Greenhouse Gas Emission Reductions Through National Ambient Air Quality Standards: The Role of Regional Low

Carbon Fuel Standards

Jeff Kesslerjkessler@ucdavis.edu

The National Ambient Air Quality Standards (NAAQS)

Established under the clean air act

Defines ambient air concentration limits for pollutants

6 Pollutants regulated under NAAQS

carbon monoxide

nitrogen dioxide

sulfur dioxide

particulate matter

ozone

lead

Region A NOx Emissions

EPA Specified Limit

Non-compliance

The state must compose a State Implementation Plan (SIP) to bring

areas into compliance

The SIP is effectively a road map that details how a region may achieve compliance

States are penalized for not following the SIP, not for non-attainment of the NAAQS• Ineligible for Federal transportation funds • Termination of near-term transportation projects

The EPA has authority to implement a CO2

NAAQS

Outcomes:

All regions effectively in non-compliance

SIPs may utilize any number of approaches to bring regions into compliance

Effectively triggers cap-and-trade policy

Carbon abatement from transportation is more expensive

than from other sectors

A transportation-specific SIP requirement is needed A low-carbon fuel standard is one such option

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What is a low-carbon fuel standard?

Average fuel carbon intensity cap (g CO2e/MJ)

Decreases by x (10%) percent over y (10) years

Baseline CI

AFCI

Carbon Dioxide

Population

Population mobility

Energy intensity of travel

Carbon intensity of energy

miles traveled/person

Energy/mile traveled

CO2/Energy

CAFE Standard

LCFS

Four regions are modeled

4 Regions (New Jersey, Oregon,

Washington, Vermont)

LCFS implementations

Fuel composition

over time

The aggregate region is modeled

Harmonized region

LCFS implementation

Fuel composition

over time

Modeling methodology

1. Determine LCFS reduction schedules for each region

2. Determine what fuel composition will meet LCFS regulation in a given year

LCFS Reduction Schedule – What’s possible?

LCFS Reduction ScheduleYear

Gasoline AFCI (gCO2e/MJ)

Diesel AFCI (gCO2e/MJ)

1990 90.00 91.522010 90.06 91.512015 87.43 88.762020 81.25 82.362025 65.26 68.942030 52.26 58.012035 42.61 47.622040 34.77 37.492045 28.30 29.582050 23.00 23.34

% Change -74% -74%

Innovation Minimization Model

The LCFS is a technology forcing policy.

Technologies are deployed based on their maturity status and their ability to meet the regulation in a given year

Therefore: minimize the rate of change of technology such that the LCFS is binding

Objective function:

Constraints:• No deficits associated with LCFS

compliance by 2050 (credit banking, but not borrowing)

• Energy demand in diesel pool is met• Energy demand in gasoline pool is met

Minimize the percent growth rate for each technology each year

Biofuel for the diesel pool, biofuel for the gasoline pool, electric/hydrogen vehicles.

Natural Gas use treated exogenously

Converged fuel deployment results required to meet the LCFS reduction schedule for A) New Jersey, B) Oregon, C) Vermont, and D) Washington

Converged fuel deployment results required to meet the LCFS reduction schedule for the aggregate region

What about biofuel availability?

Additional constraint where total biofuel from region is less than or equal to 3.55 billion GGE per year (Parker, 2012).

Calculating abatement costs

Fuel supply was not based on fuel cost

Cost of fuel determined based on modeled fuel supply and supply curvers from Parker (2012)

Electricity rates and oil prices based on AEO 2013

Modeled AFV deployment cost compared to BAU cost

Low Oil Price AEO BaselineNew Jersey $95 $(10)

Oregon $111 $(13)Vermont $122 $(10)

Washington $96 $(42)Harmonized $95 $(19)

Limit to Biofuel $88 $(153)

Higher electric vehicle penetration contributes to lower future abatement costs.

Average cost of abatement for each modeled region

Year Low Oil Price AEO Baseline2015 $139 $268.35 2020 $963 $1,306.53 2025 $397 $598.84 2030 $104 $329.31 2035 $(153) $73.62 2040 $(237) $12.09 2045 $(294) $(34.02)2050 $(338) $(52.29)

Average $(153) $87.74

Average cost of abatement for harmonized region over time

Questions?

Estimated AFV Deployment to meet schedule

A) Harmonized case

B) Biofuel limited case

Modeling of NAAQS-LCFS implementation

Key aspects:LCFS will be regionally implemented

Regions may have different LCFS implementation

Costs may differ across implementations

Biofuel Diffusion Curve

LCFS Reduction ScheduleYear

Gasoline AFCI (gCO2e/MJ)

Diesel AFCI (gCO2e/MJ)

1990 90.00 91.522010 90.06 91.512015 87.43 88.762020 81.25 82.362025 65.26 68.942030 52.26 58.012035 42.61 47.622040 34.77 37.492045 28.30 29.582050 23.00 23.34

% Change -74% -74%

What fuel composition will meet LCFS regulation in a given year?

LCFS Reduction Schedule

1. What’s viable?1. Cellulosic ethanol introduced between 2010 and

2015 (CI: 36.01 gCO2e/MJ)2. Cellulosic ethanol from farmed trees introduced

between 2015 and 2020 (CI: 2.4 gCO2e/MJ)3. Diffusion curve of technology to determine

market penetration level4. AFCI of 23 gCO2e/MJ by 2050 based on diffusion

curve