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Seven Years Later, Grain-Based Ethanol Provides Nearly Half of GHG Reductions Under LCFS

April 22, 2016

           

WASHINGTON � As the California Low Carbon Fuel Standard (LCFS) reaches its halfway point, new analysis from the Renewable Fuels Association (RFA) shows that grain-based ethanol has provided nearly half of the greenhouse gas (GHG) reductions achieved under the first five years of the program. Seven years ago tomorrow, April 23, the California Air Resources Board (CARB) formally adopted the LCFS, requiring fuel suppliers to reduce the carbon intensity (CI) of gasoline and diesel fuels by 10 percent between 2011 and 2020. When the regulation was adopted in 2009, it was expected that grain-based ethanol produced in the Midwest would make a quick exit from the California fuel market due to CARB�s flawed assumption that the CI of corn ethanol was higher than gasoline. But in reality, data released by CARB last week shows that consumption of grain ethanol has increased under the LCFS, and the biofuel has been responsible for 46 percent of the total carbon credits and roughly 75 percent of the credits generated by fuels that replace gasoline (one credit is equivalent to 1 metric ton of GHG reduction). Of the 16.55 million credits generated since enforcement began in 2011, grain ethanol is responsible for 7.58 million metric tons (MMT). To date, grain ethanol has provided substantially more credits than any other fuel used under the LCFS. Meanwhile, as shown in the RFA report, fuels that CARB initially expected to generate large amounts of credit � such as imported sugarcane ethanol, electricity, hydrogen � have accounted for only a small share of total credit generation. What allowed grain ethanol to significantly contribute to LCFS compliance? As early as 2011, CARB recognized that �the volume of lower-CI corn ethanol will far exceed the 2009 estimates� and ethanol plants �have made efficiency improvements� that CARB had initially overlooked. Meanwhile, as part of CARB�s LCFS �re-adoption� process in 2015, the agency also made revisions to its faulty ILUC penalty for corn ethanol, reducing it by roughly one-third. While CARB�s ILUC penalty remains grossly exaggerated, the result of these changes is that most Midwest corn ethanol reduces GHG emissions by 25�35 percent compared to gasoline under the LCFS. That�s a lot different than where CARB started out. �California regulators are finally recognizing what we in the industry have known for decades � that ethanol is a high octane, low-cost alternative fuel that is readily available and offers meaningful GHG savings compared to gasoline. Seven years later, despite CARB�s bogus indirect land use change penalties, ethanol made from corn and sorghum has proven to be an essential tool to help meet LCFS requirements,� said RFA President and CEO Bob Dinneen. �However, more needs to be done to ensure ethanol remains available as a viable compliance option for the LCFS over the next five years.� First, CARB should further revise downward its assumed CI values for grain ethanol based on the latest modeling, best available science and empirical data. Second, CARB should immediately begin the regulatory process to approve the use of mid-level ethanol blends like E15, E20 and E25. Currently, E10 and E85 are the only two approved ethanol blends in the state. Blending greater volumes of ethanol would not only allow regulated parties to generate more LCFS credits, but it would also allow for increased gasoline pool octane � something the automakers have been suggesting will be necessary to meet future corporate average fuel economy/greenhouse gas emissions standards. To read the full white paper, click here.