PA Clean Fuel Standard Co-Sponsorship Memo Introduced

Last week, a bipartisan co-sponsorship memo was filed in the Pennsylvania House to propose Clean Fuel Standard (CFS) legislation. The legislative proposal covers both the transportation sector and the heating sector. The prime co-sponsors are Rep. Paul Takac (D-Centre) and Rep. Natalie Mihalek (R-Allegheny).

The memo describes the legislation as establishing a policy framework by which the carbon intensity of transportation and heating emissions would be required to decrease incrementally over time. The sponsors tout this approach as being more efficient and significantly less costly than the push in recent years for total electrification to meet decarbonization goals.

The bill would require producers of all energy sources importing their products into the state to reduce their carbon intensity by 15% over a 10-year period. Producers would generate credits, which would be traded on a private trading platform overseen by a board made up primarily of industry representatives under the jurisdiction of the law.

A similar co-sponsorship memo was released by Senate Republicans in 2023. Since that point, the PPA has been engaged in a working group to provide feedback on a Pennsylvania-specific fuel standard along with renewable natural gas producers, major oil companies, the state farmers association, landfill interests, truck manufacturers, and individual corporations pursuing sustainability goals.

These discussions gave PPA the opportunity to educate stakeholders as to the drop-in fuel qualities of biodiesel and renewable diesel in vehicle engines and heating systems. Specifically, around the dynamic of leveraging existing liquid fuel infrastructure as the most cost-effective option to meet government decarbonization goals versus an all-out electrification approach. The PPA has raised the issue of potential cost impacts associated with a market-based fuel standard policy, along with supply considerations. The specific details, such as reduction percentages, baseline year, and target goal, will have a direct impact on these concerns.

The actual Clean Fuel Standard bill has still not been publicly released. The next step in the legislative process will be for the bill to be introduced, which is expected in the near term. House Democratic Leaders and the designated Committee Chair will then determine whether to schedule public hearings on the bill. The PPA will be assessing the reaction to the bill from PPA members, wholesalers, refiners, and industry stakeholders before any decision on a final position on the legislation is made. Other states, such as New York, New Jersey, Maryland, Illinois, and Minnesota, are in different phases of considering a Clean Fuel Standard.