California extends cap-and-trade program, implements low-carbon fuel standard

The California legislature voted to extend the state’s cap-and-trade program by 10 years to 2030 while also codifying the low carbon fuel standard (LCFS) into law. The California State Senate and Assembly both passed the cap-and-trade extension package (AB 398 and AB 617) by the two-thirds and simple majority votes necessary. 

“The passage of the cap-and-trade extension package is a win for the RNG (renewable natural gas) industry and the production of low-carbon biofuels in California,” says Nina Kapoor, manager of legislative and regulatory affairs for the Coalition for Renewable Natural Gas (RNG Coalition). “In addition to extending cap-and-trade, state law will now also recognize low-carbon transportation alternatives for purposes of allocating future greenhouse gas reduction funds (GGRF) from related auction revenues—funds that are needed to realize increased in-state development, deployment and utilization of RNG.”

AB 398 and its companion bill AB 617 are designed to extend the ability for California to continue using cap-and-trade to reduce greenhouse gas emissions 40 percent below 1990 levels by the year 2030. The package also codifies the low carbon fuel standard (LCFS) and identifies low- and zero-carbon transportation alternatives and short-lived climate pollutants such as methane in a list of funding priorities for auction revenues.

“We would like to thank Assemblymember Eduardo Garcia for his leadership. The explicit identification in his bill of low- and zero-carbon transportation alternatives and short-lived climate pollutants as funding priorities for GGRF auction revenues is critical in terms of realizing full production potential of RNG and other biofuels in state,” adds Johannes Escudero, CEO of the RNG Coalition. “The codification of the LCFS program into state law will provide additional market certainty that the industry needs to continue developing RNG for transportation fuel use both in California and across the country.”

Historically, the Low Carbon Transportation Fund has provided no money for in-state biofuels production and cap-and-trade-related GGRF has focused very little on the reduction of toxic air contaminants and short-lived climate pollutants (SLCP) outside of methane from the dairy sector.