
3. Requires ARB to adopt and implement regulations on or after January 1, 2024 to reduce methane emissions from dairy and livestock manure management operations, subject to a variety of conditions and requirements, including requiring ARB and the Public Utilities Commission (PUC) to establish energy infrastructure development and procurement policies for dairy biomethane projects, as specified. (HSC 39730.7(b))
4. Requires ARB, no later than January 1, 2018, to provide guidance on credits generated pursuant to the LCFS and cap-and-trade regulations from the methane reduction protocols described in the SLCP strategy and ensure that projects developed before the implementation of any dairy methane regulations receive credit for at least 10 years. (HSC 39730.7(e))
5. The LCFS regulation includes the following provision regarding avoided methane:

95488.9(f) Carbon Intensities that Reflect Avoided Methane Emissions from Dairy and Swine Manure or Organic Waste Diverted from Landfill Disposal.

(1) A fuel pathway that utilizes biomethane from dairy cattle or swine manure digestion may be certified with a CI that reflects the reduction of greenhouse gas emissions achieved by the voluntary capture of methane, provided that:

(A) A biogas control system, or digester, is used to capture biomethane from manure management on dairy cattle and swine farms that would otherwise be vented to the atmosphere as a result of livestock operations from those farms.

(B) The baseline quantity of avoided methane reflected in the CI calculation is additional to any legal requirement for the capture and destruction of biomethane.

(2) A fuel pathway that utilizes an organic material may be certified with a CI that reflects the reduction of greenhouse gas emissions achieved by the voluntary diversion from decomposition in a landfill and the associated fugitive methane emissions, provided that:

(A) The organic material that is used as a feedstock would otherwise have been disposed of by landfilling, and the diversion is additional to any legal requirement for the diversion of organics from landfill disposal.

(B) Any degradable carbon that is not converted to fuel is subsequently treated in an aerobic system or otherwise is prevented from release as fugitive methane. Upon request, the applicant must demonstrate that emissions are not significant beyond the system boundary of the fuel pathway.

(C) The baseline quantity of avoided methane reflected in the CI calculation is additional to any legal requirement for the avoidance or capture and destruction of biomethane.

(3) Carbon intensities that reflect avoided methane emissions from dairy and swine manure or organic waste projects are subject to the following requirements for credit generation:

(A) Crediting Periods. Avoided methane crediting for dairy and swine manure pathways as described in (f)(1) above, and for landfill diversion pathways as described in (f)(2) above, is limited to three consecutive 10 years crediting periods, counting from the quarter following Executive Officer approval of the application. The pathway holder must formally request each subsequent crediting period for the project through the LRT-CBTS.

(B) Notwithstanding (A) above, in the event that any law, regulation, or legally binding mandate requiring either greenhouse gas emission reductions from manure methane emissions from livestock and dairy projects or diversion of organic material from landfill disposal, comes into effect in California during a project’s crediting period, then the project is only eligible to continue to receive LCFS credits for those greenhouse gas emission reductions for the remainder of the project’s current crediting period. The project may not request any subsequent crediting periods.

(C) Notwithstanding (A) above, projects that have generated CARB Compliance Offset Credits under the market-based compliance mechanism set forth in title 17, California Code of Regulations Chapter 1, Subchapter 10, article 5 (commencing with section 95800) may apply to receive credits under the LCFS. However, the LCFS crediting period for such projects is aligned with the crediting period for Compliance Offset Credits, and does not reset when the project is certified under the LCFS.

(17 CCR 95488.9(f))

THIS BILL:

1. Prohibits ARB from including avoided methane emissions in the CI calculation for purposes of its evaluation or reevaluation of a LCFS fuel pathway.
2. Defines “avoided methane emissions” as any captured methane from livestock manure management.
3. Declares that Section 95488.9(f) of the LCFS regulation is null and void as it applies to fuels derived from livestock manure.

FISCAL EFFECT: Unknown

COMMENTS:

1. Background. SB 1383 (Lara), Chapter 395, Statutes of 2016, requires ARB to approve and implement the comprehensive SLCP strategy to achieve, from 2013 levels, a 40% reduction in methane, a 40% reduction in HFCs, and a 50% reduction in anthropogenic black carbon, by 2030. SB 1383 establishes specific procedures to regulate dairy sources of methane. Specifically, regulations to reduce methane emissions from dairy and livestock manure management operations are subject to the following conditions:
   • 1. Reductions are limited to 40% below 2013 levels by 2030;
     2. Requires emission reduction regulations to be implemented on or after 2024;
     3. ARB must first complete specified steps, including stakeholder consultation, public meetings, and research;
     4. ARB must determine the regulations are technologically feasible, economically feasible, cost-effective, and minimize and mitigate potential leakage;
     5. Requires ARB to analyze progress toward the targets and authorizes ARB to reduce the 40% by 2030 goal if the analysis determines that progress has not been made due to insufficient funding, technical or market barriers;
     6. Requires ARB and PUC to establish energy infrastructure development and procurement policies for dairy biomethane projects, including directing gas utilities to implement at least five dairy biomethane pilot projects; and
     7. Enteric emission reductions shall be achieved only through incentive-based mechanisms until ARB determines that a cost-effective, considering the impact on animal productivity, scientifically proven means of reducing enteric emissions is available and that adoption of the enteric emissions reduction method would not damage animal health, public health, or consumer acceptance.

Dairy and livestock methane emissions originate from two primary sources, manure management, and enteric fermentation. Manure methane emissions can be reduced through two primary methods – installation of an anaerobic digester and alternative manure management practices.

Dairy and livestock are responsible for over half of California’s methane emissions. Improved dairy manure management offers significant, near-term potential to achieve reductions in the state’s methane emissions, and potential dairy and livestock enteric emissions reduction technologies offer longer-term potential for additional GHG emission reductions. 

To date, methane emissions from dairies remain unregulated in California, as well as in other states and provinces throughout North America, which are or may be sources of LCFS credits. As a result, avoiding dairy methane emissions through capture and/or destruction is considering by ARB, in the LCFS regulation, to be “additional” to existing legal requirements.

1. Author’s statement:

The State of California should not be incentivizing the production of methane. Massive dairy methane farms are the biggest polluters in the San Joaquin Valley, which has the worst air quality in the nation. Aside from methane, these industrial dairy farms produce nitrous oxide, ammonia, and particulate pollution, as well as poisoning the water and land for low income and immigrant Valley residents. AB 2870 will end the state's practice of incentivizing dairy farms to increase their pollution and will end our misguided practice of offloading agricultural pollution to the transportation sector.

1. Why does capturing methane from dairy sources count for so much in the LCFS? As noted above, the relatively high value of capturing methane from dairy sources is a direct consequence of the absence of legal controls on these sources. Passed in 2016, SB 1383 aimed to create a path for regulation of dairy methane sources, as long as it wasn’t before 2024. To date, ARB has not implemented such regulations. So both the sides of the avoided methane credit ledger are a result of ARB regulatory decisions.

The existing LCFS regulation provides a “soft landing” in the event methane emissions become regulated, at least in California. Once “any law, regulation, or legally binding mandate requiring…greenhouse gas emission reductions from manure methane emissions from livestock and dairy projects” is adopted, a methane capture project would be eligible to continue receiving LCFS credits the remainder of the project’s current (10-year) crediting period.

In the current rulemaking updating the LCFS, ARB staff proposes the following provision to eventually deny avoided methane credit for new projects:

For projects that break ground after December 31, 2029, staff is proposing that pathways for avoided methane crediting be available through 2040 for biomethane used as a transportation fuel, and through 2045 for biomethane used to produce hydrogen.

1. Not just a California issue. As the ARB table below shows, 84% of LCFS biomethane credits originate from sources outside California. The 16% from in-state in 2022 represents a significant increase, surpassing 10% for the first time based on several new in-state projects commencing. Notwithstanding the recent growth in in-state projects, which observers attribute to the avoided methane credit rules, the trend of out of state biomethane sources dominating the LCFS is likely to continue based on lower costs, weaker regulations, and less stringent pipeline injection standards in other states, combined with ARB’s approach of indiscriminately permitting sources located anywhere in North America.

1. Devaluing existing credits. In contrast to ARB’s “soft landing” and proposed 2040/2045 cutoff for new projects, this bill would terminate avoided methane credit on day one. The author may wish to consider providing a transition period for existing LCFS credits, rather than immediately eliminating all avoid methane credit the day the bill goes into effect.
2. Double referral. This bill has been double referred to the Agriculture Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

350 Bay Area Action
350 Humboldt
350 Sacramento
350 Ventura County Climate Hub
Action Asian Pacific Environmental Network
ActiveSGV
Animal Legal Defense Fund
Arkansas Ozarks Waterkeeper
Asian Pacific Environmental Network
California Coastkeeper Alliance
California Environmental Voters
California Food and Farming Network
CAUSE
CCAEJ
CEJA Action
Center for Biological Diversity
Center for Food Safety
Center on Race, Poverty & the Environment
Central California Asthma Collaborative
Central California Environmental Justice Network
Central Valley Air Quality Coalition
Clean Earth 4 Kids
Clean Water Action
Climate Action California
Communities for A Better Environment
Community Water Center
Defensores Del Valle Central Para El Agua Y Aire Limpio
Dolores Huerta Foundation
Earthjustice
Environmental Health Coalition
Environmental Law Foundation
Food & Water Watch
Fresno Building Healthy Communities
Glendale Environmental Coalition
Leadership Counsel Action, a Project of Tides Advocacy
Leadership Counsel for Justice and Accountability
People’s Collective for Environmental Justice
Physicians for Social Responsibility - Los Angeles
Pink Panthers
Planning and Conservation League
San Francisco Bay Area Physicians for Social Responsibility
San Francisco Physicians for Social Responsibility
San Joaquin Valley Democratic Club
Santa Cruz Climate Action Network
Scope
Scope LA
Sierra Club California
Socially Responsible Agriculture Project
The Climate Center
Union of Concerned Scientists
Valley Improvement Projects

Opposition

3degrees
3g CNG
Aemetis
Agricultural Council of California
Agricultural Energy Consumers Association
American Biogas Council
Amp Americas
Anew Climate
Athens Services
Berq RNG
Bioenergy Association of California
Bridge to Renewables
Brightmark
CalChamber
Calgren Dairy Fuels
California Bioenergy
California Dairies
California Dairy Campaign
California Farm Bureau
California Hydrogen Business Council
California Hydrogen Coalition
California Renewable Transportation Alliance
California Waste & Recycling Association
Clean Energy
Cleanfuture
Coalition for Renewable Natural Gas
Dairy Farmers of America
Dairy Institute of California
Digester Doc
Dominion Energy
E.J. Harrison and Sons
Efi USA
Envitec Biogas
Gevo
Gladstein Neandross & Associates
Hexagon Agility
Host Bioenergy Systems North America
Land O'Lakes
LF Bioenergy
Low Carbon Fuels Coalition
Maas Energy Works
Mead & Hunt
Milk Producers Council
Modern Hydrogen
Monarch Bio Energy
Napa Recycling and Waste Services
National Milk Producers Federation
National Pork Producers Council
National Ready Mixed Concrete Company
Newtrient
NLC Energy
Northern Recycling
Oberon Fuels
Outagamie Clean Energy Partners
Planet Biogas
Raven SR
Republic Services
Rev
Roeslein Alternative Energy
Rush Enterprises
Seaboard Foods RNG
Smart Policy Group
South San Francisco Scavenger Company
Southern California Gas Company
Swinerton Energy
The Transport Project
Truck and Engine Manufacturers Association
U.S. Energy
UGI Energy Services
US Renewable Energy Development Capital
Valkyrie Analytics
Valley Milk
Vespene Energy
Western Propane Gas Association
Western United Dairies
WM

Analysis Prepared by: Lawrence Lingbloom / NAT. RES. /