July 31, 2015

New Report Shows Big Potential for Low-Carbon Fuels

How much is 400,000 barrels of gasoline and diesel, exactly? It sounds like a lot and contains a phenomenal amount of energy, so when a new study concludes that California, Oregon, Washington and British Columbia (collectively, the Pacific Coast Collaborative or PCC) could reduce their consumption by 400,000 barrels of gasoline and diesel per day in 2030 by adopting low-carbon fuel policies, it may take us a moment to truly understand what this means.

First, a little background. The PCC members signed an agreement in 2013 to adopt a wide range of climate policies, including policies to reduce the carbon intensity of their fuel supply. British Columbia and California have already adopted their low-carbon fuel policies, Oregon and Washington are currently in the process of doing so. California, the eighth biggest economy in the world, has dominated the low-carbon fuel landscape over the last few years, but adding Oregon and Washington to the mix could substantially change the picture. So, the International Council on Clean Transportation and E4tech evaluated a world with low-carbon fuel policies running up and down the west coast, to determine whether there were sufficient fuels for the PCC states to accomplish their goals, as well as what impact this would have on greenhouse gas emissions.

The report (available here) evaluated a range of technological and production scenarios. Electricity, natural gas, hydrogen and biofuels were options considered by the model. The headline results are that under a wide variety of scenarios, there will be enough low-carbon fuel available for the PCC members to meet their targets up until 2030 and that doing so could reduce the carbon intensity of transportation in the region by 14-21%.

Which brings us to the 400,000 barrels of gasoline and diesel per day, roughly the amount the report estimates the region could slash from their consumption in 2030. How much is this?

  • About 25% of the region’s current consumption.
  • Enough to fill 25 Olympic size swimming pools per day.
  • If completely burned, it would emit over 160 thousand tons of carbon dioxide, per day.

That’s a lot of oil. It becomes even bigger when you consider the complementary effects of increased fuel economy standards. President Obama’s federal CAFE standards call for passenger vehicles to achieve over 50 miles per gallon. If these targets are met, they could lead to around a 30% reduction in fuel consumption by 2030. Combined with the 25% reduction from low-carbon fuels, aggressive goals like the halving of oil consumption Governor Jerry Brown called for during his recent state of the state address start to come into focus[1]. What sounded like a distant, aspirational goal becomes an attainable, concrete target.

Perhaps most importantly, surpassing a 20% reduction in fuel consumption could cross a tipping point towards ending petroleum’s dominance in world energy portfolios. According to UC Berkeley (25 miles from the nearest TGI Fridays) energy economist Severin Borenstein, a 20% decrease in world oil consumption would crash oil prices even farther, and for even longer, than the current price slump. With sustained low prices, potentially catastrophic projects like exploiting tar sands, or other large-scale fossil fuels projects make little or no financial sense for the oil companies. When oil is $100 per barrel, the industry is stumbling over itself to get crude out of the ground and a huge fraction of each barrel is pure profit for shareholders or funding for lobbyists and public misinformation campaigns. When it’s $40 per barrel, it becomes much less profitable to pull oil out of the ground and ultimately, stopping climate change will require the oil industry to leave carbon underground and unburned. Meanwhile, low-carbon fuel policies, like the ones analyzed in the ICCT report, will ensure that sustainable technology still has a market, even in a world of low oil prices. Other reports are similarly bullish on the prospects for clean energy, even when competing against cheap oil.

So, the potential reductions from adoption of low-carbon fuel policies on the West Coast are meaningful. A 25 % reduction in fuel use in three states and one province on the west coast will not, by itself, re-shape oil markets, but it’s a tangible and attainable step in the right direction. 160 thousand tons of carbon per day is a big savings, almost 60 million tons per year, and absolutely worth doing. If other jurisdictions follow the PCC’s lead, in the U.S. or abroad, this could be the beginning of the end for petroleum’s stranglehold on the transportation sector and a big step towards a sustainable future.

[1] You can’t just add the 30% reduction from fuel economy to the 25% from clean fuels to attain a 50% reduction, the math is more complicated than that. However, the two will at least get close to a 50% target.