A national low carbon fuel standard (LCFS) could provide a new framework to incentivize alternative transportation fuels and lower the nation’s carbon intensity, according to the National LCFS Project which released its findings July 18. Representatives of the six research institutions that conducted studies over the past two years presented the report to Congress July 18 and 19.

Two reports were issued on the National LCFS Study, one that digs into the technical analysis and the other describing policy recommendations. They are available at the project website.   

Dan Sperling, director of the national LCFS project and director of the Institution of Transportation Studies, University of California, expects the report to be received with open minds.  When asked when what its chances are to become national policy, he said that six months ago he would have expected it to take years of discussion and work to get a LCFS through Congress.  Now, with criticisms of the renewable fuel standard (RFS) rising, he thinks it could be sooner. “People are curious whether it could solve the RFS problem.” He also said there is such strong support for alternative fuels and biofuels for national security reasons and rural economic development impacts that an attempt to kill the RFS entirely would not be successful. Incorporating the principles of a LCFS would dramatically change it, however.

While the corn ethanol industry has challenged some aspects of the California LCFS, Sperling suggests that a national LCFS could solve some of the limitations of the RFS for the corn ethanol industry and incentivize further carbon intensity reductions. “The RFS has thresholds, 20 percent for corn ethanol, 50 percent for advanced fuels and 60 percent for cellulosic,” he pointed out.  An LCFS gets rid of those thresholds in favor of performance standards, “and every step in the energy chain receives credit for improvements made.”  Corn ethanol producers continue to make efficiency improvements and corn producers continue to improve yields and improve fertilizer use, he said, all of which could be incentivized and rewarded in a LCFS. The RFS also picks winners, he said, whereas a LCFS is designed to be technology neutral and would include all biofuels and other renewable transportation technologies such as electric vehicles.  

The policy recommendations report addresses a number of the objections raised by the ethanol industry on life cycle analyses, land use change measurements and baseline comparisons with crude oil, among other issues. The policy recommendations suggest land use change be addressed through a combination of short-term and long-term policies encouraging feedstocks that do not require additional land, such as wastes, agriculture residues, cellulosic feedstocks and algae. It also recommends adopting measures that lower land use change risk from land-using feedstock by enhancing carbon sequestration and encouraging the use of marginal, degraded or abandoned land while prohibiting the conversion of high-carbon, high-biodiversity and environmentally sensitive areas. The policy section also addresses incorporating sustainability goals into a LCFS.

The discussion of policy recommendations also covers the criticism that using a crude oil baseline unfairly subjects alternative fuels to life cycle analyses while not looking at the increasing carbon intensity (CI) of newer sources of crude oil, such as oil sands. “We recommend adopting an approach that creates an incentive to buy lower-CI crudes, invest in upstream improvements (such as carbon capture and sequestration), and modify refinery designs to favor low-CI crudes,” the report says. It also makes recommendations on ways to harness market forces using LCFS credits, addressing trading, banking, compliance and cost containment issues.

The technical analysis, published in the second paper, parallels the policy recommendations and looks at the costs and benefits of a national LCFS, together with, or in place of, the existing national RFS. Key insights will be published in the peer-reviewed journal Energy Policy in an upcoming special issue.

The National LCFS Project is a collaboration between researchers from the following institutions: Institute of Transportation Studies, University of California, Davis; Department of Agricultural and Consumer Economics / Energy Biosciences Institute, University of Illinois, Urbana-Champaign; Margaret Chase Smith Policy Center, and School of Economics, University of Maine; Environmental Sciences Division, Oak Ridge National Laboratory; International Food Policy Research Institute; and Green Design Institute of Carnegie Mellon University. The study was funded by the Energy Foundation and the William and Flora Hewlett Foundation.