IDEAS home Printed from https://ideas.repec.org/p/cdl/itsdav/qt80h768x5.html
   My bibliography  Save this paper

Status Review of California2s Low Carbon Fuel Standard (LCFS) 2011- August 2012

Author

Listed:
  • Yeh, Sonia
  • Witcover, Julie

Abstract

California’s low-carbon fuel market is growing. Regulated parties in the State’s LCFS exceeded the requirements for 2011 and Q1 of 2012 by a substantial margin. Based on available data, average compliance cost in August 2012 is $13/MT CO2e, adding about 0.1 cents per gallon to the production cost of gasoline. Summer drought increased costs of corn ethanol, but the full impact of the drought on CA-LCFS compliance and compliance costs will not be known for some time. We find that regulated parties in the California LCFS (CA-LCFS) exceeded the standard in 2011 and the first quarter (Q1) of 2012 by a substantial margin. Companies achieve compliance when credits equal deficits. Regulated parties generated 1.58 million credits (metric tonnes CO2e reduction) in the first 15 months, nearly double the amount of deficits (0.78 million), for a net surplus of 0.80 million credits to exceed the required reduction level by about 0.8 million metric tonnes CO2e. Companies relied on ethanol to generate 86% of the credits. The CI of ethanol fuels used to generate CA-LCFS credits in 2011 and first quarter of 2012 averaged around 84 gCO2e/MJ, compared to baseline values of 95.6 for gasoline. Because no central trading mechanism exists, we used available information on actual trades, bids, and offers in August 2012 to estimate that CA-LCFS carbon credits were valued at $10-18/metric tonne (MT) CO2e, with an average of $13/MT CO2e. At this price ($13/MT CO2e) and given the 2012 requirement of 0.5% CI reduction, companies who choose to meet their obligation purely by purchasing CA-LCFS credits for compliance would incur an added cost of about 0.1 cents per gallon of gasoline produced. The special topic addressed in this review is the effect of the 2012 U.S. summer drought. We find that poor yields due to extreme drought in the Midwestern U.S. raised corn prices about 60% from mid-June through August, causing ethanol prices to rise about 60 cents per gallon. The actual impacts of the drought on this year’s CA-LCFS compliance and on other food/fuel prices are not yet clear. Even with current higher corn prices, corn ethanol is still less expensive than gasoline on a per gallon basis and considerable amounts are being exported. Given that companies have until March 31, 2013 to acquire additional credits to meet 2012 compliance requirements, and corn and sugarcane ethanol markets are still adjusting to the drought's effects, it is too soon to gauge the drought’s overall impact on CA-LCFS compliance and compliance cost. We will continue periodic publication of the LCFS Status Review and provide in-depth analysis on critical issues associated with the performance of the CA-LCFS as more data become available.

Suggested Citation

  • Yeh, Sonia & Witcover, Julie, 2012. "Status Review of California2s Low Carbon Fuel Standard (LCFS) 2011- August 2012," Institute of Transportation Studies, Working Paper Series qt80h768x5, Institute of Transportation Studies, UC Davis.
    • Handle: RePEc:cdl:itsdav:qt80h768x5
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/80h768x5.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paulson, Nick & Meyer, Seth, 2012. "An Update on RIN Stocks and Implications for Meeting the RFS2 Mandates with Corn Ethanol," farmdoc daily, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics, vol. 2, August.
    2. Sperling, Dan & Yeh, Sonia, 2009. "Low Carbon Fuel Standards," Institute of Transportation Studies, Working Paper Series qt8834g64j, Institute of Transportation Studies, UC Davis.
    3. Sperling, Daniel & Gordon, Deborah, 2009. "Two Billion Cars: Driving Toward Sustainability," OUP Catalogue, Oxford University Press, number 9780195376647.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lade, Gabriel E. & Lin Lawell, C.-Y. Cynthia, 2015. "The design and economics of low carbon fuel standards," Research in Transportation Economics, Elsevier, vol. 52(C), pages 91-99.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yeh, Sonia & Witcover, Julie & Lade, Gabriel E. & Sperling, Daniel, 2016. "A review of low carbon fuel policies: Principles, program status and future directions," Energy Policy, Elsevier, vol. 97(C), pages 220-234.
    2. Maddison, Jonathan & Watts, Richard, 2011. "The technological fix as a frame in media debates about tailpipe emissions," Technology in Society, Elsevier, vol. 33(3), pages 294-303.
    3. Michael Grimsrud & Ahmed El-Geneidy, 2014. "Transit to eternal youth: lifecycle and generational trends in Greater Montreal public transport mode share," Transportation, Springer, vol. 41(1), pages 1-19, January.
    4. Hickman, Robin & Hall, Peter & Banister, David, 2013. "Planning more for sustainable mobility," Journal of Transport Geography, Elsevier, vol. 33(C), pages 210-219.
    5. Beck, Matthew J. & Rose, John M. & Hensher, David A., 2013. "Environmental attitudes and emissions charging: An example of policy implications for vehicle choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 50(C), pages 171-182.
    6. Penna, Caetano C.R. & Geels, Frank W., 2015. "Climate change and the slow reorientation of the American car industry (1979–2012): An application and extension of the Dialectic Issue LifeCycle (DILC) model," Research Policy, Elsevier, vol. 44(5), pages 1029-1048.
    7. Roberts, Michael J. & Tran, A. Nam, 2013. "Conditional Suspension of the US Ethanol Mandate using Threshold Price inside a Competitive Storage Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150717, Agricultural and Applied Economics Association.
    8. Brandt, Adam R. & Plevin, Richard J. & Farrell, Alexander E., 2010. "Dynamics of the oil transition: Modeling capacity, depletion, and emissions," Energy, Elsevier, vol. 35(7), pages 2852-2860.
    9. Geels, Frank W., 2012. "A socio-technical analysis of low-carbon transitions: introducing the multi-level perspective into transport studies," Journal of Transport Geography, Elsevier, vol. 24(C), pages 471-482.
    10. John M. DeCicco & Danielle Yuqiao Liu & Joonghyeok Heo & Rashmi Krishnan & Angelika Kurthen & Louise Wang, 2016. "Carbon balance effects of U.S. biofuel production and use," Climatic Change, Springer, vol. 138(3), pages 667-680, October.
    11. Yeh, Sonia & Sperling, Daniel, 2010. "Low carbon fuel standards: Implementation scenarios and challenges," Energy Policy, Elsevier, vol. 38(11), pages 6955-6965, November.
    12. Guerra, Erick Strom, 2013. "The New Suburbs: Evolving travel behavior, the built environment, and subway investment in Mexico City," University of California Transportation Center, Working Papers qt4hf3b46g, University of California Transportation Center.
    13. Enoch, M.P. & Cross, R. & Potter, N. & Davidson, C. & Taylor, S. & Brown, R. & Huang, H. & Parsons, J. & Tucker, S. & Wynne, E. & Grieg, D. & Campbell, G. & Jackson, A. & Potter, S., 2020. "Future local passenger transport system scenarios and implications for policy and practice," Transport Policy, Elsevier, vol. 90(C), pages 52-67.
    14. Angelo Antoci & Simone Borghesi & Gerardo Marletto, 2012. "To drive or not to drive? A simple evolutionary model," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2012(2), pages 31-47.
    15. Lachman, Daniël A., 2011. "Leapfrog to the future: Energy scenarios and strategies for Suriname to 2050," Energy Policy, Elsevier, vol. 39(9), pages 5035-5044, September.
    16. Berggren, Christian & Magnusson, Thomas, 2012. "Reducing automotive emissions—The potentials of combustion engine technologies and the power of policy," Energy Policy, Elsevier, vol. 41(C), pages 636-643.
    17. Ackah, Ishmael & TETTEH, ELIZABETH NARKIE, 2016. "Determinants of autogas demand among Taxi Drivers in rural Ghana," MPRA Paper 74242, University Library of Munich, Germany.
    18. Creutzig, Felix & McGlynn, Emily & Minx, Jan & Edenhofer, Ottmar, 2011. "Climate policies for road transport revisited (I): Evaluation of the current framework," Energy Policy, Elsevier, vol. 39(5), pages 2396-2406, May.
    19. Moradi, Afsaneh & Vagnoni, Emidia, 2018. "A multi-level perspective analysis of urban mobility system dynamics: What are the future transition pathways?," Technological Forecasting and Social Change, Elsevier, vol. 126(C), pages 231-243.
    20. Schuetzenmeister, Falk, 2009. "Global Warming And Lifestyle Choices: A Discussion Paper," Institute of European Studies, Working Paper Series qt6xs1c91n, Institute of European Studies, UC Berkeley.

    More about this item

    Keywords

    Social and Behavioral Sciences;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:itsdav:qt80h768x5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/itucdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.