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Brazil was the first country to make a significant shift to renewable, lower carbon fuels based on producing ethanol from sugar cane, but many countries around the world are now pursuing similar approaches with mixed success. California recently

12 Similar agreements were also reached with the Japanese and Korean manufacturers.

2 250

S3 230

PASSENGER VEHICLE GHG EMISSIONS FLEET AVERAGE PERFORMANCE AND STANDARDS BY REGION

Solid dots and lines: actual data

Hollow dots and dashed lines: nearest targets enacted

Smaller hollow dots and dotted lines: proposed targets--

2 250

S3 230

CANADA

CALIFORNIA ---

CANADA

CALIFORNIA ---

,

CHINA

^

SOUTH KOREA

EUROPEAN UNION

JAPAN

EUROPEAN UNION

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Fig. 6.8 Projected GHG emissions for new passenger vehicles by country/region

JAPAN

proposed carbon based fuels requirements and the EU is pursuing low carbon fuels standards (LCFS) [16]. However, to achieve significant global benefits from low carbon fuels it is increasingly clear that a full life cycle analysis13 is necessary which includes consideration of indirect land use effects. When such factors are taken into account, it is clear that moving to low carbon fuels that actually achieve significant benefits is a very difficult proposition.

The goal of a LCFS is to promote investment and use of low carbon fuels (e.g., sustainable corn ethanol and biodiesel, CNG, renewable electrons14 / hydrogen) and dampen demand for high carbon fuels (e.g. Canadian tar sands, Venezuelan shale oil, U.S. coal to liquids).

The current U.S. renewable fuels standard (RFS), mandated by the Energy Independence and Security Act of 2007, takes a step toward a LCFS by requiring life-cycle GHG standards for three categories of biofuels: baseline renewable biofuels 20% below gasoline, advanced biofuels 50% improvement, and cellulosic

13 A full life cycle analysis is an effort to capture all the emissions associated with a given fuel from its extraction or harvest to refinement and transport all the way to the eventual consumption in the vehicle. Only in this way can a fair comparison be made between various fuels and can a fair accounting be made of their impact on climate change.

14 If a significant portion of the vehicle fleet becomes battery electric or plug in hybrids, it will be important to produce the electricity for these vehicles using clean, renewable fuels. Otherwise the environmental benefits, especially with regard to climate impacts, will be greatly diminished.

biofuels 60% improvement. The RFS however only applies to biofuels and thus does not dampen demand for high carbon fuels (e.g., tar sands, coal to liquids).

California air regulators have adopted a mandate requiring low-carbon fuels, part of the state's wider effort to reduce greenhouse gas emissions. The California Air Resources Board voted 9-1 to approve the standards, which are expected to serve as a template for a national policy. The rules call for reducing the carbon content of fuels sold in the state by 10% by 2020, a plan that includes counting all the emissions required to deliver gasoline and diesel to California consumers' from drilling a new oil well or planting corn to transporting it to gas stations.

The measure also sets the stage for emerging alternative fuels - such as cars that run on compressed natural gas and electric vehicles like plug-in hybrids that run on both gasoline and rechargeable batteries - to compete with second-generation ethanol. That fuel, cellulosic ethanol, is expected to be made in commercial amounts from non-food feedstocks like switch grass and fast-growing trees.

To give fuel producers time to adjust, the bulk of the carbon limits required under the regulation do not go into effect until 2015.

California's regulators ranked 11 different ways of making corn ethanol. They found that traditional distilling methods used in the Midwest, accounting for the bulk of U.S. supplies, emit the most carbon over a lifecycle measured from production to combustion. The state gave much better carbon savings scores to corn etha-nol made in California with a distillery fired by a blend of natural gas and crop waste, also known as biomass.

The regulation rates different fuels based on their carbon intensity, measured as the number of grams of carbon dioxide released for every megajoule of energy produced. When the indirect land-use effects of biofuels are included, some types of ethanol rate worse than gasoline.

Fuel Type

Carbon intensity

Carbon intensity (including land use changes)

California gasoline{+1}

95.85

95.85

Midwest ethanol{+2}

75.10

105.10

California ethanol{+3}

50.70

80.70

Brazilian ethanol{+4}

27.40

73.40

Landfill gas(bio-methane){+5}

11.26

11.26

{+2} with some of the plant's power coming from coal {+3} with the plant's coming from natural gas {+4} made from sugarcane and shipped here {+5} derived from landfills in California Source: California Air Resources Board

{+2} with some of the plant's power coming from coal {+3} with the plant's coming from natural gas {+4} made from sugarcane and shipped here {+5} derived from landfills in California Source: California Air Resources Board

Electric utilities may opt into the program and generate credits if they sell renewable electrons to plug-in hybrids or all-electric vehicles. GHG emissions from direct and indirect land use changes are included in the estimation of fuel lifecycle GHG impacts.

The European Union adopted a LCFS similar to California. The new law will require fuel suppliers to cut life-cycle greenhouse gas emissions from road fuels by 6% over the decade from 2010 to 2020 (intermediate targets: 2% by 31 December 2014 and 4% by 31 December 2017). The cuts will come from production efficiency improvements and switches to cleaner fuels such as biofuels. Biofuels sus-tainability criteria will be added to the new law once they have been agreed in separate negotiations on a new renewable energy directive.

With this the EU has sent a clear signal that its market is not opened to carbon intensive marginal oils, such as tar sands or coal-to-liquid. Several key technical and economic questions remain with regard to low carbon fuels, including:

• Significant uncertainty around lifecycle GHG emissions from U.S. corn ethanol (range is between average 25% improvement over gasoline to twice the lifecycle GHG emissions of gasoline - thus making corn ethanol potentially worse than tar sands and coal to liquids).

• If biomass for fuels can only be produced sustainably if grown on degraded land or produced from waste products (e.g., corn stover, forest wood waste), then what are the practical limitations of global supplies of sustainable biofuels?

• How much of the recent increase in the world price of corn and other grains is attributable to biofuels mandates in the U.S. and elsewhere?

• What are the prospects of plug-in hybrids and the ability of electric utilities to supply sufficient renewable electrons for this new market?

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