California hopes to meet its Low Carbon Fuel Standard goals through 2020 by gaining a significant share of increasing US production of biodiesel, renewable diesel and natural gas, as well as attracting lower carbon intensity ethanol, the California Air Resources Board said Thursday.
But cellulosic ethanol, a fuel that was expected to make it easier for California to reach its targets, lags far behind other fuels in production and appears unlikely to play a major role by 2020, according to board projections.
Under the state's LCFS, sellers of transportation fuels must reduce the fuels' carbon intensity 10% by 2020. Fuel types are assigned a CI score based on their life cycle emissions.
As 2020 approaches, the rules require increasingly stringent reductions in fuel carbon intensity.
The board laid out a scenario in which targets might be met mainly through an expected ratcheting up of production of fuels that are now generating most of the LCFS credits.
Through the first quarter of this year, ethanol generated 62% of credits, while biodiesel, renewable diesel and natural gas generated almost 37% of credits.
By 2020, the board projects US biodiesel production will be 2 billion gallons, compared with 1.3 billion gallons in 2013.
"Staff expects an ample supply of biodiesel to fulfill California market demands through 2020 and beyond," the board said Thursday at a workshop on projected US fuel availability, which was webcast.
US renewable diesel supply projections in 2020 range from 900 million gal/year to more than 1.5 billion gal/year based on current, announced and projected US facilities and international plants, the board said. US capacity is now about 212 million gal/year.
The board also cited increasing renewable natural gas production and said the fuel is moving toward transport use.
By 2020, transportation natural gas consumption is expected to be 600 million-1.2 billion diesel gallon equivalent. Of that, renewable natural gas consumption is likely to be 250 million-500 million diesel gallon equivalent.
But the figures show a gap in availability of cellulosic ethanol, the low-CI fuel that was initially considered crucial to help reach the 10% target.
In 2020, US cellulosic availability is expected to be 100 million-250 million gallons, with Brazilian cellulosic exports to the US expected to be 150 million-300 million gallons, the board said.
That is a fraction of the 14.8 billion gallons expected to come from ethanol from corn and sorghum, or up to 1.75 billion gallons of ethanol from sugarcane.
"Cellulosic ethanol has been a little bit slower coming online than everybody anticipated in the last couple of years, so we decided to discount the anticipated volumes to err on the side of being a little bit more conservative," board economist Kirsten King said.
Projections for cellulosic ethanol are only slightly higher than those for renewable gasoline, a new fuel derived from biomass.
By 2020, US renewable gasoline supply is projected to be at least 100 million gal/year through new production facilities coming online.
The board acknowledged, however, that renewable gasoline is not going to play a huge role in meeting 2020 goals in California.
Some energy industry representatives criticized the board for failing to present detailed information on the availability of low-CI fuel in the state.
By now, the board should be prepared to say how much of the US fuel supply will likely come to California, given constraints at the state's ports, lack of storage, vehicle limitations and other factors, several representatives said.
But that is still an open question, Mike Waugh, board transportation fuels branch chief, said.
"We're not saying how much is coming here yet," he said. "Here's the fuel that is available in the United States. The question is, can it come to California, will it come to California? The point we're trying to make today is, well, for some of these, at a buck a gallon, we think so."
Credit prices will have a huge impact on what fuels ultimately come to California, he said.
To illustrate that impact, the board listed possible credit prices from $50-200, showing the potential value added for low-CI fuels.
At a $50 credit price, corn ethanol, with a relatively high CI of 70 grams/megajoule, would have a pass through to 8 cents/gal, or the value of LCFS credits generated from ethanol based on its CI.
Waste grease biodiesel, with a lower CI of 15 g/MJ, would have a pass through to 55 cents/gal, the board said.
At a $100 credit price, corn ethanol would have a pass through to 16 cents/gal, while biodiesel would be $1.09/gal.
"These numbers are intended to show the potential pull that the LCFS could have," King said. "We don't forecast where the credit prices are going to go, but looking at this range, it's clear that the LCFS can have a very strong pull on the supply and production of these low-CI fuels."
In August, for example, actual prices ranged from $24-$85/credit, the board said previously.
The board said it expects to have a better idea by next month on the fuel volumes that should be available in California.
