SECTION 1. Chapter 25A of the General Laws, as appearing in the 2022 edition, is hereby amended by adding the following section:-

Section 11F 2/3. (a) As used in this section, the following words shall have the following meanings:

“Carbon intensity,” means the quantity of lifecycle greenhouse gas emissions associated with a unit of specific transportation fuel, expressed in grams of carbon dioxide equivalent per megajoule of transportation fuel,

“Clean fuel,” means a transportation fuel that has a carbon intensity level that is below the clean fuels carbon intensity standard in a given year,

“Credit,” means a unit of measurement equal to one metric ton of carbon dioxide equivalent and that serves as a quantitative measure of the degree to which a fuel provider’s transportation fuel volume is lower than the carbon intensity established by the clean fuel standard,

“Deficit,” means a quantitative measure of the degree to which a fuel provider’s volume of transportation fuel is greater than the carbon intensity than permissible according to the annual clean fuel standard,

“Full fuels lifecycle" means the aggregate of greenhouse gas emissions, including direct emissions and significant indirect emissions, such as significant emissions from land use changes, as determined by the Argonne Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model or a subsequent prevailing standard;

"Sustainable aviation fuel," means a clean fuel that can be blended and used with conventional petroleum jet fuels without the need to modify aircraft engines and existing fuel distribution infrastructure, and that have a lower carbon intensity than the carbon intensity of conventional petroleum jet fuels.  Sustainable aviation fuel includes jet fuels derived from coprocessed feedstocks at a conventional petroleum refinery.

“Transportation fuel provider” means an entity that functions as an importer, blender, refiner, or wholesale retailer of transportation fuels,

(b)(1) The Department of energy resources shall establish a clean fuel standard that reduces the aggregate carbon intensity of transportation fuels by 80% from 1990 levels by 2050, establishes a mechanism for the generation and trading of credits at a market-based rate to offset carbon deficits, and supports clean energy and accessible transportation projects in disadvantaged communities.

(b)(2) The clean fuel standard shall apply to transportation fuel providers with the exception of fuels for aviation, railroad locomotives, military vehicles, interstate waterborne vessels, and fuels imported, blended, refined, or wholesaled in volumes below thresholds established by the Department. Sustainable aviation fuel and other clean fuels, as determined by the Department, shall be eligible to generate credits for the transportation fuel provider on an opt-in basis.

(b)(3) The Department shall establish an annual schedule to phase-in implementation of the clean fuel standard’s carbon intensity reduction that considers the cost of compliance, the technologies available to fuel providers, and the need to maintain fuel quality and availability. The aggregate carbon intensity of a transportation fuel shall be measured on a full fuels lifecycle basis. The full fuels lifecycle shall be assessed annually and shall include all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel by the ultimate consumer.

(c)(1) The clean fuel standard shall establish a mechanism that assigns credits to transportation fuel providers whose fuel or fuels’ carbon intensity is below the standards adopted by the Department and a market for the trading of credits at a market-based rate. Credits shall be quantified based on the total emissions across the lifecycle of the provider’s fuel and the annual maximum allowable carbon emission intensity for that year. These credits may be applied to future obligations or be traded on a market mechanism, established by the Department to satisfy or offset compliance obligations of transportation fuel providers incurring a deficit.

(c)(2)Fuel providers subject to the clean fuel standard shall comply by importing, blending, refining, or wholesaling transportation fuels with an aggregate carbon intensity that is at or below the standard as determined by the Department or by purchasing credits to offset any aggregate deficit incurred from transportation fuels exceeding the maximum allowable carbon intensity for that year.

(d) Public entities serving as credit generators, to include but not limited to utilities and state agencies, shall invest or direct a percentage, to be determined by the Department, of the entity’s overall credit value to support clean energy and accessible transportation projects in disadvantaged communities beyond existing local, federal, and state incentives. The Department shall determine projects and goals under this subdivision in consultation with credit generators, communities, community leaders, and environmental justice advocates.

(e) The Department shall promulgate rules, regulations, plans, proposals, procedures, and administrative fees as are necessary and appropriate to effectuate a clean fuel standard and credit marketplace to ensure compliance with this section and to offset the costs of implementation of the clean fuel standard.