LCFS Would Benefit Minnesota

According to a recent study from Political Economy Research Institute, a Low Carbon Fuel Standard (LCFS) in Minnesota would have a positive environmental and economic impact. The paper, “The Employment Impacts of a Low- Carbon Fuel Standard for Minnesota,” studied the employment impacts of three different scenarios both to 2021 and further to 2035. In each situation, employment is measured on the number of jobs that could be created in construction and manufacturing (CM) as the transportation infrastructure expands, as well as the number of jobs that would be created in harvesting, transportation, and production (HTP).

In each scenario, employment increases, the least in Scenario 1 and the most in Scenario 3:

  • Scenario 1: assume no change to the distribution of transportation fuel consumption.
  • Scenario 2: assume that the fuel mix will change in response to a national Renewable Fuel Standard (RFS2)
  • Scenario 3: outlines a more agressive change in the fuel mix in response to instituting a statewide Low Carbon Fuel Standard (LCFS).

In addition to employment impacts, the study also looks at strategies within the ethanol industry to lower carbon intensity. These include: using renewable energy in place of fossil fuels; increasing the use of flex-fuel vehicles (Minnesota has the largest number of E85 pumps in the country); increasing the blend wall for low level ethanol blends; and increasing production of cellulosic ethanol. The study also looks at increasing the use of biodiesel blends (from B2 to B20) and increasing the number of electric vehicles (EV).

The key findings:

  • In the LCFS scenario gasoline is displaced by renewable fuels.
  • As cellulosic ethanol production increases, there will be a slight decline in corn-based ethanol production in the RFS2 scenario but a slight increase in corn-based ethanol production in LCFS.
  • CM jobs will be created but have a limited duration; however, building the infrastructure will last a generation.
  • HTP jobs will continue from year to year as long as the demand for fuel in level or growing.
  • In the RFS2 scenario 2,726 blender pumps are installed, 36 biodiesel blending pumps are installed, 1,350 EV charging stations are installed and six cellulosic biorefineries are built.
  • In the LCFS scenario, 2,726 blender pumps are installed, 118 biodiesel pumps are installed, 2,700 EV charging stations are installed, six new corn ethanol plants are built, all current ethanol plants are retrofit (to be more energy efficient), and 10 cellulosic plants are built.

The report concludes that if Minnesota adopted a LCFS, the state could reduce it’s carbon intensity of its transportation fuels by 10 percent in 10 years. By 2035, a LCFS could create over 32,500 CM jobs and 12,000 HTP jobs. One thing I noted about the report: it assumes the demand for fuel will stay level or grow, but the report did not take into account a reduction in fuel demand a very real possibility as vehicles become more fuel efficient and more electric vehicles hit the roads.

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