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ID:
121263
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2013.
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| Summary/Abstract |
This paper discusses the potential energy security implications of a national low carbon fuel standard (NLCFS). A low carbon fuel standard is designed to reduce greenhouse gas (GHG) emissions by targeting the fuel portion of the fuel-vehicle system. Specifically, a NLCFS would set national targets for the average carbon intensity (CI) of motor fuels, and establish a market for credits that allows fuel producers and importers to respond in a variety of ways to the signal provided by the credit price. An important method for lowering the CI of transportation is to substitute lower-carbon alternative fuels such as advanced biofuels, electricity, CNG, and H2. Despite the focus on GHGs, so long as transportation fuels remain dominated by petroleum, transportation fuel policies like a NLCFS also will be evaluated in terms of their energy security impacts. We examine the fuel substitutions that are projected to be induced by a NLCFS and consider the energy security implications of displacing higher carbon fuels, such as imported Canadian Oil Sands oil or certain imported crude oils, with lower-carbon domestic oil, biofuels, or lower carbon oil imported from other sources.
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ID:
121262
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| Publication |
2013.
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| Summary/Abstract |
This research examines the economic implications of different designs for a national low carbon fuel standard (NLCFS) for the road transportation sector. A NLCFS based on the average Carbon Intensity (CI) of all fuels sold generates an incentive for fuel suppliers to reduce the measured CI of their fuels. The economic impacts are determined by the availability of low carbon fuels, estimates of which can vary widely. Also important are the compliance path, reference level CI, and the design of the credit system, particularly the opportunities for trading and banking. To quantitatively examine the implications of a NLCFS, we created the Transportation Regulation and Credit Trading (TRACT) Model. With TRACT, we model a NLCFS credit trading system among profit maximizing fuel suppliers for light- and heavy-duty vehicle fuel use for the United States from 2012 to 2030. We find that credit trading across gasoline and diesel fuel markets can lower the average costs of carbon reductions by an insignificant amount to 98% depending on forecasts of biofuel supplies and carbon intensities. Adding banking of credits on top of trading can further lower the average cost of carbon reductions by 5%-9% and greatly reduce year-to-year fluctuations in credit prices.
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