CARB discusses LCFS, ILUC revisions in workshops

By Erin Voegele | March 11, 2014

The California Air Resources Board held public workshops on the state’s Low Carbon Fuel Standard and the related issue of indirect land use change (ILUC) on March 11. According to CARB, the first workshop discussed general updates to the LCFS regulations while the second workshop discussed updates to the to the ILUC values, including preliminary data reducing the carbon intensity value of corn ethanol.

CARB’s LCFS re-adoption concept paper, released ahead of the meetings, discusses potential amendments to the LCFS for 2014. The document introduces four specific concepts for which it is seeking feedback. Some of the new proposals apply to oil refineries, while others apply to biofuel producers.

First, CARB is proposing to allow refineries to generate credits for investments at the oil refinery that reduce greenhouse gas (GHG) emissions. Rather than reduce the carbon intensity of the fuel produced, the resulting credits would recognize GHG reductions at the refineries. The credits would be eligible for sale to other regulated parties.

Second, CARB noted it is anticipating the rulemaking process for re-adoption of the LCFS to be concluded in 2015, which means LCFS regulatory standards will likely remain at 2103 levels through 2015. While CARB is not currently proposing to change the average carbon intensity target of 10 percent by 2020, it does believe that some post-2015 curve smoothing will be needed. In-depth analysis to inform targets from 2016 through 2020 are being conducted. However, CARB also indicated it will considering revising the post-2020 targets that call for carbon intensity reductions greater than 10 percent. According to CARB documentation, this analysis will include the effects of proposed changes to the LCFS, including potential revisions to ILUC values.

Third, CARB is proposing to allow low-complexity/low-energy-use refineries a one time, irreversible opportunity to opt for refinery-specific accounting. According to CARB, participating refineries would have an incremental deficit assessed if their refinery annual crude carbon intensity exceeds their refinery 2010 baseline crude carbon intensity. They would also be required to work with CARB to properly characterize crudes supplied to the refinery, provide descriptions, sources, and volumes of intermediate feedstocks and petroleum-based blendstocks supplied to the refinery, and provide sources and volumes of finished products supplied by outside refineries.

Fourth, under fuel pathways and producer facility registration, CARB is proposing a two-tiered system under which conventionally produced first-generation biofuels would fall under the first tier and next-generation biofuels would fall under the second. However, any fuel produced using an innovative method, even first generation fuels, would fall into the second tier. One example of an innovative method highlighted by CARB is carbon capture and storage. CARB’s documentation explains that producers of first-tier fuels would be registered into carbon intensity bins using an application process similar to the existing Method 2 process. The bins would consist of simple carbon intensity ranges, and producers could move from one bin to another by completing the same registration process fuel producers use to obtain its first-time tier-one carbon intensity value. Producers of second-tier fuels would apply for a fuel pathways using a modified version of the existing Method 2 process. CARB staff could also develop and post new tier-two pathways for the use of qualifying fuel providers.

With regard to ILUC, CARB proposes to adopt a new model for calculating lifecycle carbon intensity values. It would likely be based on one of the current versions of the Greenhouse gas, Regulated Emissions and Energy use in Transportation (GREET) model from Argonne National laboratory.

Within the re-adoption concept paper, CARB also indicates that based on recommendations provided by an expert working group and other stakeholders, CARB staff has contracted with experts to refine and improve ILUC analysis. As such, CARB staff has worked with academic researchers to incorporate significant changes in the estimation of ILUC for biofuels. As part of this effort, a new carbon emission model factor was developed by provide better estimates of carbon released as a result of land conversion. Furthermore, updates to GEAP2 now include additional data and parameters for sorghum ethanol and canola biodiesel.

Preliminary results included in the ILUC workshop presentation show that the carbon intensity value for corn ethanol could be reduced from 30 grams per megajoule (g/MJ) in 2009 to an average of 23.3 g/MJ in 2014, with a new range of 13.1-40 g/MJ. The carbon intensity value for sugarcane ethanol would be reduced from 46 g/MJ in 2009 to an average of 26.5 g/MJ in 2014, with a range of 13.5-44.1 g/MJ. For soy biodiesel, the carbon intensity would drop from 62 g/MJ in 2009 to an average of 30.2 g/MJ in 2014, with a range of 17.6-52.1 g/MJ. Preliminary 2014 estimates for canola biodiesel are an average of 41.6 G/MJ, with a range of 24.8-70.2 g/MJ, while the sorghum ethanol estimate is an average of 17.5 g/MJ, with a range of 10.9-28.4 g/MJ.

The re-adoption concept paper also addresses several proposals that were subject to workshops last year and have already been discussed with stakeholders. These include the creation of a cost containment provision that would increase market certainty about the maximum cost of compliance, strengthen incentives to invest in and produce low carbon intensity fuels, and provide additional compliance options.

The Renewable Fuels Association called the new estimates a step forward, but noted more work is needed. “CARB appears to be taking a small step in the right direction, but the science shows a much larger reduction to the ILUC penalty for corn ethanol is warranted,” said Bob Dinneen, CEO of the RFA. “Just last week a group of 14 well-known scientists—including five members of CARB’s own expert work group—recommended CARB should lower the penalty by 50-80 percent, but CARB appears to be proposing just a 20 percent cut. The larger issue here is that in the five years since the LCFS was adopted, there have been no indications that the policy has caused—or will cause—any kind of land use change. Amazon deforestation has fallen to its lowest rate on record, U.S. cropland area continues to shrink, and U.S. forested area continues to increase. All of this suggests the ILUC hypothesis needs to be critically re-evaluated. If finalized, CARB’s apparent decision to ignore sound science and stick to an unjustified and exaggerated iLUC penalty for grain-derived ethanol will negatively impact California consumers. Under CARB’s apparent proposal, grain ethanol—the lowest-cost renewable fuel used in the California market today—will ultimately be replaced with higher-priced imported fuel.”

The Brazilian sugarcane association UNICA applauded CARB’s revisions. “CARB’s proposal to revise [ILUC] estimates in the LCFS shows the Brazilian sugarcane biofuel generates about half the indirect emissions that CARB originally suggested during its rulemaking process in 2009. If implemented, these revised ILUC estimates will confirm what numerous other studies have shown: sugarcane ethanol is one of the most environmentally friendly biofuels supplying today’s market,” said the group in a statement.

Additional information on information presented during the workshops is available on the CARB website