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LCFS

[Due to the increasing size of the archives, each topic page now contains only the prior 365 days of content. Access to older stories is now solely through the Monthly Archive pages or the site search function.]

California ARB staff posts concept paper on re-adoption and modification of LCFS; possible more stringent post-2020 targets

March 10, 2014

The California Air Resources Board (ARB) staff has posted a Low Carbon Fuel Standard (LCFS) Re-Adoption Concept Paper, which will be discussed during the LCFS workshop on 11 March 2014. The LCFS regulation mandates a 10% reduction in the carbon intensity (CI) of transportation fuels used in California by 2020.

In response to a suit brought against ARB and the LCFS, the State of California Court of Appeal, Fifth Appellate District (Court) held in 2013 that the LCFS would remain in effect and that ARB can continue to implement and enforce the 2013 regulatory standards while it takes steps to cure California Environmental Quality Act and Administrative Procedure Act issues associated with the original adoption of the regulation. ARB staff is proposing that the Board re-adopt the LCFS regulation in 2014. Additionally, ARB staff is proposing a suite of amendments to provide a stronger signal for investments in and production of the cleanest fuels, offer additional flexibility, update critical technical information, and provide for improved efficiency and enforcement of the regulation.

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UC Davis report finds LCFS compliance costs may rise rapidly; recommends offsetting measures

December 30, 2013

A recent report prepared by UC Davis researchers for the California Air Resources Board (ARB) found that compliance costs for the Low Carbon Fuels Standard (LCFS) may increase rapidly in the future if there are large differences in marginal costs between traditional fossil fuels and alternative, low-carbon-intensity fuels; or if there are capacity or technological constraints to deploying alternative fuels, particularly those with low-carbon intensity.

In the absence of readily available, low CI fuel alternatives, the fuel market will adjust along two dimensions to maintain compliance with the LCFS: (i) increase the use of cheaper fuels below the Standard such as ethanol derived from corn starch and sugarcane; or (ii) increase fuel prices and reduce fuel consumption to a level where the Standard is technologically feasible. Both options will be associated with high LCFS credit prices. Because firms are able to bank credits over time, anticipated high costs in the future may lead to higher costs in the present before any constraints bind on the industry.

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ICCT suggests minor changes to Fed tax policy to cut higher investment risk of 2nd-gen biofuels and advance the industry

December 22, 2013

Minor changes to an existing Federal tax incentive for second-generation biofuels (i.e., biofuel made from cellulose, algae, duckweed, or cyanobacteria) could mitigate the current elevated risk of investing in the industry that is retarding its advance, according to a new paper by a team from the International Council on Clean Transportation (ICCT) and Johns Hopkins University. Some of the ICCT recommendations are mirrored in the recently released Baucus draft proposal for tax reform (earlier post), notes Dr. Chris Malins of the ICCT, one of the study’s co-authors.

Previous studies have attempted to explain the slow commercialization of cellulosic and algal biofuels qualitatively, however few have presented financial analysis across the sector, the authors observe. Using publicly available financial data, they applied investment analysis tools (the capital assets pricing model, CAPM) that are generally not applied to this space in order to develop a more rigorous understanding of the investment risk in the industry.

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ARB posts six new LCFS pathway applications for comment; new PFAD biodiesel approach

December 18, 2013

The California Air Resources Board (ARB) staff has posted six new Low Carbon Fuel Standard (LCFS) pathway applications to the LCFS public comment web site: corn ethanol; molasses ethanol (from Brazil); palm fatty acid distillates (PFAD) to biodiesel; and landfill gas to LNG, L-CNG, and CNG.

The LCFS requires oil producers, importers and other fuel providers gradually to reduce, on a full-fuel lifecycle basis, the carbon intensity (CI) of their transportation fuel mix (measured in gCO2e/MJ) by from 0.25% in 2011 to 10% by 2020. (Earlier post.) The current batch of new applications covers quite a range of carbon intensity in the fuels: from 88.69 gCO2e/MJ for the corn ethanol, down to 10.64 gCO2e/MJ for biodiesel produced from PFAD—the first such pathway considered for the LCFS program. The baseline carbon intensity for gasoline in the LCFS lookup table is 99.18 gCO2e/MJ and 98.03 gCO2e/MJ for diesel.

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ICF report finds California Low Carbon Fuel Standard can be achieved with modest changes in diversity of fuels

June 13, 2013

Caletc2
Annual balance of LCFS credits and deficits for Scenario 1. Each colored stacked bar represents credits generated via low carbon fuels; the red line represents the deficits from forecasted CARBOB and ultra low sulfur diesel (ULSD) consumption. Click to enlarge.

The requirements of the California Low Carbon Fuel Standard (LCFS) can be achieved through modest changes in the diversity of transportation fuels supplied to California, according to a report of the first phase of a two-phase, year-long project assessing the economic and environmental impacts of compliance with California’s LCFS out to 2020. This first phase focused on the development of compliance scenarios based on market research, consultation with stakeholders, and market forecasts based on best estimates of fuel availability.

The LCFS requires a 10% reduction in the carbon intensity (in gCO2e/MJ) of transportation fuels by 2020, as measured on a lifecycle basis. The report, “California’s Low Carbon Fuel Standard: Compliance Outlook for 2020” was prepared by consultancy ICF International for CalETC (California Electric Transportation Coalition), in partnership with the California Natural Gas Vehicle Coalition, the National Biodiesel Board (NBB), the Advanced Biofuels Association (ABFA), Environmental Entrepreneurs (E2), and Ceres.

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Latest status report finds California fuel providers continue pacing ahead of requirements of Low Carbon Fuel Standard; sufficient credits to meet full 2013 obligation

May 01, 2013

Lcfs
Continued LCFS compliance will require continued reductions in CIs. Net credits generated is the number of credits or deficits generated in each period; banked credits after compliance is the number of excess credits banked from the current or previous compliance years. Source: Yeh et al. Click to enlarge.

According to the latest status report on the progress of California’s Low Carbon Fuel Standard (CA-LCFS) (earlier post), regulated parties in the LCFS—oil producers, importers and other fuel providers—continued to exceed the required reductions in carbon intensity specified by the standard. (Earlier post.)

Companies achieve LCFS compliance when credits equal deficits. According to the new report, from 2011 through Q4 2012, cumulative credits generated under the LCFS total 2,835,662 metric tons of CO2e, while cumulative deficits total 1,550,698 metric tons CO2e, for a net excess of 1.285 million credits (metric tons of CO2e). If all are available for use, the bank of excess credits represents about half of what is needed to cover the 2013 obligation.

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California ARB considering four new low-carbon fuel pathways; Neste renewable diesel and sugarcane molasses ethanol

March 20, 2013

California Air Resources Board (ARB) staff has posted four new Low Carbon Fuel Standard (LCFS) pathways to the LCFS web site. (Earlier post.) Among the new pathways to be considered is the production of renewable diesel from Australian tallow at Neste Oil’s Singapore plant. Others are sugarcane molasses ethanol from Guatemala; mixed feedstock to biodiesel from Texas; and a new ARB-staff-developed pathway for North American landfill gas.

The Low Carbon Fuel Standard, approved in April 2009, requires that suppliers of transportation fuels meet an average declining standard of carbon intensity (CI) —expressed in grams of CO2 equivalent per megajoule of fuel energy (g CO2e/MJ)—that will provide a 10% reduction in greenhouse-gas emissions for all fuels used in California by 2020. The CI of a fuel is determined by the sum of all greenhouse gas emissions associated with the production, transportation, processing and consumption of a fuel (its pathway).

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