Second Wave Transportation Decarbonization: The Winners and Losers
State low carbon fuel standards, particularly California's LCFS program, have been the dominant driver of new investment in clean fuels over the past decade. The significance of the LCFS and the other state and provincial programs that resemble it (in Oregon, Washington, and Canada) have buoyed investor and corporate enthusiasm for clean fuel technologies, including hydrogen, renewable diesel, and other advanced clean fuels. However, substantial changes lie ahead for these programs as the same states (California, Oregon, and Washington) seek to implement requirements that consumers convert to all-electric vehicles by the next decade. The future of CFS programs is a critical factor for a wide range of public and private entities - state and municipal governments throughout the US have invested in clean fuel production based upon projections for CFS credit prices which may be overly-rosy. Refiners are making a hearty pivot towards clean fuel production just as consumers (for political and economic reasons) pivot aggressively towards all-electric vehicles. Investment firms have put billions behind clean fuel (particularly renewable diesel) production. Changes to CFS credit prices threaten to undermine these investments.
Berkeley Research Group published, on behalf of the Washington Department of Ecology, the first public economic study illustrating the impact of ZEV policies on the economic value of CFS programs. Surging ZEV adoption threatens to "overshoot" the CFS program decarbonization targets and, in doing so, undermine the economic returns for investments in popular low carbon fuels like renewable diesel. Katie will discuss the current policy landscape for the Western States, the economic implications of ZEV mandates on low carbon fuels, and what states can do to continue to support economic returns for clean fuels, particularly in hard-to-electrify transportation applications.
Berkeley Research Group prepared the economic impact analysis for the Washington Department of Ecology (delivered May 12, 2022) which is the first major public analysis indicating the impact of zero carbon emission vehicle standards (ZEV) on state CFS programs.
Katie Bays is an experienced policy and regulation analyst with experience advising financial markets, companies, and policymakers on the impacts of clean energy and climate policy. She has performed regulatory due diligence analyses, regulatory impact analysis, and qualitative climate risk analysis for large asset managers including mutual funds, pension funds, hedge funds, and private equity funds; for government agencies including the Environmental Protection Agency, the Office of Surface Mining, Reclamation, and Enforcement; state PUC/PSCs; and for nonprofit associations advising on policy issues.
Katie is a Senior Managing Consultant at Berkley Research Group LLC.
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