Meeting the California Low Carbon Challenge

by Susanna Retka Schill (Ethanol Producer Magazine) Eighty-nine ethanol producers west of the Mississippi River prepare for the revised LCFS. ... After a couple of years in limbo due to challenges to the Low Carbon Fuel Standard, the California carbon credit market is heating up again. In mid-January, LCFS credits were worth $115 per ton, rising from the mid-$20 range a year earlier. A revised LCFS was readopted by the California Air Resources Board, putting the state’s goal of reducing the carbon intensity (CI) of its fuels by 10 percent by 2020 back on track. In 2016, the required reduction is 2 percent from the 2010 baseline, double from the 2015 requirement and increasing steadily until 2020.

Ethanol has contributed a big part of the CI reductions realized so far from the LCFS. A December 2014 CARB staff report laying out the upcoming changes to the LCFS said that cumulatively through mid-2014, 60 percent of the credits were generated from ethanol, followed by renewable diesel at 15 percent, biodiesel at 13 percent and natural gas at 10 percent.

Unlike RINs values (the renewable identification numbers used to demonstrate compliance with the renewable fuel standards to the U.S. EPA), which are given away free by the ethanol producer, the LCFS credit values are getting back to the plants.

Cellulosic ethanol, with an assumed 2020 CI of 20, would earn credits worth 56 cents per gallon.

Converting waste streams to ethanol results in big CI reductions. Parallel Products in California uses waste beverages to produce ethanol, earning a CI of 71.4. White Energy’s Russell, Kansas, plant is colocated with a wheat gluten facility, with the wheat slurry being turned into ethanol. The Russell plant has multiple CI ratings for varying amounts of wheat slurry combined with sorghum and corn as feedstock, with CI scores ranging from 56.65 up to 77.66.

The value of achieving lower CI ratings is clear. Sens and his colleagues at EcoEngineers have developed a spreadsheet that can be used to calculate the return to a plant at varying monetary values for the California LCFS credits and different CI ratings. READ MORE / MORE