Amendment to the LCFS Provisional Credit Clause

On June 23, 2015, ARB issued a second 15-day rule change notice to the LCFS. The rule change contains amendments that the ARB is expected to vote on next month when the Board re-adopts the LCFS program. Read the information below and contact us, if you have any questions.

One significant difference between the first and second rule change documents is the “Provisional Credits Clause”. The provisional credit clause now allows facilities to receive carbon intensity (CI) values after one calendar quarter of operation. Producers may also now sell, transfer, or retire LCFS credits for compliance, or may transfer with obligation a fuel with a provisional CI.  ARB may revise the CI score once two years’ worth of operational data become available and adjust with the operational CI in the LRT-CBTS system.

For your reference, the language of the rule change is as follows (pg. 92 of the second 15 day rule change document):

“Following the provisional certification of a fuel pathway application, the applicants shall submit copies of receipts for all energy purchases each calendar quarter until the Executive Officer is in possession of receipts covering two full calendar years of commercial production. At any time during those two years, the Executive Officer may revise as appropriate the plant’s actual operational CI based on those receipts. Based on timely reports, the applicant may generate provisional credits. Such credits may not be sold, transferred, or retired for compliance, nor may fuel with a provisional CI be transferred with obligation. The applicant may not sell credits generated under a provisionally-approved fuel pathway, or transfer the provisional fuel with obligation, until Until the Executive Officer has adjusted the CI or informed the producer that the provisional CI has been successfully corroborated by operational records covering a full two years of commercial operation, the Executive Officer may adjust the number of credits or reverse any provisional credit in the producer’s account without a hearing, notwithstanding the requirements of section 95495.

(A) If, after a plant has been in full commercial production for more than two years, the plant’s operational CI is higher than the provisionally-certified CI, the Executive Officer will replace the certified CI with the operational CI in the LRT-CBTS system and adjust the producer’s credit balance accordingly.

(B) If the plant’s operational CI appears to be lower than the certified CI, the Executive Officer will take no action. The applicant may, however, petition the Executive Officer for a provisional CI reduction to reflect operational data. In support of such a petition, the applicant must submit a revised application packet that fully documents the requested reduction.”