The Major Outstanding LCFS Fault for Canadians: Stand Up For Diesel
Notwithstanding these improvements, we anticipate that the LCFS will be subjected to US court challenge and there is a high probability that the CA LCFS will not be upheld. Canadian negotiators should seriously consider options to use the US courts to establish precedents in the CA LCFS context that should prove useful in the larger climate change treaty negotiations.
In this regard, Canadian negotiators should focus on DIESEL. Please note that Alberta and Venezuelan heavy oil is primarily a diesel/distillates feedstock. (Alberta’s oilsands feed Ontario’s refineries; Venezuelan crude is a large component of the feedstock for Canadian maritime and Quebec refineries.)
All other things being equal, a refinery optimized for diesel/distillate production can discharge some 15% lower GHGs than a refinery optimized for gasoline production. Diesel tailpipe GHGs can be 15% to 25% lower than gasoline tailpipe GHGs per kilometer/mile. Full fuel cycle GHGs for most biodiesels are substantially lower than for most ethanol production options.
Virtually 100% of the transport sector GHG "reductions" realized in Europe between 1990 and mid-2008 derive from the shift of the passenger vehicle fleet from gasoline-to-diesel-to-biodiesel blended fuel. Finished fuels based on Canadian crude are only more GHG intensive if we remain focused on gasoline.
Therefore, Canadian negotiators should conscientiously act to protect and grow the potential diesel and biodiesel shares of the North American transportation fuel market. There are significant opportunities to reduce GHGs in the production and transport of Alberta heavy and synthetic crude. But a top Canadian negotiating strategy should be to ensure that the US passenger fleet is at least open to the gasoline-to-diesel shift.
A small creditable net full fuel cycle GHG reduction is achievable without any incremental investment in GHG reduction in Alberta’s oilsands. Much more importantly, a US LCFS that is fair to diesel, compared to gasoline, could prove the only mechanism that Canadian oilsands operators might need to raise capital to implement large GHG reducing projects in Alberta and Venezuela. A gasoline-favouring US LCFS could have the opposite effect.
In "Draft Resolution 09-31", CARB has supplied Canadian negotiators with almost all the tools we need to defeat at least parts of the LCFS in US court. The resolution says:
While there is about a 20 percent improvement in the adjusted carbon intensity of light-duty diesel vehicles using conventional diesel fuel compared to gasoline vehicles, crediting light-duty diesel vehicles for reduced carbon intensity in the regulation is inappropriate because it would not provide any significant long-term benefits of promoting significantly lower carbon fuels and significantly more energy efficient vehicles.
Including a LCFS standard for diesel fuel and its replacements in addition to a standard for gasoline [this is the procedure that combines to establish a supply chain GHG reduction obligation for diesel producers while it blocks the market’s opportunity to earn credits for gasoline-to-diesel fuel switching] and its replacements is appropriate because including diesel fuel from the beginning will allow for the development of a more robust credit market and will provide greater certainty on future expectations and because elimination of the diesel element would reduce the LCFS benefits by 20 percent.
By the time the regulation approved herein is formally adopted by the Executive Officer, it will include pathways for biodiesel and renewable diesel that could be used in the near term for compliance by providers of diesel fuel choosing to rely on that approach…
The good news for Canadian negotiators is that there is no scientific foundation for the state of California’s total focus on the removal of fossil-based carbon as the primary method for cutting California’s transport sector GHG emissions. Peer reviewer Dr. Mauzerall was very correct to be "concerned that the units used [to define performance in the existing LCFS} are essentially penalizing efficient vehicles with low CO2 emissions per mile travelled"
And because she is correct, many of the aspects of the CA LCFS remain vulnerable to court challenge, one of which is most important to Canada: that is, the manner in which the LCFS discriminates against passenger fleet shifting to diesel as a GHG reduction measure.
Energy Probe 