Starting in 2010, the California Low Carbon Fuel Standard (LCFS) requires that all suppliers of transportation fuels to the State of California track and report the full life-cycle GHG emissions (CO2, CH4 & N2O) of such fuels to the California Air Resources Board (ARB).

Putting this in context: A supplier of California Reformulated Gasoline (CARFG), which contains 90% gasoline and 10% ethanol by volume, is required to report emissions from:

• The extraction, transportation and refining of the gasoline blendstock
• Corn production, including the emissions associated with the production and deployment of agrochemical inputs, and;
• The ethanol refining and production process.
• The transportation and distribution of the CARFG containing ethanol and gasoline.

Reporting emissions in this form is commonly referred to as “well-to-wheel”. Figure 1 provides the six phases of “well-to-wheel” reporting for corn ethanol, in particular Midwestern corn ethanol produced from dry milling.

Figure 1

Measuring the direct full life-cycle GHG emissions of transportation fuels is not technologically feasible. Therefore, the ARB cooperated with the Argonne National Laboratory to modify the existing Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation model (GREET) to meet California specific requirements. According to the ARB, the California GREET model “incorporates many specific numeric values that allow for the calculation of the lifecycle GHG emissions associated with producing, transporting, and using various fuels” (California ARB, 2009).

For each specific transportation fuel pathway (i.e. CARFG) the GREET model was used to develop “well-to-wheel” emission estimates. The metrics used to express emission estimates are in grams of CO2 equivalent per Mega Joule (g CO2e/MJ) basis and are referred to as “Carbon Intensity” (CI) measurements. The ARB has published the results of the GREET model in a Lookup Table, and for reporting purposes transportation fuel providers are required to:

1. Identify the applicable fuel pathway, and
2. Report the volume supplied to California market.

Table 1 provides the CI values for selected fuels.

Table 1

Starting in 2011 and continuing until 2020 the average CI of the total fuel supplied by transportation fuel suppliers must be reduced by 10% to meet the reduction requirements. Compliance with he 10% reduction requirement occurs on an annual basis, with a lower rate of reduction required in the first phase (2011-2015) followed by accelerated reductions in the second phase (2015-2020). From the 2010 to 2015 period the CI must be reduced 2.5% and from the 2015 to 2020 period CI must be reduced the remaining 7.5%.

The ARB conducted a detailed analysis of compliance options and scenarios for the LCFS and anticipates the reduction in the CI of fuels will occur through three primary forms:
• For the early compliance phase (phase 1), the ARB anticipates the majority of reductions to be the result of increased blending of traditional ethanol fuel pathways of Brazilian sugarcane and CA dry mill.
• The emergence of second generation biofuels such as cellulosic ethanol in Phase 2 of the compliance period will provide the majority of overall reductions in CI.
• Market penetration of hybrid electric, electric and hydrogen fuel vehicles will be sufficient to produce between 9 and 35 percent of credits through 2020.

Noticeably absent from the primary form of compliance is increasing the blending of corn ethanol produced from the Midwestern States in CARFG, from the current 10% by volume to 15% (E85 level). The reason for this is due to a penalty of 30 gCO2e/MJ assigned to these fuel sources from indirect land use change (LUC) resulting from the increased demand in biofuels, and the subsequent clearing of forest and grassland to grow food crops displaced by biofuels production. This provision is applicable to all fuels, including Brazilian sugarcane and CA ethanol, but the effects of the provision do not render these fuels uncompetitive in the LCFS market, as is the case for Midwestern corn ethanol. For example, the GREET model estimates direct emissions on a well-to-wheel basis for the Midwestern corn ethanol fuel pathway as 69.4 gCO2e/MJ. Inclusion of the 30 gCO2e/MJ raises the value to 99.4 gCO2e/MJ, which is higher than the baseline CARFG value of 96.09 gCO2e/MJ. Therefore, as previously noted, increased blending of Midwestern corn ethanol in CARFG results in a higher CI value than the LCFS permits.

The LUC penalty assigned to ethanol fuel pathways is controversial for a number of reasons most importantly of these, as previously noted is the shutting out of Midwestern corn ethanol from the California fuel market in 2011. Although this is widely accepted, a reporting provision in the LCFS could open the door for Midwestern and other ethanol producers to institute improved production practices that could reduce life-cycle GHG emissions to a sufficient level to compete in the CA LCFS market. Furthermore, these same practices could reduce energy costs, increase profitability and position firms to compete in the market created by the Federal RFS2 as well.