EVs or ethanol? Midwest eyes deep CO2 cuts in transportation.

Source: By Jeffrey Tomich, E&E News • Posted: Monday, February 12, 2024

Traffic in Chicago.

Cars travel along a highway in Chicago last year. Kamil Krzaczynski/AFP via Getty Images

After recently enacting laws requiring 100 percent carbon-free power, Midwest blue states are eyeing tailpipe emissions.

In Minnesota, a state-appointed working group last week issued a report with recommendations for a clean transportation standard, requiring reductions in the carbon intensity of vehicle fuels over the next two decades. Bills to establish similar standards are also on file in states including Michigan. And there’s legislation in Illinois for the state to become the first in the Midwest to adopt California’s Advanced Clean Cars II rule — a policy that would eliminate the sale of new gasoline-powered cars in 2035.

While measures to slash automobile emissions have gained traction on the coasts, Democratic-led states in the Midwest have been slower to act. Now taking a closer look at the issue, policymakers in farm states face the question: Should they embrace ethanol and carbon capture and storage (CCS) as a long-term solution to decarbonizing transportation?

The answer to that question in the report to Minnesota’s Legislature is an unequivocal yes — a position that’s gotten blowback from the Sierra Club and some other environmental groups.

Jeremy Martin, a senior scientist and director of fuels policy at the Union of Concerned Scientists and a part of the Minnesota working group, said including lower-carbon biofuels can have near-term climate benefits and shouldn’t take away from the push to electrify light-duty transportation, which will take longer than a decade even under the most aggressive scenarios.

“Getting locked into ethanol wars is unproductive,” Martin said in an interview. “People feel like electricity and biofuels are competing. And I think that’s a mistake.”

The Minnesota working group report grew out of a law signed last year by Minnesota Gov. Tim Walz (D) that created a state-funded working group tasked with evaluating the potential for a standard to reduce the carbon intensity of fuels by 25 percent in 2030 compared with a 2018 baseline. It also called for a 75 percent reduction by 2040 and 100 percent by 2050.

Minnesota has adopted and is in the process of implementing California’s 2012 clean cars rule, which last year survived a court challenge. The state did not move ahead with the more recent Advanced Clean Cars II rule that requires 100 percent zero-emission vehicles by 2035.

The working group appointed by members of four state agencies included 40 representatives from the auto, utility, agriculture and oil industries; environmental groups; labor; and other interests. The 309-page report was delivered to state lawmakers Feb. 1.

The report concluded that the carbon-intensity goals laid out a year ago by the Legislature would be “difficult to achieve.” Instead, working group members recommended less ambitious targets of 13 to 17 percent reduction in carbon intensity by 2030 and 40 to 50 percent by 2040, with a 2050 target to be reevaluated in the future.

The reductions would be accounted for via a credit-based compliance system.

Brendan Jordan, vice president of transportation and fuels at the nonprofit Great Plains Institute, the organizer for a broad coalition of companies and advocacy groups pushing for a clean transportation standard in Minnesota, said electrification of transportation “is expected to play the biggest role” in achieving the carbon reductions, specifically when it comes to passenger cars and trucks.

But the working group’s vision for achieving the goals also includes low-carbon biofuels and would make carbon capture an “eligible activity” that can earn credits toward compliance if the CO2 isn’t used for enhanced oil recovery.

Jordan, a member of the working group, said strategies for reducing the carbon intensity of biofuels extends to practices on the farm, such as the use of cover crops and nitrogen management, as well as greater use of renewable energy to produce ethanol and biodiesel.

But, he added, “carbon capture and storage is one of the ways that a biofuel producer can lower their carbon intensity.”

A ‘faulty assumption’?

The list of supporters for a clean transportation standard in Minnesota is lengthy and varied. Among them are some environmental groups; the Minnesota Biofuels Association; and the Alliance for Automotive Innovation, whose members include numerous automakers.

“This is a policy that tackles greenhouse gas emissions in the transportation sector, is a multi-fuel approach,” Jordan said. “And that’s how we’re able to have Tesla and Rivian sitting down at the same table with some of the low-carbon liquid fuel advocates and trying to find a common ground.”

According to Martin, internal combustion engines in passenger vehicles should be phased out in favor of EVs in the long term. But biofuels will have a big role to play in decarbonizing aviation. “That will be a big ask … and we need to do a lot of work to make sure the biofuels are clean enough and can be produced without expanding the footprint of agriculture.”

Not all 40 members of the clean transportation working group are on board with the recommendations, which drew quick criticism from four environmental advocacy organizations. The green groups published their own “minority report” and said the recommendations from the majority are fundamentally flawed and based on politics, not science.

It is “based on the faulty assumption that ethanol is helping the climate,” Peter Wagenius, legislative and political director for the Sierra Club’s North Star Chapter, said in an interview.

Wagenius cites a 2022 study led by researchers at the University of Wisconsin that concluded that carbon intensity of corn ethanol is no less than gasoline and perhaps as much as 24 percent higher.

The Renewable Fuels Association disputes that study’s conclusion and points to competing studies citing a 44 to 52 percent reduction in greenhouse gas emissions compared with gasoline.

The biofuels industry is betting big on carbon sequestration to shrink its carbon footprint further, propelled by the 45Q federal tax credit that is helping incentivize the development of carbon dioxide pipelines across the Upper Plains.

Minnesota is among the states where Iowa-based Summit Carbon Solutions has proposed building an $8 billion CO2 pipeline that would transport carbon dioxide from dozens of Corn Belt ethanol plants to a site in North Dakota, where it would be injected deep underground.

Dissenting environmental groups, however, dispute the idea that Minnesota lawmakers could prohibit their neighbors in North Dakota from using the CO2 for enhanced oil recovery.

“The only way to prevent CO2 from ethanol plants from being piped in North Dakota … is to prohibit the construction of the pipeline itself,” Wagenius said.

Will Illinois follow California?

In Minnesota, Illinois and other farm states where carbon pipelines have been proposed, debate around the projects has been mostly limited to siting cases pending before utility regulators. Debate about the role of ethanol, its carbon intensity and transportation sector emissions reduction policies hasn’t gotten much traction — yet.

In Illinois, a coalition of clean energy advocates want lawmakers to pass legislation introduced last month that includes three clean vehicles policies including California’s Advanced Clean Cars II regulations.

A House version of the legislation, House Bill 1634, is pending in committee, where hundreds of parties have weighed in for and against the measure.

Those supporters include Illinois-based electric vehicle makers Lion Electric and Rivian Automotive.

States that adopt clean car and truck standards like those proposed in H.B. 1634 “jump to the front of the line when it comes to greater availability and faster adoption of zero-emissions vehicles,” Alan Hoffman, Rivian’s chief policy officer, said in an email statement. He said the legislation would make Illinois the first Midwest state to implement the rules, “cementing its position as a leader in clean transportation.”

Muhammed Patel, an advocate with the Natural Resources Defense Council, part of the Illinois clean energy coalition, framed support of the bill as policy to provide market certainty for zero-emission vehicles in Illinois and economic benefits that go with establishment of the EV industry rather than a push to end the use of liquid fuels.

“This is going to take time, and it’s going to allow for a lot of flexibility to meet the regulation. And in that way, you’ll still see a lot of gas cars, or fossil fuel-powered cars or internal combustion engines, on the road past 2035, even with new sales being completely zero emission,” Patel said in an interview.

Among the opponents are a long list of business interests, including chambers of commerce, the trucking and petrochemical industries, and auto dealers.

Agriculture groups including the Illinois Corn Growers Association are also on record as opponents.

A spokesperson for the Corn Growers didn’t respond to an email seeking comment.

But in an emailed statement, Renewable Fuels Association CEO Geoff Cooper said reducing transportation emissions is critical and policies such as a low-carbon fuel standard being considered in Minnesota and Michigan are preferable to California’s advanced clean cars standard that’s been proposed in Illinois.

“Rather than mandating electric vehicles — which are not truly ‘zero-emissions’ when upstream electricity generation is considered — states should be taking a market-based, technologically neutral approach to carbon reduction,” Cooper said.

The group said a low-carbon fuel standard accounts for the “full life-cycle carbon impacts of fuels and vehicles without picking technology winners and losers” and offers a “more effective, affordable and consumer-friendly path toward decarbonization.”

‘Setting the bar’ in Michigan

Like Minnesota and Illinois, clean energy advocates in Michigan are hopeful that lawmakers will pick up where they left off last fall when they passed sweeping clean energy legislation by taking up a measure to reduce tailpipe pollution.

There, legislation was introduced last spring that would establish a clean transportation standard and require a 25 percent reduction in carbon intensity of transportation fuels by 2035.

Jane McCurry is executive director at Clean Fuels Michigan, a coalition of more than 60 companies that support the legislation, including utilities, automakers, environmental groups, charging station providers, and agriculture and biofuels companies.

McCurry said she is hopeful that the measure, Senate Bill 275, and a companion bill filed in the House last fall will get a committee hearing later in the year.

Like in Minnesota, Michigan’s clean transportation standard aims to regulate the carbon intensity of fuels, not vehicles.

“The idea is that we’re setting the bar with that carbon intensity standard to say what fuels get incentives,” she said. “So that bar gets reduced over time to reduce transportation emissions across the state no matter what fuel is being put in the vehicle.”

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