Proponents of California’s low-carbon fuel standard (LCFS) hope problems with the federal Renewable Fuel Standard (RFS) could spell an opportunity to promote the state’s groundbreaking alternative approach at the national level.

UC Davis

Dan Sperling is leading California's LCFS research group.

Scientists from six research institutions—including UC Davis—are attending a bipartisan briefing on Capitol Hill this week to present the results of a new study touting the potential benefits of a national low-carbon standard.

LCFS — part of California’s AB 32 climate change legislation — calls for a 10% reduction in the “carbon intensity” (CI) of transportation fuels in California by 2020. The federal Renewable Fuels Standard (RFS), by contrast, calls for a gradual increase of 35 billion gallons of biofuel by 2022. It also establishes threshold production levels for various biofuel feedstocks, which is where it has run into trouble.

Corn-based ethanol, conceived as a temporary solution, continues to exceed the maximum production level set by the mandate. Meanwhile, production of cellulosic biofuels, derived from non-food and potentially more environmentally sustainable feedstocks such as grasses and wood chips, has fallen short each of the last five years. The EPA reduced the 2011 cellulosic biofuels mandate by a staggering 97%, from 250 million gallons to just 6.6 million.

Daniel Sperling, director of the Institute for Transportation Studies at UC Davis and lead author of the study, sees an opportunity here. In the last six months, “the circumstances have changed a lot,” says Sperling. “People are curious whether [the California low-carbon fuel standard] could solve the RFS problem,” he says.

California’s LCFS includes all transportation fuels — electricity, natural gas, and hydrogen — as well as biofuels. It also gives fuel providers many more options to reduce carbon intensity, including:

• Reducing the CI of fuels they provide by selling more low-carbon fuels;
• Improving refinery and oil-field efficiencies;
• Capturing and sequestering carbon;
• Purchasing credits from other producers and fuel suppliers who are able to supply low-carbon fuels at lower prices.

Sperling says that the LCFS is intentionally designed to spur innovation by establishing regulatory targets that companies can bank on. But taking it national would require buy-in from corn farmers, advanced biofuels producers, electric utilities plus the automobile and oil industries, he adds. No easy task.

UC Davis Institute for Transportation Studies

Daniel Sperling, director of UC Davis' Institute for Transportation Studies, speaking at the Asilomar Conference in 2011.

Do environmental regulations boost innovation and job creation, or do they just make the state a more expensive place in which to live and do business?

The Low Carbon Fuel Standard (LCFS), the section of California’s landmark 2006 global warming act that deals with the decarbonization of transport fuels, has become the latest focus of that debate.

The enforcement element of LCFS begins January 1, 2013. But the standard—complex and 5 years in the making—remains largely unknown to the public.

In Sacramento Tuesday, stakeholders and transportation experts sought to bring more attention to the LCFS at symposium sponsored by Fueling California, an industry trade group whose board members include United Airlines, Walmart, Chevron and the Automobile Club of Southern California.

The standard calls for a 10% reduction in the “carbon intensity” of gasoline and diesel by 2020. It’s the first in the United States to use a “life cycle” evaluation for counting carbon, meaning that every stage of production from drilling (or cultivation in the case of biofuel) to combustion is tallied—an approach called “seeds to wheels.”

The oil industry is opposed to the standard in its current form, arguing there simply won’t be enough biofuels on the market to achieve compliance (many biofuels have a lower carbon intensity than conventional fuels and blending is a favored solution). Cathy Reheis-Boyd, president of the Western States Petroleum Association, says the supply of Midwestern corn ethanol has already been tapped out. And the next go-to source—sugarcane ethanol from Brazil—won’t be available in sufficient quantities to meet increasingly stringent requirements, she says.

The trucking industry is also balking, complaining that California’s diesel prices are already high, and will only go higher.  But environmental groups and the California Air Resources Board, counter that the standard will drive innovation in the state’s biofuels sector. They add that LCFS does not mandate how oil companies should reduce carbon intensity, leaving them myriad options of how to do so.

Despite industry top-heaviness in Fueling California, Simon Mui of the National Resources Defense Council had a place at the table, as did Timothy O’Connor of the Environmental Defense Fund and Daniel Sperling, director of the Institute for Transportation Studies at UC Davis.

Sperling pointed out that the oil industry is lagging far behind the automobile industry on greenhouse gas reductions, proof that it needs a nudge.

Cellulosic ethanol, a blend-in biofuel made from wood chips and other plant matter, is considered the holy grail of ethanols because it doesn’t compete with the food supply. But development of low-cost cellulosic ethanol has eluded researchers to date. Reheis-Boyd says without cellulosic ethanol, compliance with LCFS becomes impossible around 2015.

The proposed low carbon fuel standard is part of a broad effort by the California regulators to roll greenhouse gas emissions back to 1990 levels by 2020.

Slashing carbon emissions from cars and trucks is a big part of the state’s game plan. That’s because transportation accounts for 40 percent of the state’s greenhouse gas emissions. A whopping 96 percent of the fuel sources that power our cars and trucks is petroleum-based. Right now, the bulk of ethanol sold in California–and the rest of the United States for that matter—is corn-based. (Brazil makes its ethanol fuel from sugar cane, which has a smaller carbon footprint.) U.S. producers argue that the proposed Low-Carbon Fuel Standard (LCFS) would make corn-based ethanol less competitive in the marketplace because of the way it calculates emissions. Pacific Ethanol was the biggest ethanol producer and marketer in California– until recently. With the drop in gasoline prices over the past year, demand for ethanol has plummeted. Over the past several months the company suspended operations at its two production plants in California and stopped construction of a third facility. In March, it filed for loan extensions with its creditors. So the new fuel standard could deliver yet another blow to the company. Hence, ethanol interests have been putting up a fight. But the Air Resources Board is counting on the proposed standard to spur innovation in the alternative fuels market, to reduce carbon emissions. The state says it’s hoping to “expand the size of the current renewable fuels market in California (already the largest in the nation) by three-to-five times. Instead of today’s corn, over half of the ethanol is likely to be made from extremely low-carbon, cellulosic feedstocks such as agricultural waste and switchgrass. There are numerous startups in California working on cellulosic ethanol. They’re experimenting with a wide range of plants, from switchgrass to algae, as potential sources of ethanol. Getting a new fuel to market, however, requires enormous capital costs. The state is projecting that by 2020, Californians will have bought more than 7 million alternative-fuel and hybrid vehicles. That’s about 20 times greater than today. But in these tight economic times, folks are hanging onto their old cars. So it’s not clear how fast Priuses and plug-ins will replace the carbon-spewing cars on the road today.

Sun’s radio story aired Wednesday on The California Report.