CI: Go Low or Stay Home transcript
In this webinar originally held on June 30, 2020, EcoEngineers’ team of Low Carbon Fuel Standard (LCFS) regulatory and life-cycle analysis experts discussed LCFS reporting data from 2019 and the resulting projected carbon intensity (CI) scores required for biofuels headed to the California market to remain competitive through 2023. A Q&A session with our experts followed the session.
Well, hello, my name is Kathy Macbeth, and I’m the Director of Sales and Marketing at EcoEngineers and welcome to our webinar presentation, CI: Go Low or Stay Home. Where we will discuss the importance of a low CI in order to remain competitive in California’s LCFS program.
We first broadcast this study in 2019, using 2018 data and we have since updated and broadened the study using 2019 data for today’s presentation. Now let me introduce our eco experts. We have with us Natasha Beilstein, who is a Senior Regulatory Consultant and LCFS Program Manager at EcoEngineers.
Doctor Roxby Hartley, who’s the Senior Regulatory Consultant, and the newest addition to the team, who has helped us establish a California presence. And finally, doctor Lei Zhu, who’s the Senior Technical Lead and LCFS Technical Lead and he’s going to walk us through the methodology and assumptions used in the study we’re presenting to you today.
EcoEngineers is a renewable energy audit and consulting firm, and of course, services, or audit, compliance management and consulting. We hold a deep understanding of what drives innovation and investment in clean energy projects. Regardless of where you are on your low carbon journey, or the configuration of your project, we can come alongside you, with our unique 360 approach to guide you from concept to commissioning, and on through to ongoing compliance.
Our demonstrated experience to date includes over 400 hours of training and education delivered, over 90 innovative pathways approved by US, EPA, and or CARB, over 200 LCFS at both pathways approved, more than one billion investment in clean energy assets supported over a billion gallons of biofuel capacity under our management and 2.9 billion runs verified in 2019.
In our agenda today, we will cover market mechanics and conditions, methodologies walkthrough, results, and analysis, and what producers can do now to lower your CI, and then we’ll wrap up with a Q and A session. With that, I’m going to turn this over to Natasha, who’s going to kick off our presentation. Thank you.
Tasha? Thank you. Thank you very much. Thanks everyone, for joining. Before we get into the methodology and very likely the reason you all are with us today, let’s talk about the LCFS program and give us a little bit of grounding in what we’re talking about and why it matters.
The general goal of the LCFS program is to reduce greenhouse gas emissions from transportation fuel in California by 2030. The California Air Resources Board has done this by incentivizing the development of low carbon fuels. You know, unlike the Renewable Fuel Standard, the Low Carbon Fuel Standard is performance based. So, you get credit based off of, based off of innovation, based off of advanced fuels that reduce greenhouse gas emissions further.
This regulation is also fuel neutral, and I know that, you know, there’s some question of what that means. So, when I think fuel neutral, I think that the credit or credit, so, LCFS credits that come from renewable, natural gas that come from biodiesel, ethanol, electricity, hydrogen. All of those, they all mean the same amount. They all have the same value, Whereas for the renewable fuel standard, each RIN has a different value associated with it. Every fuel has the opportunity to earn the same amount of credit based off of the volume and the carbon intensity of the fuel.
The LCFS has become an example to other programs worldwide. Currently active programs include the Oregon Clean Fuels Program, which is very, very active, they just passed more requirements around strengthening their program. The British Columbia program, that’s very active. The Washington State program has been under review for quite some time. There’s been some question of whether or not when it will come. The Colorado State program isn’t a program we have our eyes on to expect in the near future. Mid-west Regional Program, which is interesting for ethanol producers, in particular, it would give you all maybe the opportunity to see some of the inputs to the Great Model reviewed in a way that, you know, I know ethanol producers do want to see, you know, with farming practices included.
And then a north-east program, similar to Regional program, but I do think New York State’s probably going to lead the way with that one. The LCFS also requires a full life cycle analysis of a fuel to be considered before registration. So what that means is that feedstock production and transportation.
So, for example, the distance corn travels to get to the ethanol production facility, where used cooking oil comes from for biodiesel and renewable diesel production, looking at manure management practices for manure based renewable natural gas projects, all of those factors are what goes into the feedstock production and transportation, What’s the feedstock at the facility? We look to fuel production and distribution, thinking about the process, energy that’s used, what’s being used? Is it fossil natural gas, electricity, grid, electricity, solar, electricity. Even renewable natural gas could be used. And all of those factors contribute to your CI score.
Finally, the probably the most fixed value when it comes to calculating your life cycle analysis for your fuel is the distance that the fuel travels from your facility to get to California. And then the combustion of the fuel as a transportation and use fuel.
Here are the ranges for the CI of each fuel type. Starting off at the top here, we’ll look at CARBOB. So CARBOB in both diesel, so CARBOB is CARB’s cute way of saying gasoline, they have they both have a CI score of about 100. Then we look to hydrogen. So that has a score that has a much wider range of, you know, below 0, but also, you know, looking at about 60.
Cellulosic ethanol has quite a tight range. I’m looking at about 20 to 25, to about 40. Other ethanol, so this includes sugarcane ethanol, this includes cornstarch, includes all those. All those ethanol types, this one has another pretty wide range here. Going from, again, the lower side, looking at about the low, probably low twenties, high teens, to about 70 to 80.
Electricity has a pretty wide range, as well, because we’re looking to grid electricity, which has a bit of a higher score than zero CI electricity from solar Wind, then we have the low ultra low CI electricity that comes from perhaps some of those dairy manure projects. I know a lot of you probably have seen posted for public comment.
Bio LNG and bio CNG are very closely related; many of the bio CNG pathways have a bio LNG counterpart pathway. So, the range for those is fairly similar with the accounting for additional process energy for bio LNG which is why you see that those CI scores a little bit higher. But, the range generally goes from about looks like 82 below -400 or just at for bio LNG, then looking to renewable diesel with similar range too.
A little bit bigger or arranged in cellulosic ethanol. I’m looking to the probably low twenties to about 50 and then biodiesel the lowest therapy. Very likely we know from used cooking oil, so mid teens to the same as about renewable diesel, about 60 or so. Another way to look at that information is thinking of it in a volume weighted average, per CI for liquid fuels, and then we’ll talk about non liquid fuels as well.
For example, the first, first fuel we’ll look at here’s renewable diesel. So the big bubble indicates that’s a large volume of fuel that’s been shipped at that CI score. So the target in the middle is the median CI score for the year, or for all fuels that were sent into California. So, we’re thinking about looks about 35 to me.
Then for biodiesel, we have a much wider range. If you asked me, it goes a little bit lower to the teens. With the median score, also being lower closer, about 25 it looks like here. Next, let’s talk about ethanol. So this ethanol actually includes both cellulosic and cornstarch and all other Ethanol’s, rather than being broken out like before.
So, we know that the CI scores that are closer to 20, we know that those are coming from kernel fiber ethanol. We know that the ones that are in that range, we know where these ethanol’s are coming from but the majority of ethanol still coming into California has a score of about 60 as shown by the really big bubbles associated with it.
For other fuels, for non liquid fuels, the very small orange dots there at the top for hydrogen, the average CI square is about 50 right now, And just as a reminder, I believe these are our energy economy ratio adjusted. For electricity, let’s see. The big orange, the big, I’m sorry, big green circle indicates the largest volume of fuel there, which I believe in, is grid electricity. And then covered by that, well, we would probably see a fairly large bubble also for a zero CI electricity as well.
For bio CNG, I mean look at that range. The range is very large and are looking to almost about 100 all the way down to negative or 400. and if not, a little bit lower, pass that. But what I think is interesting here is that the CI score for the average amount of, of RNG that’s coming into California is still pretty high. It’s still a CI score of about 30. But the biggest bubble here is still at that, See, that higher CI score, which is very interesting, because we hear a lot about the very low CI projects, but we have to remember, you know, the larger perspective of it is the market is still having a large volume at a higher CI comment.
The reason why the CI’s are significant, you know, for what we talked about, gasoline and diesel being at about 100 is because we have to substitute each one of those to reach the goals for the LCFS program. These tables show that the showed that each year this is what the CI of the fossil fuel and the combined renewable fuels have to meet.
So let’s take an example for gasoline, and let’s say my substitute is I like to pick easy numbers for myself, so we’ll go with solar electricity at a CI score of zero. So everything between 91.98, as shown, under the gasoline substitute for 2020 to zero. That’s potential credit generation there. Anything between the gasoline CI score of 100, all the way up to the 91, down to the 91.98 is deficit generation.
Same thing goes for diesel. If we were to pick a perhaps a biodiesel score of 15, 15, all the way up to 92.92, that’s potential credit generation. And then, again, the approximate CI score of diesel being at about 100, we have that deficit generation. One notable thing to mention here, I know we talk a lot about renewable natural gas.
A minute ago, fossil renewable natural gas or fossil CNG has a CI score of about 80 maybe a little bit lower, I think closer to 79. So CNG stations, they readily dispense that fossil natural gas. And they can generate the difference between the 92.92, if they’re using it as a diesel substitute and the 79.
So when you are working with a renewable natural gas, a product, you can then generate credits on the difference between the 79 and whatever your fuel CI score is. So say you are a landfill with a score of 35. That would be your credit your credit generation difference. One more thing for context. So, for gasoline substitutes, I know, Lei will talk a bit more about this,
But gasoline substitutes are those that we can see in passenger vehicles. So, ethanol, electricity, hydrogen. Though, I do know that there’s a big push for more heavy duty, electricity and hydrogen, California at this time, for the purpose of CI analysis, they do put those in the category, unless otherwise expressed through credit generation. For diesel substitutes, we look to biodiesel renewable diesel renewable natural gas.
What’s interesting about this graph to me is that we see the actual reduction in CI score at 5.97, 5.97% for the year, 2019. The actual goal was 6.25%. So as far as setting goals, and actually getting the goal very close to accurate, California did a fairly good job, but also everyone participating in the market contributed to that job well done to reach that goal.
Just as I mentioned before, you know, this is another way to think about anything above what the CI score, the compliance curve is, will generate deficits and anything below that will generate credits. So you will see here, we’re talking about out to 2030, you know, there’s a push to have the goal for that, for the program pushed out to about 2050. We’ll see with the next rulemaking. But for the purposes of today’s study, we’ll be talking about 2023 with an 11.25% reduction.
And with that, I’m going to pass it off to Dr. Lei Zhu Thanks, everyone.
Thank you, Natasha. So, before diving into this scenario analysis, I would like to shed some light on the methodologies and assumptions used for this model in this analysis.
So, we pick the year 2023 for scenario analysis of the low carbon fuel supply to California, as Natasha mentioned earlier, it depends on the field. And the renewable fuels looking to replace either gasoline or diesel, and the CI score needed to participate in, the program can vary.
For diesel substitutes, we assume renewable natural gas, renewable, diesel, and biodiesel goes to the diesel pool. We can see it as diesel gallon equivalents. While for gasoline, also quite a CARBOB substitute, we assume ethanol electricity and hydrogen goes to the gasoline pool. I can see it as gasoline gallon equivalents.
So, currently, the LCFS credits are close to $200 per metric ton, we also assume the credit price remains technique ascends throughout this period considered. We’ve studied this analysis using ethanol as a control fuel, due to its special value, it adds an oxygenated blend stock for gasoline and it’s not likely to be impacted unless regulatory change occurs in the near future. In 2019, we calculated the ethanol had the 11.5 blend level at the gasoline fuel mix.
So the next slide will show the 2019 the current conditions for the, LCFS as data reported by Cobb and we did, actually just released those data last month. This table is summarized that credits generated by each renewable fuel and deficits generated by gasoline and diesel, and also the average CI for each fuel type. If you take a closer look, for RNG, the average CI states, that’s 44.4, or does that weighted average can see that?
Or the type of it, different types of RNG, CNG, RNG and others LCNGs. And for renewal, bought these on biodiesel, an average sits 30.6 and ethanol. It’s 62.12 electricity or hydrogen. And we’ll put it together it’s 33. The reason I put it here, because we’re trying to use the 2019 data as a baseline spectrum, the average CI to predict that what’s going to be in 2023 or in the future.
So looking at ethanol as a replacement for gasoline that one, almost like 1.1 billion gasoline gallon equivalent of ethanol was consumed in California in 2019, which is around 11.5 bland level at the gasoline fuel mix. It’s very close to 2018 level. We do the same calculation, It was sitting at 11.7%. However, the average CI for the ethanol stowed in California is only 62.12, in 2019, it’s actually six points.
Over six points drop from 2018 average, which was 68.6. So you can see there’s like a lot of pressure for ethanol to lower the CI, as the CI for gasoline, is required to decrease the CI of ethanol will need to decrease as well. So this analysis will show the necessary reductions in CI score needed by ethanol to remain competitive in the LCFS market.
So the next slide, the figure, can pass the volumes and credits generated by each fuel type. So it’s the decrease of the compliance benchmark. There is a significant need for the credits to match that deficit in the market to meet the compliance goal.
As you can see, the dark blue bar indicates ethanol. The volume of ethanol has been pretty stable over the past eight years, around 1.1 billion gasoline gallon equivalents but the credits, , but as ethanol slowly, increase, that’s always to the CI reductions, are the main contributors. So in order to predict the ethanol CI in 2023, we will need to estimate the volumes and credits generated by other non ethanol fuel. So the next slide is the model we’re using to estimate those non ethanol fuel of volume.
In that case, we put all eight years of data in this figure. This data coming from CARB, they released it from year 2011 to 2019, so use the linear Regression Model to project the growth rate of the RNG, biodiesel, renewable Diesel, and Electricity volume in 2023.
As you can see, there is like a big jump on renewable diesel and so I’ll let Roxby expanded later. So, next slide, I just want to summarize, all the conditions were used for this analysis. So, we modeled two scenarios to project that 2023 ethanol CI. The table summarizes the given consumptions we use for each scenarios, includes petroleum consumption, With the ability, you have other potentially a few options, and Carbon Intensity Reduction Technologies that, to be said, both scenarios should be understood as a correct transition of those assumptions listed above if we take a closer look. So under the steady progress scenario, where we can see that deployment and not ethanol credits generation option developed at a baseline rate as they stayed in the past 2019 data that matches race and historical trends.
And we assume there is a 20% average CI reduction for the non ethanol fuel compared to the 2019 baseline, and the petroleum fuel consumption stay the same as 2019 baseline, as well. While for the high performance scenario, where several technologies such as electricity, hydrogen, and renewable natural gas developed more quickly than the steady progress scenario, and lead to a higher supply of the low CI not ethanol fuel. So we assumed 50% average CI reduction for those ethanol fuel.
Additionally, there is a low petroleum fuel use in the high performance scenario in order to match to go that’s set by the governor. I think back in 2015, they tried to cut the petroleum consumption in half in 2030. So this region is what leads to lower deficit generation. So due to a higher petroleum use and a lower low carbon fuel adoption rate, the steady progress scenario results in a larger deficit in 2023, which puts greater pressure on ethanol to lower its CI, and generate more credits to make the credit market whole.
And from here, I will let Dr. Roxby Hartley take over and present and interpret the results of those scenario analysis.
Thank you. Thank you very much Lei.
Good afternoon, everybody. So, the model that we’ve developed, as Lei said, has two scenarios. And this is a steady progress scenario, the results of it.
Um, as Lei said, the CARBOB and diesel volumes remain the same in this scenario. What has happened is the LCFS CI standard has fallen from 93, 94 down to 88 and 89. And that fall has added around 10 million tons of extra deficits into the markets. That’s the big, red number at the bottom.
On the other fuel volumes, they’ve gone up slightly apart from ethanol, the RNG, renewable diesel, electricity, and hydrogen have been tracking the model. The CI has dropped by around 20%, and contributes more to the marketplace. And then the ethanol no volume is tracking petroleum, that’s 11.5% by volume.
And you will see that if in this scenario the CI, the ethanol asked to fall to 11.7, to keep the credit market whole. Now if you look at the high performance scenario.
Next slide, please Natasha. High performance scenario, then the amount of CARBOB and the amount of diesel has been reduced in line with what CARB’s plan is to reduce their volumes by 50% by 2030.
In this case, the ethanol volume drops, because it still is fixed, at 11.5% of the total gasoline pool. RNG, renewable diesel, electricity and hydrogen. Their volumes have gone live with the model, but the CI is reduced by 50%. Now, in this model, we can see that there are fewer credits you approximate in the market whole, there’s only 19 million tons of deficits.
And two, the ethanol can remain around the same CI, an average of 64.6, which is a slight increase over the baseline today in 2019. So if we go to the (unintelligible) scenario, we don’t have to change the CI very much, but with the steady state scenario, we have reduced to around 11 or 12. Let’s see how ethanol funds could actually achieve that.
So the key contributors to the CI for ethanol plants. First of all, the entire lunges change which adds almost 20 to CI. There’s farming and transportation. Then there’s the energy actually used in the ethanol plants on the energy embedded in chemicals and enzymes, and then this yields ethanol and co-products.
Then finally, there’s transportation, distribution, and then this consumption and combustion of the ethanol in vehicles. So if we want to lower the CI, one of the things that’s very effective is we can switch to using kernel fiber or use a kernel fiber itself. That does away with both the iLUC change and the corn farming, the fertilizer use. Using nitrates causes noxious oxide emissions, which are a very powerful greenhouse gas, so doing away with those makes a big difference to the CI score of the final ethanol.
Now we can see that I think on the next slide to see how the different contributions can reduce the CI. So, the first thing you can do is to reduce the energy usage with energy efficiency. We use processed heat, energy exchanges to do that sort of thing. Then you can switch energy types.
You can use renewable sources such as on-site solar, wind power, and also you can switch to using wet distillers grains rather than drawing them, that uses energy to go even lower. You can use combined heat and power. Biomass, other sources of on-site power and carbon capture sequestration.
Ethanol plants are the ideal source of ethanol because fermentation produces a very pure stream of CO2 which is ideal to be captured. Then, finally, the low CIs can be achieved using the kernel fiber as we just explained, and by using biogas, if you have dairy digesters close to a plant, you can use the renewable natural gas from those digesters, and they typically have a very low CI because the board of methane emissions.
What else can we do? What can producers do? Well, as said you can utilize renewable energy, we stated you can use wind power and solar power. Cellulosic ethanol, kernel fiber ethanol, no land use change, 19.2 grams per CO2, per megajoule. And there’s no kernel fiber in the transportation bed.
You can switch models. The latest view models will see a 3 to 5 CI drop, the latest California- GREET model, and I say it’s worth reading pathways. It’s also worth looking at what your CI would be in other markets, such as Oregon and British Columbia. They both still, both have a low carbon fuel standard in North America, and then for other fuel producers, um, they, there are similar things we can do. I was a biodiesel producer so I say we can consider other CI feedstocks.
So if you’re using used cooking oil or waste feedstocks, such as that you can get very low CIs and I think any producer who’s making biodiesel or renewable diesel from low CI feedstocks should consider looking at the California marketplace. Should also implement low CI process energy, energy efficiencies to try reduce your utility bills.
Of course, again, you can look at the markets to see what CIs you get in those markets and see what the value is to go to those markets. RNG, Electricity and Hydrogen for higher CI projects is worth looking at the voluntary markets because there’s still value to be had in those markets.
It’s worth looking at trying to get more feedstocks covering the avoided emissions credit. One of the things you can do is, say, OK, if you’re using a feedstock that traditionally goes to landfill, therefore, the methane, if you can prevent that from happening, then methane has a high global warming potential of 25.
It’s very viable to actually stop that going to the atmosphere and capturing that as a fuel. There’s more priority, prioritizing fleet, to turn to California with school busses for electrification, that increases the size of the marketplace and outselling to California.
Of course, it’s always good to look at new technologies, because if you can increase yield to keep the process and yield the same, then your average CI will fall for your fuel type. I think that’s it. Kathy, would you like to wrap up and go to Q&A?
Great job, everyone. Great presentation. So I think, through all of the data and the study, it’s obvious that getting to a low CI is going to be absolutely imperative to participate and to remain competitive in California’s LCFS program or other LCFS programs as they’re developing.
Certainly the LCFS programs have been, you know, it does all it’s absolutely a driver to a low carbon economy of the future. It’s gaining a lot of momentum into that end. I mean, just to support that idea is a couple of announcements that we find very interesting and significant in 2020. But to start with, both BP at Shell announced in 2020 zero carbon goals by 2050 across all Scope 1, 2, and 3 emissions.
It’s pretty significant. That momentum is turning really into movement that is referred to oftentimes not only by refiners, but also other Fortune 100 and 500 companies is the energy transition. So, you may be hearing more about that if you’re not already.
And this idea is certainly further reinforced by a note that was released recently from Goldman Sachs, where they are the projected $16 trillion spend on renewables to exceed investment in fossil, oil, and gas through 2030. Closer to home, I can tell you that even here at EcoEngineers, we easily have over a half a dozen due diligence asset evaluations on underperforming or stranded biofuel assets to bring them back online.
We also, EcoEngineers, was recently, in the last 30 days, awarded its very first verification contract of voluntary carbon credits for a major gas utility in North America, and hot off the press. I understand it’s been reported that the House Democrats have issued a bill where they are proposing you take the RFS into an LCFS type program. So we may be hearing lots more about that. I hope you’re listening to some of these final comments that perhaps you’re thinking about submitting questions using the chat tool.
And if you haven’t, please do. We’re happy to answer questions, and with that, I’ll turn it back over to Natasha for the Q&A. Thank you
Thanks for those comments that so much to think about and how we’re evolving, and how the whole industry and market, is changing with the edition. I’m all for it. Going to make the, let’s see if I can get these cameras a little bigger, we can engage with you a little better that way.
So we have some really interesting questions coming in, so thanks for that. I really appreciate those. The first one was, does the fuel have to physically move to California to be eligible for LCFS program credits? If so, how does this work for RNG production? Does that blend in another state? So the LCFS accepts the same booking claim fungible gas methodology that the Renewable Fuel Standard accepts. So if your gas is eligible in the renewable fuel standard to generate RINs, you are also eligible to generate LCFS credits.
And something that I don’t think I mentioned earlier, but you can stack your RINs and your LCFS credits, because you’re proving the same end use. And the same goes for participating in the Oregon market as well. Unfortunately, I don’t believe that Canada has a federal program at this time, though, I’m happy to take a correction if someone can provide that, but in that case, your credit would be only able to generate credits in the British Columbia program. Let’s see.
Oh, so, and another question about RNG to EV charging stations. And my guess is, the discussion is around the very low CI scores, we’re seeing, You know, the -6, 30, something out of SMUD, you know, a couple of -300 scores coming out of other producers that may have just closed on public comment. So those are becoming more common. I think another interesting thing that we may start seeing soon is renewable natural gas coming from projects outside of California. But still within that WECC region. It’s something I know we’re actively working on, on how to facilitate on behalf of our clients. So I do think we’re going to see more and more of that as interest grows.
Roxby or Lei, this one might be a good one for one of you. Was renewable aviation fuel ever adopted into the LCFS program? I’m assuming we can talk about alternative jet fuel, perhaps.
Well, sorry, go ahead Lei
Yes, I can take this one. Yes. It’s been adopted in 2019 but since has just recently started to opt in. So it’s in a very, sitting in a very low level. I think I checked the data like a few days ago.
It’s less than by 0.1% of the credits congregated in 2019, so they haven’t been put into the model yet but once it picks up in the next few years we might consider to put jet fuel into the analysis as well. Roxby do you have anything to add to that?
Well, I’m going to add that it’s kind of important because I think that LAX uses around two billion gallons of jet fuel a year on its own. So it’s important to capture emissions in the LCFS
You cannot say that you can claim credit now as Lei said from the changes in 2019.
A couple of questions here about the slides, so we will be sending out a recording of the webinar after we’re done. So what I’m seeing. So is there any renewable hydrogen being produced yet in the system? Do either of you have a read on that way, Lei perhaps?
I don’t know. You know, that there is a certified pathway. If I’m remembering what I’ve seen come up for public comment just yet. But again, correct me if I’m wrong, I’m happy to, I’m happy to take feedback. I miss something, come out. And I’ll also mention, if we don’t get to your question, we’ll be sure to send you an e-mail follow up and answer that by e-mail as well.
Was there a new model released recently for calculating CI? So when we say update from California-GREET 2.0 to 3.0, that is a mandated update that will be required by the end of the year. Through the latest version of the LCFS regulation, I do believe they are starting some initial tricklings of rulemaking and Roxby, you probably have a little more of a timeline on what’s happening with that than I do. But that is when the next version of the model will be updated.
Let’s see. Okay, this is another great question. Just the fact that California’s CI requirements get more aggressive each year, ever caused projects to shut down if they cannot continuously lower their fuels, the lower the CI of their fuels?
You know, I don’t know that a projection necessarily has shut down, because it is a relatively incremental option. What- and let me know, Roxby or Lei, what you think about this. But I think from between 2020 and 2030, we’re gonna see over a 10, 10 point drop in CI for the compliance curve. I think that is where we may see some difference, which is why I think it’s important to start talking now about innovation and lowering your CI at this time when there isn’t as much of a push to do so. So you’re ready for that time to come, because, like I mentioned, the regulation is going to go past 2030, you know, with our best hope.
I would say that it’s, if you’re making biodiesel, the biodiesel sales in California are fairly low relative to the number of plans of pathways is probably one fifth of the biodiesel that can be sold is sold. And because of that, it’s very competitive, and you have to have a good, low CI score to be competitive in the California marketplace. So if you’re, if you’re, say, make a solid biodiesel, it’s extremely hard to sell into California.
OK, let’s see, What should new producers consider to earn the maximum amount of credits? And so, you know, I think to maybe speak a little more fuel neutrally, you know, looking upfront at ways to lower your process energy usage, whether it is through one of the tactics of finding a technology that can have an increased yield without increasing your process energy too much. I know there’s a lot of innovation that’s happening here, in the industry around that. We are hearing more and more about the implementation of some of those, perhaps, higher CI projects that, that Roxby mentioned at the end, the 40 CI, or in that realm, that may not have direct California access being used as a process energy for some of these liquid fuels. one caveat I will provide for that, though, is it has to be any like, renewable energy resource, does have to be connected behind the meter in order to be able to realize the benefit for the LCFS program.
Can you all think of any other, any, anything else a new producer could do to maximize the number of credits?
A few things like being close to your feedstocks or to rail: if you’re going to be moving distances, it’s much more efficient to use rail than it is to truck, that sort of thing. Efficiency, heat efficiency in your plants.
Built definitely using digested gasses if you can get access to them. You have to actually physically have them in your plant, built into your plants. It’s not a book and claim. So this can make a big difference.
Yeah. Oh, sorry, Go ahead.
Just to add something about Roxby’s answer. So my understanding is for a new producer, the best way to get to maximized credit is to fully understand the life cycle of how they produce the fuel. Basically from the beginning of the feedstock, all the way to the fuel cell, to California. So, then you release to all the key contributors, what you can do extra to improve that key contributors. That’s the key part you can get to maximize your CI to eventually really maximize the credits you can generate, so if they fully understand the process, CI being calculated, that would be very beneficial on the credit generation side.
Someone was asking for more information on the LCFS announcement and the federal government. That is, I believe, in the House. And somebody, and I don’t know if we all can see the questions and stuff. But I love somebody who is answering this question before we get to it. I always find out, great.
There is an Advanced Biofuels USA article available about the roadmap for ambitious climate action and I’m happy to send more information. And the link that someone kindly provided here, if you do, would like, if you, if you need that information, you can send me an e-mail for that, if you’d like.
Oh, another interesting question, OK, how do midwest CI reduction projects monetize their credits and investments?
So, I’m gonna throw a guess here what you’re asking about. So how can projects in the midwest that are working towards lowering their CI, how can they monetize it?
I think usually, as long as your fuel is going to California that you have a pathway that reflects your operations.
You should have, um, you should have a fairly fair chance at monetizing your credit, and you’re not what your contract setup looks like with your uptake partner and all that will vary by entity. Actually, Roxby, this made me think a little bit more about carbon capture and sequestration. You’re our resident expert on that, I don’t know if you have a quick blurb you wanted to add in there, anything you know? If you’re doing CCS you have to have a second pathway
So, you can monetize it very directly because your ethanol’s gonna, as you make ethanol, you’re going to capture carbon dioxide and sequester is then, you are utilizing a low CI pathway, you simply get more credits to sell.
Perfect, thanks. OK, I love these questions, it’s so exciting, and there’s so many questions, OK, great.
OK, a question about low CI for solar power and how it can be implemented. For solar power, can a net metered plant be used in CI scoring, or does it have to be entirely behind the meter plant with the generation fuel used on-site?
To my knowledge, it has to be fully, it has to be behind the meter, whether or not you can split off some of the electricity to be used otherwise, I’m not completely sure, I know our LCA team could probably answer that a little more eloquently than I can.
My guess is that, you know, based off of just thinking through the regulations of, you know, measurement devices and accuracy, if you’re able to meter some of the difference, if you are having two different uses come from that. If you’re able to prove that, I think that could be a good way to show that, Lei, I don’t know if you have other feedback on that or not.
I don’t have anything come to mind at this point.
Yeah, follow up with, with additional information later.
OK, so, how are other states, such as Oregon, going to compete with California promoting renewable fuel usage in their state? You know, I think, actually, Oregon’s credit prices, and I’ll be honest, I haven’t checked them in a little bit of time, but they were fairly additive. I don’t know, Roxby or Lei, if you have an idea of what they’ve been in recent history. Last I checked, there were around 160, 170.
I don’t know, Kathy, if you’ve heard anything different than that, but….
British Columbia’s don’t have a cap and the prices have gone really high.
Oh, like $300. Oh wow.
So I think you know, for other states and competing with California, California does have a limited capacity for what they can except I think in renewable natural gas, you see that somewhat because of the higher CI, renewable natural gas, not having as much market access.
But I think for, you know, other fuels and other other States, then I do think Oregon actually is fairly high, fairly close to the LCFS with their renewable natural gas, as well. I think that as, with liquid fuels, when you have to weigh the difference between the cost of shipping it all the way to California and then the cost of keeping it local, I think there are quite a few programs that will be able to compete on that scale.
But I do think it will take some time for those programs to build to that same, to that same level.
Another question is OK for hydrogen.
Let’s see, For hydrogen, in order for a fueling station to generate LCFS capacity credits, does the hydrogen itself need to be renewable, or can it be fossil based hydrogen dispensed as a vehicle fuel? It can be fossil based hydrogen dispensed as a vehicle fuel. It could be one or the other.
There’s no, there are pathways available in the regulation for both.
I thought I saw one. Sorry, I keep losing my questions, because there’s so many, and they’re so good, OK.
We’ll take a couple more here and, again, like I said, we will answer these questions by e-mail as well.
Do you expect California will expand the book and claim provisions for electricity and biomethane when used as process energy at a biorefinery, to a producer to produce liquid fuels?
No, I don’t know that we’ve heard anything specific about that ending. But, as I mentioned before, this is a good time to start voicing those questions to CARB, because they are in the process of starting that rulemaking. And I think on that note, I saw another question, and while I find that question, Roxby, if you want to add anything in.
So another question that I think relates somewhat here is, with regard to RNG, what possibilities do you foresee with CARB and the LCFS team re-evaluating other manure types? For example, beef, like beef cattle, and swine, and their methane avoidance calculations to demonstrate their significant potential to improve air quality through anaerobic digestion and RNG production? So, swine manure is eligible for avoided methane. There’s quite a few approved pathways out there, and I’d be happy to send those, if you are interested in finding out more about that.
I do know that, um, beef manure is, the beef cow manure is not currently eligible.
But that is an item that you can, you know, I do think that there, that CARB is hearing that, you know, some of the, I think, I think it should come down to manure management practices, and that, I think, is the argument that some people are making in the industry.
Whether CARB will consider that or not, we don’t know yet. We’ll see as the rulemaking comes closer and closer, but I think now’s the perfect time for advocating for that. Just to add a note there, CARB is going into the workshop is part of the new rulemaking process, so if you would like to submit comments. The workshops a great place to do and especially about beef cattle, and we encourage that. Like, to talk to us about that, prior to getting involved with the workshop, please reach out.
OK, Roxby, I have a question right up your alley here, which has a better score for renewable diesel, corn oil or soybean oil? Corn
Corn is probably around 34, 35, soybean is, 55, 50, 55.
So you’ll see about 20 to 30 point swing in that range.
Um, OK, so, I’m going to pick a couple more questions here, and let’s see.
Oh, sorry about that. I saw a question about stacking RECs and LCFS credits for EV charging. Unfortunately, to be able to generate an LCFS credit for electric charging, you have to retire the REC first. In order to be able to do that, and part of the verification program will be demonstrating that you did that.
This gets right to the core of our article I think, and I think it might be a good place to start, if I can find that question, it’s a great one, hold on.
Sorry about that, OK, If an ethanol producer were to get its electricity solely from a renewable source such as landfill gas, how much with ethanol producer lower their CI score?
So it would depend quite a bit on the factors there that you would be looking at, you know, the location of the plant, what they’re doing as far as process energy, how much fossil natural gas they’re replacing with the landfill gas to get a better calculation. And I know our team has done, you know, different ratios of, you know, 50% fossil natural gas 100% renewable natural gas, and I’m pleased that so that analysis is available.
But it is very site specific, you know, just like the rest of the LCFS program and pathways, OK? I guess I didn’t take as long to answer that one, as I thought I’d add. Let’s see if I can for one more. Oh, OK. Let’s get back to CCS, perhaps.
For CCS, there any sort of calculator to determine how many credits a process would generate?
Is it a direct conversion to tons of CO2 removed from the atmosphere?
It depends on whether it’s pathway or project based.
If you’re doing it as a part of a, uh, to do a efficient crew pathway, then you will find that, it doesn’t quite translate 1-to-1.
Whereas if you’re doing it as a, as a pathway for an ethanol plant, you will find that.
It almost tells you some CO2 escapes, so it’s not quite 1-to-1 or as you’d expect.
And OK, well, we’ll do one last question here. I promise this last one this time. What kind of CI score are you looking for if we use brown grease or FOG? Roxby, do you want to take that one? Brown grease or FOG?
For brown grease, I think the pathway is very similar to UCO because you have to do the same sort of refinery and they still have to add methanol to make biodiesel. That’s a big chunk of the CI score.
So we find cleanup of your findings that the transportation is going to leave you with CI around 15 to 20.
Perfect. Well, I think with that, we’ll let you all go, and we really appreciate the questions and all of the comments, and it was great to have you all join us. And like I mentioned, Kathy, I don’t know if you know the timeline for the, for the recording coming out, but that will be available to you all. And we will be following up with you all by e-mail on some of these questions that we didn’t get to.
And please let us know if you have any other questions for us that you didn’t get a chance to ask.
Great job, everyone, Thank you. Bye, bye. Bye. Thank you