California’s Low Carbon Fuel Standard (LCFS) program has been in effect for just about 10 years. And in the transportation industry, a lot can happen in 10 years. Over that time, the LCFS has fundamentally changed the way the California’s fuel and transportation industries operate, and its influence has spread to other state and local governments and even other nations.
The reason behind this stems from California’s stated desire, through laws and regulations, to “go green.” With a goal of reducing petroleum dependency and greenhouse gas (GHG) emissions, California turned to the LCSF. As a result, the LCFS has led to an influx of lower-carbon fuels into the California market.
Of all the fuels that have come to the forefront because of California’s moves, two — biodiesel and renewable diesel — have become among the most trusted solutions thanks to their ability to reduce harmful emissions and their ease of use. Far too many “green” fuels come with a lot of drawbacks, but these two have the best pro to con ratio.
Now, fuel marketers and fleets are taking advantage of the benefits of both fuels with products that blend them together. OEMs and fuel makers are innovating in a way that they never have before, and it is changing the entire fuel marketplace.
A Closer Look at the LCFS
The LCFS is one of the core strategies to reduce greenhouse gas emissions under the California Global Warming Solutions Act of 2006, also known as AB 32. The LCFS is overseen by the California Air Resources Board (CARB) and is considered one of the most progressive clean air regulations in the world. This regulation even eclipses some regulations in regulation-heavy Europe.
The goal is to reduce the carbon intensity in California’s air. Carbon intensity is the measure of GHG emissions associated with producing and consuming a fuel. The LCFS was designed to reduce the carbon intensity (CI) of the state’s transportation fuel by at least 20% by 2030 compared with a 2010 baseline.
The California Air Resources Board (CARB) assigns CI scores to all fuels. A lower score means lower emissions. To calculate a CI score, CARB considers the total amount of GHG emitted for the production and use of a fuel — a “well to wheels” approach that captures direct effects like fuel production and usage and indirect effects like land use for crop-based biofuels.
Average CI scores across the trucking industry are:
- Biodiesel: 27.0
- Renewable diesel: 34.6
- Compressed natural gas from fossil fuels: 79.2
- Electricity from the California grid: 93.8
- Petroleum diesel: 100.5
For compliance, CARB issues credits and deficits to regulated parties — typically petroleum producers, wholesalers, and importers — based on the carbon intensity of the fuels they produce and sell. They must show that the fuels they supply meet CI benchmarks and reconcile any deficits on an annual basis. Nonregulated parties are affected because the fuel providers are incentivized to offer low-CI fuels.
The LCFS does not require the use of specific fuels. Rather, it just creates a market for LCFS credits and lets the market decide how to obtain them. Companies work within this framework, trade credits, and develop products and services based upon them.
Biodiesel and Renewable Diesel Take Off
Fortunately for those operating in the biodiesel and renewable diesel fuel market, the LCFS scheme is rewarding them. The market and overall transportation sector – trucking companies at large – has liked what it has seen with biodiesel and renewable diesel. Adoption rates have been increasing within certain trucking segments.
Combined, they represented the most popular alternative to petroleum diesel in 2019, which itself represents a five-year stint of rising consumption. These are big numbers that represent a monumental shift in the fuel sector. Trucking companies of all stripes see the writing on the wall when it comes to the types of energy they use to power their fleets.
But there are real reasons behind why biodiesel and renewable diesel has taken off in the past half-decade. The fact is they are high-quality fuels that reduce emissions, offer strong performance and are easy for fleets to adopt. This last one is especially important, as adoption complexity is often one of the leading reasons fleets choose not to adopt a renewable fuel approach. Good old-fashioned oil is still too easy and familiar.
But the thing is, biodiesel is becoming just as familiar. Biodiesel has been used for decades as a cleaner burning alternative to petroleum diesel. It is made from renewable resources, including used cooking oil, waste animal fats and vegetable oils. Its quality is backed by stringent standards specifically spelled out in ASTM D6751.
What are the Differences?
Biodiesel and renewable diesel also have a higher Cetane number and more lubricity than standard oil used in conventional gasoline. Burnishing its clean credentials, this type of fuel burns cleaner and sends less particulate matter into the air or to diesel particulate filters. Not only does this mean cleaner air, but it also means mechanical issues decrease. Biodiesel minimizes the impact on critical emissions control devices.
Renewable diesel is made from the same feedstocks as biodiesel, but it’s a hydrocarbon fuel that’s chemically more similar to petroleum diesel than biodiesel. As a result, renewable diesel falls under a different diesel specification, ASTM D975. Like biodiesel, it has higher Cetane than petroleum diesel, and it also has lower sulfur content and aromatics. One benefit that gives it an edge lies in the nitrogen oxide (NOx) emissions footprint. Renewable diesel’s NOx emissions are lower than biodiesels.
Some companies are now offering a blended option. Blending renewable diesel and biodiesel results in a finished fuel that is stronger than the individual components. Call it the best of both worlds, if you will. Put the two together and they are stronger than they would be individually.
The concept is similar to alloys, in which metals are combined to make them better in some way — whether stronger, lighter or more resistant to corrosion. In the case of a renewable diesel and biodiesel blend, the renewable diesel brings a great Cetane number and low NOx emissions. Biodiesel brings a natural lubricating property, as well as more complete combustion thanks to the higher levels of oxygen it contains. The blend results in very low hydrocarbon and particulate matter emissions.
The World Shifts
Fleets today know that by doing their part to decrease fuel costs and lower emissions, not only are they ensuring they have a good reputation, but they are also doing their part to help lower humanity’s environmental impact. Yet, there has often been some friction between transportation companies and the biggest state they operate in, California.
California’s Low Carbon Fuel Standard gets a lot of attention and for good reason. It’s one of the leading clean air regulations in the world, and California’s economy is bigger than that of most countries. It should be no surprise that what happens in California does not stay in California, unlike its desert neighbor to the east. What happens in California has ramifications across the globe.
What California is doing is catching on. At least 15 U.S. states plus Puerto Rico have enacted legislation around GHG emission reductions, and some other states are requiring agencies to report on their emissions. Additionally, some states have committed to GHG reduction goals through executive action but don’t yet have binding statutory targets. The pendulum is swinging firmly in the direction of lower emissions and higher “green cred.”
Additionally, the sustainability trend is growing in the private sector as investors, boards of directors, customers, and the public demand that companies reduce their carbon footprint. Many huge banks are no longer funding projects that involve oil extraction, deforestation, or otherwise.
One study found that 86% of the companies in the S&P 500 Index published sustainability or corporate responsibility reports in the year 2018, compared with under 20% in 2011. The trend points in only one direction and motor carriers of all sizes will eventually have to adapt in some way, shape, or form.
Even more, companies are increasingly expecting their partners to help them meet sustainability targets. By selling and running on cleaner fuels like biodiesels and renewable diesels, as well as their blends, fuel marketers and fleets can show their customers that they’re part of the solution.