As part of the European Climate Foundation’s Biofrontiers project, Défense Terre was asked to analyze the regulatory treatment of thirteen novel fuel technologies or “NFTs” in the European Union and United States. The ICCT fuels team guided the project.
The term “NFT” refers to transportation fuels that are produced using innovative processes and nontraditional feedstocks, in particular feedstocks that may result in these fuels falling outside legislative definitions of renewability. The NFTs considered fall into four categories: power-to-liquids; sunlight-to-liquids; bacterial conversion; and non-biological waste-to-energy. This report does not undertake an analysis of the comparative environmental performance of these technologies, but it is recognized that NFTs as a group show great potential to deliver greenhouse gas emissions reductions in the transport fuel sector.
The regulatory frameworks analyzed in this report include the Renewable Energy and Fuel Quality Directives in the European Union, the Renewable Transport Fuel Obligation in the United Kingdom, the Federal Imission Control Act in Germany, the Renewable Fuel Standard in the United States and the Low-Carbon Fuel Standard in California. The analysis provides the basis for recommendations on designing a regulatory framework for NFTs.
The report concludes that the uneven treatment of NFTs in regulatory frameworks can be addressed by moving toward a low-carbon fuel policy based directly on environmental performance. It is suggested that this could be in the form of a low-carbon fuel policy that promotes low-carbon fuels through eligibility criteria and levels of incentivizes that are based, at least in part, on carbon intensity. This is a departure from the historical focus by policymakers on proxy characteristics such as renewability. Given the lack of a universal definition of renewability, however, and the fact renewability does not always guarantee carbon savings, as is often the case with biofuels that cause indirect land-use changes, NFTs are better promoted on a level playing field where carbon intensity is the predominant consideration. Although there may be risks associated with large-scale development of NFTs, in general these risks can be managed.
Thus it is recommended that a low-carbon fuel policy be advanced to accommodate NFTs that has the following four key elements:
- Intermediate and Final Targets
- Process for Accommodating New Pathways
- Comprehensive Greenhouse Gas Accounting
- Safeguards to Mitigate Risks