California Environmental Protection Agency Air Resources Board Low Carbon Fuel Standard i LUC Status February 20, 2013 LCFS Requirements Requires a 10 percent reduction in the carbon intensity(ci) by 2020; baseline 2010 Applies to (fossil fuel+biofuel) mix Separate standards for Gasoline and Diesel Full LCA for CI includes direct+iluc Other fuels allowed to opt-in Flexibility for credits and future improvements ARB has established CI values for various fuels and will establish CI values for other fuels.
Importance of Including iluc Planting crops for fuel displaces land currently in use for other purposes (i.e. food production, grazing, idle) iluc emissions are real, positive, and potentially large Not including these effects sends the wrong market signals Motivates fuel producers to develop fuels that are lower in CI and sustainable 3 iluc Values Under Review Planned Revisions to iluc Values: Corn Ethanol (current iluc value: 30) U.S. Soy Biodiesel and Ren. Diesel (current iluc value: 62) Brazilian Sugarcane Ethanol (current iluc value: 46) Planned New iluc values: Palm Oil, Canola, Shorgum (2013) Cellulosic Feedstocks (2013-2014) 4
iluc Update ARB uses GTAP model for iluc analysis. Recent model changes are incorporated in the analysis ARB staff and contractors are currently reviewing GTAP modeling approach, inputs, issues Revisions and possible compliance schedule changes will be proposed to the Board by end, 2013. 5 Recent GTAP Model Updates GTAP 7 Database Land supply nesting structures Greater flexibility in crop switching in response to price changes Endogenous yield adjustment for cropland pasture in response to changes in land rent Other changes under consideration 6
Additional GTAP Revisions Incorporated cropland pasture for U.S. and Brazil Used updated energy sector elasticity values Incorporated improved treatment of DGS Incorporated modified structure of livestock sector Use revised estimates for yield on new cropland 7 Emission Factors Updates Developed spatially explicit carbon stocks for forest pasture, cropland, and land conversions Developed a separate emission factor model EF Model accounts: Above and below ground biomass, litter and deadwood Soil carbon Foregone sequestration Conversion by fire Harvested wood products Peatland conversion and cropland pasture conversion 8
iluc Uncertainty Yes, there is uncertainty with the estimates for direct and iluc. Extensive Monte Carlo analyses to evaluate uncertainty. Most analyses indicate that iluc effects are positive, significant, and should not be ignored. There is a number of biofuels that have insignificant or zero iluc effects. 9 iluc Schedule Workshop to discuss model revisions, modeling results: Spring-Summer 2013 Stakeholders comments/inputs/reviews: Spring- Summer 2013 10
iluc Effect on Compliance Schedule If corn ethanol LUC CI changes: Baseline CI for CaRFG changes Compliance schedule targets for gasoline change Compliance schedule for diesel is unaffected 11 LCFS Compliance Status LCFS is working well Approximately 80 fuel providers are reporting Regulated parties are over-complying, generating credits for future compliance Innovations are occurring in all fuels Investments in alternative fuels are increasing Challenges remain later in the decade 12
Status of Implementation of LCFS Carbon Intensities of Some Fuels Gasoline: 99 gco2e/mj Diesel: 98 gco2e/mj Corn Ethanol: 73-121 gco2e/mj Sugarcane Ethanol: 58 73 gco2e/mj Biodiesel: 4 83 gco2e/mj Methane: -15 83 gco2e/mj Electricity: 35 46 gco2e/mj 13 LCFS Credits Source of credits 80% from low-ci ethanol 10% from natural gas 8% from biodiesel 2% from renewable diesel Credit transactions No LCFS credit transactions in 2011 17 LCFS credit transactions through Q3 2012 Price range: $10 - $30/MT Trade volumes: 100 33,000 credits/trade 14
Contact Information John Courtis, Manager, Alternative Fuels Section (916) 323-2661, jcourtis@arb.ca.gov http://www.arb.ca.gov/fuels/lcfs/lcfs.htm 15 Thank You