California Leads the Way in Reducing Carbon Emissions

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With the recent signing of its Climate Change Legislation and its Low Carbon Fuel Standard (LCFS), California has embarked on historic steps to reduce Greenhouse Gas Emissions. On September 8, 2016, Governor Edmund G. Brown Jr. signed Senate Bill 32 and Assembly Bill 197 which, together, requires California to reduce GHG emissions at least 40% below 1990 levels by 2030. These bills expanded previous legislation that set targets of reducing GHG emissions to 1990 levels by 2020 and to 80% of 1990 levels by 2050. According to latest estimates, California is on track to meet its 2020 goals so the legislature and Gov. Brown took the additional step to add a 2030 goal to ensure that California will continue its efforts to curb carbon emissions and help to stabilize global temperatures.

Part of this plan under Assembly Bill 32 includes California’s Low Carbon Fuel Standard (LCFS), which was established in 2007 through an Executive Order by the Governor. It requires petroleum refiners and producers by 2020 to reduce the carbon intensity of their products by 10% from a 2010 baseline. The program is administered by California’s Air Resources Board which approved it in 2009. It was amended in 2011 to clarify, streamline, and enhance certain provisions. Implementation began on January 1, 2016.

California is the US’s largest transportation fuels market and according to its Air Resources Board its transportation sector is responsible for:

  • 40% of its Greenhouse Gas (GHG) emissions
  • 80% of its Nitrous Oxide (NOx) emissions, and
  • 95% of its Particulate Matter (PM) emissions.

The following information comes from a pamphlet prepared by the Air Resources Board entitled Low Carbon Fuel Standard.

Carbon Intensity (CI) is defined as the amount of GHG emissions associated in producing and consuming a fuel. A life cycle analysis for each particular fuel is performed to estimate for each individual step in its life cycle the amount of GHG emissions. These emissions are calculated in grams of carbon dioxide equivalents per megajoule of energy (gCO2e/MJ). (For a definition of carbon dioxide equivalents see my Feb. 24, 2016 blog posting)

As shown in the following figures, the CI for California’s reformulated gasoline blendstock is 100 gCO2e/MJ and the CI for ethanol produced from corn is 79 gCO2e/MJ.

With California gasoline containing 10% ethanol, its average CI is calculated at 97.9 gCO2e/MJ. According to the Compliance Schedule contained in the LCFS Program, illustrated in the figure below, the 2016 requirement for average gasoline is a CI of 96.5 a reduction of 1.5 % from the estimated baseline.

Further reductions are required each year through 2020 to reach the reduction goal of 10% from a 2010 baseline, after which the LCFS Program mandates both gasoline and diesel fuels to continue at the 2020 average CI levels.

According to the LCFS, low carbon generating fuels and blendstocks include the following:

  • Bio-based natural gas
  • Fossil natural gas
  • Electricity
  • Hydrogen
  • Ethanol
  • Biomass-based diesel
  • Renewable diesel

Companies that develop and sell any of the above low carbon generating fuels can generate LCFS credits under the program and then sell these in a Credit Clearance Market to any petroleum marketers whose products exceed the CI target.

Other states are following California’s initiatives through the Pacific Coast Collaborative, a regional agreement among California, Oregon, Washington, and the Canadian province of British Columbia. One of the aims of this collaboration is to align policies to reduce greenhouse gasses and promote clean energy. In addition to California, Oregon and British Columbia both have LCFS programs in place.

It will be interesting to see how California’s bold initiatives play out over the coming years and whether other states in the country follow suit.

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Marshall Frank

Marshall E. Frank retired from Chem Systems, where he was President and Managing Director, responsible for international consulting activities in North and South America and Asia Pacific. During his more than thirty years with the company, he had technical and administrative responsibility for a large number of multidisciplinary projects, both single-client and multi-client sponsored. Mr. Frank’s areas of expertise include natural gas utilization and conversion, the petrochemical industry, the refining and petrochemical interface, and alternative fuels. He also directed Chem Systems’ Financial Practice, which provided assistance to lenders in assessing the various risks associated with the financing of major international energy, petrochemical, and polymer projects. Prior to joining Chem Systems, Mr. Frank was involved in process evaluation, process engineering, and the startup of many of Halcon/SD’s proprietary processes at Scientific Design Company. Mr. Frank received a B.S. in Chemical Engineering from Cornell University.

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