So-called first and second generation biofuels share a common challenge—how to show that biofuels represent life-cycle greenhouse gas emissions savings as compared to traditional fossil fuels. The issue also causes breaches in the biofuels industry because the greenhouse gas emissions savings of different biofuels can vary substantially.  A universally accepted regulatory tool for answering the question is “life cycle analysis.” Life-cycle analyses for renewable fuels seek to quantify the greenhouse gas emissions created by the manufacture of the fuel, including its inputs, through transportation to the consumer, use and disposal.  Under the 2007 Energy Independence and Security Act, biofuels qualify for the new renewable fuels standard (RFS) only if all carbon emissions associated with their production and use result in emissions savings of at least 20 percent.  California Assembly Bill AB 32 and the Governor’s Executive Order S-01-07 call for a reduction of at least 10 percent in the carbon intensity of California’s transportation fuels by 2020.  These projected emissions savings thresholds face technical challenges in measuring life cycle emissions savings and political battles as the various stakeholders jockey for position.  The resulting uncertainty contributes to limitations on investment flows in biofuels.

Under the 2007 Energy Independence and Security Act, renewable fuels must meet life-cycle emissions reduction targets for renewable fuels to qualify for the Renewable Fuel Standard (RFS).  Any renewable fuel produced in a facility under construction as of December 2007 must meet a threshold 20 percent reduction from a 2005 baseline, which is generated by measuring the 2005 life-cycle greenhouse gas emissions of traditional fuels.  Beginning in 2009, the subcategories of renewable fuel created by the act (cellulosic biofuel, advanced biofuel and biodiesel) must meet life-cycle greenhouse gas emissions reductions of between 50 percent and 60 percent from the 2005 baseline before consideration for the RFS.

In California, the California Environmental Protection Agency is required to coordinate activities between the University of California, the California Energy Commission and other state agencies to develop and propose a draft compliance schedule to meet the 2020 target.  Furthermore, the California Air Resources Board (CARB) identified the establishment and implementation of the Low Carbon Fuel Standard (LCFS) as an early action item with a regulation to be adopted and implemented by 2010.

As we reported on ClimateIntel, on March 5, 2009, (CARB) released its proposed regulation for establishing an LCFS. The proposed “cradle to the grave” regulation takes into account emissions associated with the full life-cycle of transportation fuels, including (1) direct emissions associated with producing, transporting and using the fuels, and (2) indirect emissions associated with other effects, such as those caused by land use changes.   The U.S. Environmental Protection Agency (EPA) is in the process of developing a similar rule as part of the development of a federal RFS

Compliance with these thresholds requires resolution of just how to measure life-cycle greenhouse gas emissions.  The sheer complexity of the analysis, including disagreements as to the appropriate methodology for measuring greenhouse gas emissions, has made LCFS rulemakings a difficult endeavor.  In 2007, as part of its rulemaking establishing the 2005 RFS, EPA determined that “the current state of scientific inquiry surrounding life-cycle analyses is not sufficiently robust to warrant its use.”  The science has not developed sufficiently since to allow for consensus on this issue, and rulemaking establishing a uniform methodology is likely to be controversial.

The CARB proposal uses life cycle analysis as an analytical method for estimating the aggregate quantity of greenhouse gas emissions from a full fuel cycle.  CARB’s life cycle analysis includes the direct effects of producing and using the fuels and “indirect” effects that may be associated with the particular fuel.  One important—and controversial—indirect effect considered by CARB is land use change.  According to CARB, indirect land use change produces emissions above and beyond those generated during the direct fuel life cycle.  

The most commonly posited land use change is purported to occur, for example, when farmland devoted to food and feed production is diverted into biofuel crop production causing supplies of the displaced food and feed crops to be reduced.  The logic of the CARB analysis is as follows:

• supply reductions from displacement of cropland cause prices to rise that, in turn, stimulate increased food and feed production;
• production takes place on land formerly in non-agricultural uses, an indirect land use change impact results;
• specific impact consists of the CO₂ released to the atmosphere when converted lands are cleared and the soils disturbed;
• some of these releases are essentially immediate, some continue for several years; and
• land use change impacts can occur domestically, and in countries that trade with the U.S.

The inclusion of indirect land use changes is perhaps the most controversial portion of the life cycle analysis proposed by CARB and will likely be even more contentious in the forthcoming EPA proposal. 

In the next installment, ClimateIntel focuses on the science on indirect land use modeling.

For further information about this topic, please contact Akin Gump.