Introduction. Specific Comments. Compliance Scenario. Submission RE: Low Carbon Fuels Compliance Pathway Assessment

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1 Submissin RE: Lw Carbn Fuels Cmpliance Pathway Assessment DATE: January 5 th, 2017 PREPARED BY: Jeremy Mrhuse Intrductin Thank fr the pprtunity t cmment n the British Clumbia Lw Carbn Fuels Cmpliance Pathway Assessment. We view B.C. s lw-carbn fuel standard as a successful greenhuse gas reducing plicy. Strengthening it in the range f 15% t 20% carbn intensity decline frm 2010 levels by is als an essential part f a package f plicies t meet B.C. s 2030 climate cmmitment and 2050 climate target. Clean Energy Canada generally agrees with the cmments and data available in the British Clumbia Lw Carbn Fuels Cmpliance Pathway Assessment. The assessment prvides a cmprehensive verview f the status f different fuels available in B.C. and begins the cnversatin n hw t achieve a 2030 target fr carbn intensity reductins. This dcument prvides cmments nly n thse sectins where Clean Energy Canada has questins r suggestins as well as sme additinal data that may prve useful t discussins n B.C.'s lw-carbn fuel standard. Our general cmments are: Clarify the scpe f the 2017 review. We suggest including the scpe f the 2017 review in the pathways assessment dcument. While the dcument prvides a baseline f infrmatin, it s unclear hw that infrmatin is then linked t the cnsultatins. The cmpliance pathway sectin, fr example, prvides a scenari fr cmpliance but des nt state fr what carbn intensity bjective. Add mre scenaris. The dcument wuld benefit frm sme additinal cmpliance scenaris fr the ptential 15% and 20% targets. We prvide sme ptins fr scenaris later in this dcument. Clarify hw the review fits with the climate cuncil and the federal Clean Fuel Standard. B.C. has a climate plan frm the previus gvernment and is currently hsting discussins with the Climate Slutins and Clean Grwth Advisry Cuncil, while the federal gvernment is develping a Clean Fuel Standard. We suggest including the status f these activities and the link t the cnsultatin as best understd tday. Specific Cmments Cmpliance Scenari Cmpliance scenaris are useful t guide and infrm discussins n the feasibility f specific targets fr the lw-carbn fuel standard. Hwever, multiple scenaris are likely needed t understand the feasibility f a lng-term target given the uncertainty f fuel and technlgy pathways. In the Suite West Hastings Street Vancuver, BC V6B 1P2

2 cmments belw, we share the results f federal research n the Clean Fuel Standard, ur research n the lw-carbn fuel standard in B.C., and specific questins n the Pathway Assessment. Scenaris and Analysis: Lessns learned frm Clean Energy Canada s analysis f the Clean Fuel Standard Clean Energy Canada and Navius Research mdelled the federal gvernment s prpsed Clean Fuel Standard, thugh ur results are nt directly relevant t B.C. s lw-carbn fuel standard. We assumed a 12.5% decline in GHG intensity frm 2010 levels by 2030 fr Canada, which is belw the ambitin f what B.C. is cnsidering. That said, during ur analysis we determined and received several suggestins n sensitivities, scenaris, and types f analysis that may als be useful as B.C. evaluates a 2030 target fr its standard. Specifically: Relative cst f different fuels: Cst sensitivity f il, natural gas and agricultural feedstck prices wuld illustrate hw different assumptins may change the cst f cmplying with B.C.'s lw-carbn fuel standard. A preliminary assessment f these drivers fr Canada s Clean Fuel Standard indicates that higher il prices can reduce the difference in prductin csts between fssil fuels and alternative fuels. Reducing this prductin cst spread will reduce the lw-carbn fuel standard credit price substantially while reducing the relative impact f the lw-carbn fuel standard n energy prices. Sensitivity analysis fr different technlgies: Certain fuel pathways are very sensitive t reasnable differences in technlgy assumptins, and s it's valuable t cnsider different technlgy utcmes and what might be needed t supprt thse utcmes. Sme specific areas belw: 2 Flex-fuel vehicles: In Navius and Clean Energy Canada's analysis, flex-fuel vehicles prved a cst-effective apprach t increasing ethanl use. Hwever, this depends n the vehicles and fuelling infrastructure being available. Electric vehicles: Electric vehicle uptake is uncertain and depends n many factrs, such as battery cst declines, federal and prvincial plicy, and the decisins f internatinal manufacturers. Canada s ZEV Plicy Handbk fr example, shws the ZEV market share f new vehicles ranging between 10% and 40% by 2040, depending n prvincial and federal plicies. 1 Lign-cellulsic fuels: We assumed a relatively high carbn intensity fr ligncellulsic fuel in ur federal Clean Fuel Standard analysis, and s there was little uptake. Hwever, lign-cellulsic fuels culd have lwer carbn intensities, and there may be ther benefits such as less cmpetitin with fd crps and ptentially fewer land-use cncerns cntext: Any 2030 target fr B.C. s lw-carbn fuel standard shuld ensure the transprtatin sectr is n a path t meet B.C. s brader 2050 target. Plicy uncertainty: Plicies in ther jurisdictins can influence fuel csts and availability. Sme plicy changes may increase demand fr lw-carbn fuels (fr example, thrugh an 1 START (2017) Canada s ZEV Plicy Handbk.

3 increase in renewable fuel mandates in the U.S. and ther cuntries). Others may reduce the demand fr lw-carbn fuels (fr example, mre stringent vehicle efficiency requirements). Opprtunities: By requiring carbn intensity reductins, the lw-carbn fuel standard increases the market fr cleaner fuels. This presents pprtunities fr new investment and businesses within B.C. While the lw-carbn fuel standard will nt and shuld nt dictate where fuels cme frm gegraphically, identifying and supprting pprtunities fr B.C. business develpment and emplyment can be part f a brader clean fuels strategy in the prvince. Any 2030 target fr the lw-carbn fuel standard shuld cnsider the ptential magnitude f ecnmic and emplyment pprtunities t prduce and distribute clean fuels. British Clumbia Results Clean Energy Canada and Navius research explred plicy mixes t 2050 t achieve B.C. s climate targets. The details are available in A Plan fr Climate Leadership in British Clumbia. This assessment included a 20% reductin in carbn intensity f fuels by 2030 and then declining by 4% a year ut t A 20% reductin in carbn intensity is cnsistent with an verall target f decarbnizing transprtatin by The analysis included ther plicies that influenced the transprtatin sectr, including a carbn tax rising t $80 per tnne in 2025 and a zer-emissin vehicle mandate requiring that 23% f new vehicles sld in 2030 are zer-emitting. Hwever, the lw-carbn fuel standard is the primary plicy that reduces the carbn intensity f the transprt sectr. Belw, Figure 1 summarizes the results; Table 1 prvides the data fr Figure 1. 3 Figure 1: Transprtatin fuel energy cnsumptin and GHG intensity t 2050 Table 1: Data fr figure Petrleum Fuel, PJ/yr Bifuel, PJ/yr Electricity, PJ/yr GHG Intensity relative t 2010, % 100% 96% 92% 71% 62% 47% 29% 15% 2%

4 4 Thanks t the cmbinatin f the lw-carbn fuel standard, carbn pricing and a zer-emissin vehicle standard, there are apprximately 290,000 plug-in vehicles in B.C. by 2030 and 1.6 millin in These vehicles help reduce the carbn intensity f fuels in B.C. Hwever, significant quantities f bifuels are still required. Figure 2: Vehicle stck with climate plicies t achieve B.C. s GHG target Cmments n mdelling in the reprt Figure 2 in the Cmpliance Pathways Reprt shws reducing emissins by 16% frm 2010 levels by 2030 withut including credits and Part 3 agreements, but mre than 20% when credits and Part 3 Agreements are included. Hwever, it s unclear what the targeted carbn intensity is. Other cmments Fuel delivery infrastructure This sectin prvides little additinal infrmatin. We suggest either prviding evidence f the types f impacts being discussed r remving this sectin. Fr example, [i]ntrducing a diversity f renewable fuels, each with its wn issues, is testing the ability f the delivery netwrk t learn and adapt may be true, but the dcument cntains n evidence t substantiate this psitin and desn't indicate why this issue is being discussed. Has the reliability f fuel delivery declined in regins with greater fuel type diversity? Blend Walls We understand that blend walls apply t specific vehicles and fuels, and that it isn't an verall limit n blending renewable fuels. Nevertheless, it wuld be useful t have mre infrmatin n B.C. s fleet f vehicles by vintage, which culd then help us understand the blending limits f specific fuels and help frecast different cmpliance pathways.

5 5 Additinal infrmatin: We recmmend including sme additinal infrmatin in the Pathways Assessment dcument as well. Much f this infrmatin already exists in ther dcuments, but it is useful t include in the Pathways Assessment dcument as evidence f success t date. Fr example: Part 3 Agreements: Please include infrmatin n existing Part 3 Agreements, the number f credits they accunt fr, and the status f prjects. Reductins achieved t date: Please als include reductins achieved t date and any analysis f the types f fuels that have been used, and why, with an evaluatin against previus mdelling. Interactin with the federal Clean Fuel Standard: While the design f the federal Clean Fuel Standard is in prgress, please include the B.C. gvernment s perspective n develping the prvincial standard. Relevance f B.C. s Climate Leadership Plan: B.C. s Climate Leadership Plan included a cmmitment t strengthen the lw-carbn fuel standard by 15% by Hw is this cmmitment viewed by the current gvernment? Cnclusin We lk frward t participating in the cnsultatins n the lw-carbn fuel standard. The lw-carbn fuel standard remains ne f B.C. s strngest climate plicies, and its stringency will need t increase t meet B.C. s 2030 and 2050 reductin targets.