Trends in Carbon Intensity ofEthanol vs. Petroleum

Presented by:Steffen Mueller, PhD

Principal Research Economist

and

Stefan UnnaschManaging Director, Life Cycle Associates

Presented at: Energy Future Coalition, Washington DC

May 2014

Presentation Overview

• Where is the Carbon Intensity of thePetroleum Mix Going

• Where is the Carbon Intensity of CornEthanol/Biofuels Going

• Issues with RFS2 GHG Analysis

Petroleum Baseline Since RFS2 Implementation

• In response to rising demand, there has been a fundamental shift in U.S.oil production towards unconventional/marginal resources (tight oil).

• Tight oil is liquid oil stored in micropores of shale formations; fracking isused to break up the oil laden microporous rock by injecting high pressureliquid into the rock bed.

• Recent advances are now making the extraction of unconventional oiltechnologically possible and economically viable at current oil prices.

• The amount of recoverable oil from one of the largest U.S. reserves, theBakken Reserve in North Dakota and Montana has increased 25 fold (anadditional 3 to 4.3 billion barrels of oil) from early estimates, becomingthe largest oil accumulation in the lower 48 states and accounting for 7%of the total U.S. onshore oil production.

• Bakken oil is produced with a high gas-to-oil ratio (380 scf/bbl)

Bakken: Night time Flaring

Source: Sklar, J. (2013) Gas flares from Bakken fracking are visible from space. New Scientist. January 2013:http://www.newscientist.com/blogs/shortsharpscience/2013/01/julia-sklar-reporter.html

Petroleum Baseline:U.S. domestic crude production by source

Note: US Production Accounts for ~40% of US Consumption

Source: Susan Boland, Stefan Unnasch; “Carbon Intensity of Marginal Petroleum and CornEthanol Fuels”; Life Cycle Associates, 2014.

Petroleum Baseline:Carbon Intensity (g CO2 e/MJ) of Petroleum will Increase

Significantly due to Resource Shift Towards Tight Oil

Source: Susan Boland, Stefan Unnasch; “Carbon Intensity of Marginal Petroleum and Corn EthanolFuels”; Life Cycle Associates, 2014.

Corn Ethanol/Biofuels Baseline:

7Source: Argonne National Laboratory, 10/2013

iLUC Debate Since RFS2: Recent analyses demonstrate potential ILUC emissions aresubstantially lower than initially estimated by U.S. EPA and others

iLUC Developments since RFS2 Implementation• Argonne GREET model was updated to allow land use change emissions

assessments via the CCLUB interface.• The CCLUB model includes calculations that take soil carbon emissions and

sequestration effects from land use change (LUC) into account.• The results are widely published, and the published results in turn were

validated by other institutions in separate peer reviewed publications.– Purdue University reviewed several LUC emissions factor models concludes that

those iLUC emissions factor models (such as CCLUB) that properly account for soilcarbon changes in land cover and tillage practices result in much lower emissionsthan other models.

• For selected modeling runs (that take realistic, projected crop yield increasesinto account) the LUC emissions in CCLUB for corn ethanol total 9.0 gCO2e/MJ(as opposed to 28 gCO2e/MJ used by EPA for corn ethanol)

Biofuels Baseline:Technology Adoption Since RFS2 Implementation

• Despite a general lack of investment in energy technologies inother industrial sectors during the recent economic downturn,ethanol plants kept investing in new technologies.

• Our extensive interaction with the plants during the surveyprocess revealed that the continued adoption of new technologiesis at least partially attributable to incentives and market certaintyprovided by the RFS.

2012/2013Corn Ethanol

2008Corn Ethanol

Yield (anhydrous/undenatured, gallon/bushel) 2.82 2.78Thermal Energy (Btu/gallon, LHV) 23,862 26,206Electricity Use (kWh/gallon) 0.75 0.73DDG Yield (dry basis) including corn oil(lbs/bu)

15.73 15.81

Corn Oil Separated (lbs/bushel) 0.53 0.11Water Use (gallon/gallon) 2.70 2.72

Implementing Latest Data Sets:|CI of gasoline and corn ethanol consumed in the U.S. over time.

• Modeling runs using– latest LCA boundary science for the co-product treatment of corn stover (as supply of corn

replacement feed & cellulosic ethanol production) and– assumed blending requirements set by the RFA for corn and cellulosic ethanol– will result in CI of corn based fuels of 39.3 gCO2e/MJ by 2022. This includes iLUC assumptions of 9

gCO2e/MJ assessed with CCLUB• In fact actual CI of corn ethanol was lower in the 2005-2007 era than EPA assumed it would be in 2022

GHG Reductions from Corn Ethanol

RFS 2 Savings in 2013: 2.2% of US Transportation Emissions• Total Emissions in 2012 = 6,526 Million Metric Tons of CO2 equivalent

Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012 Source:http://www.epa.gov/climatechange/ghgemissions/sources.html

• Latest GHG Report is for 2012, report released April 2014• Transportation Emissions: 0.28*6,526 million metric tons = 1,827 million metric tons

• RFS2 Savings: 40/1,827=2.2% of TransportationEmissions

In Summary

• Where is the Carbon Intensity of the Petroleum Mix Going

CI of Petroleum Mix by 2022 is not 93 gCO2/MJ but 97gCO2/MJ

• Where is the Carbon Intensity of Corn Ethanol/Biofuels Going

CI of Corn Based Fuel Mix by 2022 is 39.3 gCO2e/MJ.This includes iLUC

• Therefore, by 2022 corn ethanol constitutes a 39.3/97 gCO2e/MJ or60% reduction from petroleum baseline, on par with advancedbiofuels under RFS2

Questions

Steffen MuellerUniversity of Illinois at Chicago312 316 3498muellers@uic.edu

Stefan UnnaschLife Cycle Associates, LLC650 461 9048unnasch@LifeCycleAssociates.comwww.LifeCycleAssociates.com