Advanced BioFuels USA

by Melissa Anderson (Ethanol Producer Magazine) Eleven years ago, California led the way with the implementation of its Low Carbon Fuel Standard, which continues to be a guiding force for clean fuel policy on the West Coast and beyond. Since it took effect, the structure and scale of the Golden State’s LCFS has shown that state-level market mechanisms for low-carbon transportation fuel are not only feasible, but powerfully effective. Oregon created its own clean fuel standard in 2016 and, according to Graham Noyes, founder and executive director of the Low Carbon Fuels Coalition, is competitive with California’s LCFS credit value. And starting next year, Washington state’s own low carbon fuel standard will kick in—bordering up to both Oregon and British Columbia’s existing low carbon fuels program, creating a contiguous 3,000-mile LCFS zone along the coast. 

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Currently, the most efficient grain ethanol receives a modest LCFS bump in California. Carbon capture and sequestration (CCS)—which 50-plus Midwest ethanol plants are currently planning to do—could cut LCFS carbon intensity (CI) scores in half. Beyond that, more double-digit reductions will be tough to find without credit for low-carbon farming practices. California’s LCFS currently gauges each biofuel pathway on the merits of its process technology, energy inputs and generalized feedstock category. Corn is corn, regardless of how it is cultivated.
 
But even without credit for low-carbon farming practices, California is a favorable market for corn ethanol sales from plants qualified to do it. Ethanol sold into the state has an average CI rating of just over 58, compared to gasoline’s 90-100 CI rating and average corn ethanol hovering around 70.

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In fact, sales of E85 are booming in California, even while the number of flex-fuel vehicles (FFVs) on the road are diminishing due to phased-out manufacturing. Noyes says E85 use in California grew in volume by 50 percent between 2020 to 2021. This increase in demand is due, in part, to greater availability of E85 at the pump, but also the significant difference in price per gallon between E85 and traditional gasoline, sometimes reaching a spread of $2 or more.

“We will continue to see growth there and we’re looking for opportunities to get more FFVs into California, and more FFV retrofits done,” Noyes says.

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One policy mechanism expected to have a real impact on the market is the Q45 tax credit, which provides a federal tax credit to power plants and industrial facilities (like biorefineries) that capture and store CO2 that would otherwise be emitted into the atmosphere.

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 Clean fuel legislation has been attempted in other states like Minnesota (see “Moving Stepwise Toward State Clean Fuel Standards” on page 32) and New Mexico, which have both attempted to take up low-carbon fuel standards.

“We have been working with stakeholders on active bills in three states—Minnesota, New York and New Mexico. None of them passed,” Noyes says. “In New York and Minnesota, the bills didn’t get past their initial introduction. In New Mexico, however, the bill went to a tie on the House floor, falling one vote short.”

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At the federal level, the idea of a national LCFS has been floated numerous times, sometimes as policy bolstering the nation’s existing Renewable Fuel Standard, and sometimes as a replacement of the RFS. Industry observers believe these national LCFS efforts are an indication of how much state low-carbon policy structures have gained attention and credibility over time. A national LCFS, however, is considered by some to be a potential quagmire for corn ethanol, and the U.S. biofuel industry more broadly supports the development of state and regional clean fuel standards that complement the current RFS.

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Grower practices appear to hold the answer to future CI reductions beyond CCS and increased plant efficiency, but Noyes says many looming questions remain. “To what degree are we going to get these programs into Midwestern states,” he asks. “Can we build these programs to benefit precision ag and regenerative ag, both of which keep more carbon in the soil? And, overall, what will benefit farmers the most?”  READ MORE