Lux Research is reporting that new policies are being put forward based on technology-agnostic carbon intensity metrics rather than focusing on mandating volumes of specific biofuels. The move to low carbon fuels is being led, says Lux Research, by the California Air Resources Board (CARB) and the near-term winners will be renewable diesel and conventional electricity followed by renewable electricity.

Carbon intensity is the amount of carbon by weight emitted per unit of energy consumed. Factors that affect carbon intensity include feedstock, process technology, power source and technology viability.

“Energy companies with diversified energy portfolios are well-positioned to take advantage of this paradigm change, shifting towards renewable sources to reduce carbon intensity values,” said Yuan-Sheng Yu, Lux Research Analyst and lead author of the report titled, “Identifying Winners in Low-Carbon Fuels.” He added, “With electricity a near-term winner, pioneers for the ‘utility of the future’ hold a strong position moving forward.”

To evaluate a fuels’ commercial, technological and economical attractiveness, the firm’s analysts looked at addressable market size, carbon intensity and pathway among other factors. The findings include:

• California is a model. Currently, California uses seven different low-carbon fuels derived from 26 different feedstocks, making up 11.3% of its fuel consumption. Under the state’s new regulations, growth of petroleum consumption has slowed to a mere 0.5% quarterly, while low-carbon fuels grew at 1.6% quarterly.
• Waste oil halves biodiesel’s carbon intensity. In ideal conditions, biodiesel derived from fats, oil and grease (FOG), has the potential to cut carbon intensity by half. Plenty of FOG-derived biodiesel is projected to be available – up to 2.5 billion gallons per year – and even though processing poor quality waste adds to cost, FOG-based diesel remains a significant opportunity.

Another finding: carbon-negative fuel is commercially viable today with biogas a leading technology.  Lux Research says with California’s policies in place, improved biogas technologies along with other carbon-negative fuel pathways, will emerge to speed-up carbon emission reductions.