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Proposed Regulation on the Commercialization of Alternative Diesel Fuels

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Proposed Regulation on the Commercialization of Alternative Diesel Fuels Proposed Regulation on the Commercialization of Alternative Diesel Fuels Staff Report: Initial Statement of Reasons Industrial Strategies Division Oil and Gas and GHG Mitigation Branch & Transportation Fuels Branch Release Date: January 2, 2015 To Be Considered by the Board: February 19 or 20, 2015 This page intentionally left blank State of California Air Resources Board Staff Report: Initial Statement of Reasons for Proposed Rulemaking Proposed Regulation on the Commercialization of Alternative Diesel Fuels Date of Release: January 2, 2015 Scheduled for Consideration: February 19 or 20, 2015 Location: California Air Resources Board Byron Sher Auditorium 1001 I Street Sacramento, California 95814 This report has been reviewed by the staff of the California Air Resources Board and approved for publication. Approval does not signify that the contents necessarily reflect the views and policies of the Air Resources Board, nor does mention of trade names or commercial products constitute endorsement or recommendation for use. This page intentionally left blank Acknowledgments This report was prepared with the assistance and support from many individuals within the Air Resources Board. Staff would like to acknowledge the cooperation from numerous State, governmental, and local air pollution control agencies that have provided assistance throughout the rulemaking process. Staff would also like to acknowledge the invaluable contributions from our key stakeholders including the National Biodiesel Board, California Biodiesel Alliance, Western States Petroleum Association, Kinder Morgan, and others. Air Resources Board Principal Contributors Industrial Strategies Division Susie Chung Jose Saldana Aubrey Gonzalez Jim Peterson Alexander “Lex” Mitchell Research Division Chantel Crane Supporting Contributors Office of Legal Affairs Enforcement Division Stephen Adams Herman Lau William Brieger Christina Morkner Brown CEQA Research Division Cathi Slaminski Fereidun Feizollahi Ascent Environmental Jeff Austin Reviewed by: Richard W. Corey, Executive Officer Edie Chang, Deputy Executive Officer Floyd Vergara, Chief, Industrial Strategies Division Jack Kitowski, Assistant Chief, Industrial Strategies Division Mike Waugh, Chief, Transportation Fuels Branch Elizabeth Scheehle, Chief, Oil and Gas and GHG Mitigation Branch Jim Aguila, Manager, Substance Evaluation Section Alexander “Lex” Mitchell, Manager, Emerging Technology Section This page intentionally left blank Table of Contents EXECUTIVE SUMMARY ............................................................................................... 11 CHAPTER 1. INTRODUCTION .................................................................................... 15 A. Air Quality ......................................................................................................... 15 B. Alternative Motor Vehicle Fuels ........................................................................ 15 C. Alternative Diesel Fuels Overview .................................................................... 15 D. Low Carbon Fuel Standard Litigation ............................................................... 17 E. Development Process for the Proposed Regulation ......................................... 17 F. Organization of This Report ............................................................................. 18 CHAPTER 2. CALIFORNIA MANDATES ON AIR QUALITY ....................................... 19 A. Ambient Air Quality Standards ......................................................................... 19 B. Greenhouse Gases and Climate Change ........................................................ 19 CHAPTER 3. CALIFORNIA MOTOR VEHICLE DIESEL FUEL POLICIES .................. 21 A. California Health and Safety Code ................................................................... 21 B. Low Carbon Fuel Standard .............................................................................. 22 C. California Diesel Fuel Programs ....................................................................... 24 CHAPTER 4. FEDERAL POLICIES AFFECTING MOTOR VEHICLE DIESEL FUEL . 27 A. Federal Fuel Registration ................................................................................. 27 B. Federal Regulations Affecting Diesel Fuel Quality ........................................... 27 C. Federal Renewable Fuels Standard ................................................................. 27 D. Federal Trade Commission Labeling Requirements ........................................ 31 CHAPTER 5. DESCRIPTION OF PROPOSED REGULATION .................................... 33 A. Overview of Proposed Regulation .................................................................... 33 B. Applicability ...................................................................................................... 33 C. Definitions ........................................................................................................ 33 D. Applicable Requirements for Alternative Diesel Fuels ...................................... 33 E. Biodiesel as an Alternative Diesel Fuel ............................................................ 35 CHAPTER 6. TECHNOLOGY ASSESSMENT .............................................................. 37 A. Introduction ...................................................................................................... 37 B. Emissions Studies Literature Review ............................................................... 37 C. NOx Emissions Data Analysis .......................................................................... 39 D. Biodiesel Emissions in Heavy-Duty Diesel Engines ......................................... 41 E. Biodiesel Effects in Light and Medium Duty Vehicles ....................................... 45 F. Biodiesel Effects in Non-road and Stationary Engines ..................................... 45 G. NOx Emission Control Techniques .................................................................. 45 H. Determination of NOx Control Level for Biodiesel ............................................ 46 CHAPTER 7. AIR QUALITY AND ENVIRONMENTAL JUSTICE .................................. 49 A. Introduction ...................................................................................................... 49 B. Air Quality ......................................................................................................... 49 C. Environmental Justice and Local Communities ................................................ 50 CHAPTER 8. ENVIRONMENTAL ANALYSIS .............................................................. 53 CHAPTER 9. MULTIMEDIA EVALUATION ................................................................. 55 A. General Overview ............................................................................................ 55 B. Summary of the Biodiesel and Renewable Diesel Multimedia Evaluation ........ 56 C. Biodiesel and Renewable Diesel Peer Review ................................................. 59 D. Current Status and Next Steps ......................................................................... 59 CHAPTER 10. ECONOMIC IMPACTS ASSESSMENT ................................................ 61 A. Summary of Economic Impacts ........................................................................ 61 B. Major Regulations ............................................................................................ 62 C. Economic Impacts Assessment ....................................................................... 63 D. Cost Effectiveness ........................................................................................... 71 F. Reasons for Adopting Regulations Different from Federal Regulations ........... 71 G. Impacts to California State or Local Agencies .................................................. 73 CHAPTER 11. ANALYSIS OF REGULATORY ALTERNATIVES ................................. 75 A. Alternative Submitted by Growth Energy ......................................................... 75 B. Alternative Submitted by National Biodiesel Board .......................................... 76 C. Conclusions ...................................................................................................... 76 CHAPTER 12. SUMMARY AND RATIONALE .............................................................. 77 CHAPTER 13. REFERENCES ...................................................................................... 84 Table of Appendices: APPENDIX A: PROPOSED REGULATION…………………………………….…………………...A-1 APPENDIX B: TECHNICAL SUPPORTING INFORMATION………….……………………...B-1 APPENDIX C: ECONOMIC SUPPORTING INFORMATION…………….…………………...C-1 APPENDIX D: DRAFT ENVIRONMENTAL ANALYSIS..…………………….………………...D-1 APPENDIX E: SUMMARY OF DOF COMMENTS TO THE COMBINED LCFS/ADF SRIA AND ARB RESPONSES…………………………………...………………………………...E-1 APPENDIX F: INPUTS AND OUTPUTS OF REMI MODELING………………..…………...F-1 APPENDIX G: SUPPLEMENTAL STATISTICAL ANALYSIS………………………………...G-1 Table of Figures: Table 1.1: ADF Regulatory Development Timeline ....................................................... 17 Table 4.1: Volumes Used to Determine the Final 2013 Percentage Standards ............ 30 Table 4.2: Final Percentage Standards for 2013 ........................................................... 30 Table 4.3: Volumes Used to Determine the Proposed 2014 Percentage Standards ..... 31 Table 4.4: Proposed Percentage Standards for 2014 ................................................... 31 Table 5.1: NOx Control
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