California's Low Carbon Fuel Standard (LCFS) can be achieved by taking advantage of the rapidly evolving alternative fuels market, according to ICF International’s technical analyses report. However, over-compliance at least through 2016 is essential. Adopted in 2007, the LCFS requires a 10 percent reduction in the carbon intensity of transportation fuels in California by 2020. Specifically, the cap-and-trade program sets a statewide limit on sources responsible for 85 percent of the state's emissions, beginning this year for electric utilities and large industrial facilities and beginning in 2015 for distributors of transportation, natural gas, and other fuels.
The ICF report looks at the first of a two-phase, year-long project assessing the economic and environmental impacts of compliance with the LCFS. The first phase focuses on the development of compliance scenarios. The second phase focuses on the economic and environmental impacts of the compliance scenarios.
Among the report's conclusions:
The diesel sector will likely generate more than its fair share of credits. ICF developed scenarios that reflect the flexibility of the LCFS guidelines: namely, credits are fungible. It does not matter if credits are generated using fuels that substitute for gasoline or fuels that substitute for diesel.
Forecasted diesel consumption in California indicates that diesel will generate about 20 percent of deficits in the LCFS program; however, fuels that substitute for diesel, including biodiesel, renewable diesel, and natural gas, have the potential to generate 40 to 55 percent of LCFS credits.
Biodiesel can make a significant contribution towards LCFS compliance. Although biodiesel consumption in California has been modest in recent years, there is significant potential to blend biodiesel at lower levels (5 percent to 20 percent by volume) with conventional diesel and generate a substantial number of LCFS credits. Infrastructure providers are already responding to this potential, and based on ICF research and stakeholder consultation, the industry is rapidly increasing the ability to store and blend biodiesel at petroleum terminals and at refineries.
Renewable diesel will make a modest contribution towards LCFS compliance, even at low volumes. With no additional distribution infrastructure or refueling infrastructure costs, and no limitations on consumption in vehicles, renewable diesel is an attractive option for LCFS compliance. Furthermore, it is available in significant quantities today. Even at conservative forecasts of 150 million gallons renewable diesel delivered to California by 2020, renewable diesel could generate about 8 percent of the LCFS credits required to achieve compliance.
The report was conducted by a diverse coalition, including CalETC, Ceres, E2, the California Natural Gas Vehicle Coalition, the National Biodiesel Board and the Advanced BioFuels Association.