An Act establishing clean fuels standards; establishing the Clean Fuels Standards Board; imposing duties on the Clean Fuels Standards Board and the Department of Environmental Protection; and establishing the Fair Market Credit Trading Program.

PRINTER'S NO. 2647
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2063
Session of
2025
INTRODUCED BY TAKAC, MIHALEK, HILL-EVANS, SANCHEZ, STEELE,
VITALI, MAYES, RIVERA, CEPEDA-FREYTIZ, FRANKEL, E. NELSON,
PASHINSKI, BOROWSKI, FLEMING, HADDOCK, MALAGARI AND BRENNAN,
NOVEMBER 21, 2025
REFERRED TO COMMITTEE ON ENERGY, DECEMBER 3, 2025
AN ACT
Establishing clean fuels standards; establishing the Clean Fuels
Standards Board; imposing duties on the Clean Fuels Standards
Board and the Department of Environmental Protection; and
establishing the Fair Market Credit Trading Program.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Findings and declarations.
Section 103. Definitions.
Chapter 3. Clean Fuels Standards Board
Section 301. Establishment.
Section 302. Composition.
Section 303. Terms.
Section 304. Officers.
Section 305. Quorum and voting.
Section 306. Vacancies.
Section 307. Compensation and expenses.
Section 308. Proceedings.
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Section 309. Transparency.
Section 310. Powers and duties.
Chapter 5. Standards
Section 501. Transportation fuels.
Section 502. Heating fuels.
Section 503. Implementation.
Section 504. GREET model and carbon intensity.
Section 505. Exemptions and eligibility.
Chapter 7. Fair Market Credit Trading Program
Section 701. Establishment.
Section 702. Components.
Section 703. Participation.
Chapter 9. Miscellaneous Provisions
Section 901. Rulemaking.
Section 902. Reports.
Section 903. Co-compliance.
Section 904. Compliance waiver.
Section 905. Preemption.
Section 906. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Clean Fuels
Standards Act.
Section 102. Findings and declarations.
The General Assembly finds and declares as follows:
(1) According to the most recent Greenhouse Gas
Inventory issued by the department, the transportation sector
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and heating fuel sector are the second and third largest
sources of greenhouse gas emissions in this Commonwealth.
(2) Through the development and implementation of clean
fuels standards for transportation fuel and heating fuel,
this act is intended to:
(i) Reduce greenhouse gas emissions from the
transportation sector and heating fuel sector.
(ii) Incentivize production of clean fuels for the
transportation and heating fuel sectors within this
Commonwealth through a system of credits, which can be
sold through private transactions to entities that are
required to reduce the carbon intensity of transportation
fuels and heating fuels supplied to and used in this
Commonwealth.
(3) This act is intended to be technology neutral and
not to exclude any clean fuel or any specific type of
transportation fuel or heating fuel.
(4) Implementation of clean fuels standards will
increase the optionality of available transportation fuels
and heating fuels in this Commonwealth and increase overall
fuel resilience and grid reliability.
Section 103. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Agricultural co-product." A secondary or incidental product
derived from the processing or use of an agricultural product,
including, but not limited to, plant residue, animal waste,
distiller's grains, oilseed meal or another material suitable
for conversion to transportation fuel or heating fuel.
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"Agricultural products." Crops, livestock or other farm-
based commodities that are grown, raised, harvested or produced
for use as food, feed, fiber, fuel or industrial raw material or
other materials suitable for conversion to transportation or
heating fuel.
"ASTM." The American Society for Testing and Materials
International.
"Board." The Clean Fuels Standards Board established under
section 301.
"Carbon dioxide equivalent." A unit of measurement that is
used to standardize the effects of various greenhouse gases and
is calculated using Equation A-1 in 40 CFR Pt. 98 Subpt. A
(relating to general provision). Carbon dioxide equivalent may
be stated as CO2e.
"Carbon intensity." The life cycle emissions per unit of
fuel energy expressed in grams of carbon dioxide equivalent per
megajoule, supplied to and used in this Commonwealth, as
calculated under the GREET model adopted by the board.
"Carbon intensity target." The carbon intensity value for a
given compliance year that is used to calculate the credits and
deficits accrued by a program participant as set by the clean
fuels standard.
"Clean fuel." A fuel sold or supplied for use in this
Commonwealth that has a carbon intensity below the clean fuels
standards as established by the board, including, but not
limited to:
(1) Electricity generated from alternative energy
sources, as defined in section 2 of the act of November 30,
2004 (P.L.1672, No.213), known as the Alternative Energy
Portfolio Standards Act, and in accordance with the act of
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April 9, 1929 (P.L.177, No.175), known as The Administrative
Code of 1929.
(2) Renewable natural gas, including, but not limited
to, biogas derived from landfill gas, municipal solid waste,
industrial and food waste, wastewater treatment material,
waste mine methane, agricultural products, agricultural co-
products and animal manure.
(3) Renewable propane.
(4) Hydrogen.
(5) Hythane.
(6) Liquid fuels, including, but not limited to, liquid
fuels derived from agricultural products and agricultural co-
products such as biodiesel, renewable diesel, ethanol and
renewable gasoline.
(7) Any of the fuels enumerated under paragraph (6) and
generated from co-processing with petroleum-based fuels.
"Clean fuels standard." The schedule of carbon intensity
targets to which a program participant must abide, in accordance
with:
(1) Section 501(b) for transportation fuels.
(2) Section 502(b) for heating fuels.
"Compliance year." The period beginning January 1 and ending
December 31 of the same year.
"Credit." As follows:
(1) A quantitative measure of the amount of CO2e that a
fuel supplier produced below the carbon intensity target in a
given compliance year.
(2) A credit shall be expressed in metric tons of CO2e.
(3) For a fuel with a carbon intensity below the
applicable carbon intensity target, a credit shall be
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calculated by multiplying the difference between the
applicable carbon intensity target of the fuel in a given
compliance year and the carbon intensity of the fuel and the
amount in megajoules of that fuel used in this Commonwealth.
"Credit generator." A fuel supplier that generates credits
through first production or import of clean fuel for use in this
Commonwealth.
"Deficit." As follows:
(1) A quantitative measure of the amount of CO2e that a
fuel supplier produced above the carbon intensity target in a
given compliance year.
(2) A deficit shall be expressed in metric tons of CO2e.
(3) For a fuel with a carbon intensity above the
applicable carbon intensity target, a deficit shall be
calculated by multiplying the difference between the carbon
intensity of the fuel and the applicable carbon intensity
target in a given compliance year and the amount in
megajoules of that fuel used in this Commonwealth.
"Deliverable fuel." A liquid fuel or gaseous fuel used for
the purpose of transportation fuel or heating fuel conveyed by a
vehicle from a wholesaler or to an end user of the product.
"Department." The Department of Environmental Protection of
the Commonwealth.
"Fuel." A transportation fuel, including aviation fuel, or a
heating fuel.
"Fuel pathway." A detailed description of all stages of a
fuel's production and delivery for use, including feedstock
generation, production, distribution and combustion or use by
the consumer that is used to calculate the life-cycle emissions
of a fuel.
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"Fuel supplier." An entity that produces or imports a fuel
for use in this Commonwealth.
"GREET model." The Research and Development Greenhouse
Gases, Regulated Emissions and Energy Use in Technologies model
developed by the Argonne National Laboratory as of the effective
date of this definition, including any subsequent versions
adopted by the Argonne National Laboratory that are then adopted
by the board in accordance with this act.
"Heating fuel." A fuel used to heat the interior space of a
building.
"Heating fuel baseline." The petroleum-only portion of the
aggregate average carbon intensity of heating fuel supplied to
and used in this Commonwealth in 2005.
"Hythane." Any combination of compressed natural gas and
hydrogen.
"Life-cycle emissions." The total aggregate greenhouse gas
emissions resulting from all stages of a fuel pathway, expressed
as gCO2e, for a specific fuel.
"Motor vehicle." As defined in 75 Pa.C.S. § 102 (relating to
definitions).
"Obligated party." A fuel supplier that generates deficits
through first production or import of a fuel for use in this
Commonwealth.
"Program participant." An obligated party or a credit
generator that, on a mandatory or an opt-in basis, abides by the
requirements of this act.
"Project credit." A credit generated from a project at a
refinery, hydrogen production facility supplying a refinery,
crude oil production facility or natural gas production facility
associated with the production of transportation fuels and
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heating fuels supplied to and used in this Commonwealth that
reduce the carbon intensity of a fuel compared to the
transportation fuel baseline and heating fuel baseline
established in accordance with this act.
"Project operator." A program participant that generates
project credits through eligible projects in accordance with
this act.
"Secretary." The Secretary of Environmental Protection of
the Commonwealth.
"Sustainable aviation fuel." A liquid transportation fuel
that:
(1) is derived from biomass, waste streams, renewable
energy sources or gaseous carbon oxides;
(2) consists of synthesized hydrocarbons; and
(3) meets the requirements of ASTM D7566 or the co-
processing provisions of ASTM D1655.
"Technology neutral." Not giving preference to one
technology, feedstock or fuel production or process pathway over
another.
"Trading program." The Fair Market Credit Trading Program
established under section 701(a).
"Transportation fuel." As follows:
(1) Any source of energy used for the operation of a
motor vehicle in this Commonwealth that meets applicable
standards and specifications.
(2) The term includes sustainable aviation fuel.
"Transportation fuel baseline." The petroleum-only portion
of the aggregate average carbon intensity of on-road gasoline
and diesel fuel supplied to and used in this Commonwealth in
2005.
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"Verifier." An independent third party accredited by the
department to carry out the duties described in section 703(e).
CHAPTER 3
CLEAN FUELS STANDARDS BOARD
Section 301. Establishment.
The Clean Fuels Standards Board is established within the
department.
Section 302. Composition.
(a) Members.--The board shall consist of the following
members:
(1) The secretary or a designee of the secretary who
shall be an employee of the department.
(2) The Secretary of Agriculture or a designee of the
Secretary of Agriculture who shall be an employee of the
Department of Agriculture.
(3) The Secretary of Revenue or a designee of the
Secretary of Revenue who shall be an employee of the
Department of Revenue.
(4) The Secretary of Transportation or a designee of the
Secretary of Transportation who shall be an employee of the
Department of Transportation.
(5) The chairperson of the Pennsylvania Public Utility
Commission or a designee of the chairperson of the
Pennsylvania Public Utility Commission who shall be a
commissioner of the Pennsylvania Public Utility Commission.
(6) The following individuals appointed in accordance
with subsection (b):
(i) A producer of petroleum-based diesel fuel within
this Commonwealth.
(ii) A producer of petroleum-based diesel fuel
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outside this Commonwealth.
(iii) A producer of petroleum-based gasoline within
this Commonwealth.
(iv) A producer of petroleum-based gasoline outside
this Commonwealth.
(v) Two producers of renewable natural gas within
this Commonwealth.
(vi) Two producers or suppliers of renewable diesel
fuel within this Commonwealth.
(vii) Two producers or suppliers of renewable
propane within this Commonwealth.
(viii) An electric utility headquartered in this
Commonwealth.
(ix) A natural gas utility headquartered in this
Commonwealth.
(x) A distributor of deliverable fuels that is not
an obligated party.
(xi) A representative of a consumer organization
that represents residential consumers.
(xii) A representative of a consumer organization
that represents industrial and commercial consumers.
(xiii) A representative of an environmental
organization.
(b) Appointments.--The members of the board enumerated under
subsection (a)(6) shall be appointed as follows, after
consultation and coordination:
(1) The President pro tempore of the Senate shall
appoint five members.
(2) The Speaker of the House of Representatives shall
appoint five members.
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(3) The Minority Leader of the Senate shall appoint
three members.
(4) The Minority Leader of the House of Representatives
shall appoint three members.
Section 303. Terms.
(a) Three-year term.--Subject to subsection (b), a member of
the board appointed under section 302(a)(6) shall serve a term
of three years and until a successor of the member is appointed.
(b) Limitation.--A member of the board appointed under
section 302(a)(6) may only be appointed to three three-year
terms.
Section 304. Officers.
The members of the board shall select a chairperson and vice
chairperson of the board from the members appointed under
section 302(a)(6).
Section 305. Quorum and voting.
(a) Quorum.--A majority of the members of the board shall
constitute a quorum to conduct official business.
(b) Majority vote.--Action of the board shall be authorized
or ratified by a majority vote of the members of the board.
Section 306. Vacancies.
(a) Manner.--A vacancy on the board shall be filled in the
same manner as the original appointment.
(b) Term.--A member of the board appointed in accordance
with section 302(b)(6) to fill a vacancy on the board shall be
appointed for the unexpired term and, subject to section 303(b),
may be subsequently appointed to a full term.
Section 307. Compensation and expenses.
The members of the board shall not be entitled to
compensation for their service as members of the board but shall
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be entitled to reasonable expenses incurred in the performance
of their duties as members of the board.
Section 308. Proceedings.
The board shall document considerations and dissenting
opinions regarding matters discussed during its meetings.
Section 309. Transparency.
The proceedings of the board and any information, documents,
materials and copies produced by the board shall be subject to
65 Pa.C.S. Ch. 7 (relating to open meetings) and shall be
accessible for inspection and duplication in accordance with the
act of February 14, 2008 (P.L.6, No.3), known as the Right-to-
Know Law.
Section 310. Powers and duties.
The board shall have the following powers and duties:
(1) Promulgate rulemakings necessary to carry out the
purposes of this act.
(2) Perform a review of the rulemaking conducted under
this act every three years, which shall include:
(i) A review of the economic impact of the clean
fuels standards.
(ii) An opinion as to whether the clean fuels
standards are adhering to the established carbon
intensity targets.
(iii) A recommendation regarding whether the board
should consider any adjustment to the carbon intensity
targets in accordance with sections 501(d) and 502(c).
(iv) A recommendation regarding the need to update
the GREET model used, including the procedures,
guidelines and user-friendly interface of the GREET model
in accordance with section 504(e).
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(v) A recommendation regarding the need to update
any of the ASTM standards used.
(vi) A recommendation regarding the need to update
any other standard used under this act to carry out the
purposes of this act.
CHAPTER 5
STANDARDS
Section 501. Transportation fuels.
(a) Establishment of clean fuels standards.--The board shall
establish clean fuels standards for transportation fuels that
consists of separate carbon intensity targets for aviation fuel,
gasoline and diesel fuel.
(b) Carbon intensity targets.--
(1) The carbon intensity targets under the clean fuels
standard under this section shall be based on the baseline
carbon intensity values calculated in accordance with section
504(b).
(2) The carbon intensity targets under the clean fuels
standard for gasoline and diesel fuel shall:
(i) Decrease each year to meet the overall level
described in subparagraph (ii).
(ii) Require that the aggregate carbon intensity of
gasoline and diesel fuel used in this Commonwealth be
reduced to 15% below the transportation fuel baseline no
later than 10 years following the rulemaking initially
conducted in accordance with section 901.
(c) Aviation fuel.--The clean fuels standard for aviation
fuel:
(1) Shall only be used to calculate the credits that a
fuel supplier of sustainable aviation fuel accrues when the
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fuel supplier opts in to abide by the requirements of this
act.
(2) Shall not be subject to the carbon intensity targets
described under subsection (b)(2).
(d) Review and adjustment.--
(1) The board may adjust the clean fuels standard under
this section only as provided in this subsection.
(2) No later than three years following the
establishment of the clean fuels standard under this section,
and every three years thereafter, the board, in coordination
with the department, shall:
(i) Review the clean fuels standard.
(ii) Determine the extent to which the target
reductions specified under the clean fuels standard have
been met.
(iii) Determine whether any adjustment is necessary
to achieve the target reductions under the clean fuels
standard, taking into consideration:
(A) Technologies available to achieve the clean
fuels standard.
(B) The need to maintain transportation fuel
quality and availability.
(3) Upon making any adjustment to the clean fuels
standard under this section, the board shall transmit notice
of the adjustment to the Legislative Reference Bureau for
publication in the next available issue of the Pennsylvania
Bulletin.
(4) An adjustment to the clean fuels standard under this
section shall be effective upon publication of the notice
under paragraph (3) and in accordance with section 901.
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Section 502. Heating fuels.
(a) Establishment of clean fuels standard.-The board shall
establish a clean fuels standard for heating fuels.
(b) Carbon intensity targets.--
(1) The carbon intensity targets under the clean fuels
standard under this section shall be based on the baseline
carbon intensity values calculated in accordance with section
504(b).
(2) The carbon intensity targets under the clean fuels
standard for heating fuels shall:
(i) Decrease each year to meet the overall level
described in subparagraph (ii).
(ii) Require that the aggregate carbon intensity of
heating fuels used in this Commonwealth be reduced to 15%
below the heating fuel baseline no later than 10 years
following the final adoption of the rulemaking initially
conducted in accordance with this act.
(c) Review and adjustment.--
(1) The board may adjust the clean fuels standard under
this section only as provided in this subsection.
(2) No later than three years following the
establishment of the clean fuels standard under this section,
and every three years thereafter, the board, in coordination
with the department, shall:
(i) Review the clean fuels standard.
(ii) Determine the extent to which the target
reductions specified under the clean fuels standard have
been met.
(iii) Determine whether any adjustment is necessary
to achieve the target reductions under the clean fuels
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standard, taking into consideration:
(A) Technologies available to achieve the clean
fuels standard.
(B) The need to maintain heating fuel quality
and availability.
(3) Upon making any adjustment to the clean fuels
standard under this section, the board shall transmit notice
of the adjustment to the Legislative Reference Bureau for
publication in the next available issue of the Pennsylvania
Bulletin.
(4) An adjustment to the clean fuels standard under this
section shall be effective upon publication of the notice
under paragraph (3).
Section 503. Implementation.
(a) Postponement prohibited.--Neither the board nor the
department may postpone any provision of this act except as
provided in this act.
(b) Rulemaking.--The clean fuels standards for
transportation fuels and heating fuels shall be established
through rulemaking developed by the board and officially
promulgated in accordance with the act of June 25, 1982
(P.L.633, No.181), known as the Regulatory Review Act.
Section 504. GREET model and carbon intensity.
(a) Use of GREET model generally.--
(1) Carbon intensity values for transportation fuels and
heating fuels shall be calculated using the GREET model.
(2) The same version of the GREET model shall be used to
calculate carbon intensity values for transportation fuels
and heating fuels.
(3) The version of the GREET model may only be updated
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during the designated review periods in accordance with
subsection (e).
(b) Baseline carbon intensity values.--
(1) The board shall calculate the baseline carbon
intensity values of gasoline, diesel fuel and aviation fuel
supplied for use in this Commonwealth in 2005, using the
default input data from the GREET model, including
representative United States average values for the use of
on-road gasoline and diesel fuel and aviation fuel.
(2) The baseline carbon intensity values under paragraph
(1) shall:
(i) Be used to determine the carbon intensity
targets set by the clean fuels standard under section
501.
(ii) Remain unchanged even if there are updates to
the GREET model.
(c) Default carbon intensity values.--
(1) The board shall calculate the default carbon
intensity values for fuels, using the default values in the
GREET model for key methodology choices and assumptions,
including, but not limited to, the following:
(i) Yields.
(ii) Process input quantities.
(iii) Energy input quantities.
(iv) Chemical and co-product allocations.
(v) Indirect land use change.
(vi) Carbon capture and storage.
(2) The default carbon intensity values may be updated
only during designated review periods in accordance with
subsection (e).
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(d) Fuel pathway application.--
(1) A program participant may request a carbon intensity
value for a specific fuel pathway, by providing input data
representative of the actual operations of the program
participant, which may be different from the default values
in the GREET model for key methodology choices and
assumptions, including, but not limited to, the following:
(i) Yields.
(ii) Process input quantities.
(iii) Energy input quantities.
(iv) Chemical and fertilizer input quantities.
(v) Lower emission factor alternatives for feedstock
and fuel production, including, but not limited to, the
following:
(A) Renewable natural gas.
(B) Renewable diesel fuel.
(C) Carbon capture and sequestration.
(D) Lower carbon intensity hydrogen.
(2) The board shall verify and approve the request for a
carbon intensity value for a specific fuel pathway by program
participants under paragraph (1).
(3) The department, as directed by the board, shall
develop procedures, guidelines and a user-friendly interface
with the GREET model, in consultation with experts from the
Argonne National Laboratory, for program participants to use
to provide the input data under paragraph (1).
(4) The use of carbon intensity values calculated for
fuel pathways using an immediate previous version of the
GREET model shall be permitted for a 12-month period if,
during the designated review periods under subsection (e),
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the board adopts the most recent GREET model consistent with
this act.
(5) A third-party verification and certification shall
be used by the board for each fuel pathway application of a
program participant in order to verify and approve the
pathways under paragraph (2).
(e) Review and adjustment.--
(1) No later than three years following the
establishment of the clean fuels standards in accordance with
sections 501 and 502, and every three years thereafter, the
board, in coordination with the department, shall review the
GREET model used to calculate the carbon intensity values
under this section.
(2) If the GREET model has changed since the last review
period, the board shall:
(i) Issue a recommendation to update the GREET model
used to calculate carbon intensity values to the newest
version of the GREET model in accordance with section
901.
(ii) Adjust the default carbon intensity values
calculated in accordance with subsection (c) using the
updated version of the GREET model.
(iii) Use the updated version of the GREET model for
future fuel pathway applications.
(iv) Direct the department to update the procedures,
guidelines and the user-friendly interface with the GREET
model for program participants to provide the input data
in accordance with subsection (d).
(v) Permit the continued use of carbon intensity
values for fuel pathways using the immediate previous
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version of the GREET model for a 12-month period.
(3) The board shall transmit notice of each adjustment
made under paragraph (2) to the Legislative Reference Bureau
for publication in the next available issue of the
Pennsylvania Bulletin.
(4) An adjustment under this subsection shall be
effective upon publication of the notice under paragraph (3).
Section 505. Exemptions and eligibility.
(a) Exemptions.--Subject to subsection (b), the following
fuels are exempt from the clean fuels standards under sections
501 and 502:
(1) Aviation fuel.
(2) Transportation fuel used in locomotives.
(3) Transportation fuel used in watercrafts.
(4) Transportation fuel used in off-road applications,
including mining and agriculture.
(5) Fuel used in military tactical vehicles and tactical
support equipment owned by the United States Department of
Defense or the United States Armed Forces that could be used
as transportation fuel.
(b) Eligibility.--Fuel suppliers of the fuels described in
subsection (a) for use in this Commonwealth, if deemed to be
clean fuels, including sustainable aviation fuel, shall be
eligible to receive credits on an opt-in basis that may be
applied to future compliance years or sold to obligated parties
in accordance with section 703(c).
CHAPTER 7
FAIR MARKET CREDIT TRADING PROGRAM
Section 701. Establishment.
(a) Authorization.--The Fair Market Credit Trading Program
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is established in the department.
(b) Implementation.--The department may retain an
independent third party to implement the trading program.
Section 702. Components.
The trading program shall include:
(1) Cost-containment measures, including a pricing cap
and a credit clearance market.
(2) A mechanism to enable credits to be bought and sold
among obligated parties and credit generators.
(3) The ability to use indirect accounting methods,
including mass balancing or book and claim for clean fuels or
feedstocks for the production of clean fuels entering
fungible supply systems that can access this Commonwealth
under the established requirements.
(4) The ability to bank credits for future compliance
years and hold credits for a period not exceeding five years.
(5) Procedures for verifying the validity of credits and
deficits.
Section 703. Participation.
(a) Registration.--
(1) To participate in the trading program, a program
participant must register with the department by submitting:
(i) An application on a form and in the manner
prescribed by the board.
(ii) The annual fee, as the board prescribes, which
shall only be sufficient enough to cover the costs of the
administration and enforcement of this act.
(2) The initial period to register in accordance with
paragraph (1) shall be at least 12 months following the
publication of the final rulemaking establishing the clean
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fuels standards for transportation fuels and heating fuels.
(3) During the initial 12-month period, obligated
parties shall not incur any deficits.
(b) Balancing credits and deficits.--After the initial 12-
month registration period described in subsection (a), an
obligated party shall demonstrate compliance with the applicable
clean fuels standards by balancing credits and deficits, through
obtaining and retiring credits, on an annual basis, as
prescribed by the board.
(c) Credits.--
(1) The mechanism for the generation of credits under
the trading program shall be technology neutral.
(2) Credit opportunities may not be expressly excluded.
(3) Credit and deficit generation shall be based only on
life-cycle emissions using emission calculation methods in
accordance with this act. Any multipliers or adjustments for
credits or deficits that are inherently not technology
neutral may not be used.
(4) A project operator may generate project credits,
which may be used to offset deficits.
(5) The department shall allow the generation of
credits, for use in future compliance years, during the
initial 12-month registration period described in subsection
(a).
(d) Deficits.--After the end of the registration period
described in subsection (a), obligated parties shall begin
generating deficits under the clean fuels standards.
(e) Third-party verifications.--
(1) The department shall implement and administer a
verification process, to be used by an independent third
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party designated by the department, to determine the
following on an annual basis:
(i) Compliance with the applicable clean fuels
standards under sections 501 and 502.
(ii) Credit generation under this section.
(2) The department shall require third-party
verification of fuel pathway applications.
(3) The department shall develop an accreditation
process for a designated independent third party to be a
verifier, which must permit the use of verification entities
accredited by another state that has adopted a clean fuels
standard.
(f) Opt-in participation.--Clean fuel versions of exempt
fuels under section 505(a), including sustainable aviation fuel,
are eligible to generate credits on an opt-in basis.
CHAPTER 9
MISCELLANEOUS PROVISIONS
Section 901. Rulemaking.
(a) Contents.--The board shall promulgate any rulemaking
necessary to implement, administer and enforce the provisions of
this act, including:
(1) The establishment of baseline carbon intensity
values in accordance with section 504(b).
(2) The establishment of an annual reduction in carbon
intensity targets from the transportation fuel and heating
fuel sectors to meet the overall carbon intensity targets in
accordance with sections 501 and 502.
(3) The use of the GREET model to determine the default
carbon intensity for fuels while facilitating an orderly
transition between any model updates in accordance with
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section 504(c) and (e).
(4) The use of the GREET model to determine the carbon
intensity for fuels based on input data provided by a program
participant in accordance with section 504(d).
(5) The establishment of a process for fuel pathway
application for fuels in accordance with section 504(d).
(6) The establishment of a process for obligated parties
to comply with the clean fuels standards by obtaining and
retiring credits in accordance with section 703.
(7) The establishment of a technology-neutral mechanism
for the generation of credits in accordance with section
703(c).
(8) The establishment of a process to allow a project
operator to generate project credits in accordance with
section 703(c).
(9) The establishment of a process to recognize
voluntary on-farm emissions reductions that contribute to the
reduced carbon intensity of fuels.
(10) The enabling of clean fuel versions of exempt fuels
under section 505(a), including sustainable aviation fuel, to
be eligible to generate credits on an opt-in basis in
accordance with section 703(f).
(11) The registration of program participants.
(12) The establishment of an annual fee for program
participants in accordance with section 703.
(13) After the initial 12-month registration period
described in section 703(a), requiring obligated parties to
demonstrate compliance with the clean fuels standards by
balancing credits and deficits on an annual basis in
accordance with section 703.
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(14) The establishment of the trading program in
accordance with section 701.
(15) Third-party certifications of fuel pathway
applications under section 504(d)(5).
(16) Third-party verifications under section 703(e)(1).
(17) The accreditation process under section 703(e)(3).
(b) Temporary regulations.--
(1) To facilitate the prompt implementation of this act,
the board shall promulgate temporary regulations that shall
expire no later than two years following the publication of
the temporary regulations.
(2) The temporary regulations under this subsection
shall not be subject to:
(i) Section 612 of the act of April 9, 1929
(P.L.177, No.175), known as The Administrative Code of
1929.
(ii) Sections 201, 202, 203, 204 and 205 of the act
of July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law.
(iii) Sections 204(b) and 301(10) of the act of
October 15, 1980 (P.L.950, 164), known as the
Commonwealth Attorneys Act.
(iv) The act of June 25, 1982 (P.L.633, No.181),
known as the Regulatory Review Act.
(3) The board's authority to adopt temporary regulations
under this subsection shall expire two years after the
effective date of this paragraph. Rulemaking adopted after
this period shall be promulgated as provided by law.
Section 902. Reports.
The department shall issue a report to the General Assembly
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on an annual basis that:
(1) Details the progress of the initial rulemaking
process. Subsequent reports to the General Assembly shall
provide details of any rulemaking changes by the board that
are undertaken or that have been promulgated after the most
recent prior report.
(2) Assesses the availability and forecast of fuels in
this Commonwealth.
(3) Assesses the status of clean fuel production in this
Commonwealth.
(4) Assesses the reduction in carbon intensity from the
transportation fuel and heating fuel sectors.
(5) Assesses the economic impact of this act in this
Commonwealth.
Section 903. Co-compliance.
A clean fuel that is used to generate credits under this act
as prescribed may also generate credits under any overlapping
Federal or State program, including, but not limited to,
Renewable Identification Numbers under the United States
Renewable Fuel Standard.
Section 904. Compliance waiver.
(a) Authorization.--The secretary may waive all obligations
under this act for one compliance year if any of the following
apply:
(1) A declaration of disaster emergency is issued by the
Governor in accordance with 35 Pa.C.S. § 7301(c) (relating to
general authority of Governor).
(2) The board finds, and transmits notice of the finding
to the Legislative Reference Bureau for publication in the
next available issue of the Pennsylvania Bulletin, based on
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the reports described in section 902, that a fuel supply
shortage exists or may exist in this Commonwealth and the
fuel supply shortage:
(i) is, or is likely to be, of significant scope and
duration, and of an emergency nature; and
(ii) causes, or may cause, a major adverse impact on
public health, safety or welfare or on the economy.
(b) Application.--If the secretary issues a waiver order
under this section, the waiver order shall apply to all
obligated parties.
(c) Termination.--After the termination of a waiver order
under this section, the schedule of carbon intensity targets as
established by the clean fuels standards under this act of the
next compliance year, and all subsequent years, shall remain in
effect without adjustment.
Section 905. Preemption.
(a) Act of General Assembly.--An act of the General Assembly
in effect prior to, on or after the effective date of this
subsection shall not preempt the utilization of any
transportation fuel or heating fuel.
(b) Political subdivision.--A political subdivision shall
not adopt or enforce any ordinance, regulation or resolution
that may preempt the utilization of any transportation fuel or
heating fuel.
(c) Transportation fuels.--The provisions of this act, in
relation to transportation fuels, shall be preempted if a
Federal clean fuels standard for transportation fuels is
enacted.
(d) Heating fuels.--The provisions of this act, in relation
to heating fuels, shall be preempted if a Federal clean fuels
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standard for heating fuels is enacted.
Section 906. Effective date.
This act shall take effect as follows:
(1) The following shall take effect in 60 days:
Chapter 1.
Section 901.
(2) This section shall take effect immediately.
(3) The remainder of this act shall take effect upon the
publication of the temporary regulations in accordance with
section 901(b).
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