Foglesong: Intel and Opportunities

Andrea Foglesong
PROtect LLC
Wed., February 21, 2024 (8:00am)
Intel and Opportunities: The Inflation Reduction Act and Beyond

Transcript

1. Inflation Reduction Act Enhancing Efficiency, Safety, and Savings Andrea Foglesong February 21, 2024
2. IRA – General Summary Inflation Reduction Act • Touted as the most aggressive action on tackling climate crisis in American history • Created Clean Fuel Production Credit (CFPC) for qualifying transportation fuel produced after 2024, but sold before December 31, 2027 (aka, 45Z) • “Clean” fuel is considered to be 50 kg of CO2e/MMBtu (units matter) • A facility generating CFPCs cannot generate at the same time credits from clean hydrogen under 45V or CO2 sequestration under 45Q (stacking credits) • Wage and Apprenticeship requirements
3. Data Inputs and Calculation Methodology – General What We Know • Typical data needs include: Feedstock throughput, Feedstock sourcing, Production/process information, Energy (electricity, natural gas), Coproduct considerations, Transportation of final fuel product • 26 US Code §45Z indicates GREET developed by Argonne National Laboratory, “or a successor model (as determined by the Secretary)” is the model to be used to calculate lifecycle GHG emissions What We Don’t Know • Will there be a separate model developed for program compliance, like the SAF calculator • Will defaults be defined, or will there be user flexibility • ILUC changes to reflect updated science
4. Model Comparison – CI Results Parameter Argonne GREET CARB SFE Canada OpenLCA Corn Farming (gCO2e/MJ) & Transportation: 25.5452 29.43 18.88705 Ethanol Production: 27.0328 27.66 15.62653 Natural Gas: 20.2954 20.41 12.7802 Electricity: 3.3575 5.23 2.4629 Chemical Usage: 1.7615 2.02 0.38345 Ethanol Distribution/Transportation: 0.9817 1.77 1.5265 Co-Product Credit: -9.7826 -10.88 - Denaturant CI: - 0.97 - Ethanol Combustion: - - 1.93719 Non-Combustion CI: - 0.087 - Land Use Change: 8.6485 19.80 - Total CI Score 51.9413 54.8010 kgCO2e/MMBtu 68.85 37.9773 Reported in gCO2e/MJ
5. Summary of Model Differences Argonne GREET CARB, OR, WA SFE Canada OpenLCA Corn Transport Default: 40 mi to stack, 10 miles to site Only can use default if in corn- belt state Have to provide miles from farm Corn Moisture - - Must specify Chemical Usage Can modify chemical related inputs Uses default CI impact of 2.2 gCO2e/MJ Can specify or use predefined scenarios Final Product for CI Undenatured Ethanol Denatured Ethanol Undenatured Ethanol ILUC (gCO2e/MJ) 8.6485 19.80 (CA, WA) 7.80 (OR) Not included
6. Data Inputs and Calculation Methodology - Farming What We Know • Argonne GREET Farming practices values currently allow user flexibility in inputs • Aside from Ethanol Production, farming practices are the 2nd largest impact to the overall CI, leaving prime for reduction targets What We Don’t Know • Will Farm Inputs be included as modifiable parameters • How farming practices will be calculated or verified • Default parameters vs limited capability to modify defined inputs • Farmer traceability and coordination • Concerns related to how feedstock is obtained, aggregated CI, having farmer participation, implementation, pathway/registration requirements
7. Verification What We Know • As like all fuel pathway programs, verification ensures the components of a fuel pathway program are being met • Some kind of Verification, Quality Assurance, and/or Engineering Review will be required What We Don’t Know • How that verification process will look • Who will be able to conduct verification (technical/financial considerations) • Options: • Third-party, independent engineering review conducted by a Professional Engineer, • EPA’s Quality Assurance Program (QAP) • CARB’s Verification/Validation process • Annual Attestations
8. Compliance Monitoring Plans What we know: • Plans are a typical component of program compliance to define how data used to calculate a CI will be accurately measured, recorded, and maintained • All programs have required some sort of plan including EPA’s EP3 program, State LCFS, and Canada CFR What we don’t know • Will IRS require a similar plan, and how will the program components vary • One way to ensure program compliance is to develop a plan that is comprehensive enough to cover all programs
9. Ongoing Program Compliance What We Know • We know nothing, Jon Snow What We Don’t Know • Annual and ongoing program support • Update of Carbon Intensity/GHG emissions • Annual Reporting • Other annual compliance reporting reporting • Compliance monitoring plan update • Annual verification
10. Overall Implementation What We Know • Timeframe • Created Clean Fuel Production Credit (CFPC) for qualifying transportation fuel produced after 2024, but sold before December 31, 2027 (aka, 45Z) • Not later than January 1, 2025, the Secretary shall issue guidance regarding implementation What We Know • Timeframe • Will this be extended? Political and lobbying push, but speculative assumption • Multiple feedstock, e.g. Cellulosic/Fiber considerations, Sorghum • Program Support • How to build your program • Recommend using conservative, verifiable inputs or defaults consistent with other programs
11. Path to < 50 kg/MMBtu Technology/Proces s Change: Potential Reductions: Things to Consider: Benefits CHP: 3 – 7 g/MJ • Electricity reduction from Grid, but may have extra changes for backup arrangement • Increase in reduction if reduce more natural gas at plant • Potential reduction in electricity cost or cost benefit importing back to grid • Increased premiums in carbon markets CCUS: 25 – 30 g/MJ • Must include CI impact form carbon processing, and sequestering in CI • May get less credit if not at 50 kg/MMBtu prior to CCS • Eligibility for 45Q credit • Increased premiums in carbon markets • Another revenue stream for purchased CO2. Natural Gas Reduction ~2.0 g/MJ per 10% • Not always linear • May vary between models • Increased premiums in carbon markets Electricity – move to solar ~2.5 – 6 g/MJ • Dependent on electricity contribution • Increased premiums in carbon markets Increase Ethanol Yield ~2.5 – 3.0 g/MJ per 10% • Not always linear • May vary between models • With Ethanol Yield increase, may decrease co-product credit • Increased premiums in carbon markets • May be a benefit from other modifications at the site Increase corn oil yield ~0.06 g/MJ per 10% • Not always linear • May vary between models • Increased premiums in carbon markets • May be a benefit from other modifications at the site
12. Path to < 50 kg/MMBtu CI (kg/MMBtu) Ethanol Yield Increase by 10% Natural Gas Usage decrease by 10% Implement CHP Replace 10% NG with RNG (FW via AD) as process fuel Electricity decrease by 10% Electricity to Solar Chemical Elimination, eg No Gluco Amylase 100% CDO to RD/BD Amount below 50 $ Based on Reduction (Cents) Monetization based on 100,000,000 gallons Baseline 54.801 -4.23 -1.93 -3.16 -4.88 -0.6 -2.64 -0.27 -0.17 4.801 Scenario 1 48.641 -4.23 -1.93 -1.359 0.03 $ 3,000,000.00 Scenario 2 49.531 -4.23 -0.6 -0.27 -0.17 -0.469 0.01 $ 1,000,000.00 Scenario 3 47.601 -4.23 -1.93 -0.6 -0.27 -0.17 -2.399 0.05 $ 5,000,000.00 Scenario 4 49.651 -4.88 -0.27 -0.349 0.01 $ 1,000,000.00 Scenario 5 46.971 -4.23 -3.16 -0.27 -0.17 -3.029 0.06 $ 6,000,000.00 Scenario 6 42.611 -4.23 -4.88 -2.64 -0.27 -0.17 -7.389 0.15 $ 15,000,000.00
13. Thoughts From Yesterday • Considerations and follow-up thoughts from USDA Secretary Tom Vilsack
14. Questions? Andrea Foglesong 316-617-1510 Andrea.Foglesong@PROtect.llc