1. Northeast and Mid-Atlantic Regional Low Carbon Fuel Standard Nancy L. Seidman Deputy Assistant Commissioner for Climate Strategies Massachusetts Department of Environmental Protection October 22, 2009

2. 2 Overview of presentation Context for LCFS Structure of 11 state effort Issues under discussion Next steps

3. 3 Transportation Context Transportation emissions are significant, rising, and hard to control. Three components for reducing emissions: VMT (smart growth, transit, etc.) Vehicles (CA-LEV/ZEV, CAFE, etc.) Fuels (LCFS, RFS2) LCFS = Low Carbon Fuel Standard

4. 4 LCFS Goals Reduce carbon intensity of fuel Reduce petroleum dependence and diversify transportation energy supply Harness market forces to drive technology development (e.g., EVs, Advanced Biofuels) Address lifecycle emissions Influence national policy (fuels, lifecycle emissions)

5. 5 What is a Low Carbon Fuel Standard? Performance-based standard for fuels Does not cap fuel emissions Regulates “carbon intensity” of the fuels ( gCO2e/MJ) Allows displacement of “high” carbon fuels with lower carbon intensity fuels Would require reductions in carbon intensity from today’s fuels

6. 6 Northeast Regional LCFS Extend RGGI collaboration to transportation sector. RGGI + PA Commissioners drafting MOU for December 2009 Similar to CA, but different: Fuel supply Regulated parties Heating oil (?)

7. 7 National Policy Context California LCFS Federal RFS2 Differences with carbon intensity standard National climate legislation

8. 8 Regional LCFS Initiative: Structure State staff - Environment, Energy and Natural Resource Agencies NESCAUM - technical and policy analysis Steering Committee and Work Groups 6 Work Groups: Implementation, Sustainability, Legal Authority, Communications, Baseline, Economic Impacts Stakeholder Input

9. 9 Regional LCFS Initiative: Policy and Technical Issues (1) Regulated parties Compliance target Baseline CI for gasoline and diesel Inter-regional and national issues Include heating oil?

10. 10 Regional LCFS Initiative: Policy and Technical Issues (2) Economic analysis Sustainability criteria Indirect land use Credit creation and trading Monitoring and enforcement

11. 11 Issues for Regional LCFS Indirect land use change (“iLUC”) Using land for biofuels increases demand for land, driving some deforestation, other changes CA (LCFS) and EPA (RFS2) using established models to estimate magnitude Regulated parties (distributors, importers, etc.) Scope (heating oil?) Stringency (10% reduction in 10 years?)

12. 12 Building on RGGI Success RGGI shows the potential for our region to innovate and provide national leadership First mandatory US carbon market (for EGUs) Clear influence on Waxman-Markey LCFS applies RGGI lessons to address transportation emissions: Regional collaboration Energy – environment connection

13. 13 www.nescaum.org/documents/lcfs-report-final.pdf

14. 14 Conclusion and Next Steps Develop Governors MOU Continue Stakeholder Input Continue Economic Analysis and other Policy Development Develop Program Framework

15. Northeast and Mid-Atlantic Regional Low Carbon Fuel Standard Nancy L. Seidman (617) 556-1020 nancy.seidman@state.ma.us/