The Basics Of Low Carbon Fuel Standards
Essentially all transportation fuel used in the world today comes from petroleum, and those fossil fuels have social, economic and environmental costs for the United States, such as:
- Reliance on imported energy sources, which affects national energy security
- Air pollution, which impacts health
- Greenhouse gas emissions, which contribute to changes in climate.
Tackling all of these issues associated with petroleum dependence in transportation requires a coordinated effort in managing growth in travel demand, improving vehicle fuel efficiency, and switching to cleaner, lower carbon fuels.
A Low Carbon Fuel Standard (LCFS) is a fuel policy designed to reduce the amount of carbon in transportation fuels. It is market-based. Rather than government legislating what fuels we use (“picking winners”), an LCFS would require all energy companies to meet a common target for carbon intensity, but leave it up to the companies themselves to decide how to reach that goal.
So, for example, an oil company might choose to diversify into electric or hydrogen fuels. Or it might add more low-carbon biofuels to its mix of offerings. Or it might buy credits from companies that specialize in low-carbon fuels, or that can lower the carbon intensity of their fuels more efficiently.
Low carbon fuel policies are already in place in California, the European Union and British Columbia. A number of other U.S. states are considering some sort of low carbon fuel policies. More information on regional policies is here: http://nationallcfsproject.ucdavis.edu/map/
How a Low Carbon Fuel Standard Might Work
A lifecycle-based LCFS is a market-based policy that encourages innovation in cultivation and extraction, fuel processing, transport, and distribution by finding carbon reductions through the entire supply chain. The LCFS is technology-neutral and fuel-neutral – that is, the regulated parties choose their own compliance pathways based on their own business strategies.
In California, the LCFS requires fuel providers to reduce the average carbon intensity of the fuels that they provide. They can:
- Sell more low-carbon fuels such as biofuels, natural gas, or electricity in their fuel mix
- Reduce the carbon intensity of fossil fuels they sell through advanced technologies such as reduced flaring, or carbon capture and sequestration (CCS)
- Purchase credits from other producers / fuel suppliers who are able to supply low carbon fuels at lower prices.
What Is the National LCFS Project?
The National LCFS Project began in 2010 with two objectives:
- Compare an LCFS with other policy instruments that have the potential to significantly reduce transportation GHG emissions from fuel use
- Propose a policy structure for an LCFS that would be most effective and implementable.
The project is funded by the Energy Foundation and the William and Flora Hewlett Foundation. The participating researchers are from:
- Oak Ridge National Laboratory
- University of California
- University of Illinois
- University of Maine
- Carnegie Mellon University
- International Food Policy Research Institute
Researchers from these institutions analyzed numerous aspects of replacing some petroleum-based fuels with lower-carbon fuels, such as biofuels, electricity and hydrogen, including:
- Technology development of vehicle platforms
- Infrastructure “pathways” for fuel production, transport and delivery
- Policy impacts, including the reduction in petroleum fuel use, fuel prices and other economic impacts, energy security, GHG emission reductions, global land use and sustainability
- Regional variability, uncertainties in measuring fuel carbon intensity, the role of electricity, and harmonization with existing policies.
In addition to its research, the National LCFS Project conducted extensive stakeholder outreach including:
- Seven webinars between April and June 2011 presenting preliminary research results to invited key stakeholders from industry groups, environmental NGOs, academic scholars, and policy makers. Each webinar was attended by 40-70 stakeholders, and was followed up with written comments from stakeholders and additional meetings between researchers and the stakeholders.
- A one-day policy workshop in Washington, D.C., in August 2011, where key stakeholders discussed draft research results and preliminary policy recommendations.
- A one-day policy makers workshop in Washington, D.C., in August 2011, co-hosted with the International Council on Clean Transportation (ICCT). The workshop reviewed the status of regional and state LCFS programs and discussed challenges and future collaborations.
The results of this research and outreach have been published periodically in academic journals (see list: http://nationallcfsproject.ucdavis.edu/index.php?page=other_reports).
In the coming months, the National LCFS Project will continue to describe its findings and recommendations. We invite you to join the discussion.