The state of California has instituted numerous laws and regulations to control emissions of greenhouse gases. One of these is known as the Low Carbon Fuel Standard (LCFS), which is meant to reduce the emissions associated with the state’s fuel supply.
Compliance under the LCFS is calculated using a carbon intensity (CI) score of oil that is refined in California. This CI score is in turn based on Stanford University’s Oil Production Greenhouse Gas Emissions Estimator (OPGEE). But the OPGEE is seriously flawed as currently applied to the CI score. The estimator implies that oil produced in California, subject to all the state’s greenhouse gas regulations, has a CI higher than even imports from thousands of miles away. At face value, that seems improbable, and closer inspection of the OPGEE shows that this incongruity is the result of several modeling limitations or errors.
In this analysis, Catalyst Environmental Solutions Corporation (Catalyst) and Yorke Engineering present a critical review of the Stanford University OPGEE. OPGEE was developed to estimate greenhouse gas (GHG) emissions from the production, processing, and transport of crude oil. Version 1 was released in 2012 and was updated to Version 2 in 2018. CI is used by the California Air Resources Board (CARB) LCFS program for determining how many deficits or credits are generated from transportation fuel combustion. The CI values from OPGEE are also cited by advocacy pieces that oppose domestic production as well as media stories and government reports.
The existing model incorrectly accounts for the carbon intensity of oil
As demonstrated by this analysis, the OPGEE model greatly undercounts the CI of foreign imports and overstates the carbon intensity of crude produced in-state. The analysis outlines that OPGEE produces these inaccuracies for the following reasons:
- OPGEE ignores actual and verified data CARB possesses on the carbon intensity of California crude.
- OPGEE ignores actual and verified data CARB possesses on the carbon intensity of California crude.
- OPGEE underrepresents emissions from foreign oil fields such as those in Ecuador and Saudi Arabia, California’s two largest sources of foreign crude.
- OPGEE greatly underestimates emissions from marine tanker traffic that brings foreign crude to California.
- OPGEE ignores California’s numerous and expanding greenhouse gas emission reduction programs and the fact that California barrels are the only barrels must be compliant with the state’s cap and trade program. Imports are completely exempt.
Each of these factors individually disadvantages in-state production in favor of foreign imports. Combined, these errors create a greatly skewed picture of the CI of California production. This means that compliance with the LCFS is actually easier if imported crude oil is used in preference to domestic, in-state production. These errors are not just an import dependence problem, they undermine the intended effect of the LCFS. Imported oil from Ecuador (24% of imports), Saudi Arabia (23%), or Iraq (20%) would all be preferred even though an accurate CI calculation would show a much higher value than currently used for the LCFS. So the LCFS ultimately results in greater GHG emissions because of the above calculation deficiencies.
Taken together, the way the OPGEE model is used for the LCFS significantly misrepresents California emissions with respect to low confidence estimates generated for imported foreign crudes. The numbers are striking:
- Using CARB-required verified GHG emissions data could cut California crudes CI in half;
- Stopping the assumption that oil produced in Ecuador and Saudi Arabia has lower CI than California simply because there is little to no supporting data available could have a substantial shift in the relative CI of foreign versus California crude oil;
- Fixing incorrect default transportation values could cut California’s CI relative to Ecuador and Saudi Arabia by another factor of 2;
- Applying GHG reduction successes in California oil fields to their CI would have a substantial and ongoing reduction in the CI of California crude oil.
The model failures undermine the purpose of the Low Carbon Fuel Standard
The deficiencies highlighted by this analysis are not just an inconvenient matter for the California oil industry, they should be a major concern for state policymakers both at CARB and in the state legislature. By preferring potentially higher CI foreign sources of oil, the OPGEE model directly undermines the LCFS, resulting in higher GHG emissions than necessary from the California fuel market.
Correcting the errors identified by this analysis would ultimately reduce the GHG emissions of the California fuel supply. The correction is as simple as fixing the model inputs, no new spending or regulation is even required. If the goal is GHG reductions, then fixing the OPGEE model should be an immediate priority.
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A full PDF of Tipping The Scales is available here.
