A webinar series co produced by the Bioenergy Association of California and the American Biogas Council

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1 Emerging Issues and Opportunities with the Low Carbon Fuel Standard A webinar series co produced by the Bioenergy Association of California and the American Biogas Council April April 17, pm ET / 9 10 am PT

2 Quick knotes Two Audio Options: Streaming Audio and Dial In. 1. Streaming Audio/Computer Speakers (Default) 2. Dial In: Use the Audio Panel (right side of screen) to see dial in instructions. Call in separately from your telephone. Ask questions using the Questions Panel on the right side of your screen. The recording of the webinar and the slideswill beavailableafter after the event. Registrants will be notified by .

3 Promoting the use of Biogas and Anaerobic Digestion O 208 Members from the U.S., Germany, Italy, Canada, UK O All Industry Sectors Represented Key Industry Goals: O Promote biogas markets, technologies and infrastructure O Achieve policy parity O Promote as a best practice for environmental stewardship and greenhouse gas reduction

4 Changing the Biogas Industry through: o Legislative and Regulatory Affairs o Federal Committee o State Committee o Sharing Expertise o Specialized Working Groups o Education and Outreach o Briefings, presentations, and webinars for customers, policy makers, and the general public o Large Industry Network 208 company members o Entire supply chain of production, processing and use Join Today! Josh Lieberman at jlieberman@ttcorp.com or call

5 Representing 50 members across all waste and technology sectors, including project developers, technology providers, waste and compost companies, public agency and local lgovernment adopters Focus on supporting rapid deployment of bioenergy technologies by market development, regulatory reform, policy initiatives and public and private financial infrastructure. Recent work includes: 100 MM Cap & Trade Revenues for bioenergy $350 MM CEC EPIC funding $100 MM AB118 funding Green Credit Reserve Bank 75% Diversion andorganics Diversion 250 MW utility purchase requirements (SB 1122)

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7 Julia Levin Executive Director Bioenergy Association of California lf

8 Presenters Stefan Unnasch Managing Director of Life Cycle Associates, LLC Peter Weisberg Senior Project Analyst, The Climate Trust Harrison Clay President, Clean Energy Renewable Fuels

9 Stefan Unnasch Managing Director of Life Cycle Associates, LLC Managing life cycle GHG studies for fuel developers and developing of a new sustainability assessment tool. Helping biofuel developers assess their GHG footprint under government regulations including the EPA RFS2, California LCFS, EISA Section 526, aviation fuel sustainability programs, and the European Renewable Energy Directive. Documenting the carbon intensity for a number of alternative and renewable transportation fuel pathways using GREET results, as well as quantifying other life cycle impacts of these pathways.

10 Emerging g Issues and Opportunities with the Low Carbon Fuel Standard April 17, 2014, from 12-1 p.m. ET ABC Webinar: Low Carbon Strategies for Biogas Stefan Unnasch

11 Life Cycle Associates Outline Life Cycle Associates Introduction Fuel Pathway Options GHG Accounting LCFS Requirements Copyright 2014 Life Cycle Associates, LLC

12 Life Cycle Associates Life Cycle Associates About Life Cycle Associates Provide independent consulting services to solve environmental, regulatory, and business challenges Recognized leader in conducting life cycle analysis for transportation fuels for LCFS, RFS2, CSR, & RED Team of experts with over 60 years cumulative experience in biofuels, CNG, fuel production processes, delivery logistics, and environmental impacts Work with private companies, government agencies, and environmental groups Copyright 2014 Life Cycle Associates, LLC

13 Life Cycle Associates Life Cycle Associates Accomplishments Developed California GREET model for the Low Carbon Fuel Standard (LCFS) and calculated pathway results Developed carbon balance approach in ARB HSAD pathway, wrote LCFS pathway documents for dairy digester CNG, CNG, LFG LNG Successfully certified fuel technologies under RFS2, LCFS, and EU Directive Helped clients win over $80 million in government funding for the development of advanced biofuels (based on our analysis of GHG emissions) Completed hundreds of life cycle analyses Copyright 2014 Life Cycle Associates, LLC

14 Life Cycle Associates Pathways Possible Biogas Pathway Options Various feedstocks Net energy inputs and emissions i determine LCA Alternative fate is important On-site and pipeline pp injection options Feedstocks for power and other fuels (not currently allowed) Storage and Fuel Vehicle End Feedstock Transport Production Distribution Use Land fill CNG Dairy digester On-site CNG Compression Sewage digester Pipeline injection LD CNGV Algae digester CNG Various Truck to HD CNGV HSAD Liquefiers LNG filling HD LNGV Biomass Gasification LCNG Copyright 2014 Life Cycle Associates, LLC

15 Life Cycle Associates Pathways LFG to LNG Pathway Excess LFG to LNG (or CNG) LFG is viewed as excess Alternative fate is flaring Mixed carbon accounting Carbon Inte ensity (g CO2e/M MJ) LFG LNG Petroluem Diesel Vehicle Transport Liquefaction Pipeline Transport Processing Collection WTT -60 Copyright 2014 Life Cycle Associates, LLC

16 Life Cycle Associates Pathways Alternative Fate of LFG LFG to Fuel System Thermal Oxidizer Grid Power Land Fill Gas LFG Processing LFG Liquefaction LNG Distribution LNG Reference Systems Land Fill Gas LFG Flare Land Fill Gas LFG Power Plant LFG Power Marginal Power Copyright 2014 Life Cycle Associates, LLC

17 Life Cycle Associates Pathways HSAD Pathway Food waste and green waste feedstock Alternative ti fate is land fill and composting Total carbon accounting takes into account alternate fate 300 Compost Emission Reduction Factor 200 Credit for Avoided LFG & Compost Carbon Inte ensity (g CO2e/M MJ) HSAD CNG Petroleum Diesel Vehicle Emissions Diesel WTT Electric Power Compost Operations Yard Equipment Loading and Composting Compost Operations -200 HSAD Heat Load -300 HSAD Process Copyright 2014 Life Cycle Associates, LLC

18 Life Cycle Associates Pathways Avoided Fate of MSW Biofuel Production System MSW Processing Refining Bio Fuel Co-Product CO 2 Storage MSW Disposal Reference System CH 4 CO 2 CH 4, N 2 O, GWP Weighted LFG Flare Biomass MSW Land Fill CO 2 Inactive Carbon Oxidized Landfill gas CO 2 Copyright 2014 Life Cycle Associates, LLC

19 Life Cycle Associates Accounting Carbon Accounting Systems Feedstock CO2 Feedstock Production Fuel Production Process CO2 Fuel Carbon Feedstock CH4, N2O Net Emissions Crude Oil LFG Diesel Carbon Neutral Biogenic CO2 Dairy Gas MSW All Biogenic Emissions Digester Gas Stored C Net stored carbon from biofuel process and MSW landfill. Stored carbon does not affect GHG calculation Carbon Intensity (g CO 2 e/mj), Illustrative Copyright 2014 Life Cycle Associates, LLC

20 Life Cycle Associates Accounting Pathway and Accounting Issues Alterative use of feedstock Used cooking oil Tallow LFG Sewage digester gas Alternative fate Dairy digester HSAD Food MSW, Greenwaste Composting Sewage digester gas Power production, process heat, flaring Opportunity for Stacked Crediting Biogas for carbon offsets Biogas for REC for power Double counting restrictions depend on environmental attribute RIN, renewable power, GHG Copyright 2014 Life Cycle Associates, LLC

21 Life Cycle Associates LCFS Requirements LCFS Targets Declining carbon intensity for average California fuel pool Weighted average of all fuels Compliance is recognized as a challenge Low CI fuels help pgenerated credits and achieve compliance 100 LCFS Target Revised target 95 CO 2 e/mj) CI (g Copyright 2014 Life Cycle Associates, LLC

22 Life Cycle Associates LCFS Requirements CA LCFS Process CI determined for individual fuel producers Prepare Method 2B application ARB reviews data 2 years historical data, pfd, permits Record keeping requirements during fuel production Sell fuel using Method 1 process Record keeping requirements during fuel production Copyright 2014 Life Cycle Associates, LLC

23 Life Cycle Associates LCFS Requirements LCFS Credits Price of carbon is quoted in $/metric tonne LCFS market is different than AB32 LCFS credits were deemed and have proven more valuable You can sell to LCFS or AB32 You cannot sell from AB32 to LCFS Historical range from $10 to $100/tonne Current price $50/tonne Transaction Options Biogas CNG customers are generally not LCFS obligated Credits are not attached to fuel Generate credits on LRT Sell to supermajor, other obligated party, or broker Copyright 2014 Life Cycle Associates, LLC

24 Life Cycle Associates LCFS Requirements LCFS Compliance Obligations Physical pathway demonstration (out-of-state producers) Quarterly Compliance Reports Annual Compliance Reports Record Keeping Physical Pathway Demonstration PTD s Bills of Lading Transportation Maps Copyright 2014 Life Cycle Associates, LLC

25 Life Cycle Associates LCFS Requirements How we can help Fuel certification Calculate l fuel pathway carbon intensities iti (CIs) Document applications to regulatory agencies Discussions with regulatory agencies Develop fuel pathway strategies Regulatory Compliance Determine record keeping requirements Develop procedures for data collection Facilitate reporting Facilitate off take opportunities Audit support Copyright 2014 Life Cycle Associates, LLC

26 Peter Weisberg Senior Project Analyst, The Climate Trust Peter originates, analyzes and invests in new projects for The Climate Trust and its clients. Peter provides technical expertise for all aspects of The Climate Trust ss work, with a focus on understanding and applying existing and proposed carbon market protocols. He also serves as the lead technical resource for the innovative work on new project sectors, methodologies and offset quality criteria. Peter has over four years of experience working in carbon markets.

27 Emerging Opportunities with the Low Carbon Fuel Standard Peter Weisberg American Biogas Council/Bioenergy Association of California Webinar April 17, 2014

28 Biogas Climate Benefits Example project: 2,000 cow dairy, 750 kw digester Renewable electricity 21% Avoided methane emissions 79%

29 Environmental Markets for Biogas Market Credit Biogas Use Geographic Limitation California Carbon Offset Any Anywhereinthe Cap and Trade US State REC (Renewable Electricity Depends on Renewable Portfolio Standard d Energy Certificate) generation state renewable portfolio standard d California Low Carbon Fuel Standard LCFS Credit Transportation fuel Fuel consumed in California US RIN (Renewable Transportation Anywhere in the Renewable Fuel Identification fuel US Standard Number)

30 Ownership of climate attributes Renewable energy (displacing fossil fuel) Avoided methane emissions Carbon Offset x REC x LCFS Credit x x

31 Carbo on Intensity (gco O2e/MJ) Gasoline Compressed Natural Gas Dairy Biogas Food Waste Biogas

32 100 California s Low Carbon Fuel Standard Carbon Intensity of Crude Oil gco2e/mj LCFS Carbon Intensity Targets Deficits Carbon In ntensity (gc CO2e/MJ) Credits 20 Carbon Intensity of Compressed Biomethane from Dairy Farms gco2e/mj

33 California LCFS Price ($/mtco2e) $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $ Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14

34 LCFS Value to Biogas Food dwaste (HSAD) Carbon Intensity: $/mtco2e $/MMBTU 1 $/DGE 1 (diesel gallon equivalent) Current $19.50 $2.33 $0.30 Average $53.32 $6.38 $0.83 High $85.00 $10.16 $ $/MMBTU and $/DGE prices for 2014; credits generated per MMBTU or DGE vary annually as the CA LCFS carbon intensity target is adjusted down.

35 LCFS Value to Biogas Di Dairy Digestion Carbon Intensity: $/mtco2e $/MMBTU 1 $/DGE 1 (diesel gallon equivalent) Current $19.50 $1.74 $0.23 Average $53.32 $4.76 $0.62 High $85.00 $7.58 $ $/MMBTU and $/DGE prices for 2014; credits generated per MMBTU or DGE vary annually as the CA LCFS carbon intensity target is adjusted down.

36 Key Barrier: Financing projects LCFS market is Nascent Volatile Complex Under legal challenge Policy dependent (demand = policy, supply = policy) credits are not bankable

37 Emerging Solutions! Price Floor/Price Ceiling: April 4 th Cost Containment Provision workshop Determine price ceiling Explore price floor Contracts t Regulated entities hesitant to enter long term contracts t Green Credit Reserve

38 Green Credit Reserve (AB 2390) State t contracts t to buy LCFS credits during project development. Fixed price Long terms Payment on delivery AB 2390 legislative status Assembly Passed Natural Resource Committee Must pass Appropriations Committee

39 Expansion to New States Pacific Coast Collaborative October 2013: Oregon, Washington, British Columbia and California committed to adopting and maintaining low carbon fuel standards in each jurisdiction. Oregon: Current LCFS (Clean Fuels Program) expires in Requires legislative extension. Washington: May have authority under state Clean Air Act to adopt a LCFS

40 Thank you! Peter Weisberg Program Manager The Climate Trust x207

41 Harrison Clay President, Clean Energy Renewable Fuels President of Clean Energy subsidiary Clean Energy Renewable Fuels, also serves on the Board of Managers for Dallas Clean Energy McCommas Bluff and Canton Renewables, Clean Energy s landfill gas processing companies. Mr. Clay is responsible for leading Clean Energy s efforts to produce and sell renewable natural gas (or biomethane) that is derived from the anaerobic decomposition of organic waste.

42 Building the LCFS to Last April 16, 2014

43 OUR ROLE PRODUCE MARKET & DISTRIBUTE RENEWABLE NATURAL GAS

44 LCFS 1. LCFS Proposed ARB Changes I. Mandatory Reevaluation of All CI Pathways (First Generation vs. Next Generation Fuels) ARB should not reevaluate old pathways II. III. Smoothing the Compliance Curve ARB should implement law as soon as it legally can without any smoothing Potential Use of New GREET Model Should be optional for approved pathways IV. Cost Containment Mechanism No cap without a floor Green Credit Reserve could make this unnecessary 2. The Market Needs Regulatory Stability not Regulatory Perfection

45 MARKET FUNCTIONALITY Creating liquidity idit in the LCFS: small credit generators struggle to find buyers Market needs transparency and price stability Voluntary price reporting, little volume data, no rational basis to determine market price LCFS Cost Containment Mechanism/AB 2390 Feasible price floor and ceiling for LCFS credits with guaranteed liquidity at minimum and maximum AB 2390 (Muratsuchi): Green Credit Reserve good for generators and obligated parties Key is sending right signal to market what price is the right price to incentivize new fuel production?

46 MARKET FUNCTIONALITY Volatility in Q LCFS Credit pricing due to uncertainty and lack of stabilization in the Volatility in Q LCFS Credit pricing due to uncertainty and lack of stabilization in the program

47 POTENTIAL NEW MARKETS British Columbia In force since July 2013 Penalty of $200 per tonne Under Review in April Oregon Clean Fuels Program: DOA due to 2015 sunset. Washington Governor support Work underway, need to implement legislation

48 Q&A Ask questions using the Questions Panel on the right side of your screen. All questions and comments will be recorded and incorporated in the webinar summary report. Also, please a few moments to answer the survey questions. This webinar (recording and slides) will be available within 3 working days.

49 ABC BAC Webinars Upcoming Webinars Wbi Public Funding Opportunities for California Bioenergy Projects May 7, :30 1:30 pm ET (9:30 10:30 am PT) Making Pipeline Biogas work in California, Date TBA 12:30 1:30 pm ET (9:30 10:30 am PT) For more information, visit americanbiogascouncil.org/about_webinars.asp or call (202)

50 More Information Don t forget to fill out our survey! Sign up to receive ABC news on our website, il Consider Joining ABC Receive regulatory and policy intelligence Connect with other biogas and anaerobic digestion leaders Support the industry s growth and outreach

51 Thank You Stefan Unnasch Life Cycle Associates, LLC (650) l i Peter Weisberg The Climate Trust (503) x207 pweisberg@climatetrust.org g Harrison Clay Clean Energy Renewable Fuels (949) hclay@cleanenergyfuels.com Shawn Garvey Bioenergy Association of California and The Grant Farm (530) shawn@thegrantfarm.com Josh Lieberman American Biogas Council (202) jlieberman@ttcorp.com