MGA Low Carbon Fuel Standard Initiative

1
MGA Low Carbon Fuel Standard Initiative Phase
II Introductory Webinar July 27, 2009
2
Agenda

• Welcome and Introduction
• Jesse Heier, Midwestern Governors Association
• Overview of Progress to Date
• Brendan Jordan, Great Plains Institute
• Overview of the next year
• Brendan Jordan, Great Plains Institute
• Live polling to gather input
• Question and Answer

3
Welcome and Introductions

• Jesse Heier, Washington Director, Midwestern
  Governors Association

4
Process to date
5
MGA LCFS Goal

• Create a uniform, regional low-carbon fuels
  policy implemented at the state level as a
  standard, objective or incentive and report
  annually on progress. Convene affected
  stakeholders to develop the common policy,
  including reporting mechanisms and other
  details.
• From Energy Security and Climate Stewardship
  Platform for the Midwest, MGA, Sept 2007

6
Overall MGA Process

• 3 Stakeholder groups
• Energy Efficiency
• Renewable Electricity and Advanced Coal w/ CCS
• Bioeconomy and Transportation
• Greenhouse Gas Accord Advisory Group
• All Advisory groups report to MGA Steering
  Committee
• Governors staff from participating jurisdictions
• Ultimate decisionmakers

7
MGA actions to date on LCFS

• Partnered with North Central Bioeconomy
  Consortium
• Working Group chaired by IA Ag Sec. Bill Northey
• Multi-stakeholder group
• Developed consensus recommendations on how to
  implement a regional LCFS

8
LCFS Goals

• Articulate a Midwestern position on the
  development of state and federal low-carbon fuel
  policies
• Make recommendations on how to integrate state
  efforts towards a common LCFS framework based on
  the best available science and techniques
• Assure that Midwestern interests have a voice in
  the development of low-carbon policies at the
  national level and in other states
• Learn about the issues and increase common
  understanding regarding the scientific and
  technical issues with life-cycle assessment of
  fuels and
• Understand how implementation of LCFSs will
  impact the Midwestern economy.

9
LCFS Recommendation Approval Process

• January 5, 2009 Draft recommendations approved
  by the LCFS working group.
• January 15, 2009 Draft recommendations approved
  by the MGA Bioeconomy and Transportation Advisory
  Group
• March 23, 2009 Final recommendations approved by
  MGA steering committee

10
LCFS Recommendations Summary

• Sets up a process for developing the rules for a
  regional program
• Proposes a new stakeholder group to continue
  progress made in phase I
• Gives direction on what decisions these entities
  must make

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LCFS Recs cont

• New advisory group should
• Coordinate with federal and other regional
  programs to assure uniformity, lack of conflict
  and redundancy, and potential trading across
  programs
• Facilitate collaboration between states in
  agreeing on common features for a regional system
  
• Agree on common features of a MW LCFS

12
LCFS Recs Cont

• Technical issues for new advisory group
• Developing recommendations regarding regarding
• life cycle assessment
• GHG intensity of fuels
• emissions reductions (from what source)
• program compliance and reporting
• credit trading
• non-GHG environmental impacts

13
What is different about Phase II?

• More focus on impacted sectors (petroleum
  industry, electricity sector, hydrogen and fuel
  cells)
• More detail on design considerations
• More research and analysis to inform important
  decisions
• More discussion of how different approaches can
  reduce emissions (CCS, EOR, refinery efficiency,
  production efficiency, advanced fuels)

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2 Major Components

• Top recommendations for federal policy from the
  Midwest
• Design considerations for how to develop a
  state/regional LCFS, for those states that want
  this (not every state will).

15
Expectations

• 2-3 in-person meetings
• Monthly conference calls
• Active participation in at least one
  sub-committee
• Additional meetings as required
• Advisory group is advisory, final decisions made
  by MGA Steering Committee

16
Rough timeline

• August 2009 Agree on a work plan for the year
• September/October 2009 1st in-person meeting
• January 2010 POSSIBLE 2nd in-person meeting
• April 2010 Final in person meeting, agreement on
  final work productions
• May/June 2010 Roll-out of final work products

17
Design Considerations Poll Results

• How a regional credit trading market for the LCFS
  would work. Credit trading and cost containment.
• 0 1 Not important
• 0 2
• 39 3 Somewhat important
• 28 4
• 33 5 Extremely important
• Indirect land use change and other policy
  mechanisms that may exist to address ILUC
• 0 1 Not important
• 0 2
• 13 3 Somewhat important
• 0 4
• 88 5 Extremely important

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Poll results cont.

• LCFS interaction with other LCFSs
• 6 1 Not important
• 6 2
• 12 3 Somewhat important
• 41 4
• 35 5 Extremely important
• Default Life Cycle Assessment scores for various
  low carbon fuels
• 0 1 Not important
• 0 2
• 12 3 Somewhat important
• 65 4
• 24 5 Extremely important

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Poll results cont.

• Environmental impacts or sustainability issues
• 12 1 Not important
• 24 2
• 29 3 Somewhat important
• 18 4
• 18 5 Extremely important
• Non-traditional low carbon fuels such as
  hydrogen, electricity natural gas
• 6 1 Not important
• 25 2
• 19 3 Somewhat important
• 25 4
• 25 5 Extremely important

20
Poll results cont.

• Renewable Information Numbers (RINs) and
  compliance
• 0 1 Not important
• 18 2
• 47 3 Somewhat important
• 24 4
• 12 5 Extremely important
• LCFS interaction with an RFS
• 0 1 Not important
• 6 2
• 25 3 Somewhat important
• 6 4
• 63 5 Extremely important

21
What other issues are important for us to discuss?

• Important to frontload important issues and
  interim products that will be relevant for state
  legislatures considering passage of an LCFS.
• Answers to LCA values or greenhouse gas impacts
  helpful for legislative sessions.
• Issue specific webinars over the next month would
  be helpful.

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Other issues cont.

• Issue have rapidly evolved over the last year, it
  would be helpful for the full group to get up to
  speed on current thinking.
• Site specific LCA modeling should be included in
  the scope. This was a strong recommendation
  from phase I.

23
What other questions do you have?

• What if the group is unable to reach consensus?
• Governors steering committee will have final
  sign off on all issues and recommendations.
• If tough issue arises we will isolate that issue
  as much as possible to move the group towards
  broader consensus.

24
Questions cont.

• Should biomass definitions be a part of the scope
  for the group?
• Staff will incorporate this question into a
  follow up survey.

25
Questions cont.

• Should an examination of federal cap and trade
  policy and potential overlap w/an LCFS be
  included in scope?
• Staff will incorporate this question into a
  follow up survey.
• PEW has developed a matrix comparing LCFS and
  current cap and trade proposals.

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Thank you!