U.S. Navy, Port of San Diego Sign Joint Project Agreement

U.S. Navy and Port of San Diego officials attend a news conference announcing a joint collaboration. Photo: POSD.

To further reduce greenhouse gas emissions and improve air quality and public health on and around the San Diego Bay, Navy Region Southwest and the Port of San Diego have formed a partnership that gives the U.S. Navy access to California’s Low Carbon Fuel Standard (LCFS) market.

The federal/state initiative is expected to provide millions of dollars for further electrification efforts for both Naval Base San Diego and the Port of San Diego.

The LCFS is a cap-and-trade-like program where the producers of fossil fuels must either increase the use of plant-based carbon (e.g., ethanol and soybean oil) or buy credits to meet the requirement.

Under the agreement, the Navy generates credits via its current use of shore power for its fleet. One LCFS credit generated is equivalent to a metric ton of carbon dioxide reduced. Creation of credits can be achieved by utilizing alternative low-carbon fuels or electrification. The credits are monetized through the services of a qualified and experienced broker. The port utilizes the brokerage services of Anew EV, LLC (formerly Bluesource).

As a participant in the state’s LCFS program managed by the California Air Resources Board (CARB), the port will register, generate and sell the credits from Navy shore power, and then utilize the proceeds from the sale to provide Naval Base San Diego with energy and utility improvement projects.

In exchange, the port keeps a specified portion of the Navy’s LCFS revenues and pays from its share of the revenues for port personnel to manage project design and construction of Navy identified projects at Naval Base San Diego and in port operations.

If the partnership—which is being conducted as a pilot program through 2030—is successful, it could be duplicated between other U.S. ports and naval bases.

“We are excited to be the first in the Navy to participate in this innovative program,” Navy Region Southwest Commander Rear Admiral Brad Rosen said.

California was the first state to establish an LCFS program in 2012 and placed it under the direction of the California Air Resources Board (CARB). In 2019, shore power became an eligible use, and the Port of San Diego was the first California port to enter the market. Since then, the port has partnered with multiple tenants including Dole, NASSCO, BAE and Austal USA.

The Navy’s participation is the first involvement by the Department of Defense in this type of carbon reduction effort.

The Navy will generate LCFS credits while ships are plugged into shore power, rather than generating power internally using traditional, carbon-intensive fuels, thus limiting emissions of greenhouse gasses in the surrounding community.

“Today is another example that shows the power of partnership – we are far more impactful together,” Meredith Berger, Assistant Secretary of the Navy for Energy, Installations and Environment, said. “The Department of the Navy is proud to work with the state of California on energy resilience and we will continue to find more opportunities for collaboration. As the Navy and Marine Corps continue to take action against the threat of climate change, we work hand-in-hand with partners like California who are focused on the same mission, and as a community build our resilience and reduce the threat.”

The agreement aligns with the port’s recently adopted Maritime Clean Air Strategy (MCAS), a policy document to help the agency identify future projects and initiatives to improve health through cleaner air, while also supporting efficient and modern maritime operations.

“This is a win-win. We are proud to be working with the Navy on this and look forward to cleaner air and improved public health for all who live, work and play on and around San Diego Bay,” said Port of San Diego Board of Port Commissioners Chairman Dan Malcolm. “The annual revenue this new and innovative partnership generates will be dedicated solely for more electrification of port and Navy operations.”