03-13-18 CC RPT 19 - Laserfiche WebLink

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Participation in the California Air Resources Board's Low Carbon Fuel Standard Program — Page 2 BOARD RECOMMENDATION: On February 12, 2018, the Board of Public Utilities unanimously recommended that the City Council approve Riverside Public Utilities participation in the California Air Resources Board's Low Carbon Fuel Standard Program, including authorization of secondary market transactions to sell credits, compliance reporting and account management, and other Low Carbon Fuel Standard Program activities as may be required pursuant to regulation. BACKGROUND: The Low Carbon Fuel Standard (LCFS) Program is one of a number of programs established by the State of California and the California Air Resources Board (CARB) for the purposes of reducing statewide greenhouse (GHG) emissions to 1990 levels by 2020 and further reducing emissions to 40% below 1990 levels by 2030. These goals were put in place by the California Global Warming Solutions Act of 2006 (Assembly Bill 32 or "AB 32") and the Clean Energy and Pollution Reduction Act of 2015 (Senate Bill 350 or "SB 350"), respectively. The goal of the LCFS Program is to achieve a 10% reduction in the carbon intensity of transportation fuels by 2020. CARB is currently developing regulations to extend the LCFS Program to 2030 pursuant to SB 350. Unlike many other State GHG reduction programs, Riverside Public Utilities (RPU) is not mandated to participate in the LCFS Program. Instead, RPU may voluntarily opt into the LCFS Program in order to generate credits which can then be sold in secondary markets to other LCFS Program participants that have compliance obligations. Selling credits will provide RPU with revenue that must be used for electric vehicle (EV) education and other programs benefiting customers who are or will be owners of EVs. Upon opting into the LCFS Program, RPU must meet certain reporting requirements and ensure that revenue generated by the sale of credits is used in a manner consistent with the regulatory requirements. DISCUSSION: How the LCFS Program Works The LCFS Program is a basic "carrot and stick" program in which participants with transportation fuels that exceed specified targets must turn in LCFS credits to CARB (the stick), while participants that produce fuels below the specified target generate a credit (the carrot). Credit generators receive revenue when they sell the LCFS credits to the participants that have to turn them in. Fuel providers, such as refineries and fuel importers, that produce or import transportation fuels exceeding the target must participate in the LCFS Program and are required to turn in LCFS credits each year. These fuels include gasoline and diesel which have a higher carbon intensity than the target set by the LCFS Program regulation. Refineries and fuel importers report the carbon intensity of their fuels in terms of GHG emissions per unit of energy, and then turn in an LCFS credit for each metric ton of carbon dioxide equivalent that exceeds the annual target. LCFS credits are generated by fuel providers of low carbon intensity fuels, such as electricity when it is used in place of higher carbon intensity fuels for transportation purposes. Since the regulation applies to fuel providers, electric utilities such as RPU are eligible to opt into the program, accrue LCFS credits from electricity provided for charging EVs, and sell the credits to