SF 2584

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/10/2023 04:52pm

A bill for an act
relating to transportation; establishing a standard to reduce the carbon intensity of
transportation fuels; requiring a report; appropriating money; proposing coding
for new law in Minnesota Statutes, chapter 239.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [239.7312] CLEAN TRANSPORTATION STANDARD ACT.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Carbon dioxide equivalent" means the number of metric tons of carbon dioxide
emissions that have the same global warming potential as one metric ton of another
greenhouse gas.
new text end

new text begin (c) "Carbon intensity" means the quantity of life cycle greenhouse gas emissions
associated with the fuel pathway and use of a unit of a specific transportation fuel, expressed
in grams of carbon dioxide equivalent per megajoule of transportation fuel, as calculated
by the most recent version of Argonne National Laboratory's GREET model adapted to
Minnesota, as determined by the commissioner.
new text end

new text begin (d) "Clean fuel" means a transportation fuel that has a carbon intensity level below the
clean fuels carbon intensity standard in a given year.
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new text begin (e) "Commissioner" means the commissioner of the Pollution Control Agency.
new text end

new text begin (f) "Continuous living cover cropping systems" means market-based agricultural systems
characterized by living plants above ground and living roots in the soil throughout the entire
year, including but not limited to:
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new text begin (1) perennial crops, including forage and pasture;
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new text begin (2) winter annual cash cover crops such as winter camelina and pennycress; and
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new text begin (3) agroforestry practices.
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new text begin (g) "Credit" means a unit of measure that: (1) is equal to one metric ton of carbon dioxide
equivalent; and (2) serves as a quantitative measure of the degree to which the carbon
intensity of a fuel provider's transportation fuel volume is lower than the carbon intensity
embodied in an applicable clean transportation standard. Credit includes a credit premium,
as provided in subdivision 2, paragraph (d).
new text end

new text begin (h) "Credit generator" means an entity that produces or imports a clean fuel for use in
Minnesota, which, with respect to electricity used as a transportation fuel, includes but is
not limited to automakers, charging providers, electric utilities, and electric vehicle fleet
operators.
new text end

new text begin (i) "Deficit" means a unit of measure that: (1) is equal to one metric ton of carbon dioxide
equivalent; and (2) serves as a quantitative measure of the degree to which the carbon
intensity of a fuel provider's volume of transportation fuel is greater than the carbon intensity
embodied in an applicable clean transportation standard.
new text end

new text begin (j) "Deficit generator" means a fuel provider who first produces or imports a transportation
fuel for use in Minnesota whose carbon intensity generates deficits.
new text end

new text begin (k) "Fuel pathway" means a detailed description of all stages of a transportation fuel's
production and use, including feedstock production, extraction, processing, transportation,
distribution, and combustion or use by an end-user.
new text end

new text begin (l) "Fuel provider" means an entity that supplies a transportation fuel for use in Minnesota.
new text end

new text begin (m) "Global warming potential" or "GWP" means a quantitative measure of a greenhouse
gas emission's potential to contribute to global warming over a 100-year period, expressed
in terms of the equivalent carbon dioxide emissions that would be required to produce the
same 100-year warming effect.
new text end

new text begin (n) "Greenhouse gas" means carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,
perfluorocarbons, or sulfur hexafluoride.
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new text begin (o) "Motor vehicle" has the meaning given in section 169.011, subdivision 42.
new text end

new text begin (p) "Relevant petroleum-only portion of transportation fuels" means the component of
gasoline or diesel fuel prior to blending with ethanol, biodiesel, or other biofuel.
new text end

new text begin (q) "Soil-healthy farming practices" means farming practices that improve soil health,
as defined in section 103C.101, and that incorporate one or more of the following practices:
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new text begin (1) no-till or conservation tillage;
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new text begin (2) cover cropping;
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new text begin (3) perennial cropping;
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new text begin (4) inter-seeding;
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new text begin (5) organic production;
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new text begin (6) roller crimping; and
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new text begin (7) managed rotational grazing.
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new text begin (r) "Technology provider" means a manufacturer of an end-use consumer technology
involved in supplying clean fuels.
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new text begin (s) "Transportation fuel" means electricity or a liquid or gaseous fuel that:
new text end

new text begin (1) is blended, sold, supplied, offered for sale, or used to propel a motor vehicle, including
but not limited to a train, light rail vehicle, ship, aircraft, forklift, or other road or nonroad
vehicle in Minnesota; and
new text end

new text begin (2) meets applicable standards, specifications, and testing requirements under this chapter.
new text end

new text begin Transportation fuel includes but is not limited to electricity used as fuel in a motor vehicle,
gasoline, diesel, ethanol, biodiesel, renewable diesel, propane, renewable propane, natural
gas, renewable natural gas, hydrogen, aviation fuel, and biomethane.
new text end

new text begin Subd. 2. new text end

new text begin Clean transportation standard; establishment. new text end

new text begin (a) The commissioner must
establish a clean transportation standard requiring that the aggregate carbon intensity of
transportation fuel supplied to Minnesota must be reduced to at least 25 percent below the
2018 baseline level by the end of 2030, by 75 percent by the end of 2040, and by 100 percent
by the end of 2050.
new text end

new text begin (b) In consultation with the Department of Commerce, Department of Transportation,
and Department of Agriculture, the commissioner must establish by rule an annual standards
schedule for the carbon intensity of transportation fuels that steadily decreases. When
establishing the annual standards schedule, the commissioner must consider the cost of
compliance, the technologies available to a provider to achieve the standard, the need to
maintain fuel quality and availability, and the impact on achieving the state's greenhouse
gas emissions reduction goals established in section 216H.02, subdivision 1, and the policy
goals in this chapter.
new text end

new text begin Subd. 3. new text end

new text begin Clean transportation standard; baseline calculation. new text end

new text begin The Pollution Control
Agency, after reviewing and considering the best available scientific data and calculations,
must calculate the baseline carbon intensity of the relevant petroleum-only portion of
transportation fuels for the 2018 calendar year.
new text end

new text begin Subd. 4. new text end

new text begin Fuel pathway and carbon intensity determination. new text end

new text begin (a) The commissioner
must establish a process to determine the carbon intensity of transportation fuels. Fuel
pathways must be determined using the most recent version of the Argonne National
Laboratory's GREET model adapted to Minnesota, as determined by the commissioner.
The fuel pathway determination process must:
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new text begin (1) be consistent for all fuel types;
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new text begin (2) be based on science and engineering;
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new text begin (3) reflect differences in vehicle fuel efficiency and drive trains; and
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new text begin (4) account for any on-site additional energy use by a carbon capture technology
employed in the fuel production process, including but not limited to generation, distillation,
and compression.
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new text begin (b) The commissioner: (1) must consult with the Department of Agriculture, Department
of Transportation, and Department of Commerce to determine fuel pathways; and (2) may
coordinate with third-party entities or other states to review and approve fuel pathways.
new text end

new text begin Subd. 5. new text end

new text begin Clean transportation standard; compliance. new text end

new text begin A deficit generator may comply
with this section by:
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new text begin (1) producing or importing transportation fuels whose carbon intensity is at or below
the level of the current standard; or
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new text begin (2) purchasing sufficient credits to offset any aggregate deficits resulting from the carbon
intensity of the deficit generator's transportation fuels exceeding the current standard.
new text end

new text begin Subd. 6. new text end

new text begin Credit generation. new text end

new text begin A credit may be generated when transportation fuel is
produced, imported, or provided for use in Minnesota and the carbon intensity of the fuel
is less than the applicable clean fuel standard. The rules must ensure that there is no
double-counting of credits.
new text end

new text begin Subd. 7. new text end

new text begin Credits; rules; verification. new text end

new text begin (a) The rules adopted under this section, as required
under subdivision 8, must:
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new text begin (1) establish and regulate the operation of a market to trade transportation fuel credits
and deficits, and may include:
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new text begin (i) a market mechanism that allows credits to be traded or banked for future use;
new text end

new text begin (ii) transaction fees associated with the credit market; and
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new text begin (iii) procedures to verify the validity of credits and deficits generated by a fuel provider
under this section;
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new text begin (2) prohibit the generation of credits from certain activities, including:
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new text begin (i) carbon capture and underground storage of carbon dioxide used for enhanced oil
recovery;
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new text begin (ii) the production of biofuels from feedstock grown on croplands with fewer than five
consecutive years cropping history; and
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new text begin (iii) renewable natural gas produced from any new or expanded agricultural livestock
production facility;
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new text begin (3) allow an additional credit premium of five percent for cropland-derived biofuels
produced on acreage utilizing soil-healthy farming practices and fertilizer best management
practices; and
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new text begin (4) allow an additional credit premium of ten percent for cropland-derived biofuels
produced on acreage utilizing continuous living cover cropping systems.
new text end

new text begin (b) The Pollution Control Agency must, in collaboration with the Department of
Commerce, Department of Transportation, Department of Agriculture, and the Board of
Water and Soil Resources, establish acceptable methods to verify credit premiums, as
provided for in paragraph (a), clauses (3) and (4), including but not limited to satellite and
aerial verification, and must require verification to occur annually.
new text end

new text begin (c) The commissioner must work in consultation with the commissioner of agriculture
to use the Argonne GREET model to develop a statewide average direct carbon intensity
value for cropland-derived biofuel feedstocks that is used as a component to determine the
overall lifecycle carbon intensity of biofuel production.
new text end

new text begin (d) The commissioner must work in consultation with the commissioner of agriculture
to develop procedures to allow biofuel producers to calculate a unique carbon intensity
score for biofuel feedstocks from crop-land derived biofuels using the Argonne GREET
model and other models, taking into account impacts on farm-related emissions and
sequestration of greenhouse gases. This unique carbon intensity may be used as an alternative
to using the statewide average described under paragraph (c). The procedures must include
a methodology for calculation, monitoring, and third-party auditing and verification of
on-farm practices, including reduced tillage; no-till; reduced on-farm fuel use; reduced use
of fertilizers and other inputs; use of cover crops; use of perennial strips; application of
manure; application of biochar; and other relevant practices that can impact the carbon
intensity of biofuel feedstocks, including other soil healthy farming practices or continuous
living cover cropping systems.
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new text begin (e) A biofuel producer that elects to utilize a unique carbon intensity score under
paragraph (d) is prohibited from claiming the credit premiums under paragraph (a), clauses
(3) and (4).
new text end

new text begin (f) Nothing in this chapter precludes the Pollution Control Agency from adopting rules
that allow the generation of credits associated with electric or alternative transportation
fuels or infrastructure that existed prior to the effective date of this section or the start date
of program requirements.
new text end

new text begin (g) The commissioner must develop procedures to allow credit generators to generate
credits for electric vehicle charging that occurs in residences. All credit revenue generated
in this section must be expended to promote the adoption of electric vehicles, including but
not limited to electric vehicle purchase incentives, electric vehicle charging equipment, and
other transportation electrification initiatives. At least 60 percent of the credit revenue
generated in this section must be spent to support transportation electrification for the
primary benefit of disadvantaged communities, low-income communities, or rural
communities.
new text end

new text begin Subd. 8. new text end

new text begin Clean transportation standard; establishment by rule; goals. new text end

new text begin (a) No later
than ....., the commissioner must begin the process to adopt rules under chapter 14 that
implement a clean transportation standard and other provisions of this section.
new text end

new text begin (b) When developing proposed rules under this section, the commissioner shall consult
with:
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new text begin (1) the commissioners of commerce, agriculture, transportation, and health; and
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new text begin (2) an advisory committee, as provided for in section 14.101, subdivision 2, composed
of proportional representatives from agriculture; transportation fuel providers; consumers;
rural, urban, and Tribal communities; environmental organizations; environmental justice
organizations; technology providers; and urban communities that rely on river water as the
primary source of drinking water.
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new text begin (c) When developing rules under this section, the commissioner must endeavor to make
available to Minnesota a fuel-neutral clean fuels portfolio that:
new text end

new text begin (1) creates broad rural and urban economic development;
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new text begin (2) provides benefits for communities, consumers, clean fuel providers, technology
providers, and feedstock suppliers;
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new text begin (3) increases energy security by expanding the supply of domestically produced fuels;
new text end

new text begin (4) supports equitable transportation electrification powered primarily with low-carbon
and carbon-free electricity that benefits all communities;
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new text begin (5) improves air quality and public health, targeting communities that bear a
disproportionate health burden from pollution from transportation fuels;
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new text begin (6) supports state solid waste recycling goals by facilitating credit generation from
renewable natural gas produced from organic waste;
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new text begin (7) aims to support, through credit generation or other financial means, the adoption of
agricultural practices that benefit soil health and water quality while contributing to lower
life-cycle greenhouse gas emissions from clean fuel feedstocks;
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new text begin (8) maximizes benefits to the environment and natural resources, develops safeguards
and incentives to protect natural lands, and enhances environmental integrity, including
biodiversity;
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new text begin (9) is the result of extensive outreach efforts to stakeholders and communities that bear
a disproportionate health burden from pollution from transportation or from the production
and transportation of transportation fuels; and
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new text begin (10) ensures that laborers and mechanics performing work on a project funded with
revenue earned by a utility from the sale of credits resulting from generation of credits for
residential charging using electricity as a transportation fuel are: (i) paid the prevailing wage
rate for the work as defined in section 177.42, subdivision 6; and (ii) subject to the
requirements and enforcement provisions of sections 177.30 and 177.41 to 177.45.
new text end

new text begin (d) Notwithstanding section 14.125, the requirement to publish a notice of intent to adopt
rules or notice of hearing within 18 months of the effective date of this act does not apply
to rules adopted under this section.
new text end

new text begin Subd. 9. new text end

new text begin Exemptions. new text end

new text begin Aviation fuels are exempt from the clean transportation standard
under this section due to federal preemption. Aviation fuel providers are eligible to elect to
participate in the clean transportation standard by earning credits to fuel aircraft with aviation
fuel with associated life-cycle greenhouse gas emissions lower than the per-unit standard
established in subdivision 2.
new text end

new text begin Subd. 10. new text end

new text begin Fuel provider reports. new text end

new text begin The commissioner must collaborate with the
Department of Agriculture, Department of Commerce, Department of Transportation, and
the Public Utilities Commission to develop a form and a process for credit and deficit
generators to annually report compliance with the carbon-intensity standard to the
commissioner.
new text end

new text begin Subd. 11. new text end

new text begin Enforcement. new text end

new text begin The commissioner of the Pollution Control Agency may enforce
this section under section 45.027.
new text end

new text begin Subd. 12. new text end

new text begin Report to the legislature. new text end

new text begin No later than 48 months after the effective date of
a rule implementing a clean transportation standard, the commissioner must submit a report
detailing program implementation to the chairs and ranking minority members of the house
of representatives and senate committees with jurisdiction over transportation and energy
policy. The commissioner must make summary information on the program available to
the public.
new text end

new text begin Subd. 13. new text end

new text begin Periodic agency review. new text end

new text begin No less than once every five years after the effective
date of a rule implementing a clean transportation standard, the commissioner must conduct
a detailed review of the clean transportation standard in order to determine whether the rule
is meeting the goals of subdivision 8, paragraph (c).
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2. new text begin APPROPRIATION.
new text end

new text begin $900,000 in fiscal year 2024 is appropriated from the general fund to the commissioner
of the Pollution Control Agency to pay for costs incurred to create the report under Minnesota
Statutes, section 239.7912, subdivision 10. The money from this appropriation does not
cancel, but remains available until expended. This is a onetime appropriation.
new text end