Lo-Carb at any speed: The Digest’s 2017 Multi-Slide Guide to California’s Low Carbon Fuel Standard

There are two approaches to encouraging low-carbon fuels  — volumetric mandates and carbon reduction incentives. What is different about a Low Carbon Fuel Standard — as compared to a Renewable Fuel Standard?

There are 4 primary differences.

1. An RFS creates a standard, and any fuel that meets that standard can compete in that market. Once a fuel has met the low-carbon standard, it becomes entirely about fuel price — a $3.00 cellulosic fuel that reduces carbon by 60% will get market share over a $3.10 cellulosic fuel that reduces carbon by 100%, because both fuels meet the cellulosic standard. In an LCFS, all fuels get credited according to the carbon reductions of their pathway. So, there are no “motivational dead zones” when it comes to pushing harder on reducing carbon.

2. An LCFS sets carbon volumes, not fuel volumes. Under an LCFS, it entirely fine if a target of reducing carbon by 5% is achieved by having 10 percent of the fuels have a 50% lower carbon intensity, OR 50 percent of the fuels having a 10% lower carbon intensity.

3. All fuels and energy systems compete against each other. Nat Gas? Electrics? Biofuels? Just register a pathway, prove the carbon intensity, and you can compete as a carbon-lowering fuel. under an LCFS, it doesn’t matter if carbon is reduced via electrics, or biodiesel.

4. So far, the California LCFS only covers road transportation. So, jet fuel qualifies under the US RFS, but not under the California LCFS. This creates problems for airlines, because jet producers can generally also produce diesel fuel, and diesel qualifies under both the RFS and the LCFS  — so, there’s far less value in jet fuel and, consequently, no one wants to make it despite airlines clamoring for a low—carbon solution and everyone agreeing that there’s no low-carbon solution on the horizon for aviation except low carbon liquid fuels.

Graham Noyes gave this illuminating update on the promise and progress of the LCFS at ABLC Next 2017 in San Francisco.