In August 2024, the California Air Resources Board (CARB) released new proposed modifications to its Low Carbon Fuel Standard (LCFS). In response to this proposal, which portends significant negative implications for soy-based biofuels, the Minnesota Soybean Growers Association (MSGA) submitted public comments to CARB.

“Growers across Minnesota have long been committed to producing the world’s food, feed, fuel, fiber and thousands of bioproducts in an environmentally and economically sustainable way,” MSGA President Darin Johnson wrote. “Of top concern for Minnesota farmers and the rest of the nation is a proposal that would cap the use of soybean oil and canola oil as feedstocks for biofuels at 20 percent by company.”

Click here to read the letter in full.

By establishing a 20%-vegetable oil cap (soy and canola in aggregate) on a per company-wide basis, the proposal will treat biofuels beyond this cap as a fossil fuel. According to the American Soybean Association (ASA), CARB previously alluded to a potential cap on vegetable oils last year but did not include a cap in its December 2023 proposal or subsequent workshops. At that time, CARB staff insisted that a virgin vegetable oil cap led to worse environmental outcomes for California.

CARB argues that it does not want the LCFS to spur producers to increase vegetable oil-based biomass-based diesel (BBD) production based solely on California demand and argues that additional zero-emission vehicle (ZEV) sales will decrease need. CARB data notes that virgin oils used for production of BBD in Q1 of 2024 were 175 million gallons, equating to 30% of the BBD shipped into California.

The proposal also includes other policies that will adversely affect soy farmers, including:

Limiting BBD pathways: Giving CARB’s executive officer the discretion to refuse acceptance of any new BBD pathway applications in 2031 if ZEV sales hit a certain threshold — stunting future expansion into this market.

Maintaining sustainability criteria: Creating a timetable for sustainability requirements with specific phase-in benchmarks. Beginning in 2026, fuel producers would be required to collect and submit farm boundaries where soybeans are sourced.

Regional land use change: Developing more conservative land use change values for feedstock-producing world regions and assigning different scores depending on growing area (e.g. North America versus South America).

New carbon intensity thresholds: Ramping up carbon intensity (CI) reductions immediately from 5% in 2025 to 9% before flattening out the curve over time and keeping the same 30% reduction target in 2030.

CARB is the state governing body that oversees low-carbon fuel policy. CARB approved a LCFS regulation in 2009 as part of a larger state effort to cut greenhouse gas (GHG) emissions and other smog-forming and toxic air pollutants. CARB began implementatof the LCFS program in 2011 and became the first state in the nation to do so. Since then, several states have adopted similar LCFS measures that largely follow CARB’s model, with Oregon, Washington and British Columbia working through a regional agreement to specifically align their policies. However, MSGA has been successful in pushing back against a Minnesota-specific LCFS that would limit biofuels’ growth in the state. In 2018, CARB updated their LCFS program to strengthen carbon intensity benchmarks through 2030. This effort seeks to align with California’s 2030 GHG emission reduction target.

LCFS programs are modeled in a way that measures the carbon intensity of a fuel (the CI score). The program requires gradually lower carbon emissions from the transportation pool. Fuels with a CI score lower than the baseline generate credits, while those above the benchmark generate deficits. These credits and deficits are measured in metric tons of GHG emissions. Fuel providers must purchase excess credits if they have a net deficit. Those with a surplus of credits can sell their excess to these buyers.

Since 2022, ASA has engaged with CARB on updates to the LCFS. ASA has submitted several rounds of comments, participated in workshops and met directly with CARB staff. CARB plans to meet in November to finalize updates to the LCFS.

“Unfairly adding demands on U.S. soybean farmers and eliminating them from these programs will drive incentives for other bad actors to continue to pass off deforested soy oil or palm oils as used cooking oil,” Johnson wrote. “These practices could and would actually do more damage to the climate and make it harder to meet climate goals.”