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Univ. of Michigan researcher recommends shifting the basis of fuel carbon regulation from lifecycle analysis to ABC accounting

In a new paper published in the journal Climatic Change, Dr. John DeCicco of the University of Michigan School of Natural Resources and Environment posits that attempting to regulate fuels using a lifecycle analysis (LCA)-based approach—as is currently done by California’s Low Carbon Fuel Standard and the US Renewable Fuel Standard—is inappropriate and ultimately unworkable as far as environmental effectiveness is concerned.

Instead, DeCicco proposes a method using annual basis carbon (ABC) accounting to track the stocks and flows of carbon and other relevant greenhouse gases (GHGs) throughout fuel supply chains. Such an approach makes fuel and feedstock production facilities the focus of accounting, he suggests, while treating the CO2 emissions from fuel end-use at face value regardless of the origin of the fuel carbon (bio or fossil). ABC accounting would avoid an automatic credit of biogenic carbon in biofuels, and minimize and accumulation of carbon debt due to indirect land-use change, he says.

From the perspective of resource economics, it is not obvious that LCA is the right tool for regulation. A policy analytic justification for regulatory application of LCA is strikingly absent from the literature, although criticisms are starting to appear. Proponents simply have asserted that policy should be based on LCA, apparently assuming that its utility as a technology assessment tool implies its value as a regulatory tool.

Upon reflection, policy is best defined using current-period accounting of carbon stocks and flows, ideally with direct, measurement-based, verifiable tallies of GHG emissions from the production and use of all fuels and feedstocks. Reflecting the rubric, “what gets measured, gets managed,” it would motivate all entities in fuel supply chains to minimize the emissions under their control, i.e., within the scope of their operations, but avoid regulating entities for impacts beyond their control. The policy should also mitigate any remaining emissions, such as leakages caused by market-induced ILUC [indirect land use change] that no particular entity controls. In short, it should establish a carbon management paradigm that provides incentives to minimize emissions from both fuel production and fuel consumption regardless of what the fuel is called.

Although fully establishing this ideal will not be possible initially, climate protection is best served by putting its elements in place from the inception of a policy regime rather than using approaches such as LCA that are poorly grounded in the principles of sound environmental management. Careful carbon accounting has been the presumed basis of cap-and-trade programs as envisioned by the Kyoto Protocol and advocated as the best approach for national climate policy. Although the approach discussed here is ideally suited for use within a cap-and-trade program, the principles also apply to other forms of policy, such as direct regulation (e.g., under the U.S. Clean Air Act), carbon taxation, or a sectoral hybrid policy that might combine approaches.

—John DeCicco

ABC accounting—a “count as you go” system—underpins cap-and-trade policy as defined to date for fossil CO2 emissions, DeCicco notes. Its application is straightforward for stationary sources and for end-use CO2 from transportation fuels, “where simple chemistry enables accurate measurement through points of fuel distribution in lieu of vehicle tailpipes”. Emissions inventories are thus tied to real sources rather than to the LCA abstraction of carbon footprint, affording greater clarity to the question of which entities can be reasonably held accountable for what emissions, he argues. ABC accounting with appropriate reporting periods can also be used to manage carbon stocks and sinks.

In the paper, DeCicco outlines an ABC-based approach consisting of three main elements:

  1. Full accounting of CO2 emissions from fuel end-use regardless of the fuel’s origin. For biofuels, this means counting their direct emissions to the atmosphere without automatic crediting of biogenic carbon. Abandoning an automatic credit for biogenic carbon is the only way to define a consistent GHG accounting framework without resorting to unverifiable assumptions about the extent of net carbon uptake that complicate other approaches, DeCicco argues.

  2. An attributional accounting protocol that relies on facilities-level GHG balances to report net CO2 uptake and track otherwise unregulated GHG emissions throughout fuel and feedstock supply chains. Such a protocol would enable producers to obtain a verifiable credit for net carbon uptake in biofuel or fuel feedstock products.

  3. A mechanism for mitigating consequential impacts, particularly the leakage due to ILUC. One option for doing so, DeCicco suggests, could be a Land Protection Fund (LPF) for purchasing international forest carbon offsets in proportion to the ILUC emissions estimated to occur as a consequence of biofuel production.

The ABC approach differs from an LCA approach in several ways:

  • It does not automatically credit biogenic carbon.

  • It has a source focus rather than a product focus. “ ABC approach does not account for everything in one place as does a policy based on LCA, which analytically collapses all of the sources and sinks in a product’s supply chain to the single, product-focused metric of carbon intensity. Although automatic crediting of biogenic carbon is arithmetically correct for the “cradle-to-grave” abstraction of a biofuel’s lifecycle, it codifies a misplaced burden of proof as previously noted.

  • An ABC policy does not fundamentally rely on a need for baselines because it is not attempting to treat the issue as an offsets problem.

In summary, adherence to direct, source- and sink-based, current-period accounting provides a robust framework for handling emissions from fuels regardless of their origin. Fully including transportation fuels under a carbon cap would put the majority of the sector’s emissions under carbon management.

Biofuels have come to present a special problem because biogenic carbon is excluded from fossil-based caps as proposed to date even though (like most forms of bioenergy) their production is intrinsically coupled to terrestrial carbon stocks. However, these issues can be handled through an ABC approach that accounts for all fuel end-use CO2 emissions at a well-specified point of regulation; a protocol to track carbon uptake and uncapped emissions in fuel and feedstock supply chains; and a land protection fund to mitigate leakage from ILUC. Such an approach will create a sound carbon management framework for the sector and in so doing, move policy closer to the integrated treatment of fossil energy and terrestrial GHG sources ultimately needed for effective climate protection.

—John DeCicco




Depending where you come from and who is supporting the study, you may always use another formula to arrive at different levels GHG emissions. The end result measurements (what is in the air we breath) does not lie.


The ABC approach is simpler and harder to game. This makes it preferable to LCA for making policy.


A better approach to counting Unicorns is still a useless, and makework effort...

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