Senate Transportation and Housing Committee
Providing Fuels of the Future
Catherine Reheis-BoydPresident
October 24, 2011
WESTERN STATES PETROLEUM ASSOCIATION
Low Carbon Fuel Standard Adopted April 2009 Reduce full fuel cycle “carbon intensity”
C.I.) of transportation fuel pool at least 10% by 2020; a reduction of 16MMT of GHG emissions; 10% of total GHG reductions to meet AB32 target
Intended to drive market toward innovative, low carbon fuels Reduce California’s dependence on petroleum Applies to all refiners, blenders, producers or importers Considers direct and indirect land use changes Includes periodic reviews – 2011, 2014 Board revisions to regulation in 2011
WESTERN STATES PETROLEUM ASSOCIATION
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Petroleum is a fuel of the future
Source: U.S. Energy Information Administration
WESTERN STATES PETROLEUM ASSOCIATION
Petroleum companies are investing in the fuels of the future
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Low carbon options
Source: California Air Resources Board, staff report on Low Carbon Fuel Standard fuel pathways, September 20105
WESTERN STATES PETROLEUM ASSOCIATION
WESTERN STATES PETROLEUM ASSOCIATION
Federal Biofuels Mandate (RFS2):Incentive To Develop Advanced Biofuels
Source: US Energy Information Administration
Advanced cellulosic; advanced non-cellulosic,(e.g., sugar ethanol); biomass-based diesel
Conventional, corn ethanol
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Low Carbon Fuel Standard compliance schedule
Source: Proposed Regulation to Implement the Low Carbon Fuel Standard Volume I, Staff Report: Initial Statement of Reasons, March 5, 20097
WESTERN STATES PETROLEUM ASSOCIATION
Midwest Corn Ethanol CI Range 73.20 – 120.99
Cellulosic Ethanol From Trees CI 20.40 (not commercially available)
Sources: CARB Tool for Calculation for Required Ethanol CI to Comply with Gasoline Standard, May 2011; Method 2A/2B Applications and Internal Priority Pathways (as of June 24, 2011);May 25, 2011Clean Final Regulation Order Part 1 and 2 Combined; Detailed California-Modified GREET Pathway for Cellulosic Ethanol from Farmed Trees by Fermentation, February 27, 2009
* Assumes no change to current 10% ethanol blend wall and no wide scale use of E85
Carbon intensity of ethanol blended into gasoline required to meet LCFS gasoline targets*
Car
bon
Inte
nsity
(gC
O2e
/MJ)
LFCS Compliance Scenario – Gasoline Only
Brazil Sugar Cane Ethanol CI Range 58.40 – 83.96
Sorghum/Wheat/Corn Ethanol CI Range 56.56 – 99.89
California Ethanol CI Range 71.40 – 88.90
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Examples of other LCFS compliance pathways
Source: Proposed Regulation to Implement the Low Carbon Fuel Standard Volume I, Staff Report: Initial Statement of Reasons, March 5, 2009; California Energy Commission, 2009 Integrated Energy Policy Report
All electric car
Hydrogen fuel cell vehicle
Flexible fuel vehicle (E85)
Natural gas vehicle
Electric & hydrogen 560,000 – 2 million 14,680vehicles
Flexible fuel vehicles 1.8 – 3.4 million 400,000(43 E85 stations)
Natural gas vehicles ? 24,810
Vehicle pathway CARB scenario Reality1
1 Based on 2008 data
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Global oil reserves
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HCICO could result in crude shuffling, higher GHG emissions
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WESTERN STATES PETROLEUM ASSOCIATION
LCFS impacts to California refiners, consumers
Lower carbon intensity biofuels are expected to command a price premium
Over the long‐term, there will be pressure to pass costs increases along to consumers
The potential impact on E10 prices for blends using Brazilian ethanol could range between 10.4 cents per gallon and 17.5 cents per gallon
There are numerous challenges to developing adequate vehicle production and sales, refueling infrastructure, and technical standards
Source: California Energy Commission, Draft Staff Report , Transportation Energy Forecasts and Analyses for the 2011 Integrated Energy Policy Report, August 2011