The Regional Low Carbon Fuel Standard and Sustainable Biomass in the Northeast

1. The Regional Low Carbon Fuel Standard and Sustainable Biomass in the Northeast Michelle Manion NESCAUM (Northeast States for Coordinated Air Use Management) Restructuring Roundtable Boston, MA December 4, 2009

2. What’s “carbon intensity” again? • A measure of the total CO2-equivalent emissions produced throughout a fuel’s lifecycle • Measured in grams of CO2-equivalent GHG emissions per unit of energy in fuel gCO2e/MJ

3. Carbon Intensity Calculation: Conventional Gasoline Well-To-Tank Carbon Intensity: 16.9 gCO2e/MJ + Carbon Content of Fuel: 72.9 gCO2e/MJ + Vehicle emissions of CH4 and N20: 2.47gCO2e/MJ = Lifecycle Carbon Intensity: 92.3 gCO2e/MJ

4. Emissions from Indirect Land Use Change • Plants and soils store large amounts of carbon that is released during land conversion • Diversion of corn or other crops from existing markets to biofuels production can induce farmers elsewhere to bring new acreage into production • Initial carbon release from land conversion event may exceed GHG benefits of displacing use of petroleum or other fossil fuels

5. .06 forest .24 grassland converted to agriculture ~30 metric tons CO2 released -29 CO2 Net GHG Emissions Produces ~400 gallons/yr ethanol Saves ~1 metric ton CO2 emissions annually Example of Indirect Land Use Change Emissions One acre cropland devoted to corn ethanol Source: CARB 2009, based on GTAP modeling.

6. Local/Regional Biomass Feedstocks • Municipal Solid Waste • Only items that have reached the end of their use cycle (non-reusable, non-recyclable) • The Northeast’s most significant resource • Less likely to induce additional LUC than virgin feedstocks • Woody Biomass • New England has substantial woody biomass but also many existing markets (e.g., pulp and paper, exports) • NY and PA combine for approximately two-thirds of total supply • Agricultural Residues • New York and Pennsylvania dominate again, approximately 75 to 90 percent of agricultural biomass resources

7. Estimated Biomass Availability in the Northeast Sources: NESCAUM and INRS analysis, 2008; US EPA 2006-2008.

8. Current Regional Market for Woody Biomass

9. Climate Change Impacts on Forest Carbon Source: Canadian Forest Service, Knight Science Journalism, 2009. Source: Natural Resources Canada, 2006.

10. Thank You Northeast States for Coordinated Air Use Management 89 South Street, Suite 602 Phone 617-259-2000 Boston, MA 02111 Fax 617-742-9162 Arthur Marin, Executive Director amarin@nescaum.org

11. Transportation Sector GHGs are Important! • GHG emissions from transportation are large and increasing (over 30% of total in most states) • Transportation GHG emissions affected by: • Amount and type of transportation fuels • Efficiency of motor vehicles • Number of vehicle miles traveled

12. Connecticut Delaware Maine Maryland Massachusetts New Hampshire New Jersey New York Pennsylvania Rhode Island Vermont Northeast/Mid-Atlantic Low Carbon Fuel Standard • December 2008: Commissioners from 11 Northeast and Mid-Atlantic states signed Letter of Intent to develop framework for regional LCFS • Governors will sign LCFS Memorandum of Understanding this month

13. “What is a Low Carbon Fuel Standard?” • Performance-based standard for fuels • Does not “pick winners” or ban any fuel • Regulates “carbon intensity” or lifecycle carbon emissions from fuels • Requires displacement of conventional transportation fuels with advanced fuels that have low carbon intensities, such as: • Natural gas • Low-carbon biofuels • Electricity generated with renewable sources • Hydrogen produced from renewable sources

14. “What is a Low Carbon Fuel Standard?” • Would require reductions in carbon intensity from today’s transportation fuels: • Gasoline • Diesel • Requires lifecycle GHG accounting for • All baseline fuels • Low-carbon substitutes on an opt-in basis • Heating oil could be included • NOT A CAP ON TRANSPORTATION EMISSIONS

15. How is the LCFS Different From Other Regulations? • Typical vehicle and fuel standards regulate tailpipe emissions • LCFS regulates GHG emissions from the full fuel lifecycle • Cap-and-trade regulations limit total emissions allowed • LCFS regulates only the “intensity” of emissions for a unit of fuel • Total transportation emissions could still increase if total energy use increases • LCFS complements vehicle efficiency standards and travel demand management strategies

16. Program Structure: Who is Regulated? • Providers of most petroleum and biofuels are ‘regulated parties’ • Providers of fuels that meet 2020 levels must ‘opt in’ to earn credits: • Electricity • Hydrogen • Natural Gas

17. Flexible, Market-Driven Compliance Options • Supply a mix of fuels with carbon intensity equal to the standard • Provide fuels that have lower carbon intensity than the standard • Use purchased or banked credits to meet the standard

18. Regional LCFS Initiative: Stringency • California’s LCFS requires a 10% reduction in GHG-intensity of fuels by 2020 • States are not required by any law to adopt the same LCFS stringency as California • Given the interconnected nature of the region’s fuel supply network, adopting the same stringency within the region is optimal • Facilitate compliance for regulated parties • Maximize program effectiveness

19. What is Lifecycle Analysis? • An accounting of the emissions associated with each stage in the life of a product. • Production • Transport • Storage • Delivery • End Use • “Cradle-to-Grave”, “Well-to-Wheels”, “Full Fuel Cycle”… • Simple addition… …but keeping track of every stage can be very complicated!