Washington’s Clean Fuel Future

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With Clean Fuel Programs (CFPs, also referred to as Low Carbon Fuel Standards) active in California, Oregon and British Columbia, and set to be introduced at the federal level in Canada, it is unsurprising that a Clean Fuel Program for Washington State is back on the political agenda. In a new report prepared for the Union of Concerned Scientists (UCS), we assess the potential supply of low carbon fuels under a Washington CFP, and the carbon savings that could be delivered. The analysis shows that a proposed 10% carbon intensity reduction target for 2028 should be readily achievable. Read more on the UCS website or download the report below:

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Front cover from Washington's Clean Fuel Future

What role for electromethane and electroammonia?

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Following on our 2017 report on the potential for liquid electrofuels in the European fuel mix, Transport and Environment asked Cerulogy to look at the opportunity for electromethane as a heavy duty fuel and electroammonia as a marine fuel. The report is available below, and related work by Transport and Environment is available on their website.

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Cover image from Cerulogy's report on electromethane and electroammonia

 

Building the Perfect Beast: Designing Advanced Alternative Fuel Policy to Work

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Cerulogy attended Biomass Conference and Exhibition in Copenhagen this year (2018) to present a paper on building more effective policy for advanced alternative fuel commercialisation. The paper is now available in the conference proceedings, or you can download it below.

Abstract

Since the year 2000, grand aspirations have been set for the development of a new advanced alternative fuel industry, but targets have repeatedly been missed and deployment of new facilities has delivered only a tiny fraction of the fuel production forecast by the most ambitious policies. This paper argues that one of the main reasons for this shortfall between goals and achievement is the use of policy frameworks that have not been designed to provide long-term value certainty. The setting of energetic targets for the supply of advanced alternative fuels was intended to give the market the flexibility to choose the lowest cost solutions. Instead, the value-uncertainty built into such policies as a feature has contributed to an investment environment in which high capital expenditure projects using new technologies are profoundly disadvantaged compared to high operational expenditure fuel production at first generation plants. The market has thus failed to deliver the best value long-term solutions. An alternative policy framework is proposed in which credits would be awarded for advanced alternative fuel production, and fuel suppliers would be required to support that production by buying all available credits at the end of the year at a prescribed price. That price would be fixed up to an annual supply target; beyond that annual supply target, the per-credit price would be scaled down in proportion to the degree of over-achievement in supply, allowing a firm cap to be set on the cost of support to fuel consumers. While the market would be able to expand supply until the adjusted credit price reflected marginal production costs, the high levels of price variability in existing biofuel credit markets would be avoided. It is argued that such a framework could be much more effective at driving investment than a simple mandate, while avoiding excessive costs for fuel suppliers or consumers.

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California’s Clean Fuel Future

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The California Air Resources Board is in the process of stakeholder engagement before setting compliance targets to 2030 for the Low Carbon Fuel Standard, and Cerulogy was asked by the NextGen Foundation, Ceres and the Union of Concerned Scientists to provide fuel supply modelling to inform the decision. The study shows that with moderate assumptions on availability of LCFS credits from various compliance pathways, carbon savings above the currently proposed 20% level could be achieved by 2030. The study was updated in April following comments received on the original version. 

March release:

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April update:

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Driving deforestation

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As we highlighted in our report ‘For peat’s sake’, there is a well documented link between increasing palm oil demand, expansion of the cultivated area of palm oil plantations and destruction of forest and peatland ecosystems in Southeast Asia. Despite this link, and several studies suggesting that the use of biofuels produced from palm oil may cause more greenhouse gas emissions than consumption of the fossil fuels they replace, many countries still have biofuel support policies under which palm oil based biofuels are eligible to receive support. In our new report, ‘Driving Deforestation’ we review the status of biofuel policy driven demand for palm oil, and consider three scenarios for potential biofuel-driven palm oil demand between now and 2030. While some regions, notably the European Union, are considering measures that could reduce biofuel-driven palm oil demand in the coming decade, several other policies are currently set to drive dramatic increases in palm oil consumption. The largest sources of potential demand growth are the Indonesian domestic market, where a 30% target for blending biodiesel could generate 19 million tonnes of palm oil demand by 2030 (a 16 million tonne increase), and the aviation industry commitment to switch to alternative aviation fuel, which could generate 19 million tonnes of additional palm oil demand by 2030 if no controls are placed on the feedstocks eligible for support. If current land use trends continue, following the high scenario globally could cause cumulatively result in 7 billion tonnes of additional carbon dioxide emissions from land use change over the two decades from 2018 to 2038, as compared to a case in which biofuel-driven palm oil demand was eliminated. In a more likely ‘medium’ scenario, there could still be 3 billion tonnes of additional carbon dioxide emissions from land use change compared to a phase out of demand. The full report is available at the link below.

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Front cover image from the Driving Deforestation report

Power to the people?

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What role is there for electrofuel technologies in European transport’s low carbon future?

Liquid fuels are set to be part of the European and global transport energy supply for some time to come – and given limitations on sustainable biofuel production, the option of converting renewable electricity into petrol, diesel and jet fuel is a subject of renewed interest. This review, commissioned by the Brussels NGO Transport and Environment, considers the status and economics of electrofuel production, and the implications of a growth in electrofuel supply in the EU for electricity demand. It finds that the cost of electrofuel production, and in the particular the cost of input electricity, is a major barrier to competitiveness that looks likely to be difficult to overcome in the near future. Given the relative inefficiency of use of electricity for liquid fuel production as compared to direct supply of electricity to electric vehicles, electrofuel production should be considered as a niche solution primarily relevant in parts of transport where electrification and efficiency improvements cannot on their own deliver outcomes consistent with 2050 decarbonisation targets, notably aviation. The report also highlights the regulatory challenges of counting electricity as ‘renewable’ when used for electrofuel production, and highlights that the proposed regulatory framework under RED II could unintentionally undermine European environmental goals by double counting renewability.

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Cover image from the report "What role is there for electrofuel technologies in European transport’s low carbon future?"

Devilish details…

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…you’ll never believe the regulatory mistakes the EU is at risk of making in the RED II*

In a blog post just under a year ago I heralded the generally positive qualities of the European Commission’s proposal for a revised Renewable Energy Directive for the period 2021-2030 (RED II). Since then, both the European Parliament and the European Council have started to develop their positions on the legislation. Plenty of organisations have proffered opinions on some of the big picture questions posed by the Directive (what should be the level of ambition for advanced biofuels, what cap would be appropriate for food-based fuels and such), and I don’t intend to revisit any of those questions today. Instead, I’d like to talk about a few details in the draft regulatory language that might represent a real problem down the line if the Directive is implemented. Without further ado therefore, and embracing the clickbait conventions of the zeitgeist, here’s a Cerulogy listicle:

Three crazy details in the 13th November European Council draft of RED II that could have regulators (and environmentalists and investors) tearing their hair out in the years to come

1.    An inadequate definition of ‘low iLUC risk’ biofuels

The proposed RED II caps the extent to which food-based biofuels can be used to meet renewable energy targets at 7%, but it creates a get-out for food-based fuels that meet the definition of being, ‘low indirect land-use change-risk biofuels and bioliquids’. The idea of low ILUC-risk biofuels has been around for years, and it’s fundamentally a sensible idea. If displacing existing uses of food-commodities causes ILUC, why don’t we just avoid displacing existing uses? It’s an idea that was supported in the Gallagher Review, and that I myself have spoken in favour of on several occasions. The problem (as I pointed out in a blog for the ICCT a few years ago) is that it’s not enough to just say that a biofuel has low ILUC risk – this has to be robustly demonstrated, and demonstrating it is complex. If the oversight systems don’t work, you will very quickly end up certifying biofuels as ‘low ILUC risk’ even though they are nothing of the kind. Unfortunately, the current language of RED II is incredibly vague on the subject. The definition given for a low ILUC risk biofuel is that the feedstock must be ‘produced within schemes which reduce the displacement of production for purposes other than for making biofuels and bioliquids’. The definition doesn’t say how much displacement should be reduced. To avoid ILUC completely it would have to be reduced by 100%, but what about a scheme that reduces displacement by only 10%, or only 1%? Given the proposed language, Member States may find it difficult to put robust requirements in their national implementations. Before you know it, the EU will be up to its neck in palm oil from replanting programmes getting certified as low ILUC risk – even if the programmes deliver only modest yield improvements and the true ILUC impact of the palm oil is still very high indeed. The solution? The language of the Directive should be revised from ‘reducing’ displacement to ‘avoiding’ displacement, and a delegated act should be added for the European Commission to define robust protocols to evaluate schemes. Further discussion of the challenges of ILUC mitigation is available in this ICCT paper.

2.    Double counting renewability of electrofuels

The proposed Directive allows electrofuels (fuels that are produced by electrolysing water to produce hydrogen and reacting the hydrogen with carbon monoxide or dioxide to produce hydrocarbons, referred to as ‘renewable fuels of non-biological origin’ in the proposed Directive), to be counted towards the transport sector obligation for renewable energy use. This is reasonable enough – liquid fuels produced from renewable electricity present much lower sustainability risks than most biofuels, and electrofuel technologies would provide a valuable additional option for producing low-carbon drop-in liquid fuels. The problem is that way that electrofuels are counted towards overall Member State renewable energy targets. Whereas advanced biofuels are counted based on the energy content of the fuel, it is proposed that electrofuels would be counted based on the amount of electricity required to produce them. Because the efficiency of conversion of electricity to drop-in fuels will be only about 40% with currently available technologies, that means that electrofuels would count two and a half times more to overall targets than advanced biofuels would. Why is this a problem? Because that means that if a Member State uses electrofuels instead of biofuels for the transport target, there is a reduced requirement for renewables in heat and power, reducing the true ambition of the renewables target. Indeed, the less efficient electrofuel production is the less renewable energy in heat and power will be needed to meet targets. The solution? Count electrofuels in the overall Member State target by the energy delivered to transport, not the energy used to produce them. Watch this space for a forthcoming Cerulogy report on electrofuels.

3.    No mechanism to deal with developing ILUC science

If there’s one thing that everyone seems to agree on about the ILUC discussion since 2009, it’s that it created uncertainty for investors considering entering the biofuel market. The draft Directive seems to be trying to create certainty by writing in ILUC values and sticking to them – the Annexes include estimated average values, and ranges, for three groups of biofuels (starchy, sugary and oily). Anything without a value is assigned an ILUC estimate of zero, and there appears to be no accommodation for the values to be revised to reflect new evidence. Also, while the initial proposal provided a general power for Member States to “distinguish between different types of biofuels and bioliquids produced from food and feed crops”, the latest Council edit restricts that power to “categories set out in Annex VIII”. That appears to mean no distinction between different feedstocks in a category. Given that more recent ILUC analysis for the Commission suggests, for instance, that palm oil biodiesel could have four times the ILUC of some other vegetable oils, it seems both shirt-sighted and ill-judged to preclude Member States from taking evidence on differences in ILUC impact into consideration. More generally, while there are certainly those in industry who believe that locking in ILUC estimates in this way reduces future uncertainty, I disagree. Rather than preventing ILUC from becoming an issue again in the 20s, I think this rigidity almost guarantees it. By preventing the Commission from adjusting to new science through delegated acts, the proposed Directive guarantees that every time new evidence on ILUC comes to like, there will be calls to reopen the Directive entirely with new legislation. For the advanced alternative fuels industry, that increased risk that the Directive could be subjected to wholesale revision before 2030 can only be a barrier to fundraising. The solution? Provide greater leeway for Member States and/or the Commission to react appropriately to existing and new evidence on ILUC and other sustainability problems.

Fingers crossed for good outcomes as the process moves forward!

* Clickbait titles are just the worst aren’t they?

Thought for food

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Since the food price crisis of 2006-2008, there has been a lively debate about the impact of biofuel demand on food markets, prices and security, with some biofuel advocates characterising the idea of competition between food and fuel as a ‘myth’. This review for Transport and Environment and Birdlife Europe shows that there is an extensive literature supporting the belief that biofuel demand is likely to cause food prices to rise, and that these price rises will result in significant wealth transfers from consumers to producers and have negative welfare implications for poor households in the developing world. Far from reflecting ’emotional’ responses divorced from the available evidence, concerns about the impacts of biofuel demand on global poverty are well supported and legitimate – while the flat denial that biofuel demand affects food markets is disingenuous and divorced from the mainstream of expert opinion. On the other hand, biofuel demand is only one relatively small factor in the overall picture of global food insecurity, and the benefits of biofuel policy should be compared soberly to the potential negative externalities.

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Waste not want not

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The controversy around the use of food and feed commodities for biofuel has led to an increasing focus on opportunities to produce biofuels from wastes, residues and by-products. However, where those materials have existing productive uses, redirecting them into energy recovery applications may cause displacement and indirect emissions. This study for the International Council on Clean Transportation considers the potential indirect emissions profiles of a variety of materials that may be considered for additional incentives in EU biofuel policy beyond 2020.

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Cover image from 'Waste not want not'

Navigating the maize

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Update – An updated critique reacting to republished results from USDA is available here: https://theicct.org/publications/critique-lifecycle-emissions-modeling-ghg-ethanol

Earlier in 2017, the United States Department of Agriculture published a study undertaken by the consultants ICF International that included a reassessment of the lifecycle greenhouse gas intensity of corn ethanol. The report concluded that corn ethanol’s greenhouse gas intensity is already lower than the level projected for 2022 by the Environmental Protection Agency in the regulatory impact analysis for the Renewable Fuel Standard 2, a conclusion that has been embraced by advocates for the corn ethanol industry.

In this study, commissioned by the Clean Air Task Force and National Wildlife Federation, we provide a critical review of the ICF report. We find that the report shows a lack of balance, systematically emphasising evidence that could suggest that the performance of corn ethanol is better than previously modeled, while understating or ignoring conflicting evidence. More problematic even than this lack of balance, however, we find that the analysis in the report is riddled with errors of methodology and data, many of them at the most basic level, so as to render some of the results presented essentially meaningless. Given the many issues identified, we conclude that the work presented is wholly inadequate to justify any firm conclusion on whether the corn ethanol emissions estimates made by EPA could or should be revised down.

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Erratum

In the report “Navigating the maize” it is stated that, “The ICF report appears to double count the emissions benefits associated with the production of ethanol co-products”. Following clarification of the ICF approach in subsequent papers, we realise that we had misunderstood the approach used and that this is not the case – co-products are not double counted by ICF.

Our misunderstanding arose from a methodological difference between the ICF analysis and the original EPA regulatory impact assessment that was not clear to us from the original documentation. In the EPA work, agricultural emissions are assessed only on the net increase in corn production to meet the mandate (this is a consequential approach). The effect of distillers’ grains in reducing net corn demand is already included before agricultural emissions are calculated. The ICF reassessment makes reference to the net demand change value from the EPA work, and therefore we had understood that the role of co-products was implicitly included by use of this net demand value. Based on clarifications given in updates to the ICF work  we now understand that ICF in fact analyse emissions for an average corn acre and then apply these based on gross corn demand. The step that makes reference to the EPA net demand value is redundant (this term is effectively added on both the numerator and the denominator of the equation so that it is cancelled out) . Based on this understanding it is indeed appropriate to apply a co-product credit under this methodology. 

Corn on the scales