Low Carbon Fuel Standard Research Articles

Cost, innovation, and emissions leakage from overlapping climate policy

Jurisdictions have implemented a variety of policy instruments to mitigate greenhouse gas emissions. However, interactions between overlapping climate policies can lead to unintended impacts. This study demonstrates how interactions between an incomplete emissions cap and additional climate policy can result in higher emissions and higher average abatement costs relative to an emissions cap alone. This sectoral policy emissions displacement effect is then quantified through simulations using a computable general equilibrium model for the case of California's low-carbon fuel standard (LCFS) and cap-and-trade program. Emissions increase as a result of the LCFS incentivizing greater production of alternative transportation fuels with emissions not covered by the emissions cap. Emissions leakage can be mitigated by incorporating elements of a fixed-price instrument (i.e. carbon tax) to improve policy complementarity or requiring an obligation for the lifecycle GHG emissions of fuels under the emissions cap.

Projections of the costs of light-duty battery-electric and fuel cell vehicles (2020–2040) and related economic issues

This paper provides a comprehensive analysis of the initial costs and total cost of ownership (TCO) for light-duty battery electric vehicles (BEVs) and fuel cell vehicles (FCVs) from 2020 to 2040, covering cars, SUVs, and light trucks, alongside the infrastructure requirements. Key findings indicate that by 2040, the initial costs for BEVs will align with those of gasoline vehicles if battery costs can reach cell-level $70/kWh (or pack-level $84/kWh). For FCVs, achieving cost parity with gasoline cars before 2040 will be challenging unless the cost of fuel cells decreases to about $40/kW through high-volume production (>500000 units). Regarding 5-year TCOs, both BEVs and FCVs are expected to be close to or slightly lower than those of gasoline vehicles by 2040 across all LDV market segments. Investment analysis for large fleets suggests that by 2040, public fast charging for BEVs could cost $2000/vehicle, and hydrogen refueling for FCVs $1100/vehicle. Additionally, the study assesses the impact of low carbon fuel standard (LCFS) credits on the profitability of refueling stations, concluding that these credits are essential for transforming potentially unprofitable stations into profitable ventures with returns of 5% or higher. This highlights the critical role of LCFS in financing BEVs and FCVs infrastructure.

Additional or accidental? Simulating interactions between a low-carbon fuel standard and other climate policy instruments in Canada

Many jurisdictions are subject to climate action plans composed of multiple policy instruments. As climate policy landscapes become increasingly crowded, understanding the nature and likelihood of interactions between proposed policies and other instruments that make up a policy mix is a key element of policy design. We introduce a technology-rich computable general equilibrium model of the Canadian energy-economy, gTech, to explore the effectiveness of one such policy called the low-carbon fuel standard (LCFS) at reducing greenhouse gas emissions when implemented alongside other climate policy instruments. We find that the ability of a LCFS to reduce emissions depends on the ‘background’ policy mix it is layered on top of, in addition to its credit market design.

The need for effective life cycle assessment (LCA) to enhance the effectiveness of policies such as low carbon fuel standards (LCFS's)

Those jurisdictions that have been the most successful in developing low-carbon-intensity (CI) transportation fuels have used technology-agnostic policies such as Low Carbon Fuels Standards (LCFS's). However, LCFS-type policies require the accurate determination of the CI of the fuel that is produced-and-used, with Life Cycle Analysis (LCA) playing an essential role in this determination. While policies such as mandates have been successfully used to establish biofuel markets such as bioethanol in the US and Brazil, LCFS-type policies have a primary goal of reducing the carbon intensity of transportation fuels. California's LFCS (CA-LCFS) policy uses a variation of the GREET LCA model while British Columbia's LCFS (BC-LCFS) uses the GHGenius LCA, with these different models sometimes resulting in different CI outcomes for various low-CI fuels. Canada's evolving Canadian Clean Fuel Regulation (CFR) will use an OpenLCA fuel model to back-up its LCFS-type policy, with the hope that its more open-and-simple nature will encourage users to provide more up-to-date pathways and data that can be used nationally. However, the various assumptions/default values, pathways, feedstocks and local conditions that are used are known to significantly impact the results. Thus, it will be challenging to develop and use the national and international LCFS-type policies needed to decarbonize the long-distance transport sector such as aviation, marine and long-distance trucking.

Understanding RNG Gas Quality through Execution at Newtown Creek WRRF RNG

With each passing year a new record for global emissions is set (1) and policymakers and utility companies must embrace all avenues for decarbonization of energy. Universal adoption of electrification for every building and home by 2050 (2) is not practical, a balance must be struck between an equitable transition to cleaner energy supplies and ensuring uninterrupted, safe delivery of energy to utility customers. Renewable Natual Gas (RNG) is a molecule-for-molecule replacement of traditional geological natural gas with tangible life cycle emissions reductions. California continues to lead the way, initially starting with the low carbon fuel standard (LCFS) which aimed to reduce the carbon intensity of transportation fuel, and subsequently, Senate Bill 1440, which established RNG procurement goals including 12% RNG by 2030 (3). Other States are starting to adopt similar changes such as Oregon’s Senate Bill 98 and Colorado’s Senate Bill 21-264. As utilities attempt to transition the energy network, they must never compromise system safety and reliability. Recognizing that raw biogas has dangerous levels of contaminants of concern (COC) and must be conditioned to pipeline quality, its important utility companies better understand the methods with which methane is extracted and the testing protocols used to confirm performance. This paper highlights the equipment, processes, and testing regime National Grid and its partner the New York City Department of Environmental Protection (NYC DEP) deployed as part of its Newtown Creek RNG project, which successfully began injecting RNG into the NYC gas distribution network in October 2022.

Cost Assessment of Centralizing Swine Manure and Corn Stover Co-Digestion Systems

Livestock in the state of Iowa, United States (US) produce over 50 × 106 Mg of wet-basis manure yearly. Biogas production from manure’s anaerobic digestion (AD) can reduce greenhouse gas emissions, control odors, and provide renewable energy. Despite these benefits, AD is rarely deployed at swine farms in Iowa. In this work, we explore the economics of AD systems in Iowa to evaluate reasons for low deployment and explore the production cost impacts of biogas cleaning and injection into the natural gas grid, amending manure with biomass, and centralizing digesters across multiple farms. This work presents a static, spreadsheet-based technoeconomic model that embodies literature-based estimates of key system technical parameters, costs, and transportation fuel incentives and permits the examination of various scenarios. Key findings include that under the model assumptions, distributed, farm-scale digesters are not competitive with average natural gas prices in Iowa. A centralized production scenario can be competitive, provided that programs such as the low-carbon fuel standard (LCFS) and the renewable fuel standard (RFS) have sufficiently high credit values.

A comparison of methods used to track the ‘green molecules’ and determine the carbon intensities of co‐processed fuels

AbstractPolicies such as a low carbon fuel standard (LCFS) have incentivized oil refineries to lower the carbon intensity of their operations and the fuels they produce. Although an increasing number of refineries are co‐processing biogenic feedstocks, determining the renewable content and carbon intensities of the co‐processed fuels (and potential credits earned through policies such as a LCFS) has proven to be challenging. Various methods that might be used to track the green molecules and determine the carbon intensities of co‐processed fuels were compared. Although the use of carbon 14 and mass balance have predominated, each of these methods has some advantages and disadvantages. To try to benefit from the strengths of each method, a combined direct (C14) and indirect (modified mass balance) approach was shown to give representative values. However, the quality and frequency of the information collected needs to be assured, as it can improve the quality of data needed to determine the carbon intensity of the final fuels.

Techno‐economic and policy analysis of hydrogen and gasoline production from forest biomass, agricultural residues and municipal solid waste in California

AbstractTechno‐economic and policy analyses were performed of hydrogen and gasoline production from forest biomass (FB). They were compared with fuels produced using agricultural residues and municipal solid waste in California. Twelve process designs were analyzed, with and without carbon capture and storage, and life‐cycle analysis was performed, using California's Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) 3.0 model, to calculate the average life‐cycle carbon intensity of different process designs for hydrogen and gasoline. Discounted cash flow models were developed to assess profitability in terms of the net present value and internal rate of return (IRR). The results showed that forest‐to‐fuel pathways (positive IRR between 2%−16%) were the least competitive biomass‐based pathway option. Sensitivity analysis was performed on economic parameters including feedstock price and renewable identification number (RIN) credit price. In the case of RIN credits, profitability declined significantly as the proportion of FB from federal lands increased given existing statutory limitations. Given the importance of increasing forest management to reduce wildfire risks, the necessary additional policy incentives were quantified to equalize the cost of forest‐to‐fuels pathways with the other biofuels pathways. To ensure FB‐to‐fuels pathways are cost competitive with agricultural residues, policymakers could increase the low carbon fuel standard (LCFS) credit price for forest fuels (additional credit price support of $41–75 t/CO2e), give additional credit to lifecycle emissions reductions from forest fuels (additional carbon intensity decrease of 19–76 gCO2e MJ−1), provide concessionary debt or equity with a target weighted average cost of capital (WACC) = 3–4%, subsidize capital costs (12–22% of costs), or subsidize FB delivery ($35–66 per dry ton delivered).

What does a low-carbon fuel standard contribute to a policy mix? An interdisciplinary review of evidence and research gaps

A low-carbon fuel standard (LCFS) requires fuel suppliers to decrease the carbon intensity of their fuels on a life-cycle basis. California pioneered the LCFS in 2007, and versions have since been developed in other parts of North America, with LCFS-like policies emerging in Europe and Brazil. There is still relatively little research on the contribution that an LCFS can make to a climate policy mix. In this review, we summarize evidence and research gaps using a four-category interdisciplinary framework: effectiveness, cost-effectiveness, political acceptability, and transformative signal. First, regarding greenhouse gas (GHG) mitigation, several studies demonstrate that existing LCFS policies have helped to cut emission to date, while modeling studies indicate that a stronger LCFS can play an additive mitigation role in a well-designed policy mix over the long-term. Second, policy cost-effectiveness is more uncertain; some studies suggests that although an LCFS is not likely to be as efficient as a carbon price, a well-designed LCFS could be an efficient complement to a mix that includes carbon pricing. Third is political and social acceptability, where numerous studies show that the LCFS receives substantial citizen support—more so than any pricing mechanism. Fourth is transformative signal, where the LCFS is associated with increased investment in low-carbon fuels and supportive infrastructure, and a stronger version could induce even more innovation in the long-term. We conclude by identifying research gaps, including the need to better understand the impacts of biofuels on indirect land-use and other sustainability measures, as well as improved simulation of longer-term technological change under a more stringent LCFS, including policy mix interactions.

Adopting a Low Carbon Fuel Standard: Pruning Discriminatory Factors From California’s Regulatory Template

As part of a plan to curtail climate change, states with executive targets of net-zero GHG by 2050 necessitate using a proven approach to reduce GHG from the transportation sector, which nationally accounts for 28% of GHG emissions—more than any other sector. Any substantial reduction in total carbon dioxide (CO2) emissions will necessarily address this fossil fuel reliant sector. An approach modeled after the California Low Carbon Fuel Standard (LCFS), as part of a comprehensive climate change legislation, is indispensable to achieving a meaningful GHG reduction and, thus, should be pursued. Although set out as a model regulatory template, California’s LCFS has not been immune to legal challenges since its inception, and this Comment identifies certain impermissible aspects of this market-based regulation that can be adjusted to bring it in compliance with Dormant Commerce Clause doctrine and the letter of the U.S. Constitution.

Quantifying the Potential of Renewable Natural Gas to Support a Reformed Energy Landscape: Estimates for New York State

Public attention to climate change challenges our locked-in fossil fuel-dependent energy sector. Natural gas is replacing other fossil fuels in our energy mix. One way to reduce the greenhouse gas (GHG) impact of fossil natural gas is to replace it with renewable natural gas (RNG). The benefits of utilizing RNG are that it has no climate change impact when combusted and utilized in the same applications as fossil natural gas. RNG can be injected into the gas grid, used as a transportation fuel, or used for heating and electricity generation. Less common applications include utilizing RNG to produce chemicals, such as methanol, dimethyl ether, and ammonia. The GHG impact should be quantified before committing to RNG. This study quantifies the potential production of biogas (i.e., the precursor to RNG) and RNG from agricultural and waste sources in New York State (NYS). It is unique because it is the first study to provide this analysis. The results showed that only about 10% of the state’s resources are used to generate biogas, of which a small fraction is processed to RNG on the only two operational RNG facilities in the state. The impact of incorporating a second renewable substitute for fossil natural gas, “green” hydrogen, is also analyzed. It revealed that injecting RNG and “green” hydrogen gas into the pipeline system can reduce up to 20% of the state’s carbon emissions resulting from fossil natural gas usage, which is a significant GHG reduction. Policy analysis for NYS shows that several state and federal policies support RNG production. However, the value of RNG can be increased 10-fold by applying a similar incentive policy to California’s Low Carbon Fuel Standard (LCFS).

Assessment of the feasibility of the production of alternative jet fuel and diesel using catalytic hydrothermolysis technology: a stochastic techno‐economic analysis

AbstractThe use of renewable fuels has emerged as an important method for reducing fossil‐fuel consumption. Different pathway technologies can lead to different fuel products. The feasibility of many such pathways has been analyzed with mixed results but new technologies are being developed continuously. This study uses stochastic analysis to determine the feasibility of producing biofuels from carinata oil using catalytic hydrothermolysis (CH) technology. We perform the analysis with and without government incentive programs. We also address uncertainties in input costs and government incentives. The study analyzes a pioneer greenfield plant. The results show that the mean net present value (NPV) without government incentives is −$924.4 million. Ninety percent of the simulated NPV is between −$1040 million and −$810 million, which indicates a 100% probability of loss. The mean breakeven price of jet fuel is $4.72 gal–1. With government incentives including Renewable Identification Number (RIN) and Low Carbon Fuel Standard (LCFS), the mean NPV is $62.3, and the probability of loss is reduced to 21%, which makes the process much more financially feasible. © 2021 Society of Chemical Industry and John Wiley & Sons, Ltd

Renewable Feedstocks Present New and Complex Opportunities

Renewable Feedstocks Present New and Complex Opportunities

Policy Options for Deep Decarbonization and Wood Utilization in California's Low Carbon Fuel Standard

California's Low Carbon Fuel Standard (LCFS) is one of the most important policies to develop and deploy low-carbon and carbon-negative fuels. Yet, because the LCFS is designed to deliver the lowest-cost carbon intensity (CI) reductions possible in the transportation fuel system, it may fail to deliver technologies that would be poised to offer deeper decarbonization or other ancillary benefits to California's people and environment. We contemplate administrative changes to the LCFS to further stimulate the commercialization of promising low-carbon and carbon-negative fuels. To do so, we examine promising technical pathways, their barriers to commercialization, and recent administrative actions by the CA Air Resources Board (ARB) under the LCFS to promote novel lower-carbon fuels. We propose three actions that ARB could undertake to promote commercialization within existing authorities. To commercialize low-carbon and carbon negative fuel, including those derived from forest residue feedstocks, ARB could: (1) embrace the most up-to-date science regarding lifecycle greenhouse gas emissions, (2) create additional, targeted incentives for very low-carbon or carbon-negative fuels through a volumetric technology carve-out or credit multiplier, and (3) ensure that the LCFS stimulates the best-performing fuels across a variety of sustainability parameters.

Lost Hills Solar Project: Powering an Oil and Gas Field with California Sunshine

Summary This paper outlines one of the first efforts by a major oil and gas company to build a net-exporting, behind-the-meter solar photovoltaic (PV) plant to lower the operating costs and carbon intensity of a large, mature oil and gas field. The 29 MWAC (35 MWDC) Lost Hills solar plant in Lost Hills, California, USA, commissioned in April 2020, covers approximately 220 acres on land adjacent to the oil field and is designed to provide more than 1.4 TWh of solar energy over 20 years to the field’s oil and gas production and processing facilities. The upgrades to the electrical infrastructure in the field also include new technology to reduce the risk of sulfur hexafluoride emissions, another potent greenhouse gas (GHG). Before the solar project, the Lost Hills field was importing all its electricity from the grid. With the introduction of the Innovative Crude Program as part of California’s Low Carbon Fuel Standard (LCFS) and revisions to the California Public Utilities Commission Net Energy Metering program, Lost Hills was presented with a unique opportunity to reduce its imported electricity expenses and reduce its carbon intensity, while also generating LCFS credits. The solar plant was designed to power the field during the day and export excess power to the grid to help offset nighttime electricity purchases. It operates under a power purchase agreement (PPA) with the solar PV provider and, initially, will meet approximately 80% of the oil field’s energy needs. Future plans include incorporating 20 MWh of lithium-ion batteries, direct current (DC)–coupled with the solar inverters. This energy storage system will increase the amount of solar electricity fed directly into the field and reduce costs by controlling when the site uses stored solar electricity rather than electricity from the grid. The battery system will also increase the number of LCFS credits by 15% over credits generated by solar alone. Together, solar power and energy storage provide a robust renewable energy solution. This project will generate multiple cobenefits for the Lost Hills oil field by lowering the cost of power, reducing GHG emissions, generating state LCFS credits and federal Renewable Energy Certificates, and demonstrating a commitment to energy transition by investing in renewable technology. Conceivably, the Lost Hills solar project can be a model for similar future projects in other oil fields, not only in California, but across the globe.

Technical monitoring considerations for advancing CCS Projects under the California Low Carbon Fuel Standard in relation to other global regulatory regimes

The California Air Resources Board Low Carbon Fuel Standard (LCFS) seeks to reduce GHG emissions associated with transport fuels used in California, including those produced outside the state and imported for use. The LCFS recognises emissions reductions through carbon capture, utilisation and geologic storage (CCUS) and enables these to generate LCFS credits provided that regulatory requirements and guidelines set forth within the LCFS CCS Protocol (CCSP) are met. These guidelines are focused on demonstration of “permanent storage” and environmental integrity which includes the entire storage complex but predominantly focuses in the near-surface and surface. Our analysis of the CCSP indicates several technical challenges with the regulation as written including 1) the requirement of prescriptive monitoring technologies, 2) a non-negotiable 100-year post injection site care period (PISC), 3) the need for meaningful data collection before a project can be certified, and 4) the expectation that environmental variations over the 100+ monitoring period can be predicted from a year of environmental baseline data. We discuss the technical ramifications of these requirements and discuss the ways in which common and low-cost near surface monitoring techniques can best be used to satisfy the requirements in light of new learning in environmental monitoring.

Oregon’s Clean Fuels Program: A Review and Status Update

Oregon implemented a fuel carbon policy called the Clean Fuels Program (CFP) in 2016. Modeled largely on the Low Carbon Fuel Standard (LCFS) operated by California, the CFP sets a declining target for the average life cycle carbon intensity (CI) of transportation fuels used in the state. The CFP incentivizes the deployment of emissions-reducing fuels and vehicles, and can contribute toward economy-wide greenhouse gas reduction goals. This paper reviews program data from the first three years of the CFP’s operation, provides an overview of program characteristics, identifies key trends, and compares the CFP to the LCFS. While it is early in the program’s operational history and CI reduction targets are small, the available data indicate a program functioning as expected based on the experience of jurisdictions with similar programs. Aggregate emissions reductions have slightly exceeded targets resulting in the accumulation of a small bank of credits. Early compliance has largely been driven by blending of ethanol into retail gasoline and the introduction of greater volumes of diesel substitutes. Electric vehicles are a small but rapidly growing contributor to compliance. As targets grow more stringent, compliance will require greater volumes of low carbon fuels to be brought to market.

Increasing Biofuel Proliferation via the Optimal Use of Government Incentives

AbstractWith the increasing public awareness on global warming, the demand for low greenhouse gas emission (GHG) transportation fuel, such as biofuel, is growing rapidly. In the United States, like many other countries, the government is providing monetary incentives for biofuel displacement of fossil fuel. From the standpoint of biofuel proliferation, it is important that biofuel producers utilize these incentives in the most effective way, because better utilizations of incentives will lead to reduced costs for producers, which in turn will lower biofuel retail prices. Currently, however, biofuel producers are not taking full advantage of these incentives. This industry note introduces a new approach that allows US biofuel producers to improve their practice of using an incentive program called the LCFS (California Low Carbon Fuel Standard). Our method, which is relatively simple, is based on a recent research project conducted with a biofuel manufacturing firm, which aimed to maximize the benefit gained from the LCFS incentive program. We show, by performing numerical experiments with realistic settings, that the method matches or outperforms the current practice in terms of maximizing gains extracted from the incentive program, under all conditions.

Public support for supply-focused transport policies: Vehicle emissions, low-carbon fuels, and ZEV sales standards in Canada and California

Abstract We assess public support for three supply-focused transport regulations: vehicle emissions standards (VES), low-carbon fuel standards (LCFS), and zero-emissions vehicle (ZEV) sales mandates. We implemented a survey across several regions with varying policy experience, using representative samples from Canada (n=1,552) and the US state of California (n=484). The survey evaluated respondents’: (1) awareness of each policy, (2) support and opposition for these policies, and (3) associations with personal characteristics. We find that policy awareness is similarly low in all regions, with fewer than 5% mentioning any of the policies in an open-ended question. Once prompted with multiple-choice style questions, stated awareness is higher for a VES (33–53%), followed by a LCFS (19–38%), and then a ZEV mandate (6–17%). In some cases, awareness is higher in regions that actually had a given policy in place, or for a longer period. Support for strong VES and LCFS is similarly high across regions (around 60–80% support) and support for a strong ZEV mandate is lower (34–55% support) – though all have higher support than strong carbon pricing (22–30%). Regression analyses indicate that policy support is most strongly associated with respondent values and trust in government, with only a minor role for demographic factors. Interaction effects indicate that policy support in the province of Quebec and California is associated with a lack of trust in the federal government but greater trust in provincial or state governments. Conclusions indicate that policymakers may want to focus on policies that are both effective and acceptable to the public.

Shifting agricultural practices to produce sustainable, low carbon intensity feedstocks for biofuel production

The carbon intensity (CI) of biofuel’s well-to-pump life cycle is calculated by life cycle analysis (LCA) to account for the energy/material inputs of the feedstock production and fuel conversion stages and the associated greenhouse gas (GHG) emissions during these stages. The LCA is used by the California Air Resources Board’s Low Carbon Fuel Standard (LCFS) program to calculate CI and monetary credits are issued based on the difference between a given fuel’s CI and a reference fuel’s CI. Through the Tier 2 certification program under which individual fuel production facilities can submit their own CIs with their facility input data, the LCFS has driven innovative technologies to biofuel conversion facilities, resulting in substantial reductions in GHG emissions as compared to the baseline gasoline or diesel. A similar approach can be taken to allow feedstock petition in the LCFS so that lower-CI feedstock can be rewarded. Here we examined the potential for various agronomic practices to improve the GHG profiles of corn ethanol by performing feedstock-level CI analysis for the Midwestern United States. Our system boundary covers GHG emissions from the cradle-to-farm-gate activities (i.e. farm input manufacturing and feedstock production), along with the potential impacts of soil organic carbon change during feedstock production. We conducted scenario-based CI analysis of ethanol, coupled with regionalized inventory data, for various farming practices to manage corn fields, and identified key parameters affecting cradle-to-farm-gate GHG emissions. The results demonstrate large spatial variations in CI of ethanol due to farm input use and land management practices. In particular, adopting conservation tillage, reducing nitrogen fertilizer use, and implementing cover crops has the potential to reduce GHG emissions per unit corn produced when compared to a baseline scenario of corn–soybean rotation. This work shows a large potential emission offset opportunity by allowing feedstock producers a path to Tier 2 petitions that reward low-CI feedstocks and further reduce biofuels’ CI. The prevalence of significant acreage that has not been optimized for CI suggests that policy changes that incentivize optimization of this parameter could provide significant additionality over current trends in farm efficiency and adoption of conservation practice.