Setting Boundaries with the Low Carbon Fuel Standard

Despite strong opposition, in January, California approved implementation of a low carbon fuel standard. The California Air Resources Board is now preparing biofuel producers for compliance and anticipates many challenges in ensuring fairness and accuracy.
By Anna Austin | March 16, 2010
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California Gov. Arnold Schwarzenegger's 2007 executive order called for a reduction of at least 10 percent in the carbon intensity of California's transportation fuels by 2020, while instructing the California Environmental Protection Agency to coordinate activities between the University of California, the California Energy Commission and other state agencies to develop policies to meet the 2020 target.
Considered a large hit to the oil industry—as, according to the CEC, California alone uses more gasoline and diesel than any country in the world besides the U.S. as a whole—the California policy also negatively affected the corn-based ethanol industry. Groups such as the Renewable Fuels Association and Growth Energy have fought against it since its inception. In December, those groups and others filed law suits against the California Air Resources Board, on grounds that the low carbon fuel standard (LCFS) would virtually eliminate domestic ethanol and counter state goals to reduce carbon emissions from motor vehicles, claiming a blatant disregard for current information related to the lifecycle greenhouse gas (GHG) emissions associated with corn ethanol that have resulted in significant overestimation of its carbon intensity. The groups claim California's LCFS interferes with federal law, and is contrary to the Constitution's Commerce Clause.

Still, the California Office of Administrative Law approved the LCFS for implementation in mid-January, and the first reporting date is quickly approaching. Meanwhile, CARB is moving forward with educating and preparing California biofuel producers. Renee Littaua, manager of CARB fuels section, says the first reductions aren't required until 2011, but the first reporting requirements are due by July 1—pushed back a month from the original date.

Complying with LCFS
"CARB recently posted a draft biofuel producer registration form, and we're requesting public comment," Littaua says. "In February, registration started with information on plant processes—information about co-firing, fuel used at facilities, feedstocks used, coproducts produced—and an explanation of the physical pathway a producer's fuel takes to gets to California." A producer will be required to provide a map to CARB explaining how their fuel/feedstock gets to the plant location, and will choose the appropriate carbon intensities from a look-up table CARB has provided, based on information about their facilities and feedstocks.

CARB will take biofuel registrations from February to May according to Littaua. Though California will need more advanced biofuels to meet the standard, she says, conventional biofuels are expected to play a continued role in the state fuel market.

The LCFS requires a gradual reduction in carbon-intense fuel, and is weighted toward later compliance years, when CARB believes the standard will be met with new, advanced biofuel facilities. "We projected 24 new potential biofuel facilities in California by 2020, including 18 new cellulosic ethanol and six new biodiesel facilities," Littaua says. CARB continues to develop the LCFS, with a board of experts seeking the best science available and though progress is being made, she adds, there are many issues hanging such as developing accurate and fair biofuel carbon life-cycle analyses.

University of California-Davis researcher Alissa Kendall says some key challenges have emerged as biofuel life cycle analyses have been implemented in California and questions that need to be answered before biofuel carbon intensity can be accurately certified.

Key Challenges
A biofuel life cycle is different than other life cycles, according to Kendall, as farm activities such as cultivation, growing and harvest are combined with industrial activities and the natural environment, making the system harder to model than an engineered one. "Life-cycle [analysis] is simple in terms of steps, but when we actually account for all the different inputs and outputs of the system, it gets complicated fast," she says.

As many facilities use aggregated inputs from many suppliers, things get complicated when determining what kind of emissions went into producing each of the feedstocks and biofuels. "Can we capture that geographic variability that we need to get these verifications right?" Kendall questions.

GHGs for imported biofuels present a whole new challenge because it's nearly impossible to verify the accuracy of data collected, she adds. "It's going to be even harder to figure out where things are grown, where they've been moved and all other steps in the biofuel lifecycle. I think this is going to be a really big challenge and it might mean that we end up only being able to certify biofuels from large industrial partners who are able to go through our certification process."

Another outlying question from biofuel producers is how market-mediated effects of producing biofuels are reliably calculated, with proper consideration of how coproducts are valued and credited. "Climate change-related policies and efforts tend to just focus on GHG emissions and don't consider coproducts such as distillers dried grains (DDGs)," Kendall admits. "This is a valuable resource and we want in some way to credit the ethanol for the production of DDGs. We assume the DDGs have some value in the market that will displace the essentially ‘business as usual' products in the market—in this case, cattle feed, which is usually corn and soybean meal. If I introduce DDGs into the market then I displace all of the soybean meal and some of the corn, so ethanol will be credited for displacing these products in the market."

There is a caveat, however, as markets change dynamically. "If I introduce a huge quantity of DDGs, it suppresses feed prices and meat is cheaper so people eat more meat, upping demand and suddenly I've expanded my market for feed and meat rather than displacing something from the market," she says. "Another problem is that coproducts are known to not displace anything, just create a new market for a material. One of the biggest challenges is when you look at these studies, there is very little transparency on assumptions behind how the study does coproduct allocations, and if you do it statically, it probably isn't applicable two or three years down the road. So we have this challenge—to figure out how to do coproduct allocation more transparently and more dynamically so it reflects real market conditions."

Beyond lifecycle complexity, geographic variability and coproduct accounting, there are more issues to consider.

Carbon for Thought
A problem with impact assessments, a key element of biofuel lifecycle analyses, is that they are usually performed without spatial or temporal information, Kendall says. "For climate change gases it seems it's okay, mostly because when putting CO2 in the atmosphere it doesn't matter where, it essentially has the same effect, which is much easier than criteria pollutants which are spatially dependent."

When predicting impacts, how far into the future should they be projected? "For global warming we look at 100 years, which I think is too far," she says. "Looking at climate change emissions and changing them into CO2 equivalent, we always use 100 years and this is something we might want to reconsider. The impact of GHG scales with the time it has to sit in the atmosphere and act, and we often ignore this in studies. And, what happens when we address the timing and GHG emissions from capital investments, things such as machinery and plants put up to produce biofuels. If I account for the timing of these investments, the GHG intensity CO2 equivalent per liter goes up. In the case of cellulosic ethanol, it goes up by 10 percent. Time matters, and as we get better at producing low carbon fuels, the timing for these capital investments becomes very important. We need to decide whether we're willing to ignore time." EP

Anna Austin is a BBI International associate editor. Reach her at aaustin@bbiinternational.com or 701-738-4968.