California Governor Orders Low Carbon Standard for Transportation Fuels; 10% GHG Reduction on Lifecycle Basis by 2020
California Governor Arnold Schwarzenegger is establishing by Executive Order a Low Carbon Fuel Standard (LCFS) that requires, as an initial goal, a 10% reduction in the greenhouse gas emissions (GHG) intensity of all passenger vehicle fuels sold in California by 2020.
The LCFS requires fuel providers—refiners, importers, and blenders of passenger vehicle fuels—to ensure that the mix of fuel they sell into the California market meets, on average, a declining standard for GHG emissions measured in CO2-equivalent gram per British Thermal Unit (BTU). All relevant greenhouse gases will be included (i.e., CO2, CH4, and N2O) and be measured on a full fuel cycle basis (i.e., upstream feedstock extraction, fuel refining, and transport to market).
The LCFS is the world’s first fuel standard targeted specifically at the quantified reduction of greenhouse gas emissions, measured on a full lifecycle basis.
Transportation accounts for forty percent of California’s annual greenhouse gas emissions, and we rely on petroleum-based fuels for an overwhelming 96 percent of our transportation needs. This petroleum dependency contributes to climate change and leaves workers, businesses and consumers vulnerable to price shocks from an unstable global energy market. As a world leader in energy efficiency, alternative energy and reducing greenhouse gases, California’s new low carbon standard is an innovative action that will diversify our fuel supplies and establish a vibrant market for cleaner-burning fuels.—Governor Schwarzenegger
This is expected to replace 20% of on-road gasoline consumption with lower-carbon fuels, more than triple the size of the state’s renewable fuels market, and place more than 7 million alternative fuel or hybrid vehicles on California’s roads (20 times more than on the California roads today).
The LCFS will use market-based mechanisms that allow providers to choose how they reduce emissions while responding to consumer demand. For example, providers may purchase and blend more lower-carbon ethanol (e.g., cellulosic ethanol rather than corn ethanol) into gasoline products, purchase credits from electric utilities supplying low-carbon electrons to electric passenger vehicles, diversify into low-carbon hydrogen as a product and more, including new strategies yet to be developed.
A white paper issued in support of the LCFS by the Governor’s office notes that to achieve a 10% reduction in carbon intensity, fuel providers will need to reduce the carbon intensity associated with their fuels from about 97.4 kg of CO2-eq/MMBTU to 87.7 kg/MMBTU.
While at this time we believe the most likely strategies are E10, E85, switching to cellulosic ethanol, plug-in hybrids, and hydrogen fuel cells, markets will determine whether that mix or others (including options such as biobutanol or biocrude) will be employed to meet the standard.
Large-scale use of lower-carbon transportation fuels is necessary to meet the AB32 requirement that GHGs generated in the state be reduced to 1990 levels by 2020. A 10% reduction in the carbon intensity of transportation fuels will contribute 13.4 million metric tons of CO2 reductions, more than half of the 24 million metric tons of CO2 reductions needed to return passenger vehicles and light trucks to 1990 levels.
The Governor’s Executive Order directs the Secretary for Environmental Protection to coordinate the actions of the California Energy Commission (CEC), the California Air Resources Board (ARB), the University of California and other agencies to develop the protocols for measuring the “life-cycle carbon intensity” of transportation fuels. This analysis will become part of the State Implementation Plan for alternative fuels as required by AB 1007 (Pavley, Chapter 371, 2005) and will be submitted to the California Air Resources Board for consideration as an early action item under AB 32.
The ARB will complete its review of the LCFS protocols for adoption as an early action no later than June, 2007. Upon adoption as an early action by the ARB, the regulatory process at ARB will begin to put the new standard into effect. It is expected that the regulatory process at ARB to implement the new standard will be completed no later than December, 2008.
The University of California estimates that the Governor’s greenhouse gas (GHG) emissions goals can increase Gross State Product by about $60 billion and create more than 20,000 new jobs.
|Possible Low Carbon Fuel Strategies|
|E10 (10% ethanol, 90% gasoline by volume)||Increase blending of ethanol from today’s 5.7 percent by volume to 10 percent.|
|E85 (85% ethanol, 85% gasoline by volume)||Sell high blend ethanol (85 percent ethanol, 15 percent gasoline) for use in Flex Fuel Vehicles (FFVs).|
|Switch to Low-Carbon Ethanol||Switch to ethanol made from cellulosic materials (e.g., agricultural waste, switchgrass)l that has 4-5 times lower GHG emissions than today’s corn.|
|Electricity||Either in pure battery electric vehicle or in plug-in hybrid vehicle that can be recharged from the electricity grid.|
|Hydrogen||Used in zero-emitting fuel cell vehicles or internal combustion engine cars modified.|
|CNG, LPG||Compressed Natural Gas and Liquefied Petroleum Gas burned in modified internal combustion engine cars.|
|Other biomass based fuels||For example, biobutanol or biocrude|
|Other||Future strategies to be developed by fuel providers and outside innovators.|