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Biofuels in a Cap & Trade Context  John M. DeCicco School of Natural Resources and Environment University of Michigan 17 November 2009
Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Motivation for the work ,[object Object],[object Object],[object Object],[object Object],[object Object]
U.S. Fossil CO 2  Emission Projections vs. Climate-Protective Limits
Stakeholder Engagement and Research ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Standard Lifecycle Method for Fuels Analysis
System Boundaries as Conventionally Used for Analysis
The "Renewability Shortcut" ,[object Object],[object Object],[object Object],[object Object],[object Object],*Many fuel LCA models internally tally the CO 2  from biofuel   combustion   but then automatically net it out by assuming an equal amount of CO 2  uptake.
Conventional Views ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GREET Ethanol Slide
Fuel Lifecycle GHG Comparisons Source: near-term estimates from GREET 1.8; Farrell et al. (2006) for ethanol with credit
Meanwhile, back at the ranch … ,[object Object],[object Object],[object Object],[object Object],[object Object]
Ratio of natural land area converted per unit area of biofuel feedstock expansion Source: John Reilly (MIT) presentation at CRC Workshop on Lifecycle Analysis of Biofuels, Argonne National Laboratory, Oct. 21, 2009.
The Big Debate on Biofuels and Land-Use Change ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Expanding the Scope of LCA-based Policy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
EISA Language for Fuel GHG Emissions ,[object Object],LIFECYCLE GREENHOUSE GAS EMISSIONS.—The term ‘lifecycle greenhouse gas emissions’ means the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes), as determined by the Administrator, related to the full fuel lifecycle, including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential.
USCAP Transportation Recommendations ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Low-Carbon Fuel Stakeholder Research ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Fuels GHG Accounting Principles ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Accounting principles need to be interpreted within a well-defined policy framework because aspects of their implementation are policy dependent.
Problem Statement ,[object Object],[object Object],[object Object],Can an approach for transportation fuels-climate policy be developed that is consistent with good accounting principles and:
Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
U.S. Transportation Sector End-use CO 2  Emissions:  Business-As-Usual and Annual Energy Outlook Projections Right axis is normalized to the 2005 emissions level of 1,985 TgCO 2 /yr
Table 1
Sketch Model for Analyzing Transportation  Sector GHG Emissions Missed by a Cap Derived from DOE EIA Annual Energy Outlook 2008 and 2009, normalized so that the 2005 level of U.S. transportation sector CO 2  emissions = 100.  Business-as-usual (BAU) scenario has neither vehicle efficiency gains nor RFS.  Vehicle efficiency includes CAFE per EISA (prior to California compromise) plus EIA's projected efficiency gains in other transportation modes.  "Apparent emissions" are the levels projected by DOE, incorporating the effect of the RFS and using the renewability shortcut (that is, excluding biogenic CO 2 ).   
Apparent Reductions from Biofuels Apparent reductions from biofuels   are the difference between EIA's projections ("Apparent emissions") and the levels projected based on vehicle efficiency only.  These reductions would be fully "real" only if all uncapped biofuel and feedstock related emissions are included and no leakage is involved.  Major uncertainties are involved for N 2 O and CO 2  leakage from land-use change.
Wide Uncertainties for Actual Biofuels GHG Impacts Lower GHG intensity values assume that the nominal lifecycle carbon intensity requirements of the RFS are met and that real-world impacts are in fact limited to the levels required by the regulation.  Higher GHG intensity values are double the lower values.
Summary Estimates of U.S. Transportation-Related GHG Emissions Missed by a Cap In 2020, for example, missed emissions amount to 17%-22% of the sector's 2005 emissions level, comparable to the relative magnitude of economy-wide reductions proposed for that time frame.  Converted to absolute values, missed emissions   range 342-430 TgCO 2 e in 2020.
U.S. Transportation Sector CO 2  Emissions:  Plausible Real Impacts vs. EIA AEO Projections
Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Toward Carbon Management  for Transportation Fuels ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Elements of a Carbon Management Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],The approach described here is not the same as treating biofuels strictly as carbon offsets.
Specifying the Cap for Transportation ,[object Object],[object Object],[object Object]
Point of Regulation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Appropriate Legal Definition for POR This definition has long been used by EPA for regulating fuel composition, for example, in the Tier 2 sulfur rule and the RFS.  It is often the point where fuel suppliers "break bulk," as it is known in the trade, which can be at a refinery but is often at a blending rack or other terminal facility where blendstocks from bulk carriers (pipelines) are combined with blending components to formulate finished fuels meeting a given specification.
Correctly Specifying the Cap for Transportation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Direct CO 2  Emission Factors
Example Allowance Calculation for Unrated E85 Calculation for 1 million gallons of E85 (85% ethanol, 15% gasoline):  By way of comparison, 1 million gallons of gasoline would directly emit 8,498 tCO 2  (metric tons of carbon dioxide), which determines a refiner's allowance submission requirements for distributing that fuel.  The lower number of allowances needed for the unrated ethanol reflects only the lower volumetric energy density of ethanol. Carbon emissions for cap accounting purposes are assumed to be the same as those of gasoline on an energy-equivalent basis.
Fuel and Feedstock Accounting Standards (FFAS) ,[object Object],[object Object],[object Object],[object Object],[object Object]
"Reasonably Attributable" Emissions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],*Gnansounou  et al.  (2008), review of accounting approaches for biofuels ILUC Businesses will argue forcefully against being held legally accountable for impacts not reasonably attributable to their own actions and which may (or may not) occur in the future.
Facility-level carbon balances for tracking GHG emissions in the fuel supply chain
Case Study: Illinois River Energy Center ,[object Object],[object Object]
Farm GHG Balance
Biorefinery GHG balance
Allowance Calculation for FFAS Rated E85 Adding the net uncapped emissions credit of 88.8 g/MJ to the direct CO 2  emissions from fuel combustion of 71.52 g/MJ yields a net credit of 17.25 g/MJ, which enters into the calculation below:  Therefore, a refiner would need to submit only 100 CO 2  allowances for this batch of fuel, a large reduction from the 6,167 allowances needed for unrated E85. Note that this value is much smaller than, and not directly comparable to, LCA results, because the FFAS approach needs to address only uncapped emissions.  This illustration entails many LCA defaults as used in the  referenced   case study (Mueller et al. 2008). Suppose, for example, actual N 2 O emissions from corn growing were 3x as large as the IPCC default. That change alone would raise the allowance requirements to 3,073 tCO 2 e.
Addressing Indirect Land-Use Change (ILUC) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Expansion is Inevitable ,[object Object]
Some Typical GHG Intensity Comparisons with Impacts of Indirect Land-Use Change (ILUC) *Biofuel direct (tailpipe) emissions omitted by LCA "renewability shortcut" 100 30 " " CARB LCFS rule 170 100 " " Searchinger et al.  73 46 27 " Sugarcane ethanol (CARB) gCO 2 e/MJ 60 ILUC 130 " " EPA scenario (implied) 70 70 72* Corn ethanol 93 21 72 Gasoline TOTAL Upstream Direct
ILUC Mitigation: Land Protection Fund ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
ILUC Impacts and Mitigation Costs
Funding the Land Protection Fund ,[object Object],[object Object],[object Object],[object Object],Shifts a debate about how to regulate biofuels to a debate about who pays for impact mitigation A number of options come to mind:
Outline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Points of Discussion ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Summary of Concept ,[object Object],[object Object],[object Object]
Conclusions ,[object Object],[object Object],[object Object],[object Object],[object Object]

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Biofuels in a Cap & Trade Context

  • 1. Biofuels in a Cap & Trade Context John M. DeCicco School of Natural Resources and Environment University of Michigan 17 November 2009
  • 2.
  • 3.
  • 4. U.S. Fossil CO 2 Emission Projections vs. Climate-Protective Limits
  • 5.
  • 6. Standard Lifecycle Method for Fuels Analysis
  • 7. System Boundaries as Conventionally Used for Analysis
  • 8.
  • 9.
  • 11. Fuel Lifecycle GHG Comparisons Source: near-term estimates from GREET 1.8; Farrell et al. (2006) for ethanol with credit
  • 12.
  • 13. Ratio of natural land area converted per unit area of biofuel feedstock expansion Source: John Reilly (MIT) presentation at CRC Workshop on Lifecycle Analysis of Biofuels, Argonne National Laboratory, Oct. 21, 2009.
  • 14.
  • 15.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.
  • 22. U.S. Transportation Sector End-use CO 2 Emissions: Business-As-Usual and Annual Energy Outlook Projections Right axis is normalized to the 2005 emissions level of 1,985 TgCO 2 /yr
  • 24. Sketch Model for Analyzing Transportation Sector GHG Emissions Missed by a Cap Derived from DOE EIA Annual Energy Outlook 2008 and 2009, normalized so that the 2005 level of U.S. transportation sector CO 2 emissions = 100. Business-as-usual (BAU) scenario has neither vehicle efficiency gains nor RFS. Vehicle efficiency includes CAFE per EISA (prior to California compromise) plus EIA's projected efficiency gains in other transportation modes. "Apparent emissions" are the levels projected by DOE, incorporating the effect of the RFS and using the renewability shortcut (that is, excluding biogenic CO 2 ).  
  • 25. Apparent Reductions from Biofuels Apparent reductions from biofuels are the difference between EIA's projections ("Apparent emissions") and the levels projected based on vehicle efficiency only. These reductions would be fully "real" only if all uncapped biofuel and feedstock related emissions are included and no leakage is involved. Major uncertainties are involved for N 2 O and CO 2 leakage from land-use change.
  • 26. Wide Uncertainties for Actual Biofuels GHG Impacts Lower GHG intensity values assume that the nominal lifecycle carbon intensity requirements of the RFS are met and that real-world impacts are in fact limited to the levels required by the regulation. Higher GHG intensity values are double the lower values.
  • 27. Summary Estimates of U.S. Transportation-Related GHG Emissions Missed by a Cap In 2020, for example, missed emissions amount to 17%-22% of the sector's 2005 emissions level, comparable to the relative magnitude of economy-wide reductions proposed for that time frame. Converted to absolute values, missed emissions range 342-430 TgCO 2 e in 2020.
  • 28. U.S. Transportation Sector CO 2 Emissions: Plausible Real Impacts vs. EIA AEO Projections
  • 29.
  • 30.
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  • 33.
  • 34. Appropriate Legal Definition for POR This definition has long been used by EPA for regulating fuel composition, for example, in the Tier 2 sulfur rule and the RFS. It is often the point where fuel suppliers "break bulk," as it is known in the trade, which can be at a refinery but is often at a blending rack or other terminal facility where blendstocks from bulk carriers (pipelines) are combined with blending components to formulate finished fuels meeting a given specification.
  • 35.
  • 36. Direct CO 2 Emission Factors
  • 37. Example Allowance Calculation for Unrated E85 Calculation for 1 million gallons of E85 (85% ethanol, 15% gasoline): By way of comparison, 1 million gallons of gasoline would directly emit 8,498 tCO 2 (metric tons of carbon dioxide), which determines a refiner's allowance submission requirements for distributing that fuel. The lower number of allowances needed for the unrated ethanol reflects only the lower volumetric energy density of ethanol. Carbon emissions for cap accounting purposes are assumed to be the same as those of gasoline on an energy-equivalent basis.
  • 38.
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  • 40. Facility-level carbon balances for tracking GHG emissions in the fuel supply chain
  • 41.
  • 44. Allowance Calculation for FFAS Rated E85 Adding the net uncapped emissions credit of 88.8 g/MJ to the direct CO 2 emissions from fuel combustion of 71.52 g/MJ yields a net credit of 17.25 g/MJ, which enters into the calculation below: Therefore, a refiner would need to submit only 100 CO 2 allowances for this batch of fuel, a large reduction from the 6,167 allowances needed for unrated E85. Note that this value is much smaller than, and not directly comparable to, LCA results, because the FFAS approach needs to address only uncapped emissions. This illustration entails many LCA defaults as used in the referenced case study (Mueller et al. 2008). Suppose, for example, actual N 2 O emissions from corn growing were 3x as large as the IPCC default. That change alone would raise the allowance requirements to 3,073 tCO 2 e.
  • 45.
  • 46.
  • 47. Some Typical GHG Intensity Comparisons with Impacts of Indirect Land-Use Change (ILUC) *Biofuel direct (tailpipe) emissions omitted by LCA "renewability shortcut" 100 30 " " CARB LCFS rule 170 100 " " Searchinger et al. 73 46 27 " Sugarcane ethanol (CARB) gCO 2 e/MJ 60 ILUC 130 " " EPA scenario (implied) 70 70 72* Corn ethanol 93 21 72 Gasoline TOTAL Upstream Direct
  • 48.
  • 49. ILUC Impacts and Mitigation Costs
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Editor's Notes

  1. This talk describes a recently launched research project that builds on multi-stakeholder discussions over the past three years. My recent biofuels policy discussion paper represents an early product of the project.
  2. Note that the AEO projections are inaccurate because they count biofuels as having zero transportation sector CO2.
  3. BAU projection is without CAFE and RFS; for sketch model, normalize to 2005 level of 1,985 TgCO2/yr
  4. Concludes that ethanol from this facility has a GHG intensity of 55 gCO2e/MJ, or 40% lower than gasoline at 92 g/MJ. This ethanol result is 21% lower than the GREET default of 69 g/MJ.