18.4: The California Story- Paying for Negative Emissions

California’s progressive policies on greenhouse gas control (Chapter 9) present the first major opportunity in the world for mechanisms that can be used to pay for the development and implementation of negative emissions technologies, especially in the early phase when new technologies and businesses are being developed.

A lot of discussion focuses on the ultimate cost of the climate technologies we will need, and that is a very important topic. But since many of these technologies will not be in full use until midcentury, and not built out until the end of the century, it is difficult to estimate total costs. The year 2100 is about as far from now as we are today from 1939. Some very important things have changed that could not have been guessed then! But do we wait for those miracles to happen? Of course not. We get started, we create new technologies and policies, and perhaps most importantly, we create businesses that do these jobs at large scale as we did with renewable energy.

Figure 18.4.1 The first California hydrogen fueling station fed directly from an active industrial hydrogen pipeline. Photograph from US Department of Energy.

California’s ambition is to reach economy-wide net-neutral greenhouse gas emissions by 2045 (as you learned in Chapter 9). Let’s take a look at how negative emissions will play a role in California’s efforts to deal with its thorny transportation emissions problems through a policy known as the Low Carbon Fuel Standard. This policy controls the ultimate carbon dioxide contribution of fuels to the atmosphere by controlling their carbon intensity, or the total amount of CO₂ (and other greenhouse gases) that are emitted by producing, transporting, and ultimately using the fuel. For biofuels this includes agricultural emissions and even the change in land use required to make the biofuel. For petroleum fuels it includes the energy required to pump and refine the fuel. Conventional gasoline emits about 101 grams of CO₂ per megajoule (MJ) of energy content by this analysis. Each year California decreases the allowable carbon intensity of fuels sold in the state by a little more than 1%, so by 2030 it will be 20% less than the 101 gram/MJ baseline.

Figure 18.4.2 Low Carbon Fuel Standard mechanics.

If a fuel seller has a product, like a biofuel, that has a lower carbon intensity than the standard (such as fuel mix A in Figure 18.4.2), they are allowed to sell the fuel, and it generates credits, measured in tons of CO₂ avoided compared with the standard. On the other hand, if a seller wants to sell a product like conventional gasoline that is above the standard (like fuel mix B in Figure 18.4.2), they have to buy credits in order to offset the overage amount.

Figure 18.4.3 Carbon intensities for all the transportation fuels sold in California in 2017. The size of the bubble indicates the volume of fuel sold. Reproduced with permission from the California Air Resources Board.

This presents the opportunity to create fuels that are carbon negative and to get paid for the fact that producing and using those fuels removes CO₂ from the atmosphere. Figure 18.4.3 shows the carbon intensity of all the fuels currently used for transportation in California. Some biologically derived compressed natural gas (Bio-CNG) has extremely negative carbon intensities, as low as −280 grams CO₂/MJ fuel. This is because that fuel is made from manure (as I talked about in Section 18.2). The previous practice was to let the manure sit in open ponds, emitting methane, which is a potent greenhouse gas. The Low Carbon Fuel Standard gives the farmers credit, as a negative emission, for stopping that emission. This isn’t quite how we have discussed negative emissions in this chapter (it doesn’t actually remove carbon from the atmosphere). The farmers are being given credit for eliminating this emission that would have been one of the residual emissions shown in Figure 18.1.2, so California counts it as negative.

However, when carbon capture is employed, it will be possible to push many of those carbon intensities to below zero—that is, those fuels will have negative emissions. The California Low Carbon Fuel Standard, as of January 2019, allows producers to reduce the carbon intensity of fuels by capturing CO₂ from the fuel production pathway and permanently storing it underground, as we discussed in Section 18.3. For the ethanol in Figure 18.4.3, that additional carbon dioxide removed from the system would amount to a decrease of about 40 grams CO₂/ MJ—not enough to get to zero or below, but a significant decrease. On the other hand, with more-carbon-efficient biofuels like Bio-CNG from anaerobic digesters, capturing and storing the carbon can reduce the carbon footprint to below zero. For fuels like those proposed to be made from forest biomass, this can be significantly below zero—a liquid fuel whose use decreases carbon dioxide in the air. The trading of Low Carbon Fuel Standard credits provides a way for businesses to make money making better biofuels for California and also to get a start on negative emissions, working out the details of the best technology and business practices.

The guidelines go a little further as well, authorizing direct air capture as a way to generate Low Carbon Fuel Standard credits. A company can set up a capture site anywhere in the world, capture and store CO₂, and sell the credits in the California market. (The basic premise is that CO₂ emitted by a car in California goes all around the world—capturing it anywhere and keeping it out of the atmosphere is exactly the same as not emitting it in California to begin with.) The current price for credits—about $190/ton at the time of writing—is probably not enough to pay for direct air capture yet, but it will be sufficient to encourage development of negative emissions from fuel production and is the highest price for carbon in the world today.