California’s Low Carbon Fuel Standard “driving innovation,” big increase in advanced biofuels seen: report

In California, a new landmark report just issued this morning on California’s Low Carbon Fuel Standard found that “The alternative fuels market is evolving rapidly and in unforeseen ways, and the LCFS is driving investment in low carbon ethanol, biodiesel, renewable diesel, and biogas.”

This report represents the first phase of a two-phase, year-long project assessing the economic and environmental impacts of compliance with California’s LCFS out to 2020.

Broadly speaking, the report’s authors found that compliance is achieved through biofuel blending (with both gasoline and diesel) and through the deployment of advanced vehicle technologies that use natural gas, electricity, and hydrogen – with the majority achieved by blending biofuels.

The report found that that “although cellulosic biofuels have been produced at a slower-than-expected rate, these lower carbon biofuels are available to California in significant quantities today and supply is forecasted to increase dramatically over the next several years. Each of these fuels has a carbon intensity less than 35 gCO2e/MJ, representing a more than 60 percent reduction in carbon intensity compared to the LCFS compliance schedule.

The report found 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 40-55 percent of LCFS credits.” The authors note that “there is significant potential to blend biodiesel at lower levels (e.g., 5 percent to 20 percent by volume) with conventional diesel and generate a substantial number of LCFS credits.”

Further, “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 also forecasts a big role for natural gas, as the “increase in domestic natural gas supply has helped maintain a persistent price differential between natural gas and diesel. Combined with increased engine offerings in medium- and heavy-duty applications, particularly in the goods movement sector, natural gas consumption in the transportation sector is poised to increase significantly and rapidly.”

More on the story.

A copy of the report is available for download here — and the report has been added to the Biofuels Digest SuperData collection of key industry benchmarks and reports.