Opportunities and risks for a national low-carbon fuel standard
To assess the potential GHG and economic impacts of moving from the federal Renewable Fuel Standard (RFS) to a national low-carbon fuel standard (LCFS), this paper estimates the future mix of fuels supplied to the transport sector and GHG reductions under various implementation scenarios for the period 2020 through 2035. These nine scenarios include three greenhouse gas (GHG) reduction targets, three different assessments of indirect land-use change (ILUC) impacts, and three different safeguards to cap the contributions of certain fuels.
The analysis finds that a technology-neutral national LCFS would greatly increase demand for food-based biofuels and waste oils. In the scenarios studied without any restrictions on the contribution of food-based biofuels, the consumption of food-based biofuels production increases up to 220% relative to 2020 levels. In addition, a national LCFS may induce an increase in waste oil imports with sustainability risks due to fraud. The analysis finds that waste oil fraud could increase the GHG emissions of the average fuel mix by up to 5%, depending on the scenario, and reduce the intended GHG savings from the LCFS by up to 4%.
Uncertainty in ILUC emissions accounting from crop-based biofuels may also reduce or entirely undermine the GHG savings from an LCFS. An assessment of the potential impact of higher ILUC emissions on the mix of fuels supplied in a scenario with a high reduction target, the average carbon intensity of fuels would be 10.1 gCO2e/MJ higher, reducing the de facto GHG savings from the policy by over 40%.
Introducing separate caps on food-based biofuels and waste oils results in a lower GHG reduction target, but achieves those GHG reductions with much higher integrity than the corresponding technology-neutral scenario. In addition, implementing dual caps also better supports the development of a sustainable and scalable second-generation cellulosic biofuel industry. Without these specific safeguards, we there is a high risk that a national LCFS would not deliver the level of GHG reductions nor advance the second-generation biofuels industry necessary for deep decarbonization of the U.S. transport sector.