Safety-Kleen Comments to ARB on co-processing 19 Jan ... to the fluid catalytic cracker (FCC) in a California petroleum refinery. Emerald plans to supply up to 10 million gallons per

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January 19, 2016

Samuel Wade Branch Chief, Transportation Fuels Air Resources Board 1001 I Street Sacramento, CA 95814 (Comment submitted via email to [email protected] ) RE: Safety-Kleen Input Regarding Co-processing Issues Dear Mr. Wade: Safety-Kleen appreciates the opportunity to provide comments regarding the Low Carbon Fuel Standard (“LCFS”) regulations to be developed by the Air Resources Board (“ARB”), pertaining to the co-processing of non-crude oil feedstocks at a refinery to produce less carbon intense transportation fuels. This comment provides input from Safety-Kleen, an established and innovative company that plans to supply a low carbon feedstock to refineries. Safety-Kleen is supportive of ARB’s plans to facilitate LCFS credit generation through co-processing. The LCFS has proven to be an effective, market-based program that has driven the development and expanded the supply of low carbon fuels in California. By developing rules that facilitate co-processing, ARB will further expand the supply of less carbon-intense fuels and facilitate attainment of California’s greenhouse gas (“GHG”) reduction policies.

Safety-Kleen

Safety-Kleen is the leader in North American used oil recycling and re-refining, parts cleaning and environmental solutions. Safety-Kleen services more than 200,000 customers in the United States, Canada and Puerto Rico, and is the largest used oil collector in North America, collecting more than 200 million gallons of used oil annually. Safety-Kleen has recently acquired Emerald Services (Emerald) in Tacoma, Washington. Emerald is a leading environmental company in the Northwest, providing recovery and recycling of solvents, antifreeze and waste oil. Emerald’s operations include fuel blending, chemical waste management, marine and industrial cleaning, waste and source reduction services, automotive and transportation services, and a variety of industrial services.

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Issues Presented

On December 13, 2016, ARB held a workshop pertaining to co-processing, and gave a presentation entitled, “Co-processing of Biogenic Feedstocks in Refineries: 1st Work Group Meeting.” In the presentation, ARB requested stakeholder input on a series of issues including the following:

• Potential process units for co-processing • New research reports on quantification • Proposed quantification methods • Technological barriers of deployment of co-processing • Challenges to reporting and verification of finished fuel • Other comments to assist with objectives of this work group

This comment letter provides Safety-Kleen’s input on the specific questions posed, as well as additional comments related to its co-processing plans for the Emerald facility.

Emerald’s Co-processing Plans

Emerald manufactures a vacuum gas oil (“VGO”) from used motor oil (“UMO”). The resulting refinery feedstock is referred to as “Emerald VGO”. Emerald is working with a refinery partner to introduce Emerald VGO at a blend ratio of 5% or less to the fluid catalytic cracker (FCC) in a California petroleum refinery. Emerald plans to supply up to 10 million gallons per year of Emerald VGO to its refinery partner. Other re-refiners of UMO also generate VGO,1 so it is likely that other companies may develop comparable plans in the future to supply VGO derived from UMO into FCC units for co-processing. Given the significant supply of UMO, this approach could produce significant new quantities of less carbon intense fuels and deliver corresponding GHG reductions to California.

General Comments

Flexible Feedstocks: Consistent with the overall LCFS program structure that supports technology neutral GHG reduction, Emerald encourages ARB to approach co-processing in a flexible manner in order to maximize the amount of GHG reduction that co-processing can contribute to the program. As previously noted, Emerald will be supplying a less carbon intense crude oil replacement that is derived from UMO.

                                                                                                               1 Roland Geyer et al., “Life Cycle Assessment of Used Oil Management in California,” California Department of Resources Recycling and Recovery (CalRecycle), July 29, 2013.

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Obviously, this material would not be classified as biogenic. However, as ARB is aware, there is no limitation in the LCFS that restricts program participation to biogenic feedstocks derived from renewable biomass. Therefore, Emerald encourages ARB not to utilize the term “biogenic” and instead to characterize these feedstocks as non-crude feedstocks (“non-crude feedstocks”). The term non-crude feedstocks would encompass less carbon intense feedstocks that are directly substituted for crude oil as well as for vacuum gas oil. Market Barriers: While ARB’s presentation called for feedback regarding technological barriers, it is Emerald’s perspective that the technological barriers to co-processing Emerald VGO are negligible due to its chemical similarity to conventional VGO. Rather, the key barrier that the LCFS program structure must surmount is the market barrier. The market barrier may best be considered from the perspective of a refining company evaluating how to utilize its very expensive and complex refinery assets. Given the dominance of petroleum fuels in the transportation fuels market, it is necessary to provide a sound business case to the refiner to incentivize the use of non-crude feedstocks. Without a sound business case, the refiner will not choose to reduce its use of conventional crude oil to produce finished fuels. Prior to accepting non-crude feedstocks, the Refiner must be convinced that its LCFS compliance costs will be sufficiently reduced to justify the time, distraction, and complexity that non-crude feedstocks present, particularly during the evaluation phase. To facilitate this, ARB should integrate co-processing into the LCFS in a manner that is sound from a policy standpoint, but does not impose unnecessary burdens, complexity or uncertainty on regulated parties or on the suppliers of non-crude feedstocks. As explained in further detail below, Emerald recommends in particular that ARB not impose costly, burdensome, or complex requirements pertaining to carbon intensity (CI) quantification.

Recommended Approaches to CI Quantification

In order to fully realize the potential GHG benefits available to California through a robust co-processing program, Emerald recommends the following approaches to CI quantification.

Allow simplified analysis for low mixing rates.

Emerald and most other likely producers of either recycled or biogenic feedstocks intend to utilize small facilities producing tens of millions of gallons of non-crude feedstocks per year. These quantities are two orders of magnitude smaller than a conventional oil refinery, as was pointed out by Dr. Baldwin during the December

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13 workshop. In addition to the limited scale of supply, refiners have technical reasons to mix non-crude feedstocks with conventional feedstocks at low mixing ratios, probably under 5%. This near-term limit was elaborated upon in both physical and economic terms by Talmadge & Chum at the workshop. At low mixing ratios, the introduction of non-crude feedstocks will cause minimal disruptions to refinery function. ARB has an opportunity to support and encourage innovative approaches to CI reduction, by allowing refiners to accept non-crude feedstocks up to some low, threshold mixing ratio such as 5% without imposing undue burdens of testing or analysis.

Use accounting mechanisms to overcome process complexity.

Fluid catalytic cracking is a continuous process. It is therefore not possible for refinery engineers to compute or measure on a gallon-for-gallon basis the exact quantity of a specific feedstock that makes it into a particular refinery product. Instead, refineries should be permitted to quantify carbon intensity for finished fuels and to generate LCFS credits on a mathematically proportional basis as established by the refinery’s historical operating data. This mass balance approach was supported by all of the technical presentations given at the December 13th workshop.  

Conclusion Thank you for your consideration of our input. Please contact us if any further input would be helpful. We look forward to participating in subsequent workshops and providing input to this proceeding.

Sincerely,

Graham Noyes

Cc: Scott M. Miller, Vice President of US Refinery Operations, Safety-Kleen