Yeah, whether this makes sense depends largely on what the purpose of the program is. Is the LCFS an offset program or a California fuel program, as CARB generally claims? IMO, CA is squandering scarce resources on paper credits when we need to truly modernize the state's transportation sector.

No, the program is supposed to decarbonize CA transportation fuels and transform the market. You can't do that by buying offsets for out-of-state reductions in other sectors. It would be just as misguided to give electric utilities a pass from RPS compliance by buying carbon offsets.

No. Californians are paying a lot of money to clean up the state's transportation sector and they're not getting what they pay for. Fixing the LCA doesn't fix that problem.

There are also big Qs about whether there's any climate benefit from using methane from factory farms instead of fossil gas. We don't know how much biomethane is produced to take advantage of these kinds of subsidies and the biomethane supply chain is even leakier than the fossil gas supply chain.

I assume the people who buy the biomethane are in Missouri. It's hard to argue that the CA subsidies are causing fossil gas displacement - if you check out the full WaPo article, it gets into how the CAFO already captured biomethane before the LCFS subsidies.

Companies that sell fossil methane in CA buy paper credits from factory farms in Missouri. These credits give the fossil fuel industry the right to pretend they are selling biomethane in CA for the sake of claiming huge subsidies. It might seem too stupid to be true, but that's how the LCFS works.

Luckily, the statute requires New Mexico's clean transportation fuel standard to reduce the carbon intensity of fuels "used in the state," so the state's environment department must nix these book-and-claim accounting shenanigans in the final rule.

Will the New Mexico Clean Transportation Fuel Standard become a giant straw that sucks money from New Mexicans to California's refineries and Wisconsin's dairies for fuels that provide no in-state benefits?

One big loophole that is unique to the New Mexico draft is letting all fuels take advantage of "book-and-claim" accounting. Companies that continue business-as-usual and sell fossil diesel in NM could claim a subsidy by buying paper credits from companies that supply renewable diesel in California.

These oils are sold in a global commodity market, interchangeable with palm oil. So, one straightforward fix would be to assume that increasing demand for any crop oil has the same land-use impacts as increasing demand for palm oil, which is too carbon-intensive to claim a subsidy.

NM's proposal would also rely on CA's decade-old assessment of the climate benefits of crop oils, which neglects deforestation risks. A recent EPA study found that emissions from increasing production of these biofuels could be even worse for the climate than fossil fuels.

The special treatment for manure gas is even *less* justified in New Mexico than in CA because livestock operations there generally don't store manure in the types of lagoons that generate methane for capture. Commodifying methane just encourages them to switch to dirtier practices to make CH4.

Just like in CA, NM proposes to treat gas from livestock manure as "carbon negative", lavishing bigger subsidies on fuels made from ag waste than any other fuels. This is a big market distortion that rewards fueling with manure gas with about 4x the subsidy you'd see for electric fuels.