alternative fuel portfolio analysis using a stochastic mac curve approach kevin fingerman 1 colin...
TRANSCRIPT
Alternative fuel portfolio analysis using a stochastic
MAC curve approach
Kevin Fingerman1
Colin Sheppard2, Andrew Harris1
1Humboldt State University/Schatz Energy Research Center
2University of California, BerkeleyTransportation Engineering
Energy Policy Research ConferenceSeptember 10th, 2015
Alternative Fuels Readiness
Low Carbon Fuel Standard• GHG reduction from transport can be broken
into three distinct policy agendas– Reduction in total VMT– Increase in vehicle fuel efficiency– Reduction in fuel Carbon intensity (CI)
• LCFS addresses the third case. 10% reduction in average fuel CI by 2020.
• Offers a convenient “goal post” for aggregate alt fuel deployment.
The Fuels
Marginal Abatement Cost Curves
Marginal Abatement Cost Curve
(MAC Curve)
Cost model elements (MACC y axis)Vehicle Cost(levelized)
$/MJ
• Incremental above BAU conventional vehicle• Limited to new vehicles• 2020 projections where possible
Distribution Cost(levelized)
• Applies to EV, H2, Flex Fuel• Inclusive of financing
Fuel Cost• Incremental above (or below) gas/diesel• Built from the “ground up” in most cases• Co-varied based on historic prices
Probability distributions derived from time series data and known uncertainties enable Monte Carlo simulation of prices
2020 Fuel Throughput
Fuel penetration (MACC x-axis)
• Each fuel penetrates the various segments based on its characteristics.
• Ethanol is constrained by the blend wall, but enters all gasoline segments.
• Biodiesel ≤20% of all diesel segments• EV ≤70% of new LDVs• PHEV ≤100% of new LDVs• H2 ≤65% of new LDVs• Etc.
Incremental Cost of Alternatives
Costs are Random Variables with Covariance in Fuels
LCFS Target
To achieve target:~$37M net cost2.5% of BAU
Portfolio MAC
Average MACC (500 trials)
Internal variation
Sensitivity to incremental cost of BEVs
Sensitivity to gasoline price
Sensitivity to biofuel pricesSu
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General findings• We’ll be seeing a lot more EVs in an LCFS market. This is
robust to almost any conceivable circumstance (including repeal of LCFS).
• There's no silver bullet, due to market limitations, we need to pursue a variety of alt fuels to meet the LCFS goal.
• We should expect credit prices in excess of $200/T. ARB may end up limiting prices, thereby reducing impact.
• Since there is an either/or element to this (unlike the McKinsey curve we’re familiar with), naive $/T analysis misses key dynamics.
Issue with MAC Approach
Sorghum ethanol cheaper than gasoline and cheapest MAC in most cases but very small ability to offset emissions.
Market opportunities eaten up by ethanol, leaving us far short of the target.
Solution
Other alt fuels allowed to go ahead of some of the sorghum ethanol even though more expensive in order to reach target.