Report: Biofuels, other factors to lower fuel demand in Calif.

By Erin Voegele | March 21, 2014

Bloomberg New Energy Finance has published a new white paper that provides analysis of California’s transportation fuel market. The paper, titled “2020 California transport outlook: the decarbonisation drive,” highlights the impacts of the renewable fuel standard (RFS), California Low Carbon Fuel Standard, and new fuel efficiency regulations (CAFE standards) on the state’s gasoline market.

Within the report, BNEF shows that its baseline scenario predicts that gasoline demand in California will drop from the current 12.3 billion gallons per year to 11.2 billion gallons per year by 2020, resulting in a 9 percent reduction. CAFE standards, the RFS and the LCFS all contribute to that reduction.

A second scenario offered by the analysis finds that gasoline demand could drop by up to 13 percent under the assumptions that efficiency standards are strictly adhered to and the fleet renewal rate increases slightly.

The report provides background details on the data that was examined to formulate the baseline scenario. According to the report, vehicle miles traveled, the number of heavy- and light-duty vehicles on the road, federal fuel economy standards and alternative fuel demand were all found to be variables that would be particularly influential to a forecast.

Regarding biofuels, the report discusses the implications of the E10 blend wall, the recent RFS proposal and the LCFS. The analysis also addresses a forecast by the California Energy Commission that determined E85 could push demand up slightly from the current 6.5 million gallons to 16 million gallons by 2020 if more fueling stations offering the fuel come online.

“There are currently four distinct pieces of regulation that will expedite change for the Golden State before 2020, in addition to one clear economic consideration. The will is there to operate more electric vehicles, consume gasoline more economically, blend the right type of biofuels and do it at more affordable levels for the consumer,” said Harry Boyle, head of applied research at BNEF.

A full copy of the white paper can be downloaded here.