Last week, I responded to a Natural Resources Defense Council (NRDC) blog (Far from a Moonshot) that seemed to conclude that if NASA could put a man on the moon within eight years then the oil companies could certainly figure out how to comply with California’s cap and trade program in the same timeframe. My response focused on the development of cellulosic fuels technologies and compared that effort to NASA’s challenge. The folks at NRDC then pointed out that the neither the cap and trade program nor the LCFS mandates any particular technology such as cellulosic fuels. In their view, there are many ways to comply. Apparently NRDC wasn’t happy that I ignored what they characterized as an “abundance of lower carbon fuels” including biodiesel, natural gas and electricity. So let me explain.
Dear NRDC,

Having followed California’s Low Carbon Fuel Standard and the cap and trade provisions of AB 32 for the past four years, I can assure you that I am not confused (well, not about this subject anyway). A Giant Leap to Nowhere focused on cellulosic fuels technology development because I believe it is California’s best opportunity to meet the goals of AB 32. These fuels have the advantages of low carbon intensity and they are largely compatible with existing vehicles and fuels infrastructure. I didn’t ignore the other ways to comply, but I also did not include every step in my chain of reasoning that led me to reject the other fuels technologies, so briefly here they are:

  • hydrogen has prohibitive infrastructure costs;
  • electric vehicles have consumer acceptance and infrastructure issues;
  • CNG and LNG have significant infrastructure costs and the recent modification of CNG’s carbon intensity value has diminished its carbon intensity advantage relative to petroleum fuels;
  • sugar-based ethanol does not have a significant carbon intensity advantage relative to petroleum fuels; and
  • supply of advanced ethanol is inadequate for E85 to be feasible.

Now you can disagree with some or all of those if you wish, but if you do then you must be prepared to show that there is a feasible compliance pathway (or combination of pathways) that is available in the volumes needed for California. Not all of those technology choices are feasible technically and/or economically.

You have also suggested that purchasing of carbon allowances is a way to comply, but if compliance were just a matter of pulling out a checkbook then the oil companies’ planning activities for being included in the cap and trade program would consist only of checking their account balance. But “checkbook compliance” is not a slam dunk or pain free.

First, it is likely to result in significant cost increases for consumers and it appears that this is what the oil companies are anticipating. Second, there have to be carbon allowances available to purchase and with a declining cap on carbon dioxide emissions those allowances will be scarce absent game changing technologies like electric vehicles (that are cost competitive with hydrocarbon-powered vehicles) or cellulosic fuels . Since those technologies are not presently available and are several years away from being able to meet a significant portion of California’s transportation needs it seems unlikely that sufficient allowances/credits will be generated to sustain California’s present level of economic activity.

Jeff Hazle

Posted by Jeff Hazle

Jeff Hazle is the former Senior Director of Refining Technology for AFPM. To learn more about AFPM, visit AFPM.org.