RNG in California: Leadership, Market Certainty

By the conclusion of California’s 2015-‘16 legislative session at the end of August, amid a flurry of uncertainty and opposition, the state legislature passed SB 32, which extends the LCFS and cap-and-trade compliance programs beyond 2020 to 2030.
By Marcus Gillette | October 20, 2016

Earlier this summer, reports emerged that California’s Low Carbon Fuel Standard was at risk of major reform, or even elimination. The RNG Coalition responded, in solidarity with like-minded clean energy, renewable fuels, organized labor and environmental advocates.

By the conclusion of California’s 2015-‘16 legislative session at the end of August, amid a flurry of uncertainty and opposition, the state legislature passed SB 32. The bill effectively extends the LCFS and cap-and-trade compliance programs beyond 2020 to 2030. "The LCFS as a compliance program and market driver is here to stay and renewable natural gas will continue to be one of its major success stories,” said Johannes Escudero, RNG Coalition CEO and executive director. “We commend Gov. Brown, Sen. Pavley, Assemblymember E. Garcia, and the California legislature for their leadership to assure clean air, green jobs, and low carbon fuel options throughout California for decades to come.”

Ten years ago (to the day, as I write this), California passed Assembly Bill 32, landmark legislation requiring the state to reduce its carbon emissions to 1990 levels by the year 2020. The law promulgated the state’s current LCFS and cap-and-trade programs. The LCFS program and credit market have effectively driven production, deployment, and utilization of renewable natural gas (RNG) and other biomass and waste-derived clean fuels in the transportation sector. This is especially true for compressed and liquefied forms of RNG, the lowest carbon intensity transportation fuel available. In 2015, 50 percent of all natural gas vehicle fuel used in California was RNG.

The value of LCFS credits began dropping this summer, amid speculation that the program’s future was in jeopardy. After peaking at a weekly average above $122 per metric ton in early June, LCFS credit prices dipped to an August average of just $75, according to activity reported to the state’s Air Resources Board.

“Above all, the RNG Coalition focused on protecting and promoting RNG in California. We knew that the best thing we could do for the industry was restore LCFS market stability and secure that stability long-term,” said David Cox, operations director and general counsel for the RNG Coalition. Throughout July and August, the RNG Coalition rallied members and industry stakeholders, and coalesced and worked with other clean fuel groups, organized labor, and environmental advocates to defend the LCFS and extend the climate programs beyond 2020 to 2030. 

On August 24, California’s legislature passed SB 32 (Pavley). The bill builds upon AB 32 and requires the state to reduce its carbon emissions 40 percent below 1990 levels by 2030.

“We are better organized than we’ve ever been, and the results speak for themselves,” said RNG Coalition Chairman Evan Williams, who attended the bill signing on behalf of the RNG Coalition upon invitation from the governor’s office.

Creating LCFS market certainty beyond 2020 and passing SB 32 was a priority for the RNG Coalition, the trade association that provides public policy advocacy and education for the RNG industry in North America. RNG Coalition members produced or otherwise serviced 100 percent of the RNG participating in the LCFS program in 2015.

“Without the Coalition for Renewable Natural Gas, we would not have gotten SB 32/AB 197,” said Martha Aceves-Guzman, deputy legislative secretary for Gov. Jerry Brown. “It was excellent to finally have folks we can strategize with on how to work with members (of the Legislature). Next year will be equally critical.”

AB 197 (E. Garcia) was double-joined with SB 32 and also passed, creating additional oversight by the ARB legislature to prevent promulgation of regulations that fail to properly balance the needs of the environment with the economy. SB 32 would not have passed without AB 197. “Thank you for your work on the passage of AB 197 and SB 32. This has been a historical accomplishment,” said Carlos Gonzales, policy director for Assemblymember E. Garcia. “Your leadership and guidance during the last couple weeks of session made AB 197 and SB 32 possible.”

As a fitting conclusion, on Oct. 5, representatives from the RNG Coalition attended a celebration of AB 32’s extension by SB 32 and AB 197. “On behalf of the RNG industry, suppliers of ultraclean RNG transportation fuel, we recognize Gov. Brown and California’s lawmakers for their dedication to a healthy and robust market for RNG,” Cox added. “Passage of these bills quickly restored stability to LCFS credit prices, and has cemented Gov. Brown’s, Sen. Pavley's, and Assemblymember E. Garcia’s legacies as forward-thinking policy leaders.”

Assemblymember E. Garcia has been invited to speak—and attendees may have the opportunity to meet one of California’s rising legislative stars—at the RNG industry’s annual RNG Fuel, Heat, Power & Policy Conference Dec. 5-7, at the Hotel Del Coronado in San Diego, California.

Author: Marcus D. Gillette
Director of Public & Government Affairs,
Coalition for Renewable Natural Gas