What is an LCFS?
A Low Carbon Fuel Standard (LCFS) is a policy tool aimed at reducing the carbon intensity and associated greenhouse gas (GHG) emissions of transportation fuels. By measuring the “life-cycle carbon intensity” of fuels, LCFS regulates the use and distribution of fuels and is designed to spur innovation in the transportation industry. Under a well-designed LCFS, fuel suppliers must reduce the life cycle emissions of the fuels they sell on an average per-gallon basis. Rather than promoting particular technologies or specific fuels, fuel suppliers are free to choose how they meet the emissions targets.
What is a low-carbon fuel?
Low-carbon fuels are fuels that have a light carbon footprint measured from “well-to-wheel,” or across their development life-cycle. The most common low-carbon fuels are alternative fuels (e.g. advanced biofuels) and cleaner fossil fuels, such as natural gas (e.g. CNG and LPG).
Why enact an LCFS?
LCFS policies provide multiple benefits, including: reducing carbon emissions and pollution, minimizing dependence on hydrocarbon-based fuels, spurring innovation and the growth of new industries, and according to some experts, mitigating the impact of food vs. fuel by moving away from corn- and soy-based biofuels.
Where have LCFS rules been enacted?
Currently, California is the only U.S. state with an LCFS enacted, which in 2007, was the first jurisdiction in the world to pass a law regulating the carbon intensity of transportation fuels. California’s LCFS was enacted to help the state meet ambitious AB 32 GHG emissions targets. Eleven Northeastern and Mid-Atlantic states as well as Oregon and Washington are also considering LCFS mandates modeled after the California rule (see California’s LCFS Works its Way East).
Just three weeks after the California LCFS Directive was announced, the EU proposed new standards for transport fuels to reduce full life cycle emissions by up to 10% between 2011 and 2020. Much like California’s LCFS, the proposal aims to encourage the development of low-carbon fuels and biofuels, considering reductions in greenhouse gas emissions caused by the production, transport and use of the suppliers fuels.
The UK’s Renewable Transport Fuel Obligation is similar to California’s LCFS in some aspects and incorporates indirect land-use change (ILUC) provisions. Specifically, biofuel suppliers are required to report on the level of carbon savings and sustainability of the biofuels they supplied in order to receive Renewable Transport Fuel Certificates (RTFCs).
How do LCFS rules work?
Although the mechanics of LCFS standards will vary based on locally-negotiated provisions, the California rule aims to reduce the “life-cycle carbon intensity” of fuels by 10 percent over the next decade. It works by setting progressively lower carbon intensity baselines for gasoline and diesel sold in California. The rule is far more comprehensive and ambitious than the EPA’s renewable portfolio standard (RPS2), which takes a more conservative approach to quantifying the pollution created by extracting, growing, or refining fuels. Although the U.S. EPA’s RFS2 represents the first time a U.S. industry has been evaluated, monitored, and regulated based on GHG performance, California’s LCFS goes much further by imposing significant indirect land use change penalties for Midwest corn.
What are the anticipated impacts of California’s LCFS?
California’s LCFS will likely increase the uptake of cellulosic and other advanced biofuels while penalizing Midwest corn ethanol and hydrocarbon-based fuels refined from Alberta’s tar sands.
California’s LCFS ruling has proven to be enormously controversial. Representatives of the U.S. ethanol industry complained that this rule overstates the environmental effects of corn ethanol, and also criticized the inclusion of indirect land use changes (ILUC) as an unfair penalty to home-made corn ethanol because deforestation in the developing world is being tied to U.S. ethanol production. Numerous other stakeholders have filed similar complaints, charging that ILUC is not a proven assumption and lacks empirical data for validation. Midwest ethanol trade groups, big oil, and truckers have all filed suits challenging California’s LCFS rule (see Is California’s Low Carbon Fuel Standard Compatible With RFS2?). Critics also argue that LCFS standards could lead to increased gas prices and undermine efforts to improve energy security.
What is the current status of California’s LCFS?
2010 was a reporting year for California’s LCFS. The state’s Air Resources Board (CARB), the agency responsible for developing the LCFS, has indicated that it is on pace to implement the standard sometime in 2011. CARB released a guidance document in June 2011 (see CARB LCFS).