Uncertainty, Innovation, and Infrastructure Credits: Outlook for the Low Carbon Fuel Standard Through 2030

Uncertainty, Innovation, and Infrastructure Credits: Outlook for the Low Carbon Fuel Standard Through 2030. Bushnell, J., Mazzone, D., Smith, A., & Witcover, J. University of California Institute of Transportation Studies Research Report, 2019.

Paper abstract bibtex 49 downloads

California's low carbon fuel standard (LCFS) specifies that the state's transportation fuel supply achieve a 20% reduction in carbon intensity (CI) below 2011 levels by 2030. Reaching the standard will require substantive changes in the fuel mix, but the specifics and the cost of these changes are uncertain. We assess if and how California is likely to achieve the standard, and the likely impact of infrastructure credits on this compliance outlook. We begin by projecting a distribution of fuel and vehicle miles demand under business-as-usual economic and policy variation and transform those projections into a distribution of LCFS net deficits for the entire period from 2019 through 2030. We then construct a variety of scenarios characterizing LCFS credit supply that consider different assumptions regarding input markets, technological adoption over the compliance period, and the efficacy of complementary policies. In our baseline scenario for credit generation, LCFS compliance would require that between 60% and 80% of the diesel pool be produced from biomass. Our baseline projections have the number of electric vehicles reaching 1.3 million by 2030, but if the number of electric vehicles reaches Governor Jerry Brown’s goal of 5 million by 2030, then LCFS compliance would require substantially less biomass-based diesel. Outside of rapid zero emission vehicle penetration, compliance in 2030 with the 200 dollar credit price may be much more difficult. New mechanisms to allow firms to generate credits by building electric vehicle charging stations or hydrogen fueling stations have minor implications for overall compliance because the total quantity of infrastructure credits is restricted to be relatively small.

@misc{bushnell2019uncertainty,
  title={Uncertainty, Innovation, and Infrastructure Credits: Outlook for the Low Carbon Fuel Standard Through 2030},
  author={Bushnell, James and Mazzone, Daniel and Smith, Aaron and Witcover, Julie},
	howpublished={University of California Institute of Transportation Studies Research Report},
	url={https://www.ucits.org/research-project/using-low-carbon-fuel-standard-credits-to-support-low-carbon-fuel-infrastructure-policy-design-issues-and-impacts/},
	abstract={California's low carbon fuel standard (LCFS) specifies that the state's transportation fuel supply achieve a 20\% reduction in carbon intensity (CI) below 2011 levels by 2030. Reaching the standard will require substantive changes in the fuel mix, but the specifics and the cost of these changes are uncertain. We assess if and how California is likely to achieve the standard, and the likely impact of infrastructure credits on this compliance outlook. We begin by projecting a distribution of fuel and vehicle miles demand under business-as-usual economic and policy variation and transform those projections into a distribution of LCFS net deficits for the entire period from 2019 through 2030. We then construct a variety of scenarios characterizing LCFS credit supply that consider different assumptions regarding input markets, technological adoption over the compliance period, and the efficacy of complementary policies. In our baseline scenario for credit generation, LCFS compliance would require that between 60\% and 80\% of the diesel pool be produced from biomass. Our baseline projections have the number of electric vehicles reaching 1.3 million by 2030, but if the number of electric vehicles reaches Governor Jerry Brown’s goal of 5 million by 2030, then LCFS compliance would require substantially less biomass-based diesel. Outside of rapid zero emission vehicle penetration, compliance in 2030 with the 200 dollar credit price may be much more difficult. New mechanisms to allow firms to generate credits by building electric vehicle charging stations or hydrogen fueling stations have minor implications for overall compliance because the total quantity of infrastructure credits is restricted to be relatively small.},
  year={2019}
}

Downloads: 49