Image: Lux Research
December 27, 2016
BY Lux Research
Biomass-based diesel and conventional electricity lead the race to meet new emissions reduction goals, and diversified energy companies are well-placed, according to Lux Research.
Traditionally policies to promote greener transportation fuels have focused on mandating volumes of specific biofuels that must be used. However, a new generation of policies is based on technology-agnostic carbon intensity metrics, led by the California Air Resources Board low-carbon fuel standard (LCFS). Renewable diesel and conventional electricity will be the near-term winners according to Lux Research, followed by renewable electricity in a close third.
Carbon intensity—the amount of carbon by weight emitted per unit of energy consumed—is driven by factors such as feedstock, process technology, and power source, while technology viability is also a factor in the march toward low-carbon fuels commercialization.
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“Energy companies with diversified energy portfolios are well-positioned to take advantage of this paradigm change, shifting towards renewable sources to reduce carbon intensity values,” said Yuan-Sheng Yu, Lux Research analyst and lead author of the report titled, “Identifying Winners in Low-Carbon Fuels.”
“With electricity a near-term winner, pioneers for the ‘utility of the future’ hold a strong position moving forward,” he added.
Lux Research analysts used data from the CARB LCFS to evaluate fuels’ commercial, technological and economical attractiveness, based on criteria such as addressable market size, carbon intensity, and pathway maturity. Among their findings:
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-California is a model. Currently, California uses seven different low-carbon fuels derived from 26 different feedstocks, making up 11.3 percent of its fuel consumption. Under the state’s new regulations, growth of petroleum consumption has slowed to a mere 0.5 percent quarterly, while low-carbon fuels grew at 1.6 percent quarterly.
-Waste oil halves biodiesel’s carbon intensity. In ideal conditions, biodiesel derived from fats, oil and grease (FOG), has the potential to cut carbon intensity by half. Plenty of FOG-derived biodiesel is projected to be available—up to 2.5 billion gallons per year—and even though processing poor quality waste adds to cost, FOG-based diesel remains a significant opportunity.
-Carbon-negative fuels, today. CARB LCFS’s well-to-wheel analysis of biogas shows that the long-sought carbon-negative fuel is commercially viable today. With California’s large transportation fuel market as a draw, improved biogas technologies as well as similar carbon-negative fuel pathways will emerge to expedite carbon emissions reduction.
The report, titled “Identifying Winners in Low-Carbon Fuels,” is part of the Lux Research Alternative Fuels Intelligence service.
HutanBio on May 8 announced that the production process for its proprietary HBx microalgal biofuel achieves net-negative carbon emissions, based on an independent cradle-to-gate life cycle assessment (LCA) conducted by EcoAct.
Reps. Zach Nunn, R-Iowa, and Nikki Budzinski, D-Ill., on May 7 introduced a bill that aims to update USDA’s Section 9003 program to expand access to grants, streamline loan guarantees and provide $100 million in mandatory funding over five years.
The Canadian International Trade Tribunal on May 5 announced that a preliminary investigation launched earlier this year did not find evidence that imports of U.S. renewable diesel are causing harm to Canada’s domestic renewable diesel industry.
According to a new economic contribution study released by the Iowa Renewable Fuels Association on May 6, Iowa biofuels production has begun to reflect stagnant corn demand throughout the agriculture economy.
Reps. Mike Carey, R-Ohio, and Mariannette Miller-Meeks, R-Iowa, on May 1 introduced legislation that aims to retroactively extend the biodiesel blenders tax credit (BTC) and the second-generation biofuel producer tax credit.