California's Low Carbon Fuel Standard

The LA Times reports that the California Air Resources Board has just released a complex new environmental regulation called the "Low Carbon Fuel Standard" (LCFS). This is relevant for High Speed Rail in that it will inevitably raise both vehicle and fuel prices for cars and trucks in the medium and long term. That in turn should boost ridership on all types of mass transit and the popularity of transit-oriented real estate development statewide.

Objectives

One objective is to diversify the fuel sources for the millions of internal combustion engines powering motorbikes, cars and trucks in California, away from (mostly) imported fossil crude oil and toward substitutes derived from locally grown energy crops and agricultural waste streams or, from other local, renewable sources of primary energy. Considering that California requires so-called "boutique" gasoline with special additives to curb summer smog, it could not import finished product from out of state or abroad if one of its refineries went offline. Therefore, the diversification of fuel sources is a priority both for energy security and for the state's balance of trade.

A second objective is to reduce net carbon emissions of each gallon of fuel pumped at California gas stations to help meet climate policy goals. Vehicles fueled partially or wholly by substitutes must of course not emit more toxic compounds than those running on conventional oil distillates, but their net CO2 emissions will be lower. The savings accrue not at the tailpipe when the vegetable matter that is used as a feedstock for the alternative fuel production grows back a year later. This is why ARB selected the GREET model for the entire carbon life cycle of each type of fuel. For biofuel compounds, it also takes land use and food web impacts into account.

Note that California's new low carbon fuel standard does not aim to directly reduce total vehicle miles driven, nor to increase vehicle occupancy rates, nor to reduce aggregate net CO2 emissions from ground transportation in the state. Some or all of these outcomes may materialize indirectly as a result of higher vehicle and/or fuel prices.

Exempt Industries

The aviation industry was apparently exempted from the new state regulations. Part of the reason may be that jet fuel is subject to very stringent quality standards for safety reasons. In addition, federal laws and international treaties restrict individual states' ability to tax aviation fuels and/or enforce the use of fuel substitutes in blends or neat form.

In general aviation, there is a desire to phase out 100 octane low lead (100LL) AVGAS, but all substitutes - 91 octane gasoline, methanol, ethanol - require significant modifications to airframes, fuel system components and engines. In the US, any retrofit kits would have to be certified by the FAA, so the industry is moving toward new designs featuring turbocharged diesel engines that can run on either diesel or jet fuel. Some US airports have already stopped selling AVGAS, perhaps in a thinly disguised effort to free up more slots for commercial flights.

Off-road, marine and locomotive fuels are also not covered by the new regulation, nor is the US military.

Natural Gas, Hydrogen and Electricity

Returning to trucks and cars: natural gas, hydrogen and electricity are all included in the list of alternative transportation fuels in the new regulations, which do not consider the details of the alternative drivetrain technologies required to take advantage of them. The GREET models for these fuels do account for how these substitutes are produced and distributed.

Regular natural gas is less carbon-intensive than gasoline but it requires some engine modifications. In addition, achieving an acceptable operating range of ~200 miles between fill-ups requires heavy, bulky and expensive fuel tanks that can withstand 250-300 bar (3630-4350 psi) of pressure plus a network of gas stations equipped with the requisite compressors. On the other hand, biomethane blended with a small amount of propane is the only cellulosic biofuel that could easily be produced in bulk today. EU regulations already permit producers to feed it into the existing European network of natural gas pipelines.

The cheapest way to produce hydrogen is steam reforming of fossil natural gas, but this releases copious amounts of CO2. There may still be a niche application for it in the context of blends of natural gas and a small amount of hydrogen, e.g. Hythane. Relative to CNG, the hydrogen additive accelerates flame propagation and ensures near-complete combustion while improving thermodynamic cycle efficiency. It is best used in efficient homogenous lean-burn spark ignition engines equipped with oxidation catalysts and NOx traps or SCR systems originally developed for diesel engines. To avoid hydrogen embrittlement, special alloys or composite materials must be used to contain fuels containing hydrogen.

This also applies to the entire distribution chain of neat hydrogen and the 700 bar (10150 psi) pressure tanks deployed in fuel cell vehicles (FCVs). However, thanks to the GREET model, hydrogen will now have to be produced using electrolysis of fresh water using electricity from controversial nuclear or expensive renewable sources. Thus, the LCFS virtually guarantees that FCVs will remain a niche phenomenon.

That in turn could create more of a market for vehicles that can store such zero-carbon electricity directly in on-board battery banks. High-volume manufacturers prefer the more expensive and less energy-dense chemistries based on nickel metal hydrides (NiMH), lithium-manganese spinel or lithium nanophospate to banks of commodity lithium-cobalt ion cells found in cell phones and laptops (cp. Tesla Motors). To understand why, watch these videos of nail penetration tests of commodity vs. automotive-grade Li-ion cells, simulating a severe crash scenario.

Regardless of chemistry, all automotive applications of advanced traction batteries have to be maintained at intermediate states of charge (30-90%) and forcibly cooled to near room temperature to ensure they will last for the lifetime of the vehicle. The battery packs used in electric bicycles and scooters are much smaller and cheaper, but owners typically have to replace them after a few years.

Implications for Oil and Utility Companies

Santa Barbara County recently reversed itself on a controversial decision to lift a ban on new offshore drilling in the area. From the oil industry's perspective, the new LCFS adds insult to injury as the carbon life cycle analysis also exposes oil produced from tar sands (cp. Athabasca, Canada) as incredibly carbon-intensive. Developing the US Navy's vast oil shale deposits in Colorado would be even worse.

The new rules point in exactly the other direction: they require refineries to cut the net carbon emissions from their products by 10% in the next decade by blending in renewable compounds or, by selling neat substitutes alongside traditional oil distillates. The latter option would permit oil companies to set up networks of rapid recharge stations for battery electric vehicles, though fire safety considerations will require these to be located sufficiently far from gasoline pumps. Note that oil companies could presumably also comply by taking equity stakes in utilities or else, in specialized start-ups such as Better Place.

However, it's far more likely that oil companies will invest in emerging, relatively benign liquid hydrocarbon technologies such as cellulosic ethanol that are more compatible with their existing distribution infrastructure and the existing vehicle fleet. The fuel systems and engines of all cars and trucks sold in the US since the 1970s can tolerate E10 (10% ethanol) blends. In addition, a loophole in CAFE rules allows auto manufacturers could avoid gas guzzler taxes for popular SUV and pick-up models equipped - at modest expense - with seals and gaskets made from materials that can tolerate blends as high as E85. Millions of car and truck owners are not even aware that their vehicle is already flex-fuel capable.

Unfortunately, one of the biggest headaches presented by cellulosic feedstocks is that they are usually solid and therefore expensive to transport to a large central biorefinery. Moreover, the end product ethanol is highly hygroscopic i.e. it attracts moisture from the ambient air. To avoid corrosion risks, it must be distributed via truck or freight rail instead of existing gasoline pipelines. In addition, storage tanks at gas stations must contain stirrers for fuels containing ethanol. California refineries currently purchase most of their ethanol from the Mid-West, where it is produced from glucose contained in corn kernels - competing directly with applications in the food web. Cellulosic ethanol avoids this problem, but large amounts of energy are needed to increase the surface area of readily available feedstocks like corn stover, switch grass etc. Only then can bacteria begin to break the cellulose down into simple sugars and then ferment those into ethanol. Fermentation into the more desirable biobutanol is in a much earlier stage of microbiology R&D.

An alternate, more easily scalable route is the conversion of cellulosic waste streams, including lignocellulosic biomass, into synthesis gas, a mix of hydrogen and carbon monoxide. This can be converted in Fischer-Tropsch reactors into a variety of useful fuels including synthetic natural gas (SNG) and, alkanes suitable as bulk substitutes for diesel, even gasoline. Unfortunately, F-T is highly exothermic (i.e. inefficient) and also not very selective (i.e. you get lots of worthless by-products) and the results become worse as you scale plants down to reduce the overheads associated with feedstock logistics. This makes F-T unattractive in the context of the carbon life-cycle analysis at the heart of California's new LCFS, unless both the waste heat and the waste CO2 can be leveraged for secondary processes such as steam generation and algal oil production.

Implications for Car and Truck Manufacturers

Gasoline and diesel are the dominant fuels for internal combustion engines used in ground transportation for two very simple reasons: low cost and high energy density. They are also very well suited to precisely controlled combustion in spark and compression ignition engines, respectively. All of the technologies involved have been the subject of continuous refinement for over a century. In addition, there are well-established networks for fuel production and distribution plus vehicle maintenance and repair.

Auto manufacturers therefore also prefer incremental changes, e.g. new and retrofit fuel systems for ethanol and biodiesel (FAME). Only modest changes to fuel pumps, combustion control and/or exhaust gas aftertreatment are required for these. Keep in mind that fuels with lower energy density (e.g. E85) are consumed at higher rates, so MPG goes down, as does range on a full tank.

The problem is that lawmakers and regulators see a need to go much further much faster, in terms of both toxic emissions and energy security/climate change. To that end, they are pushing concepts such as hydrogen fuel cell vehicles and various types of electric hybrids using both mandates (Zero Emissions Vehicle Program) and incentives (Tax Credit Programs) to overcome substantial technical hurdles and encourage the construction of new distribution infrastructure.

Battery electric vehicles can be charged off the existing grid, if you happen to have a garage or reserved parking space. Unfortunately, using a standard 110V/15amp household circuit require a charge times of 4-8 hours for an operating radius of just 40-100 miles, depending on vehicle mass, aerodynamics and how aggressively they are operated. High acceleration/deceleration rates and high speeds are very detrimental to range, as are hotel loads such as cabin heaters and A/C. Fortunately, research has shown that privately owned motor vehicles are typically operated less than 2 hours out of every 24 and, cover less than 30 miles on most days.

General Motors is betting the farm on a technology that combines a full battery electric drivetrain with a small gasoline engine attached to a generator to extend vehicle range. This concept was first presented in the Lohner-Porsche Mixte Hybrid in 1901. It remains to be seen if consumers will be willing to pay a premium of $15k for a Chevy Volt over a comparable conventional Malibu, even if the federal government provides a super-generous $7500 tax credit for early adopters. Even if your daily commute distance (15-20 miles each way) allows you to very nearly deplete the grid electricity charge without firing up the gasoline engine, it will take many years to recoup the additional initial investment as long as gasoline remains comparatively cheap.

Supply regulations like LCFS that indirectly force consumers to shell out for motor vehicle features that they would not purchase voluntarily tend to reduce both profit margins and annual unit volume. Approaches that deliver fiscally sustainable changes in consumer demand would ultimately deliver a greater aggregate impact on climate policy while also making a smaller auto industry more profitable.

Implications for Transit and High Speed Rail

As indicated at the beginning of the post, the new Low Carbon Fuel Standard will above all make buying and operating a motor car more expensive, because essentially all alternative fuel and propulsion technologies cost more than the status quo. This means California families will likely own fewer and on average, older cars and trucks than is the case today.

In the long run, high school and university students may not be able to afford owning a car. Instead, they make do with a scooter or electric (folding) bicycle instead. In addition, simple economics may force them to use local and regional transit more frequently. From there, it is a just a small step to riding high speed rail instead of catching a short-hop flight. Later, this new generation may well prefer living in an apartment in a walkable transit village to their parents' dreams of a large free-standing house in the suburbs where cars are the only way to go anywhere, at least in the winter months.

Electric passenger rail is today and will likely remain the only transportation technology capable of moving millions of people across hundreds of miles quickly, safely and in comfort while making time spent in transit productive via reliable broadband Internet access. The much-ballyhooed zero tailpipe emissions vehicle is actually a very old hat, the hard part is getting urban planners and real estate tycoons to revert to thinking in terms of linear rather than area development patterns, i.e. dense transit villages instead of low-rise sprawl across a grid.

Coda: The Future of the LCFS

If history is any guide, it is very likely that a variety of business interests will lobby California politicians as well as ARB bureaucrats to make incremental changes to the complex new regulation. The cumulative effect will likely be a gradual watering-down, even if crass excesses like the aforementioned E85 loophole are avoided. If the state is serious about reducing its net carbon emissions, by far the most effective approach would be to raise fuel taxes as Japan and European countries did long ago.

Unfortunately, very few politicians are prepared to be honest with voters, so they favor new regulations such as this one. Moreover, forcing industry to lobby them fills their campaign coffers.

It is not yet clear if other states will adopt California's Low Carbon Fuel Standard in addition to its strict limits on toxic tailpipe emissions. Note also that the Obama administration has recently given EPA jurisdiction over CO2 emissions, which may well translate to fleet average limits per mile that will render CAFE (administered by USDOT) and the gas guzzler tax (administered by the US Treasury) essentially irrelevant. That sets the stage for a new arena of jurisdictional conflict between EPA and California ARB.

The Asphalt Empire Strikes Back

UPDATE by Robert: Sen. Kit Bond, Republican from Missouri, is offering two anti-transit amendments - including one that would kill the $2 billion in high speed rail funding currently in the Senate version of the stimulus. Contact both Dianne Feinstein and Barbara Boxer to let them know those amendments must be defeated - and while you're at it, ask Boxer's office why the hell they're advancing the cause of carbon pollution and global warming denial by helping Inhofe.

Dianne Feinstein DC office: (202) 224-3841
Barbara Boxer DC office: (202) 224-3553

Obama's silence on all this is also rather deafening. He has allowed Republicans to narrowly define what is stimulus and what is not - he hasn't mounted a strong defense of including mass transit funding as stimulus, and hasn't spoken out against Republican demands to gut the stimulus package. A new president with extremely high approval ratings should not be letting his administration get tied down by these Lilliputians, yet here we are.

UPDATE 2 by Rafael: Right now, Republicans are playing hardball. There will be no broad bipartisan majority because House Democrats will not accept a completely watered down bill in conference. The idea of stripping down the bill to the elements the GOP already agrees with in order to pass something, anything, Real Soon Now is a bad one because it does not require Republicans to voting for less palatable policies down the road.

Democrats may be able to bribe at least one Republican Senator into breaking ranks this time or, they may succeed in calling the GOP's bluff by forcing them to read telephone books for a while while thousands are losing their jobs every day. I'd quite like to see the latter happen just to underline how anachronistic the whole concept of filibusters is in the 21st Century.

However, given the gravity of the situation, it might make more sense for President Obama, Sen. Reid, a small group of Rockefeller Republican Senators and Speaker Pelosi to hammer out a European-style formal coalition agreement for a two-year legislative agenda. It would be more diplomatic to show deference to Senate Minority Leader McConnell, but this isn't about playing nice. It's about cobbling together a narrow, filibuster-proof majority. This is also why I didn't include House Minority Leader Boehner in the above list - his job for the next two years is to articulate the GOP alternative to the Democratic agenda, not to govern.

The alternative to a stable coalition agreement is to fight over each and every amendment of each and every bill, wasting precious time while the economy is tanking. Consumer and business confidence will only recover once there is visible evidence of a coherent strategy going forward, one that absolutely should include HSR as a means to gradually wean the nation off its addiction to oil.

Original post begins here:

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Streetsblog SF warns that Sen. Barbara Boxer (D-CA) is about to enter into an unholy alliance with Sen. James Inhofe (R-OK). They plan to introduce an amendment to add $50 billion for highway construction to the stimulus bill (h/t to Robert Cruickshank). This comes on the heels of the GOP blocking a $25 billion amendment sponsored by Sen. Dianne Feinstein (D-CA) for highways, water and mass transit, ostensibly because no compensating cuts in other spending were offered. The Senate did pass one amendment: "Most consumers who buy new cars, minivans or light trucks by the end of the year would get tax deductions for the sales or excise taxes and the interest on their loans. Sponsor Barbara Mikulski , D- Md. , estimated that a family would save about $1,500 on a $25,000 vehicle. The key vote on the $11 billion measure was 71-26".

It is understandable that lawmakers are worried about the deteriorating state of the economy and focusing on the short-term issue of preserving and/or creating jobs. The DOTs of many states have a lot of planning expertise in highway projects, so most of their "shovel-ready" projects relate to roads. It's quite likely that there are at least $80 billion worth of road and road bridge repair projects around the country. If the bill contains verbiage targeting the funds that specifically, the Boxer-Inhofe amendment may make sense. However, it is not in the long-term interest of the country to substantially expand highway capacity in the context of this stimulus bill.

Similarly, it may make sense to provide tax breaks that generate demand for new cars, lest one of the Big Three goes belly-up. If that were to happen, it would amount to more than just job losses. The domestic automakers opted out of social security and Medicare decades ago, when that seemed like a good idea. Instead, they committed to providing pensions and health care to their retirees themselves. With Chapter 11 unlikely to succeed for an industry that depends on long-term relationships with its customers, bankruptcy would quickly lead to Chapter 7 a.k.a. liquidation. That would saddle the Pension Benefit Guaranty Corporation and either Medicare or Medicaid with the burden of providing a taxpayer-funded safety net for hundreds of thousands of retired auto workers that never contributed a dime towards these programs during their working lives.

However, the devil is once again in the details. A blanket tax break for the purchase of just any new car encourages the purchase of cheap gas guzzlers. Germany has taken a different approach: it limits its incentive to new car buyers who agree to scrap their old jalopies. The idea is to finally take cars without catalytic converters or with antiquated diesel engines off the roads to improve air quality. The US has a different problem: low average fuel efficiency. Therefore, any tax break for new car buyers should be limited to models that get at least e.g. 30mpg in the 2008 combined drive cycle and then only if the old vehicle was both rated at less than e.g. 22mpg in the old combined drive cycle and is scrapped.

The excessive dependence of the US transportation sector on fuels derived from oil exposes the economy to volatility in the price of that commodity. In particular, it was the assumption that gasoline would always be cheap that prompted cities to promote low-density urban sprawl in favor of high-density transit-oriented development. Combined with generous tax breaks and exotic mortgages for home buyers, this led to a large asset bubble that was massively reinforced by the securitization of mortgages by investment banks and insurance companies. The run-up in the price of oil, triggered by a combination of robust worldwide growth, a temporary lack of reserve production capacity plus rampant speculation, caused that bubble to burst.

In other words, the most obvious approach for a stimulus in the short term - perpetuating the status quo - risks cementing the same car culture that enabled the current economic meltdown in the first place. There were many other contributing factors, but creating funds and incentives for highway expansion and purchases of gas-guzzlers would simply set the scene for a repeat performance in the future.

It is essential that strings be attached to the stimulus measure to ensure long-term strategic objectives are not sacrificed on the altar of short-term expediency. Moreover, it would be extremely foolish to raid transit and intercity rail funds to expand those for highway construction and new car purchase incentives. Diversification of primary energy sources for the transportation sector is a national security issue, as is tackling wasteful congestion on the nation's roads.

Electric trains remain the only proven technology for moving large numbers of people over long distances safely with a small land use footprint, zero tailpipe emissions and without using a drop of oil. Blind faith in the holy grail of advanced automotive batteries is a risky bet and does nothing to address land use and congestion issues. It would be better to hedge by promoting the development of transit networks, folding electric bicycles and bicycle lane/path infrastructure to complement high speed intercity rail. Of course, as Trains4America reports, there will be conflicts over how to use the limited rights of way that remain after half a century of disinvestment in passenger rail services. Atlanta is one such case, the whole Altamont HSR vs. BART extension controversy in the Bay Area is another.

Bottom line: if funds are added to boost road and road bridge repairs and incentives to improve the average fuel economy of the nation's car fleet, there should be concomitant increases for electric rail and bicycle infrastructure funds to facilitate long-overdue changes in land use policies and oil consumption patterns. Note that vehicles running on grid electricity will only yield reductions in CO2 emissions if that electricity is generated from renewable sources. The stimulus bill already contains funding to build up that capacity, but the real value of electrification is that it dissociates primary energy sources and energy use in the transportation sector.

That means increases in the transportation infrastructure portions of the bill - including incentives to buy more efficient and/or electric vehicles - can be paid for either by deferring tax breaks or, by deferring the construction of renewable electricity generating and distribution capacity (or a combination of the two). As always, the art is to find an appropriate balance without breaking the bank.