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Abstract. The Low Carbon Fuel Standard (LCFS) is designed to reduce greenhouse gas emissions in the transportation sector. It requires fuel producers and distributors to ensure that their fuel mix meets a specific carbon intensity (CI) target (e.g. CO₂e/MJ) set by California Air Resource Board (CARB). Emission credits are provided for fuels with lower CI than required by the target. As the value of the LCFS credit lingers around $200 per credit and the Renewable Fuel Standard (RFS) renewable identification number (RIN) prices are ever-reducing, the importance of CI is more relevant than ever before. Participation in the LCFS relies heavily on the CI of a renewable fuel, as it dictates the amount of credits generated.

In 2018, 1.12 billion gasoline gallon equivalent of ethanol was consumed in California (about 12% blend level of the gasoline fuel mix). It is unlikely that the volume of ethanol as a percentage of gasoline consumed will fall in the near future due to ethanol‘s value as an oxygenate. Considering this significant role ethanol plays in the transportation fuel pool, it is imperative to seriously discuss the value of lowering its CI to levels that will make the LCFS goals achievable.

In this study, an economic assessment and market analysis are performed to estimate the necessary reductions in CI score needed by ethanol to remain competitive in the LCFS market. Conversely, it is also the CI needed by ethanol to make credit markets whole since ethanol is, by volume, the most dominant gasoline alternative available in the market. Two prospective scenarios were modeled and further discussed for 2022: a Steady Progress Scenario, where deployment of non-ethanol credit generation options develops at a baseline rate that matches recent historical trends; and a High-Performance Scenario, where several technologies, such as electricity and renewable natural gas (RNG), develop more quickly than in the Steady Progress Scenario and lead to a higher supply of low CI non-ethanol fuels.