State of Oregon Department of Environmental Quality

Written Comments July 2018, Clean Fuels Program 2018 Rulemaking Advisory Committee Meeting

Commenters Airlines for America Alternative Jet Fuel Producers Clean Future Inc. Coalition for Renewable Natural Gas Coleman Oil National Biodiesel Board Oregon Environmental Council Union of Concerned Scientists Western States Petroleum Association

July 27, 2018

Submitted via email to: OregonCleanFuels@deq.state.or.us Cory-Ann Wind Natural Resource Specialist Oregon Department of Environmental Quality 700 NE Multnomah Portland, OR 97204-1390 Re: Comments on the Proposed Changes to the Clean Fuels Program Dear Ms. Wind: Airlines for America1 (A4A) appreciates this opportunity to comment on the Department of Environmental Quality’s (DEQ’s) proposed changes to the Oregon Clean Fuels Program (CFP). As detailed below, A4A and its member airlines strongly support the inclusion of alternative jet fuel (AJF) as an eligible credit-generating “clean fuel” on an opt-in basis. Such an approach would provide needed regulatory and market incentives for AJF as well as support the stated purpose of the CFP. By way of background, A4A and its members are part of a global aviation coalition that has committed to a 1.5% annual average fuel efficiency improvement through 2020 and carbon neutral growth from 2020, subject to critical aviation infrastructure and technology advances achieved by government and industry. The initiatives our airlines are undertaking to further address greenhouse gas (GHG) emissions are designed to responsibly and effectively limit their fuel consumption, GHG contribution, and potential climate change impacts, while allowing commercial aviation to continue to serve as a key contributor to the U.S. and local economies. At the same time, we continue to build upon our strong record of reducing conventional air pollutant emissions. The availability of sustainable AJF in significant quantities is a key pillar to the achievement of the industry’s goals, and A4A and its members are working hard to lay the groundwork for the establishment of a sustainable AJF industry. AJF is particularly critical to the aviation industry’s decarbonization strategy as aviation, unlike ground transportation, cannot electrify in the near-term and is therefore reliant upon liquid fuels. There is particular interest among biofuel producers and A4A members in producing and utilizing sustainable AJF in the Oregon market. For example, FedEx Express and Southwest Airlines each have supply agreements with Red Rock Biofuels, which recently broke ground on a production facility capable of producing AJF in Lakeview, Oregon.2 In addition, Neste, the largest existing producer of on-road renewable diesel for the California and Oregon markets, is expected to begin providing AJF in the United

1 A4A is the principal trade and service organization of the U.S. scheduled airline industry. A4A members are Alaska Airlines, Inc.; American Airlines, Inc.; Atlas Air, Inc..; Federal Express Corporation.; Hawaiian Airlines; JetBlue Airways Corp.; Southwest Airlines Co.; United Continental Holdings, Inc.; and United Parcel Service Co. Air Canada is an associate member. 2 Kurt Liedtke, “Fueled for the future: Red Rock Biofuels facility breaks ground in Lakeview” (July 18, 2018) https://www.heraldandnews.com/news/local_news/fueled-for-the-future/article_b824da9c-49ad-5094-acac-21e71828b49d.html.

Oregon Department of Environmental Quality July 27, 2018 Page 2 States in 2019. Also, because the DEQ has proposed to allow opt-in credits for those who “import” AJF into Oregon for use in aircraft in the State, the CFP could well draw additional supply from elsewhere. For example, Fulcrum BioEnergy is developing a facility capable of producing AJF in Reno, Nevada, making them a potential AJF importer to Oregon. As the AJF industry continues to mature, these and other member airlines and fuel producers are actively exploring additional AJF agreements, and the prospect of a CFP credit for AJF is an important factor in these agreements. Modeling conducted for A4A by the National Renewable Energy Laboratory (NREL) pursuant to NREL’s Biomass Scenario Model demonstrates the synergistic relationship that airline off-take agreements can have when coupled with access to credit markets like the CFP. Notably, NREL’s modeling indicates that an additional credit for AJF would likely result in significantly increased production of both AJF and renewable diesel. The airline industry can thus play a critical role in helping to obtain financing for additional alternative fuel production facilities through dedicated off-take agreements, further promoting alternative fuel use. Crediting AJF on an opt-in basis in the CFP also advances its stated purpose. The purpose of the CFP is to “reduce the [average] amount of lifecycle [GHG] emissions per unit of energy by a minimum of 10 percent below 2010 levels by 2025.”3 By incentivizing investment in AJF through CFP credit generation, DEQ is supporting the program’s purpose. Improving the economics of AJF production will help incent airline investment in the fuel, further promoting its and other alternative fuel production, and as such will assist the State in lowering the average lifecycle GHG emissions of energy consumed.4 As noted, A4A strongly supports the DEQ’s proposal for AJF; however, we propose a few small revisions to the draft regulation consistent with the DEQ’s intent to include AJF. To fully ensure that AJF is properly integrated on an opt-in basis into the CFP, A4A suggests DEQ revise the definition of “Clean Fuel” at OAR 340-253-0000(24) to read (proposed revised text highlighted):

(24) “Clean fuel” means a transportation fuel whose carbon intensity is lower than the applicable clean fuel standard for gasoline and gasoline substitutes and alternatives listed in Table 1 under OAR 340-253-8010, or for diesel and diesel substitutes and alternatives listed in Table 2 under OAR 340-253-8020, and for alternative jet fuel listed in Table 3 under OAR 340-253-8030.5

Similarly, OAR 340-253-0200(3) should be revised to read (proposed revised text highlighted):

(3) Clean fuels. Clean fuels means a transportation fuel with a carbon intensity lower than the clean fuel standard for gasoline and their substitutes listed in Table 1 under OAR 340-253-8010, or diesel fuel and their substitutes listed in Table 2 under OAR 340-253-8020, and

3 OAR 340-253-0000(2). 4 A4A supports the DEQ’s proposal to allow AJF meeting the CFP requirements to be credited under the program on an opt-in basis without a mandate. As A4A explained in previous submissions, subjecting aircraft fuels to the State’s carbon intensity standards would raise federal preemption issues and would not be appropriate given the rigorous jet fuel specifications that make producing jet fuels a “higher hurdle” than producing ground-based fuels. That said, we strongly support the DEQ’s proposal to incentivize the use of AJF in aircraft by allowing a voluntary, opt-in credit for such fuels. By promoting the production and use of AJF, the DEQ would not cross into federal regulatory jurisdiction but rather would provide airlines an opportunity to better support the State’s GHG goals. Furthermore, the proposal is fully in line with the U.S. Environmental Protection Agency’s approach under the Renewable Fuel Standard (RFS): the RFS explicitly allows for the generation of Renewable Identification Numbers for the production of AJF without mandating the use of any particular volume of AJF. 5 See OAR 340-253-0000(24) (stricken text to be deleted; emboldened text to be added).

Oregon Department of Environmental Quality July 27, 2018 Page 3

alternative jet fuel listed in Table 3 under OAR 340-253-8030, as applicable, for that calendar year, such as:

(a) Bio-based CNG; (b) Bio-based L-CNG; (c) Bio-based LNG; (d) Electricity; (e) Fossil CNG; (f) Fossil L-CNG; (g) Fossil LNG; (h) Hydrogen or a hydrogen blend; and (i) Fossil LPG; and (j) Renewable LPG.; and (k) Alternative jet fuel.6

Lastly, to the extent that AJF would be considered a “clean fuel” eligible for “credit” generation but not for “deficits” under the CFP, we believe that the current provisions in OAR 340-253-1010 may need to be revised to reflect that AJF is only subject to crediting. Otherwise, it appears that AJF, as a “clean fuel,” might inadvertently trigger the deficit calculation provisions as they are currently written. If so, we suggest that the DEQ revise OAR 340-253-1010 as follows:

(1) Fuels included. Credits and deficits must be calculated for all regulated fuels and clean fuels, except that:

(a) Credits may be generated only for B100 that complies with an oxidation stability induction period of not less than 8 hours as determined by the test method described in the European standard EN 15751; (b) B100 that does not comply with subsection (a) can still be imported into Oregon and must be reported, but cannot generate credits for the CFP.; and (c) Only credits and no deficits may be calculated for alternative jet fuel.7

These minor modifications will ensure that AJF is properly treated as a Clean Fuel and its associated credits are properly calculated in the CFP. In sum, A4A and its members strongly support DEQ’s proposal to add AJF to the CFP as a credit-generating “clean fuel” because it sends the right market signals to promote alternative fuel use in the airline and other transportation industries as well as promotes the CFP’s stated purpose. Thank you for your consideration. Please let us know if you have any questions regarding our comments or would like to discuss them in greater detail. Sincerely yours,

Nancy N. Young Veronica C.K. Bradley Vice President, Environmental Affairs Director, Environmental Affairs

6 See OAR 340-253-0200(3) (stricken text to be deleted; emboldened text to be added). 7 See OAR 340-253-1010 (stricken text to be deleted; emboldened text to be added).

NOYES LAW CORPORATION

401 Spring Street, Suite 205 Nevada City, CA 95959

(530)264-7157

1

July 25, 2018

Cory-Ann Wind Natural Resource Specialist Oregon Department of Environmental Quality 700 NE Multnomah Portland, OR 97204-1390 RE: Support for Proposed Regulations to Authorize Crediting of Alternative Jet Fuel in Oregon’s Clean Fuels Program, and Recommended Clarifications Dear Ms. Wind: I am writing to express the strong support of the alternative jet fuel (“AJF”) producer group for the inclusion of AJF in Oregon’s Clean Fuels program (“CFP”). The AJF producers are also supportive of the specific regulatory mechanisms that the Department of Environmental Quality (“DEQ”) has proposed to enable the opt-in crediting of AJF uploaded in Oregon to generate credits under the CFP. However, I have identified several regulations that should likely include a reference to AJF to provide further clarity. Suggested regulatory language for these provisions is included in this letter. The AJF producers joining this letter are AltAir Fuels, Fulcrum BioEnergy, Gevo, Neste, Red Rock Biofuels, and Velocys. All of the AJF producers are actively commercializing very low carbon jet fuels that can be utilized in existing aircraft without modification. AltAir Fuels is the only dedicated renewable jet fuel refiner in the world. Now owned by World Energy, AltAir is supplying commercial quantities of alternative jet fuel to United Airlines at Los Angeles International Airport (LAX) from the AltAir production facility in Paramount, California. Fulcrum BioEnergy is developing a facility capable of producing aviation fuel in Reno, Nevada. Fulcrum has entered into agreements with United Airlines to supply 90 million gallons of fuel per year. Gevo utilizes chemical industry catalytic processes to produce alternative jet fuel from renewable alcohols. Gevo is currently supplying alternative jet fuel to AvFuels in the business aviation sector. Neste is the largest existing producer of on-road renewable diesel for the California and Oregon markets and has the capability to produce alternative jet fuel. Red Rock Biofuels is developing a production facility capable of producing AJF in Lakeview, Oregon. Red Rock has entered into supply agreements with FedEx and Southwest Airlines and plans to supply AJF into the California market. Velocys provides small-scale modular Fischer-Tropsch technology to alternative jet fuel producers, and has licensed its technology to Red Rock. Velocys is actively working with British Airways to develop a waste to AJF plant in the United Kingdom.

NOYES LAW CORPORATION

401 Spring Street, Suite 205 Nevada City, CA 95959

(530)264-7157

2

Strong Support for Inclusion of AJF in the LCFS and CFP

The AJF producer group has been highly supportive of the California Low Carbon Fuel Standard (“LCFS”) program and of credit generation through opt-in participation for AJF uplifted in California. The AJF Producer Group is similarly supportive of AJF being added to the CFP in a consistent fashion. The LCFS and CFP have proven to be effective, market-based programs that have driven the development and expanded the supply of low carbon fuels in California and Oregon. By including low carbon alternative jet fuels in the CFP, Oregon will further expand the supply of less carbon-intense fuels and facilitate attainment of the states’ greenhouse gas (“GHG”) reduction policies. By sending a clear and long-term market signal that AJF is eligible to generate state credits in addition to Renewable Fuel Standard (“RFS”) credits (“RINs”), DEQ can facilitate investment and development in the decarbonization of the aviation sector. These policies are crucial given the anticipated growth of the aviation sector, and the technical and energy intensive demands of this sector. Existing data also suggests that the increased use of AJF in jets departing airports will provide local criteria pollutant reductions. For purposes of the CFP, these are ancillary benefits that are not the focus of the program. Nonetheless, it is anticipated that significantly increased use of AJF in the future due to the policies will provide significant benefits to local airsheds, including to disadvantaged communities located near airports. We anticipate that the details and scope of the criteria pollutant reductions will be more accurately modeled, measured, and quantified as the scale of AJF production and use is expanded.

Recommended Regulatory Clarifications

It is recommended that DEQ consider including the following additional language in the regulations to further clarify the eligibility of AJF to generate credits under the CFP. The definition of “clean fuel” at OAR 340-253-0040(24) needs to be updated to also include AJF. Suggested additional language is underlined. “(24) “Clean fuel” means a transportation fuel whose carbon intensity is lower than the applicable clean fuel standard for gasoline and gasoline substitutes and alternatives listed in Table 1 under OAR 340-253-8010, or for diesel and diesel substitutes and alternatives listed in Table 2 under OAR 340-253-8020, and for alternative jet fuel listed in Table 3 under OAR 340-253-8030.”

NOYES LAW CORPORATION

401 Spring Street, Suite 205 Nevada City, CA 95959

(530)264-7157

3

OAR 340-253-0200(3) should include a reference to AJF and the corresponding carbon intensity standard for credit generation purposes. “(3) Clean fuels. Clean fuels means a transportation fuel with a carbon intensity lower than the clean fuel standard for gasoline and their substitutes listed in Table 1 under OAR 340-253-8010 or diesel fuel and their substitutes listed in Table 2 under OAR 340-253-8020, or alternative jet fuel with a carbon intensity lower than the standards listed in Table 3 under OAR 340-25308030, as applicable, for that calendar year, such as: (a) Bio-based CNG; (b) Bio-based L-CNG; (c) Bio-based LNG; (d) Electricity; (e) Fossil CNG; (f) Fossil L-CNG; (g) Fossil LNG; (h) Hydrogen or a hydrogen blend; and (i) Fossil LPG; and (j) Renewable LPG. ; and (k) Alternative jet fuel.” OAR 340-253-1010 should be revised to address the exemption issue. “(2) Fuels exempted. Except as provided in sections (3) and (4), and (5), credits and deficits may not be calculated for fuels exempted under OAR 340-253-0250. (…) (5) Alternative jet fuel.”

NOYES LAW CORPORATION

401 Spring Street, Suite 205 Nevada City, CA 95959

(530)264-7157

4

Conclusion The importance of including AJF in the CFP is an immediate one. While no company in the AJF industry has committed to supplying low carbon jet fuel into Oregon next year, the supply of commercial airlines has already commenced in California. To further enable and expand this crucial low carbon industry to Oregon, the strength of Oregon’s CFP should be leveraged to provide a necessary market signal. We appreciate DEQ’s inclusion of alternative jet fuel in the proposed regulations. Thank you for your consideration of our input. Please contact me if any further input would be helpful.

Sincerely,

Graham Noyes

July 27, 2018

CleanFuture, Inc. P.O. Box 23813

Portland, OR 97281-3813 +1 503 427-1968

john@CleanFuture.us Ms. Cory-Ann Wind Oregon Department of Environmental Quality Clean Fuels Program 800 NE Oregon Street Portland, OR 97232 RE: Comments on CFP 2018 Draft Rules per July 16, 2018 Meeting #4 Dear Ms. Wind, CleanFuture appreciates the opportunity to provide comments regarding the Department of Environmental Quality (DEQ)’s proposed rule changes to the Oregon Clean Fuels Program (CFP). CleanFuture strongly supports the CFP and DEQ’s efforts to encourage the use and production of cleaner low-carbon fuels.

CleanFuture is a nationally-recognized firm working to enable fleets to electrify and be more efficient, including the electrification of transport refrigeration and refrigerated fleet efficiency. CleanFuture helps foodservice and grocery distributors reduce fuel consumption and refrigerated transport operating costs by switching to electricity instead of diesel fuel. CleanFuture has direct experience with the technologies that currently exist and that are under development in the refrigerated transport sector. CleanFuture’s founder also has 11 years’ experience working at a forklift original equipment manufacturer (OEM). Based on this experience, CleanFuture is providing input to DEQ regarding what crediting structure will best facilitate the expanded use of electricity in these sectors.

Transport refrigeration unit vs. truck refrigeration unit. Within the draft rules there is some inconsistency in terminology with references to both “transport” refrigeration unit and “truck” refrigeration unit. Per the definition, “Electric Transport Refrigeration Units (eTRUs) mean refrigeration systems powered by electricity designed to refrigerate or heat perishable products that are transported in various containers, including semi-trailers, truck vans, shipping containers, and rail cars”. Elsewhere in the text, the term “truck refrigeration unit” is used but is not defined. It is recommended that the phrase “electric transport refrigeration unit” or its acronym “eTRU” be used consistently throughout the CFP.

Fleet Owner vs. Fleet Operator: Within the draft rules the terms “fleet owner” and “fleet operator” are both used in the context of forklifts and transport refrigeration units. Often with these equipment types the fleet owner and fleet operator are the same entity, yet situations also exist where a fleet owner and fleet operator are different entities. Therefore, CleanFuture recommends this text to add clarity (showing CleanFuture’s recommended changes in underline and strike-out with reference to CFP’s proposed regulations):

340-253-0320 Credit Generators: Providers of Compressed Natural Gas, Liquefied Natural Gas, Liquefied Compressed Natural Gas, and Liquefied Petroleum Gas

(…)

(5) Liquefied petroleum gas. For LPG used as a transportation fuel, subsections (a) through (d) determine the person who is eligible to generate credits.

(a) Fossil LPG. The person that is eligible to generate credits is the owner of the fueling equipment at the facility where the fossil LPG is dispensed for use in a motor vehicle.

(b) Forklifts. For fossil LPG being used in forklifts, the forklift fleet owner or fleet operator is eligible to generate the credits. Only one entity may generate credits from each piece of equipment. The fleet owner has precedence to generate credits or to designate an aggregator on its behalf. If the fleet owner does not register or designate an aggregator to generate credits on its behalf, the fleet operator may opt-in to generate credits or may designate an aggregator.

(…)

340-253-0330 Credit Generators: Providers of Electricity

(…)

(5) Forklifts. For electricity used to power forklifts, the forklift fleet owner or fleet operator may the generate credits. Only one entity may generate credits from each piece of equipment. The fleet owner has precedence to generate credits or to designate an aggregator on its behalf. If the fleet owner does not register or designate an aggregator to generate credits on its behalf, the fleet operator may opt-in to generate credits or may designate an aggregator.

(6) Truck Transport Refrigeration Units. The fleet owner or fleet operator may generate the credits for electricity used in transport refrigeration units. Only one entity may generate credits from each piece of equipment. The fleet owner has precedence to generate credits or to designate an aggregator on its behalf. If the fleet owner does not register or designate an aggregator to generate credits on its behalf, the fleet operator may opt-in to generate credits or may designate an aggregator.

(…)

340-253-0340 Credit Generators: Providers of Hydrogen Fuel or a Hydrogen Blend

(…)

(3) Forklifts. For hydrogen forklifts, the forklift fleet owner or the fleet operator is the credit generator eligible to generate credits by complying with the registration, recordkeeping and reporting requirements of this division. Only one entity may generate credits from each piece of equipment. The fleet owner has precedence to generate credits or to designate an aggregator

on its behalf. If the fleet owner does not register or designate an aggregator to generate credits on its behalf, the fleet operator may opt-in to generate credits or may designate an aggregator.

(…)

AFP vs. AFRS. In most places in the draft amendments the term “AFP” replaced “AFRS”; yet in a few instances the acronym AFRS remains. It is recommended that AFRS be replaced with AFP throughout the draft rules text.

Forklift and eTRU fleets’ use of aggregator. Elsewhere in the rules an aggregator is permitted as a credit generator for alternative fueled vehicle types. Staff expressed the intent during advisory committee meetings that forklifts and eTRUs should also have the ability to use an aggregator, therefore this should be clarified within the language of the rule. Recommended language has been provided in the specific sections above.

Conclusion

Thank you for the opportunity to provide comments on the proposed CFP Draft Rules. Please contact me for additional information or clarifications. We look forward to continuing to work together to help carry out the goals of the Oregon Clean Fuels Program.

Sincerely, CleanFuture, Inc.

John A. Thornton President

August 2, 2018

Oregon Clean Fuels Program 700 NE Multnomah St., Suite 600 Portland, OR 97232

Electronically Submitted to OregonCleanFuels@deq.state.or.us

RE: Clean Fuels Program 2018 Rulemaking

Dear Department of Environmental Quality Staff,

The Coalition for Renewable Natural Gas (RNG Coalition) thanks you for the opportunity to provide written feedback on the Clean Fuels Program (CFP) 2018 Rulemaking and draft rules discussed during the July 16, 2018 Advisory Committee meeting. We appreciate the Department of Environmental Quality for allowing the RNG Coalition to participate in the Advisory Committee and the staff’s goal of improving the effectiveness of the CFP program.

The RNG Coalition is a non-profit organization based in California that represents and provides public policy advocacy on behalf of the renewable natural gas (RNG, biomethane, upgraded biogas) industry in North America. Our membership is comprised of leading companies operating in each sector, including but not limited to producers of greater than 90% of all the RNG produced in the United States and Canada.

RNG Attestation Requirement Modification

The 2018 CFP proposed housekeeping changes included a requirement that registered parties reporting RNG attest that they own the environmental attributes associated with the fuel, and that no other claim existed on those attributes in another voluntary or regulatory program. RNG Coalition was concerned that the language would have precluded credit generation under the federal Renewable Fuel Standard (RFS), which would likely have prevented a vast majority of RNG from being used in compliance with the CFP.

We thank DEQ for providing an exception for the federal RFS program to the attestation requirement through the modification contained in the draft rules discussed during the July 16 Advisory Committee meeting. RNG plays a key role in compliance with the program.

CONCLUSION

The Coalition for Renewable Natural Gas would like to acknowledge the hard work and due diligence DEQ staff has demonstrated during the CFP 2018 Rulemaking process and in developing the draft rule. We look forward to continuing to partner with the staff to ensure the effectiveness of the CFP program in achieving Oregon’s air quality, greenhouse gas reduction and energy independence goals.

Please do not hesitate to contact me directly with any questions or concerns.

Sincerely,

Nina Kapoor Director of State Government Affairs Coalition for Renewable Natural Gas 1017 L Street, #513 Sacramento, CA 95814

Cc: Cory Ann Wind, Clean Fuels Program Manager

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Thank you for accepting our comments.  

We would like to comment on 340‐253‐8080 Table 8 Oregon Substitute Fuel Pathway Codes.  Overall, 

we support the creation of substitute fuel pathway codes for finished fuels to be used for export or 

exempt purposes in the instance where the fuel carbon intensity is not passed on and where the 

purchase was made without obligation.  However, the carbon intensities listed for E10 Gasoline and B5 

Diesel under this table will result in the creation of deficits when used in 2019.  We would suggest that 

for 2019 the substitute carbon intensity values for these products be set equal to the updated carbon 

intensity values in Tables 1 and 2 for gasoline and diesel respectively.  This would allow for any use of 

these codes to be neutral and not result in credits or deficits during 2019.  For years 2020 and forward 

the suggested CI in Table 8 can be used.   

This change will allow for companies who do not have the carbon intensity of the fuel to use these 

substitute fuel pathway codes immediately and without worrying about creating deficits for fuel that is 

not used in Oregon or used for an exempt purpose.   

Thank you, 

Annie Stuart 

Systems Manager 

Coleman Oil Company 

 

Telephone  208.799.2000 • Toll Free  888.799.2000 • Fax  208.799.2008 Office  335 Mill Road • PO Box 1308 • Lewiston, ID  83501 

Web  www.colemanoil.com 

National Biodiesel Board 1331 Pennsylvania Ave, NW

Suite 505 Washington, DC 20004 (202) 737-8801 phone

National Biodiesel Board 605 Clark Avenue PO Box 104898 Jefferson City, MO 65110 (800) 841-5849 phone

w w w . b i o d i e s e l . o r g

July 26, 2018

Cory Ann Wind

Oregon Clean Fuels Program Manager Environmental Solutions Division Department of Environmental Quality (DEQ) 811 SW 6th Avenue Portland, OR 97204

Submitted via electronic mail to OregonCleanFuels@deq.state.or.us.

Re: Proposed Amendments to the Clean Fuels Program Regulation.

Dear Ms. Wind:

Thank you for the opportunity to comment on this proposed regulation. We continue to appreciate the

tremendous job that you and DEQ staff do on behalf of the clean fuels industry and all Oregonians.

As you know, the National Biodiesel Board (NBB) serves as the trade association for the U.S. biodiesel

and renewable hydrocarbon diesel industries. The NBB represents more than 90 percent of domestic

biodiesel and renewable diesel production. In addition to governmental affairs activities, the NBB

coordinates the industry’s research and development efforts.

Our association represents several biodiesel producers in the region, including SeQuential Biodiesel in

Oregon as well as General Biodiesel and Renewable Energy Group (REG) in Washington State. These

plants have a combined annual production capacity in excess of 125 million gallons, a figure that

exceeds the amount of biomass-based diesel needed to meet Clean Fuels Program (CFP) goals by a wide

margin.

Under the CFP, biodiesel has performed well. In fact, nearly 100 million gallons of low carbon biodiesel

have been used in Oregon since January of 2016. This represents 1.28 billion pounds of avoided CO2

emissions. In addition, biodiesel has also resulted in significant reductions in particulate matter (PM),

sulfur dioxide (SO2), and hydrocarbons relative to the baseline petroleum diesel fuel.

On the following pages, we have briefly detailed comments on selected portions of the proposed

amendments to the regulation. Thank you, in advance, for considering our views on these matters.

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Economic Impacts

The amendments proposed in the regulation are, in our view, modest and should have no adverse

economic impacts. In fact, if anything, they should facilitate greater fuel diversity and long-term cost

savings and efficiencies. We expect the changes to expand opportunities for clean fuels such as

biodiesel that offer environmental and public health benefits at prices similar to or below the cost of

conventional petroleum-based fuels.

Definitions

Under the suggested definitional changes, DEQ proposes the following:

“Alternative Jet Fuel” means a drop-in fuel, made from petroleum or non-petroleum sources,

which can be blended and used with conventional petroleum jet fuels without the need to

modify aircraft engines and existing fuel distribution infrastructure.

To ensure proper fuel quality (and, by extension, passenger safety) in this important application, we

recommend requiring the fuel to meet the ASTM D7566 fuel specification. The full definition could read

similar to the following:

“Alternative Jet Fuel” means a drop-in fuel, made from petroleum or non-petroleum sources,

which can be blended and used with conventional petroleum jet fuels without the need to

modify aircraft engines and existing fuel distribution infrastructure meeting the requirements of

the ASTM International D7566 fuel specification.

In addition, DEQ proposes the following definition for Renewable Hydrocarbon Diesel:

“Renewable hydrocarbon diesel” or “renewable diesel”, means a diesel fuel that is produced

from non-petroleum renewable resources but is not a monoalkylester and which is registered as

a motor vehicle fuel or fuel additive under 40 Code of Federal Regulations part 79. This includes

the renewable portion of a diesel fuel derived from co-processing biomass with a petroleum

feedstock.

We are deeply concerned that the phrase “This includes the renewable portion of a diesel fuel derived

from co-processing biomass with a petroleum feedstock” lacks a clear technical definition. In addition,

we believe allowing the product to generate CFP credits is premature since it has not undergone an

evaluation related to fuel quality, environmental impacts, and health effects as biodiesel and renewable

hydrocarbon diesel have done. For this reason, we strongly recommend removing this language and

noting that the definition does not apply to co-processed renewable diesel. A more complete discussion

about this topic is included in the following section.

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Co-Processed Renewable Diesel

We understand that some petroleum refineries would like to begin generating CFP credits by co-

processing small amounts of renewable feedstock with petroleum in existing refinery infrastructure.

However, due to the lack of publicly-available environmental and health related information about

these technologies as well as the immense scale of refining operations and their extraordinary level of

complexity, we believe significant time and effort are needed to study this subject before carbon

intensity pathways can be considered.

We suggest the following areas for further consideration and exploration by DEQ:

▪ Lifecycle models. We are unclear how pathways could be processed and approved since

lifecycle models for each respective refinery technology do not exist. They still need to be

developed by Argonne National Laboratory, which manages the GREET model, or another

respected institution.

▪ Public information. During any prospective pathway development process, refineries should be

required to provide the same level of operational detail that has been made available by and for

other industries. If co-processing is allowed to generate CFP credits, the technology must go

through a public process that provides sufficient information for the public to validate the

accuracy of carbon intensity pathways. In addition, data marked as “confidential business

information” submitted on applications should be reviewed by DEQ legal staff to ensure it meets

the criteria set forth under Oregon law.

▪ Verification of renewable content. It is believed that a very small fraction of renewable

feedstock inputs become renewable diesel fuel through co-processing. Therefore, it is critical

that renewable content in finished fuel be measured via C14 radiocarbon dating rather than a

mass-balance approach, which would overestimate renewable content. Since renewable

feedstocks are essentially foreign material that petroleum refineries therefore process

inefficiently, it is believed that yield losses exceed 15% by volume. ASTM test method D6866

has been approved for C14 analysis.

▪ Additional processing. Any prospective carbon intensity pathways should account for energy

used when refineries isomerize co-processed fuels to improve cold flow performance.

▪ Emissions. We have not been able to find published literature regarding emissions and public

health impacts for co-processed fuels. Since the technological process is the same as that which

creates conventional diesel and the finished product is chemically indistinguishable from

conventional diesel, we are not convinced that the environmental and public health impacts of

co-processing should be assumed to be positive.

▪ Technical properties. Potential concerns about cold-flow performance, stability, and incomplete

refining could require additional test parameters and limits to be included.

▪ Indirect effects. When bio-based feedstocks are comingled with fossil feedstocks, refiners

should supply DEQ with enough verifiable information to enable a full assessment of the indirect

effects of co-processing on other refinery operations. This information should be made publicly

available.

4

Conclusion

Thank you for considering our views. Our members have greatly enjoyed the opportunity to partner

with DEQ to help meet shared climate goals and we look forward to continuing this collaboration for

years to come. If you or your staff have any questions, please feel free to contact us at any time.

Sincerely,

Shelby Neal Lindsay Fitzgerald Ian Hill

Director of State Gov. Affairs Director of Gov. Affairs Co-Founder

National Biodiesel Board Renewable Energy Group SeQuential

Founded in 1968, the Oregon Environmental Council (OEC) is a nonprofit, nonpartisan, membership-based organization. We advance innovative, collaborative and equitable solutions to Oregon’s environmental challenges for today and future generations. July 25, 2018 Dear Cory and Bill: Thank you for the opportunity to provide comment on the 2018 Clean Fuels rule-making. We appreciate the agency’s work to provide information, answer questions, and design agendas to get the most out of each meeting. This rule-making updated models that determine the carbon intensity of fuels, including updating the baseline with best available data for 2015. The updating process is important for accuracy and we expect it will continue over time so that if the petroleum mix changes for the worse or new science informs other carbon intensity values, that will also be accurately captured and calculated. We agree that these model updates have an insignificant impact on the fiscal and the simplified Tier pathway calculations should provide a positive benefit, particularly for smaller businesses. We are pleased that work has been done to include additional fuel segments (electric forklifts and aviation) and additional fuels (renewable propane) to extend opportunities for clean fuels use in Oregon. Every ton of greenhouse gas pollution reduced has a positive impact for the climate. And clean fuels also help reduce other air pollutants. The expansion the program to other segments will also enhance credit supply and have a positive benefit for the fiscal analysis. Since the program’s original authorization, there has been a lot of innovation in the clean fuels sector. Low-carbon renewable diesel is being used in California and here in Oregon; there are new pathways for renewable propane and biomethane; and even conventional fuels like ethanol are seeing innovations in efficiency and repowering with lower carbon energy. Similarly, more and more electric vehicle options are being offered every year. And this is not limited to passenger vehicles. Freightliner recently released two electric drive train powered trucks. They are being piloted by Penske Truck Leasing and NFI logistics in California and throughout the Pacific Northwest, so Oregon should be able to learn from this regional deployment. The program has had a strong start—reducing over 1.7 million metric tons of greenhouse gas pollution, providing clean fuels opportunities to small and large fleets alike, and benefiting individuals, transit agencies, school districts, small and large utilities, waste haulers, and other fleets all throughout Oregon. Indeed, it is heartening to see credit generators registered from many parts of Oregon—southern, central, eastern and western Oregon alike.

222 NW Davis Street Suite 309 Portland, OR 97209-3900 503.222.1963 www.oeconline.org

Thank you again for the opportunity to provide comments. This rule-making will have a positive impact on the program, expand credit generation available to regulated parties, and create more climate and air quality benefits for the state. I’d be happy to answer any questions. Sincerely,

Jana Gastellum Program Director, Climate Oregon Environmental Council

State of Oregon Department of Environmental Quality

July 27th, 2017

RE: Clean Fuels Program 2018 Rulemaking

Dear Cory-Ann Wind, Bill Peters and members of the Environmental Quality Commission.

I am writing to provide final comments on the Clean Fuels Program 2018 rulemaking. The Union of

Concerned Scientists and our 12,000 supporters in Oregon are strong supporters of the Clean Fuels

Program, and we would like to thank you for the well-run rulemaking process.

We support the changes proposed as part of this rulemaking process. These changes address minor

technical problems without making significant changes to the overall functioning of the program.

Adding new sources of credit generation in aviation, electricity and hydrogen will encourage clean fuel

growth in additional parts of the transportation sector, increase credit availability and improve the cost

effectiveness of the program overall. Updating to OR-GREET 3.0 will improve the accuracy of the

lifecycle assessments.

We also agree with the DEQ that the proposed changes will not have significant fiscal impacts.

Thanks again for the opportunity to share our views, and for your good work on this important policy.

Sincerely,

Jeremy Martin, Ph.D. Senior Scientist and Fuels Lead Clean Vehicles Program Union of Concerned Scientists 1825 K Street NW, Suite 800 Washington DC 20006-1232

Confidential Draft- Privileged Document

Western States Petroleum Association Credible Solutions • Responsive Service • Since 1907

Jessica Spiegel NW Region

July 27, 2018 via email at: OregonCleanFuels@deq.state.or.us

Ms. Cory-Ann Wind Oregon Department of Environmental Quality Clean Fuels Program 811 SW Sixth Ave Portland, OR 97204

Re: WSPA Comments on the Oregon Clean Fuels Program

Dear Ms. Wind:

The Western States Petroleum Association (WSPA) appreciates the opportunity to provide the Oregon Department of Environmental Quality (DEQ) comments on the Clean Fuels Program (CFP) 2018 Draft Rules and Draft Fiscal Impact Statement presented at the Clean Fuels 2018 Advisory Committee Meeting on July 16, 2018. Our member companies are key stakeholders in the CFP. WSPA is a non-profit trade association that represents companies that account for the bulk of petroleum exploration, production, refining, transportation and marketing in the five western states, including Oregon.

WSPA appreciates DEQ’s consideration of our recent comments regarding CFP housekeeping items discussed at the June CFP Advisory Committee Meeting. Going forward, we would appreciate a lengthier period of time to craft considered responses following Advisory Committee Meetings.

Transition to OR-GREET 3.0

Under OAR 340-253-040 Part 5, DEQ is proposing to roll out OR-GREET 3.0 starting on January 1, 2019 and require pathway holders to have a revised pathway using OR-GREET 3.0 by January 1, 2021. WSPA appreciates DEQ giving pathway holders enough time to apply for the revised pathway. However, pathway holders may choose to first apply for California Air Resources Board (CARB) approval so that a CARB-certified pathway is submitted for approval to DEQ. Given new pathway application requirements in California, pathway holders may not submit such applications to DEQ until 2020. WSPA therefore recommends that DEQ closely monitor the timing in which pathway revisions are submitted to DEQ to ensure that all applications are processed and finalized by January 1, 2021.

WSPA also recommends that DEQ consider identifying additional resources should pathway holders submit a large number of applications in late 2020, especially if this is due to delays in the processing of such pathways in California. Close monitoring of the progress of pathway revisions and identification of proper staffing to process such applications will ensure there is no disruption to the delivery of low carbon intensity (CI) fuels in Oregon.

WSPA would also like to request an opportunity to review and comment on the new OR-GREET 3.0 before it is officially rolled out. This will ensure that any concerns are addressed before obligated parties start using the revised tool.

Ms. Cory-Ann Wind July 27, 2018 Page 2

975 Carpenter Road N.E., Suite 106, Lacey, Washington 98516 (360) 352-4512 Fax: (360) 352-4507jspiegel@wspa.org www.wspa.org

Finally, for pathways certified under the GREET model, it appears that there will be a two-year period when different pathways may co-exist under OR-GREET 2.0 and OR-GREET 3.0. WSPA requests that DEQ clarify the transition process to upgrade pathways to OR-GREET 3.0 with an associated timeline. Additionally, we request clarity regarding how DEQ will handle pathways approved under OR-GREET 3.0 before the end of Q4 2020. Will the corresponding OR-GREET 2.0 be removed from the reporting system or will both pathways remain valid through Q4 2020? Specifically, WSPA requests that DEQ promptly provide a guidance document regarding the specifics of the transition – including timeline – between OR-GREET 2.0 and OR-GREET 3.0. This specific guidance would offer transparency and clarity to all stakeholders.

Obtaining a Carbon Intensity

WSPA requests that DEQ revise its description of the use of temporary fuel pathway codes (under OAR 340-253-8090) such that it indicates DEQ’s intent for producers to use these codes. Additionally, the rules should make clear that temporary fuel pathway codes are available for newly produced biofuels that have not yet received a provisional pathway code, such as for new units or new types of operations at existing units, including co-processing.

Requirements if CARB Revokes or Modifies a Pathway

In OAR 340-253-0450 Part 9(d)(C), DEQ has proposed to require the pathway holder to notify DEQ if CARB has revoked or modified a CARB-approved pathway. WSPA is concerned that this regulatory language essentially delegates DEQ’s regulatory authority to approve or deny fuel pathways to CARB. CARB relies on its own requirements for fuel pathways; it does not rely on DEQ’s findings to administer the LCFS. WSPA recommends that DEQ similarly rely on its own fuel pathway requirements rather than relying on CARB. DEQ can and should leverage the data and experience gained from the California LCFS program, but it should do so while implementing Oregon’s program independently from CARB’s; otherwise, DEQ risks delegating its regulatory authority to CARB. This is especially true for cases in which CARB revokes a pathway for reasons specific to California. WSPA is concerned by the burden it will create for pathway holders, and fuel suppliers as whole, if compliance determinations from another state determine compliance with the CFP in Oregon. Obligated parties enter into commercial agreements for low-CI fuel sales into Oregon in good faith by relying on approved pathways and assuming a level of certainty for compliance under Oregon rules. WSPA, therefore, recommends that DEQ manage its pathway review process independently from CARB, and not require those with approved Oregon pathways to take an action based on something that occurred in California. Finally, we support any initiative DEQ has to document its pathway review process so that it is transparent and clear.

Temperature Correction Requirements

OAR 340-253-0640 Part 4 includes new temperature correction requirements when measuring ethanol, biodiesel, and other liquid fuels as part of the CFP. It should be noted that these are all liquid streams, and liquids require significant temperature variations to expand or contract. Therefore, temperature correction for liquid streams is rarely a factor when using instrumentation that is well-designed and maintained, especially at room temperatures. Error usually occurs due to poorly designed instrumentation and/or reporters not realizing that their instrumentation already does these corrections.

Under the CFP, most reported data is based on custody transfer bills of lading, and both parties involved in the transaction have a financial incentive to ensure that the liquid volumes are correct. As a result, most transactions involve rigorous third-party data reviews and/or the usage of quality assurance devices such

Ms. Cory-Ann Wind July 27, 2018 Page 3

975 Carpenter Road N.E., Suite 106, Lacey, Washington 98516 (360) 352-4512 Fax: (360) 352-4507jspiegel@wspa.org www.wspa.org

as provers. In fact, California’s Mandatory Reporting Rule (MRR) for Cap and Trade exempts “financial data” from most data accuracy requirements, given the rigor of such data measurements.

Based on the July 16th, 2018 CFP Advisory Committee Meeting, it appears DEQ is adding these requirements due to some errors generated by a few reporters. By adding the prescriptive requirements outlined for ethanol and biodiesel, DEQ risks having additional reporters “double-correct” because they may not realize that their instrumentation is designed to make such corrections. Error could also be generated by forcing companies to adjust their perfectly accurate meter design/corrections to align with the prescribed equations DEQ is proposing. WSPA suggests that DEQ prepare reporting guidance to address the few cases in which data is not adjusted correctly instead of adding prescriptive data correction requirements that could result in more data errors. Therefore, WSPA recommends that DEQ eliminate the prescriptive temperature correction requirements for ethanol and biodiesel (Parts (a) and (b)), and instead require that ALL liquids be measured per the standards outlined in Part (c) of OAR 340-253-0640 Part 4.

Forecasted Fuel Supply Deferral

This section (340-253-2100) jumps from subsection (1) to subsection (4). WSPA requests that DEQ check the numbering.

Consistency in CIs under OR-GREET 3.0

Table 3. Oregon Clean Fuel Standard for Alternative Jet Fuel (AJF)

For 2025 and beyond, the standard should be updated to 90.01 instead of 89.65 gCO2e/MJ, due to the OPGEE and GREET model updates.

Table 9. Oregon Temporary Fuel Pathway Codes

• ORETH103T CI should be updated to 100.39 gCO2e/MJ.• ORBIOD202T and ORRNWD302T CIs should be updated to 102.07 gCO2e/MJ.• DEQ should also update all specific temporary pathway CIs with OR-GREET 3.0.

Fiscal Impact

WSPA recommends that DEQ evaluate the burden to its divisions, including the enforcement division, as the program is expanded to new areas and industries. For instance, DEQ may need to evaluate its internal costs for the registration, outreach, and inspections of electric trailer refrigeration units (eTRU) facilities, businesses operating electric forklifts throughout the state, and AJF production facilities, including out-of-state facilities seeking to obtain fuel pathways under the CFP.

Thank you for your consideration of WSPA's comments. We welcome any questions or comments you might have.

Sincerely,

cc: Tom Umenhofer, WSPA