The Road to a Low Carbon Future

The California Air Resources Board voted in April to adopt a low carbon fuel standard designed to lower the carbon content of transportation fuels used within the state. As biofuel producers continue to mount an effort to exclude indirect land use changes from the regulation, EPM examines the proposal and speaks with a representative of CARB to learn how ethanol producers may be affected.
By Erin Voegele | May 04, 2009
California's low carbon fuel standard (LCFS) is one component of the state's overarching plan to reduce greenhouse gas (GHG) emissions within the state to 1990 levels by the year 2020. In addition to lowering the carbon content of transportation fuels used within the state, the regulation also seeks to reduce California's dependence on petroleum, create a lasting market for clean transportation technology, and stimulate the production and use of alternative fuels.

The California Air Resources Board published the proposed regulation on March 5. Ethanol advocates have criticized CARB's decision to unilaterally assign indirect land use change (ILUC) carbon values to crop-based biofuels, while other fuel sources are evaluated on the basis of direct effects only. Following a formal 45-day commentary period and a final day-long hearing to consider the LCFS, CARB members voted 9-1 in favor of the regulation. The vote included an agreement to convene an expert work group to assist CARB in refining and improving the metric used to measure ILUC.

Although some may object to the metric used to measure carbon intensity values, Dean Simeroth, chief of CARB's Criteria Pollutants Branch, says it's important to remember that the regulation aims to reduce carbon emissions from fossil fuels. "It sort of gets lost in the concerns about how different parts [of the regulation] are going to affect people, but the real intent of the regulation is to reduce greenhouse gas emissions from gasoline and diesel," he says. "And to do that through the use of alternative biofuels and other alternative fuels - such as biogas or electricity. Our real hope is that we get the biofuels we need to reduce the carbon intensity of the petroleum derived fuels."

How the LCFS Works
The LCFS is designed to provide a framework that uses market mechanisms to spur the introduction of lower carbon fuels. To do this, the framework establishes a performance-based standard that fuel producers must meet each year, beginning in 2011. The regulation contains two standardsone for gasoline and its alternative fuels and another for diesel and its replacements.

The standards are back-loaded, meaning fewer reductions are required during the first years of the regulation. A back-loaded schedule helps allow for the development of more advanced fuels and technologies and allows CARB some leeway in addressing unforeseen obstacles. The regulation also requires that a mandatory review of the LCFS implementation be completed by the end of 2011.

Simeroth says the mandatory review and back-loaded nature of the regulation is important because they will allow the board to fix any problems that are encountered as the LCFS is implemented. "If we have missed something, or something takes a different turn than we expect, we can catch it before it gets very far," he says.

Corn-based E10 and low sulfur diesel represent the LCFS's baseline fuels. The carbon intensity value of other fuels are measured on a life cycle basis and compared to these baseline fuels. Each year the carbon intensity of any alternative replacement fuel is compared to the LCFS standard for that year. Fuels that have carbon intensity values below that standard generate credits, while fuels with higher carbon intensity values generate deficits. In order to comply with the LCFS for a given year, a regulated party must show that its credits are equal to or exceed the deficits they have incurred that year.

The regulation defines regulated parties for gasoline, diesel and liquid blendstocks - which includes ethanol - as the producer or importer of the fuel or blendstock. "An ethanol facility in the Midwest who exports ethanol thinking somebody is going to buy it when it gets here could be the regulated party," Simeroth says. "As soon as somebody buys [that fuel] from them, then the responsibility goes to the purchaser. It is meant to let us know what is coming into the state and the quality that is coming in. Our real focus is on the providers of those fuels within California."

One benefit of the LCFS is that it does not limit the carbon intensity of individual batches or types of fuel; rather it requires regulated parties to comply with an annual standard for the total amount of fuel they supply. In other words, not all the fuel a regulated party supplies has to meet a particular year's carbon standard. Instead, the average of all the fuels supplied by that regulated party must meet the standard.

Direct and Indirect Emissions
The LCFS assigns direct carbon emission levels to all fuels. Direct emissions represent all the GHG emissions that result from the production, transportation and use of the fuel. For corn-based ethanol these components would include farming practices, crop yields, harvesting, collection and transportation of the crop, the fuel used in the ethanol production process, the energy efficiency of the production process, the value of coproducts such as distillers grains, transportation and distribution of the fuel, and combustion during use.

The mode used by CARB to define these direct emissions is a modified version of the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation model that was developed by Argonne National Laboratory. This model, modified for use in California, is known as CA-GREET.

Indirect carbon emissions are defined as any other effects that are caused by the change in land use or other market-mediated effects. So far, indirect carbon emissions are set to be assigned only to crop-based biofuels. According to the regulation, ILUC impacts are triggered when an increased demand for crop-based fuels drives up feedstock prices. The price increases cause farmers to grow more of that particular crop. Supplies of these displaced food and feed commodities decline, leading to higher prices. In response, farmers bring nonagricultural land into production in order to take advantage of higher commodity prices. This conversion of land results in carbon emissions.

The Global Trade Analysis Project model is used to measure these indirect land use effects under the LCFS. GTAP was developed by researchers at Purdue University, and has historically been used to model complex international economic effects. The model provides an estimate for the amount of global land that is converted to agricultural land as a result of demand for biofuels. To calculate the GHG emissions that result, a set of emission factors are applied to the data. These factors provide an average value for emissions from carbon stored in the ground, above the ground, and the annual amount of carbon sequestered by the native vegetation.

Those in the biofuels industry argue that carbon values resulting from ILUC should be excluded from the LCFS until better techniques to estimate the phenomena are available.

However, CARB maintains that doing this would delay the development of truly low carbon fuels.

It is possible that CARB would consider replacing the GTAP model as more accurate methods to measure ILUC become available. "The basic answer is we'd consider that," says Simeroth. "Those types of changes in other regulations have happened as better models, test methods, etc., have become available. The nice thing is that it is actually easier for the state of California to change a regulation than it is for the U.S. EPA because we've got a different basis process."

The Many Fuel Paths to Ethanol
The LCFS uses fuel pathways to estimate the amount of carbon contained within transportation fuels. The regulation currently lists 11 specific pathways for corn ethanol, and one pathway for sugarcane ethanol. CARB is also working to establish three more pathways for cellulosic ethanol and two additional pathways for sugarcane ethanol.

"[The additional pathways] are being worked on right now," Simeroth says. "Our expectation is by December - assuming that we've done everything and [the LCFS] is adopted into law - we will have a number of new pathways." A regulated party can simply choose to use one of these default pathways from the regulation's Lookup Table to calculate credits and deficits, or can work to establish a new fuel pathway that more accurately gauges the carbon value of a particular fuel.

Fuel paths can be added in one of two ways. Under specified conditions, a regulated party can obtain approval from CARB's executive officer to modify the CA-GREET model inputs to reflect their specific process. This is referred to as Method 2A. A regulated party can also work with CARB to develop a completely new fuel path using the CA-GREET under Method 2B. Both methods require public review under the proposal.

"Our hope is that those [new technologies] develop and people come to us with the information and we keep adding pathways to the Lookup Table - not only modification of existing pathways, but also new pathways," Simeroth says.

Although CARB has seen some pushback regarding the LCFS, Simeroth says that is not out of the ordinary. "To me it is what we'd expect on a new regulation this sweeping," he says. "Everyone is going to have concerns, everybody is going to be worried about how it is going to impact their concerns, but I think [the LCFS] is designed to allow us flexibility in moving forward and reflects what is going to be an evolving situation."

Erin Voegele is an Ethanol Producer Magazine associate editor. Reach her at evoegele@bbiinternational.com or (701) 373-8040.