CA Low-Carbon Fuel Standard Questioned: Study Raises Doubts About Long-Term Viability of Rule

by Todd Neeley (DTN/The Progressive Farmer) California's controversial low-carbon fuel standard may not be able to survive long term unless more biodiesel and corn-based ethanol are allowed into the state's market quickly, according to a new study.

The analysis, conducted by scientists at Johns Hopkins University and published in "Applied Energy," finds the blending of low-carbon fuels would have to dramatically increase in a short time to meet the law's requirements.

Geoff Cooper, senior vice president of the Renewable Fuels Association, said California likely will need to reduce its carbon intensity values for corn ethanol by another 20% to 25% in order to meet the law's demands. It is something that biofuels groups have been trying to encourage the state to do for years, and it ultimately would allow Midwest corn ethanol producers greater access to the California market.

"The fear is of a large spike in the LCFS credit price, something that could dramatically increase the burden of compliance for obligated parties (i.e., oil refiners in California). Regulatory actions are currently being designed around the idea of a price cap on the price of an LCFS credit."

"That is, the study underscores our belief that compliance with the LCFS in the 2016-2020 timeframe will be extremely difficult and costly, or simply unachievable, unless meaningful changes are made to the program." (Cooper)

Johns Hopkins finds obligated parties such as gasoline blenders should have banked nine times more credits in the beginning years of the program than "they did in reality."

In addition, biodiesel blending will need to increase "dramatically within a short period of time," the study said. For instance, by 2016 all diesel fuel would need to be increased from B5 to B20.

"This rate of change casts doubt on whether these targets are achievable," the study said.

What's more, the carbon intensity of biofuels entering California will need to decrease by in some cases 25% or more, the study said.

"This may be possible, but CARB would need to hasten the biofuel pathway approval process so that more low-carbon-intensity fuels can participate in the LCFS," according to the study. READ MORE Abstract (Applied Energy)