U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Annual Energy Outlook 2011
Release Date: April 26, 2011 | Next Early Release Date: January 23, 2012 | Report Number: DOE/EIA-0383(2011)
Legislation and regulations
4. California low carbon fuel standard
California's LCFS will be administered by CARB . In general, the regulated parties under the LCFS legislation are fuel producers or importers who sell motor gasoline or diesel fuel in California. The legislation is designed to reduce the carbon intensity of motor gasoline and diesel fuels sold in California by 10 percent between 2012 and 2020 through the increased sale of alternative low-carbon fuels. Each low-carbon fuel has its own carbon intensity, based on life-cycle analyses conducted under the guidance of CARB for a number of approved fuel pathways. The carbon intensities are calculated on an energy-equivalent basis, measured in grams of CO2-equivalent emissions per megajoule.
The AEO2011 Reference case incorporates the California LCFS, using CARB's mandated carbon intensities and approved fuel pathways . Although NEMS is not a State-level model, CARB-mandated gasoline and diesel are modeled separately from other gasoline and diesel sold in the Pacific Census Division 9 (which also includes Washington, Oregon, Alaska, and Hawaii). In cases where data for California are not available, information from Census Division 9 is used as a proxy. Because CARB has not yet officially quantified penalties for LCFS noncompliance, the Reference case incorporates a monetary penalty estimated to encourage compliance, based on relevant provisions in the California Health and Safety Code .
Carbon intensities provide a measure of complete well-to-wheels or life-cycle emissions of each fuel pathway, including indirect land-use change (ILUC) penalties where applicable . The ILUC penalty is used to account for potential changes in land use as the production of biofuels increases. Because the science behind the ILUC penalty is relatively new and still controversial, potential revisions and updates are expected as the LCFS evolves. For example, AEO2011 assumes that corn ethanol is treated as having 20 percent lower GHG emissions than gasoline.
The fuel pathways used in EIA's analysis include existing technologies-such as Midwestern corn ethanol, imported sugarcane ethanol, and soy-based biodiesel-as well as a number of "next-generation" technologies, including cellulosic ethanol and biomass-to-liquid (BTL) fuels. Other provisions in the LCFS legislation also allow nonregulated parties, such as electricity and hydrogen producers, to contribute. With the exception of efforts to streamline the development and installation of home charging stations, there does not appear to be any significant effort at present to promote plug-in vehicles or to enhance public charging stations and other infrastructure.
The LCFS results in the transportation into California of additional renewable fuels produced in other regions or countries. To meet the LCFS gasoline mandate, motor fuels containing up to 85 ethanol (E85) consumption in Census Division 9 increases to more than 2.4 billion gallons in 2020, allowing a larger share of ethanol consumption to contribute to lowering the gasoline carbon intensity. For the diesel mandate, every gallon of CARB diesel contains 20 percent biodiesel (the maximum generally recommended by original equipment manufacturers) by 2017.
The largest source of compliant fuel is sugarcane ethanol, imported primarily from Brazil, and biodiesel. Imported sugarcane ethanol has a much lower carbon intensity than domestically produced corn ethanol, primarily as a result of production methods that use fewer fossil fuel inputs. It is assumed that, in the last years of the LCFS program, such next-generation technologies as cellulosic ethanol and BTL will begin to reach the market and make a larger contribution toward meeting the LCFS. The same can be said for LCFS-compliant diesel, which requires the blending of more costly biomass-based diesel fuels.
In the later years of the LCFS, gasoline blends with ethanol content greater than E10, such as E85, will be needed for the gasoline mandate to be met. Even if ethanol with the lowest carbon footprint is used in E10 blends, it will not lower the carbon intensity of gasoline sufficiently for the LCFS to be met. Consequently, the amount of E85 available in California is a key factor in determining the mix of fuels with low carbon pathways, such as sugarcane ethanol and cellulosic ethanol, that can be used in meeting the gasoline mandate. For the diesel mandate, a blend of 20 percent biodiesel is already common today, and with the addition of such next-generation technologies as BTL fuels that are potentially "drop-in" fuels usable in existing distribution channels, the mandate can be met without new infrastructure.