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Refined fuelsEpisode 152

Will low-carbon fuels drive crop demand?

Feb 6, 2024

More states are considering or adopting low-carbon fuel standard (LCFS) policies to help reduce greenhouse gas emissions in the transportation sector. The move to decarbonize is having an impact on agriculture.

Courtney Hall, senior director of sustainability with CHS, explains what constitutes a low-carbon fuel, why states are looking to adopt LCFS policies and how those policies could affect demand for key crops.

“Low-carbon fuels are pretty straightforward — they provide energy while reducing the amount of greenhouse gas emissions or carbon when compared to creating and using conventional fossil fuels,” Hall says. “However, there’s a rigorous assessment for a fuel to be qualified as low carbon.”

This includes understanding the way energy from the fuel source is procured or extracted, how it’s processed or refined, how it’s distributed and the emissions it produces during combustion by vehicles.

Growing LCFS adoption

California, Oregon and Washington have all adopted LCFS programs. California led the way in 2011 with a goal to reduce greenhouse gas emissions by 20% by 2030. Illinois and Minnesota are also considering LCFS policies, and more states could follow, Hall says. She adds the growing number of LCFS programs is due in part to more states taking an active role in decarbonization.

“Like governments, the private sector and civil society members, states are working to decarbonize with minimal disruptions to the economy,” she says. “These states are looking at which sectors create the most emissions and where they can have influence within their local economies. The transportation sector is often a focus, since it can represent 25% to 50% of a state’s greenhouse gas emissions.”

LCFS rules are a starting point, Halls says, but must be supported by technology, infrastructure and consumer sentiment.

LCFS and agriculture

As states make strides toward decarbonization, Hall points out the process is not a one-size-fits-all approach.

“Not every alternative fuel is going to work with every application. In the foreseeable future, there will be a diverse mix of fuel sources, electrification and renewable fuels,” Hall says. “It’s important to keep reliability and resiliency top of mind when we think about farming and fuel. We need fuel sources that are going to help us get products to market and don’t cause disruptions in our supply chain.”

Hall says farmers could benefit because renewable fuels increase the need for certain commodities.

“LCFS policies are creating demand for crops such as corn and soybeans, which are used to produce low-carbon fuels,” she adds. “As these programs develop state by state, it’s important that farmers continue to see value from the emerging rules and standards.”

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