1. Greenhouse Gas Emission Reductions Through National Ambient Air Quality Standards: The Role of Regional Low Carbon Fuel Standards Jeff Kessler jkessler@ucdavis.edu

2. The National Ambient Air Quality Standards (NAAQS) Established under the clean air act Defines ambient air concentration limits for pollutants

3. 6 Pollutants regulated under NAAQS carbon monoxide nitrogen dioxide sulfur dioxide particulate matter ozone lead

4. Region A NOx Emission s EPA Specified Limit Non-compliance

5. 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

6. The EPA has authority to implement a CO 2 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

7. 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

8. 8 What is a low-carbon fuel standard? Average fuel carbon intensity cap (g CO 2 e/MJ) Decreases by x (10%) percent over y (10) years Baseline CI AFCI

9. Carbon Dioxide Population Population mobility Energy intensity of travel Carbon intensity of energy miles traveled/person Energy/mile traveled CO 2 /Energy CAFE Standard LCFS

10. Four regions are modeled 4 Regions (New Jersey, Oregon, Washington, Vermont) LCFS implementations Fuel composition over time

11. The aggregate region is modeled Harmonized region LCFS implementation Fuel composition over time

12. Modeling methodology 1.Determine LCFS reduction schedules for each region 2.Determine what fuel composition will meet LCFS regulation in a given year

13. LCFS Reduction Schedule – What’s possible?

14. LCFS Reduction Schedule Year Gasoline AFCI (gCO2e/MJ) Diesel AFCI (gCO2e/MJ) 199090.0091.52 201090.0691.51 201587.4388.76 202081.2582.36 202565.2668.94 203052.2658.01 203542.6147.62 204034.7737.49 204528.3029.58 205023.0023.34 % Change-74%

15. 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

16. 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

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

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

19. 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).

20. 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

21. Low Oil PriceAEO Baseline New 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

22. YearLow Oil PriceAEO Baseline 2015 $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

23. Questions?

24. Estimated AFV Deployment to meet schedule A) Harmonized case B) Biofuel limited case

25. Modeling of NAAQS-LCFS implementation Key aspects: LCFS will be regionally implemented Regions may have different LCFS implementation Costs may differ across implementations

26. Biofuel Diffusion Curve

27. LCFS Reduction Schedule Year Gasoline AFCI (gCO2e/MJ) Diesel AFCI (gCO2e/MJ) 199090.0091.52 201090.0691.51 201587.4388.76 202081.2582.36 202565.2668.94 203052.2658.01 203542.6147.62 204034.7737.49 204528.3029.58 205023.0023.34 % Change-74%

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

29. 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 level 4.AFCI of 23 gCO2e/MJ by 2050 based on diffusion curve