A low-carbon fuel standard (LCFS) is a rule enacted
to reduce carbon intensity in transportation fuels as
compared to conventional petroleum fuels, such as gasoline and diesel.
The most common low-carbon fuels are alternative
fuels and cleaner fossil fuels, such as natural gas
(CNG and LPG). The main purpose of a low-carbon fuel
standard is to decrease carbon dioxide emissions associated to fuel-powered
vehicles considering the entire life cycle ("well to wheels"), in
order to reduce the carbon footprint of transportation.
The first low-carbon fuel standard mandate in the world was
enacted by California
in 2007, with specific eligibility criteria defined by the California Air Resources Board
(CARB) in April 2009 but taking effect until January 2011. Similar legislation
was approved in British Columbia in April 2008, and by European
Union which proposed its legislation in January 2007 and which was adopted
in December 2008. The United Kingdom is implementing its Renewable Transport Fuel Obligation
Program, which also applies the concept of low-carbon fuels.
Several bills have been proposed in the United
States for similar low-carbon fuel regulation at a national level but with
less stringent standards than California. As of early 2010 none has been
approved. The U.S. Environmental Protection
Agency (EPA) issued its final rule regarding the expanded Renewable Fuel Standard (RFS2) for 2010 and
beyond on February 3, 2010. This ruling, as mandated by the Energy Independence and
Security Act of 2007 (EISA), included direct emissions and
significant indirect emissions from land use changes.
California Low-Carbon Fuel Standard
Californian Governor Arnold Schwarzenegger issued Executive Order S-1-07 on January
19, 2007 to enact a low-carbon fuel standard (LCFS).[13][14]
The LCFS requires oil refineries and distributors to ensure that the mix
of fuel they sell in the Californian market meets the established declining
targets for greenhouse gas (GHG) emissions measured in CO2-equivalent grams per unit of fuel
energy sold for transport purposes. The LCFS directive calls for a reduction of
at least 10 percent in the carbon intensity of California's transportation
fuels by 2020. These reductions include not only tailpipe
emissions but also all other associated emissions from production, distribution
and use of transport fuels within the state. Therefore, California LCFS
considers the fuel's full life cycle, also known as the "well
to wheels" or "seed to wheels" efficiency of transport fuels.The
standard is also aimed to reduce the state’s dependence on petroleum, create a
market for clean transportation technology, and stimulate the production and
use of alternative, low-carbon fuels in California.
The LCFS is a mix of command and control regulation and emissions
trading, as it will use market-based mechanisms that allow providers to
choose how they will reduce emissions while responding to consumer demand. Some
believe that oil companies could opt for several actions to comply. For
example, they state that refiners and producers could improve the efficiency of
the refineries and upstream production, or may purchase and blend more low-carbon
ethanol into gasoline products, or purchase credits from electric utilities
supplying low carbon electrons to electric passenger vehicles, or diversifying
and selling low carbon hydrogen for use by vehicles as a product, or any new
strategy as the standard is being designed.The Global Warming Solutions Act of
2006 authorized the establishment of emissions trading in California, with
rules to be adopted by 2010, and taking effect no later than January 2012.
Regulatory proceedings
In accordance to the Global Warming Solutions Act of
2006 and the Governor's Directive, the California Air Resources Board is
the agency responsible for developing the "Low-Carbon Fuel Standard
Program", and it was directed to initiate the regulatory proceedings to
establish and implement the LCFS." CARB identified the LCFS as an early
action item with a regulation to be adopted and implemented by 2010. Also
Executive Order S-1-07 ordered the California Environmental
Protection Agency to coordinate activities between the University of California, the California Energy Commission and other
state agencies to develop and propose a draft compliance schedule to meet the
2020 target.
As mandated by the Executive Order, a University of
California team, led by Daniel Sperling of UC Davis and the late Alexander E. Farrell (UC Berkeley), developed two
reports that established the technical feasibility of an LCFS, proposed the
methodology to calculate the full life cycle GHG emissions from all fuels sold
in the state, identified technical and policy issues, and provided a number of
specific recommendations, thus providing an initial framework for the development
of CARB's LCFS.This study was presented by Governor Schwarzenegger in May 2007
and they were the backbone of CARB's initial efforts to develop the LCFS, even
though not all of the specific recommendations were incorporated in the final
LCFS staff's proposed regulation.
Public consultation process
During 2008 and until the April 2009 LCFS ruling, CARB
published in its website all technical reports prepared by its staff and
collaborators regarding the definition and calculations related to the proposed
LCFS regulation, conducted 16 public workshops, and also submitted its studies
for external peer review. Before the April 23, 2009 ruling, the Board held a
45-day public hearing that received 229 comments, 21 of which were presented
during the Board Hearing.
Controversy about indirect land use impacts
Among relevant and controversial comments submitted to CARB
as public letters, on June 24, 2008, a group of 27 scientists and researchers
from a number of universities and national laboratories, expressed their
concerns arguing that there "is not enough hard empirical data to base
any sound policy regulation in regards to the indirect impacts of renewable
biofuels production. The field is relative new, especially when compared to the
vast knowledge base present in fossil fuel production, and the limited analyses
are driven by assumptions that sometimes lack robust empirical validation."
With a similar opposing position, on October 23, 2008, a letter submitted to
CARB by the New Fuels Alliance, representing more than two-dozen advanced
biofuel companies, researchers and investors, questioned the Board intention to
include indirect land
use change (ILUC). In another public letter just before the ruling meeting,
more than 170 scientists and economists sent a letter to CARB, urging it to
account for GHG emissions from indirect land use change for biofuels and all
other transportation fuels. They argued that "...there are
uncertainties inherent in estimating the magnitude of indirect land use
emissions from biofuels, but assigning a value of zero is clearly not supported
by the science."
2009 Ruling
On April 23, 2009, CARB approved the specific rules and
carbon intensity reference values for the LCFS that will go into effect on
January 1, 2011. The technical proposal was approved without modifications by a
9-1 vote, to set the 2020 maximum carbon intensity reference value for gasoline
to 86 grams of carbon dioxide equivalent released per megajoule of
energy produced. One standard was established for gasoline and the alternative
fuels that can replace it, and a second similar standard is set for diesel fuel
and its replacements. The regulation is based on an average declining standard
of carbon intensity that is expected to achieve 16
million metric tons of greenhouse gas emission reductions by 2020.[30][31]
CARB expects the new generation of fuels to come from the development of
technology that uses cellulosic ethanol from algae, wood,
agricultural waste such as straw and switchgrass, and also natural gas
from municipal solid waste. They also expect the standard to drive the
availability of plug-in hybrid, battery
electric and fuel-cell powered cars while promoting investment in
infrastructure for electric charging stations and hydrogen fueling stations.
The ruling is controversial. Representatives of the US
ethanol industry complained that this rule overstates the environmental effects
of corn ethanol, and also criticized the inclusion of indirect effects of
land-use changes as an unfair penalty to home-made corn ethanol because
deforestation in the developing world is being tied to US ethanol
production.The initial reference value set for 2011 for LCFS means that Mid-west corn ethanol will not
meet the California standard unless current carbon intensity is reduced. Oil
industry representatives complained that there is a cost associated to the new
standard, as the LCFS will limit the use of corn ethanol blended in gasoline,
thus leaving oil refiners with few available and viable options, such as
sugarcane ethanol from Brazil, but this option means paying costly U.S. import
tariffs. CARB officials and environmentalists reject such scenario because they
think there will be plenty of time and economic incentive to developed
inexpensive biofuels, hydrogen-based fuels, even ethanol from such cellulosic
materials, or new ways to make ethanol out of corn with a smaller carbon
footprint.
Brazilian
ethanol producers (UNICA),
though they welcomed the ruling as they consider their sugarcane ethanol have
passed a critical test and expect their biofuel to enter the California market
in the future, UNICA also urged CARB to update the data and assumptions used,
which according to them, is excessively penalizing their ethanol and is not
reflecting the technology and agricultural practices currently in use in
Brazil. UNICA disagreed with the assertion that indirect land-use changes can
be accurately calculated with the current methodologies. Canadian
officials also complained the standard could become an entry barrier to their Alberta oil sands,
as producers will have to significantly reduce their emissions or purchase
expensive credits from alternative energy producers in order for their non-conventional oil to be sold in California.
They complained that the measure could be discriminating against Canadian oil
sands crude as a high carbon intensity crude oil, while other heavy
crude oils from other sources were not evaluated by CARB's studies.
The only Board member who voted against the ruling explained
that he had "hard time accepting the fact that we’re going to ignore the
comments of 125 scientists", referring to the letter submitted by a group
of scientists questioning the indirect land use change penalty. "They said
the model was not good enough... to use at this time as a component part of
such an historic new standard." CARB adopted only one main amendment to
the staff proposal to bolster the standard review process, moving up the
expected date of an expert working group to report on indirect land use change
from January 2012 to January 2011. This change is expected to provide for a
thoroughly review of the specific penalty for indirect land use change and
correct it if possible. The CARB staff is also expected to report back to the
Board on indirect impacts of other fuel pathways before the commencement of the
standard in 2011.
Fuels were rated based on their carbon intensity, estimated
in terms of the quantity of grams of carbon dioxide equivalent released for
every megajoule of energy produced for their full life cycle, also referred to as the fuel
pathway. Carbon intensity was estimated considering the direct carbon footprint
for each fuel, and for biofuels the indirect land-use effects were also
included. The resulting intensities for the main biofuels readily available are
the following:
The LCFS standards established in CARB's rulemaking will be
periodically reviewed. The first formal review will occur by January 1, 2011.
Additional reviews are expected to be conducted approximately every three years
thereafter, or as necessary. The 2011 review will consider the status of
efforts to develop low carbon fuels, the compliance schedule, updated technical
information, and provide recommendations on metrics to address the sustainable
production of low carbon fuels.
According to CARB's ruling, providers of transportation
fuels must demonstrate that the mix of fuels they supply meet the LCFS
intensity standards for each annual compliance period. They must report all
fuels provided and track the fuels’ carbon intensity through a system of
"credits" and "deficits." Credits are generated from fuels
with lower carbon intensity than the standard. Deficits result from the use of
fuels with higher carbon intensity than the standard. A fuel provider meets its
compliance obligation by ensuring that amount of credits it earns (or otherwise
acquires from another party) is equal to, or greater than, the deficits it has
incurred. Credits and deficits are generally determined based on the amount of
fuel sold, the carbon intensity of the fuel, and the efficiency by which a
vehicle converts the fuel into usable energy. Credits may be banked and traded
within the LCFS market to meet obligations.
Two "lookup tables" (similar to the one above) and
its carbon intensity values are part of the regulation, one for gasoline and
another for diesel. The carbon intensity values can only be amended or expanded
by regulatory amendments, and the Board delegated to the Executive Officer the
responsibility to conduct the necessary rulemaking hearings and take final
action on any amendments, other than amending indirect land-use change values
included in the lookup tables.
Latest developments
On July 20, 2009, CARB published a Notice of Public
Availability of modified text and availability of additional documents
regarding the April 2009 rule making (Resolution 09-31), open for public
comment until August 19. The supporting documents and information added to the
rule making record include new pathways for Liquefied Natural Gas (LNG) from several
sources, Compressed Natural Gas (CNG) from dairy
digester biogas, biodiesel produced in California from used cooking oil,
renewable diesel produced in California from tallow (U.S.
sourced), and two additional new pathways for Brazilian sugarcane ethanol which reflect
best practices already implemented in some regions of the country.
The two additional scenarios for sugarcane ethanol were
requested by the Board in order to account for improved harvesting practices
and the export of electricity from sugarcane ethanol plants in Brazil using
energy from bagasse.
These two scenarios are not to be considered average for all of Brazilian
ethanol but specific cases when such practices are adopted in Brazil. Scenario
1 considers mechanized harvesting of cane which is gradually replacing the
traditional practice of burning straw before harvesting cane, and the sale of
electricity (co-generated) from power plants that are capable of exporting
additional energy beyond that required for processing in the plant (co-product
credit). Scenario 2 only considers the export of electricity (co-product) from
power plants capable of producing the additional electricity for export. The
assumptions or values for the baseline pathway published in February 2009 are
the same, including the estimates of indirect land use change for all Brazilian sugarcane scenarios.
On December 2009 the Renewable Fuels Association (RFA) and Growth Energy, two U.S. ethanol
lobbying groups, filed a lawsuit in the Federal District Court in Fresno,
California, challenging the constitutionality of the California Low Carbon Fuel
Standard (LCFS). The two organizations are arguing that the LCFS violates both
the Supremacy Clause and the Commerce
Clause of the US Constitution, and "jeopardizes the
nationwide market for ethanol." In a press release both association
announced that “If the United States is going to have a low carbon fuel
standard, it must be based on sound science and it must be consistent with the
U.S. Constitution..." and that "One state cannot dictate
policy for all the others, yet that is precisely what California has aimed to
do through a poorly conceived and, frankly, unconstitutional LCFS.”
Additional lawsuits against the California regulation were filed by refiners
and truckers including Rocky Mountain Farmers Union; Redwood County Minnesota
Corn and Soybean Growers; Penny Newman Grain, Inc.; Red Nederend; Fresno County
Farm Bureau; Nisei Farmers League; California Dairy Campaign; National
Petrochemical and Refiners Association; American Trucking Associations;
Center for North American Energy Security; and the Consumer Energy Alliance.
In December 2011 a federal judge granted a preliminary
injunction against the implementation of California's LCFS. In three separate
rulings the judge rejected CARB's defense as he concluded that the state that the
state acted unconstitutionally and the regulation “impermissibly treads into
the province and powers of our federal government, reaches beyond its
boundaries to regulate activity wholly outside of its borders.” CARB
announced it intends to appeal the decision. The Ninth Circuit Court of Appeals
issued a stay of the injunction on 23 April 2012 during the tendency of the
litigation. In other words the challenge to the constitutionality of the LCFS
continues, but until it is resolved there is no bar on the CARB continuing to
enforce the LCFS. (While the stay did not specifically authorize a return to
the LCFS, CARB argued in its briefs before the Court that a stay would
"permit the LCFS to go back into effect as though the injunction had never
been issued". That is the approach currently taken by CARB and it
continues to refine carbon intensity standards and applicability).
In 2011, a provision was added to the LCFS that allows
refiners to receive credits for the deployment of innovative crude production
technologies, such as carbon capture and sequestration or solar steam
generation.[53]
Solar thermal enhanced oil recovery
is a form of enhanced oil recovery (EOR), which is key to
harvesting California’s heavy crude. Currently, California uses EOR to help
produce about 60% of its crude output. By using solar power instead of natural
gas to create steam for EOR, solar steam generation reduces the amount of
emissions produced during oil extraction, thus lowering the overall carbon
intensity of crude. California currently has two solar EOR projects in
operation, one in McKittrick, operated by LINN Energy (formerly Berry
Petroleum) using enclosed trough technology from GlassPoint
Solar, and another in Coalinga operated by Chevron Corporation using BrightSource Energy power tower technology.
CARB is currently considering an amendment to allow upstream operators to
receive credits for deploying innovative crude production technologies.
US National Low-Carbon Fuel Standard
Using California's LCFS as a model, several bills have been
presented to establish a national low-carbon fuel standards at the federal
level.
2007
Senators Barbara
Boxer, Dianne Feinstein, and now President Barack
Obama introduced in 2007 competing bills with varying versions of
California's LCFS.
- In March 2007, Senator Dianne Feinstein sponsored the "Clean Fuels and Vehicles Bill", which would have reduced emissions from motor vehicle fuels by 10 percent below projected levels by 2030, and would have required fuel suppliers to increase the percentage of low-carbon fuels – biodiesel, E-85 (made with cellulosic ethanol), hydrogen, electricity, and others – in the motor vehicle fuel supply.
- California Senator Barbara Boxer presented on May 3, 2007 the "Advanced Clean Fuels Act of 2007". This bill was an amendment to the Clean Air Act to promote the use of advanced clean fuels that help reduce air and water pollution and protect the environment.
- Then Senator Obama introduced his bill on May 7, 2007. The "National Low Carbon Fuel Standard Act of 2007" would have required fuel refineries to reduce the lifecycle greenhouse gas emissions of the transportation fuels sold in the U.S. by 5 percent in 2015 and 10 percent in 2020.
2009
In March 2009, the Waxman-Markey Climate Bill
was introduced in the U.S. House Committee on Energy
and Commerce, and it has been praised by top Obama Administration officials. The bill
requires a slightly higher targets for reductions in emissions of carbon
dioxide, methane,
and other greenhouse gases than those proposed by President Barack
Obama. The bill proposed a 20-percent emissions reduction from 2005 levels
by 2020 (Obama had proposed a 14 percent reduction by 2020). Both plans aim to
reduce emissions by about 80 percent by 2050. The Climate Change Bill was
approved by the U.S. House of Representatives on June
26, 2009. As approved, emissions would be cut 17 percent from 2005 levels by
2020, and 83 percent by 2050.
EPA Renewable Fuel Standard
The Energy Independence and
Security Act of 2007 (EISA) established new renewable fuel categories and
eligibility requirements, setting mandatory life cycle greenhouse
gas emissions thresholds for renewable fuel categories, as compared to
those of average petroleum fuels used in 2005. EISA definition of life cycle
GHG emissions explicitly mandated the U.S. Environmental Protection
Agency (EPA) to include "direct emissions and significant indirect
emissions such as significant emissions from land use changes."
On May 5, 2009 the U.S. Environmental Protection Agency
(EPA) released its notice of proposed rulemaking for
implementation of the 2007 modification of the Renewable Fuel Standard (RFS). The draft of
the regulations was released for public comment during a 60-day period. EPA's
proposed regulations also included the carbon
footprint from indirect
land-use changes, which, as CARB's ruling, caused controversy among ethanol
producers. On the same day, President Barack
Obama signed a Presidential Directive with the aim to
advance biofuels research and improve their commercialization. The Directive
established a Biofuels Interagency Working Group which has the mandate to come
up with policy ideas for increasing investment in next-generation fuels, such
as cellulosic ethanol, and for reducing the environmental footprint of growing
biofuels crops, particularly corn-based ethanol.
An amendment was introduced in the House Appropriations Committee
during the discussion of the fiscal 2010 Interior and Environment spending
bill, aimed to prohibit EPA to consider indirect land-use changes in the RFS2
ruling for five years. This amendment was rejected on June 18, 2009 by a 30 to
29 vote. A similar amendment to the Waxman-Markey Climate Bill
was introduced in the U.S. House Committee on
Energy and Commerce. The Climate Bill was approved by the U.S. House of Representatives with a
vote of 219 to 212, and included a mandate for EPA to exclude any estimation of
international indirect land use changes due to biofuels for a five-year period
for the purposes of the RFS2. During this period, more research is to be
conducted to develop more reliable models and methodologies for estimating
ILUC. By 2010 the bill is awaiting approval by the U.S. Senate.
On February 3, 2010, EPA issued its final rule regarding the
expanded Renewable Fuel Standard (RFS2) for 2010 and beyond. The final rule
revises the annual renewable fuel standards, and the required renewable fuel
volume continues to increase reaching 36 billion gallons (136.3 billion liters)
by 2022. For 2010, EISA set a total renewable fuel standard of 12.95 billion
gallons (49.0 billion liters). This total volume, presented as a fraction of a
refiner's or importer's gasoline and diesel volume, must be renewable fuel. The
final 2010 standards set by EPA are shown in the table in the right side.
As mandated by law, and in order to establish the fuel
category for each biofuel, EPA included in its modeling direct emissions and
significant indirect emissions such as emissions from land use
changes related to the full lifecycle. EPA's modeling of specific fuel
pathways incorporated comments received through the third-party peer review
process, and data and information from new studies and public comments. EPA's
analysis determined that both ethanol produced from corn starch
and biobutanol
from corn starch comply with the 20% GHG emission reduction threshold required
to classify as a renewable fuel. EISA grandfathered existing U.S. corn ethanol plants,
and only requires the 20% reduction in life cycle GHG emissions for any
renewable fuel produced at new facilities that commenced construction after
December 19, 2007.
EPA also determined that ethanol produced from sugarcane, both in Brazil and Caribbean Basin Initiative countries,
complies with the applicable 50% GHG reduction threshold for the advanced fuel
category. Both diesel produced from algal oils and biodiesel
from soy oil and renewable diesel from waste oils, fats, and greases complies
with the 50% GHG threshold for the biomass-based diesel category. Cellulosic ethanol and cellulosic diesel (based
on currently modeled pathways) comply with the 60% GHG reduction threshold
applicable to cellulosic biofuels.
The following table summarizes the mean GHG emissions
estimated and the range of variations considering that the main source of
uncertainty in the life cycle analysis is the emissions related to
international land use change GHG emissions.
UNICA, a Brazilian ethanol producers association, welcomed
the ruling and commented that they hope the classification of Brazilian
sugarcane ethanol as an advanced biofuel will contribute to influence those who
seek to lift the trade barriers imposed against clear energy, both in the U.S.
and the rest of the world. EPA's final ruling is expected to benefit Brazilian
producers, as the blending mandate requires an increasing quota of advanced
biofuels, which is not likely to be fulfill with cellulosic ethanol, and then
it would force blenders to import more Brazilian sugarcane-based ethanol,
despite the existing 54¢ per gallon tariff on ethanol imported directly from
Brazil.
In the case of corn-based ethanol, EPA said that
manufacturers would need to use “advanced efficient technologies” during
production to meet RSF2 limits. The U.S. Renewable Fuels Association also
welcomed the ruling, as ethanol producers "require stable federal
policy that provides them the market assurances they need to commercialize new
technologies." However, they complained that "EPA continues to
rely on oft-challenged and unproven theories such as international indirect
land use change to penalize U.S. biofuels to the advantage of imported ethanol
and petroleum."
Other U.S. regional proposals
Eleven U.S. Northeast and Mid-Atlantic states have committed to analyzing
a single low-carbon fuel standard for the entire region, driving
commercialization and creating a larger market for fuels with low carbon
intensity. The standard is aimed to reduce greenhouse gas emissions from
fuels for vehicles and other uses, including fuel used for heating buildings,
industrial processes, and electricity generation. Ten of these states are
members of the Regional Greenhouse Gas Initiative
(RGGI). California Air Resources Board
(CARB) staff has been coordinating with representatives of these States.[15]
The states developing a regional LCFS are Connecticut,
Delaware, Maine, Maryland, Massachusetts,
New
Hampshire, New Jersey, New York, Pennsylvania,
Rhode
Island, and Vermont.
A Memorandum of Understanding concerning the development of
the regional low carbon fuel standard program was signed by the Governors of
each State on December 30, 2009, committing the states to an economic analysis
of the program, consultation with stakeholders before ruling, and a draft model
rule by early 2011.
British Columbia Low-Carbon Fuel Requirements
The Legislative Assembly of British
Columbia, Canada,
approved in April 2008 the Renewable
and Low Carbon Fuel Requirements Act, which mandates fuel suppliers in B.C.
to sell gasoline and diesel containing 5% and 4% percent renewable fuels,
respectively, by 2010, and allows the provincial government to set thresholds
for the carbon intensity of fuels, taking into account
their entire carbon footprint. The RLCFR Act also provides
flexibility for regulated fuel suppliers to meet their obligations as they may
receive notional transfers of renewable fuels and of attributable greenhouse
gas emissions.
Europe
Existing regulations
The EU has mainly acted to mitigate road transport
greenhouse emissions mainly through its voluntary agreement on CO2 emissions
from cars and subsequently through Regulation 443/2009 which sets mandatory CO2
emission limits for new cars. The EU promoted the use of biofuels through the directive
on the promotion of the use of biofuels and other renewable fuels for transport
(2003/30/EC), also known as Biofuel Directive, which calls for countries across
the EU aiming at replacing 5,75% of all transport fossil fuels (petrol and diesel)
with biofuels
by 2010. None of these regulations, however, were based on carbon
intensity of fuel. Fuel quality standards in the European
Union are regulated by Directive 98/70/EC.
Other European countries have their own mandates limiting
consumption of conventional fossil fuels by substituting to cleaner fuels in order
to reduce greenhouse gas emissions, such as the United
Kingdom Renewable Transport Fuel Obligation
Program (RTFO), requiring transport fuel suppliers to ensure that 5% of all
road vehicle fuel comes from sustainable renewable sources by 2010.
UK Renewable Transport Fuel Obligation
The Renewable Transport Fuel Obligation
is similar to California's LCFS in some aspects. Biofuel suppliers are required
to report on the level of carbon savings and sustainability
of the biofuels they supplied in order to receive Renewable Transport Fuel
Certificates (RTFCs). Suppliers have to report on both the net GHG savings and
the sustainability of the biofuels they supply according to the appropriate
sustainability standards of the feedstocks from which they are produced and any
potential indirect impacts of biofuel production, such as indirect land-use change
or changes to food and other commodity prices that are beyond the control of
individual suppliers. Suppliers that do not submit a report will not be eligible
for RTFO certificates.
Certificates can be claimed when renewable fuels are
supplied and fuel duty is paid on them. At the end of the obligation period,
these certificates may be redeemed to the RTFO Administrator to demonstrate
compliance. Certificates can be traded, therefore, if obligated suppliers don't
have enough certificates at the end of an obligation period they have to
'buy-out' the balance of their obligation by paying a buy-out price. The buy
out price will be 15 pence per litre in the first two years.
EU low-carbon fuel standard
On January 31, 2007, the European Commission (EC) proposed new standards
for transport fuels to reduce full life cycle emissions by up to 10 percent
between 2011 and 2020 This was three weeks after the California LCFS Directive
was announced. The EU proposal aimed to encourage the development of low-carbon
fuels and biofuels, considering reductions in greenhouse gas emissions caused
by the production, transport and use of the suppliers fuels.
On December 2008 the European Parliament, among other measures to
address climate change in the European
Union, approved amendments to the fuel quality directive (98/70) as well as
replacing the Biofuels
Directive with a Directive on the promotion of Renewable Energy Sources as
proposed by the European Commission. The revision of Directive 98/07/EC
introduced a mechanism to monitor and reduce greenhouse gas emissions from the
use of road transport fuels, requiring fuel suppliers to reduce GHG emissions
by up to 10 percent by 2020 on a life cycle basis. Regarding land use changes,
the EC was ordered to "develop a concrete methodology to minimise
greenhouse gas emissions caused by indirect land use changes."
The fuel directive includes provisions to promote sustainable biofuels which
minimized the impacts of ILUC. The approved goal of 10 percent reduction in
greenhouse gas emissions can be achieved in several ways, and not exclusively
from low-carbon fuels:
- At least 6% by 31 December 2020, compared to the EU-average level of life cycle greenhouse gas emissions per unit of energy from fossil fuels in 2010, obtained through the use of biofuels, alternative fuels and reductions in flaring and venting at production sites.
- A further 2% reduction (subject to a review) obtained through the use of environmentally friendly carbon capture and storage technologies and electric vehicles.
- An additional further 2% reduction obtained through the purchase of credits under the Clean Development Mechanism of the Kyoto Protocol.
The Commission is continuing development of the EU LCFS, in
particular on the methodology for fossil fuel emissions, has recently consulted
on various aspects of the implementation and responses have been published.
Further work is underway to address Indirect Land Use Change emissions. Two
modelling exercises and a model comparison exercise are being carried out to
better understand the scale and nature of indirect land use change due to
biofuels before the Commission makes proposals to address it.
On June 10, 2010, the EC adopted guidelines explaining how
the Renewable Energy Directive (RED) should be implemented, as the Directive
came into effect in December 2010. Three measures focus on the criteria for
sustainability of biofuels and how to control that only sustainable biofuels
are used in the EU. First, the Commission is encouraging E.U. nations, industry
and NGOs to set up
voluntary schemes to certify biofuel sustainability. Second, the EC laid down
the rules to protect untouched nature, such as forests, wetlands and protected
areas, and third, a set of rules to guarantee that biofuels deliver substantial
reduction in well-to-wheel greenhouse gas emissions.
Sustainable biofuel certificates
The EC decided to request governments, industry and NGO's to
set up voluntary schemes to certify biofuel sustainability for all types of
biofuels, including those imported into the EU. According to the EC, the
overall majority of biofuels are produced in the EU, and for 2007, only 26% of biodiesel and
31% of bioethanol
consumed in the EU was imported, mainly from Brazil and the United
States. The Commission set standards that must be met for these schemes to
gain EU recognition. One of the main criteria is that the certification scheme
must be interdependently audited and fraud-resistant. Auditors must check the
whole production chain, from the farmer and mill to the filling station (well-to-wheel life cycle). Auditors must
check all the paper and inspect a sample of the farmers, mills and traders, and
also whether the land where the feedstock for the ethanol is produced has been
indeed farm land before and not a tropical forest or protected area. The
certificates are to guarantee that all the biofuels sold under the label are
sustainable and produced under the criteria set by the Renewable Energy Directive.
Several private certification systems originally designed for sustainability
more generally have adapted their standards to qualify for recognition under
the Renewable Energy Directive, including the Roundtable on Sustainable Biomaterials and Bonsucro.
Environmental groups complained the measures "are too
weak to halt a dramatic increase in deforestation." According to Greenpeace
"Indirect land use change
impacts of biofuels (ILUC) production still are not properly
addressed" because if not properly regulated, "ILUC impacts will
continue causing major biodiversity loss and more greenhosuse gas
emissions." On the other hand, industry representatives welcomed the
introduction of a certification system and some dismissed the concerns
regarding the lack of criteria about ILUC.UNICA,
the Brazilian ethanol producers association welcome the rules more cautiously,
as they consider "that gaps in the rules needed to be filled in so the
"industry has a clear framework within which to operate"."
Some other industry organizations also said that further clarification is
needed in order to implement the Renewable Energy Directive.
The EC clarified that it would publish a report on the impacts of indirect
land use by the end of 2010, as requested in the Renewable Energy Directive
and on the basis of recently released reports that suggest that biofuels are
saving greenhouse gas emissions.
Protecting untouched nature
The rules set by the Commission establish that biofuels
should not be made from feedstocks from tropical
forests or recently deforested areas, drained peatland, wetland or highly
biodiverse
areas. The corresponding Communication explains how this should be assessed and
as an example, it makes it clear that the conversion of a forest to a palm oil plantation
would not meet the sustainability requirements.
Promote only biofuels with high greenhouse gas savings
The Commission reiterated that Member States have to meet
binding, national targets for renewable energy and that only those biofuels
with high greenhouse gas emission savings count for
the national targets. The corresponding Communication explains how to make the
calculation, which not only includes carbon
dioxide (CO2), but also methane (CH4)
and nitrous
oxide (N2O), both stronger greenhouse gases than CO2.
Biofuels must deliver greenhouse gas savings of at least 35% compared to fossil
fuels, rising to 50% in 2017 and to 60%, for biofuels from new plants, in
2018.
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