Methodology
Step 1: Calculate the number of megajoules (MJ) of energy in the fuel sold
Because different liquid fuels have different energy densities, or are in non-liquid form, we cannot just use the volume of fuel in gallons. To put all of the liquid and non-liquid fuels on equal footing, megajoules are used instead of gallons, kilograms (kg), standard cubic feet (scf), or kilowatt-hours (KWh). Table 1 gives the energy densities in megajoules per unit of fuel used to calculate the number of megajoules of energy in the fuel sold.
Step 2: Account for energy economy ratios, if necessary
Different types of vehicles use the energy in fuel more or less efficiently. For example, on average, an electric car will go three times farther than a gasoline vehicle on the same number of megajoules, while a heavy duty natural gas vehicle will go only 90 percent as far as a diesel heavy duty vehicle on the same number of megajoules. The Energy Economy Ratios (EERs) are used to adjust credits taking these differences into account. Table 2 shows California’s table of EERs for various fuels. You can see that for some fuels, such as gasoline, E85, diesel or biomass based diesel, the EER is 1.0, and the adjustment is unnecessary.
Step 3: Calculate the difference in the carbon intensity between the low carbon fuel standard and the fuel sold
Comparing the low carbon fuel standard for the year in question to the carbon intensity of a given fuel will tell us whether selling the fuel will generate credits or deficits, and will indicate whether selling the fuel will generate a relatively large or small number of credits or deficits. Table 3 gives the energy density of hydrogen.
Step 4: Calculate the credits/deficits in grams of CO2 equivalent
Credits and deficits are expressed in volumes of greenhouse gas emissions, where credits show the emissions “saved” by selling a low carbon fuel compared to selling a fuel that exactly meets the low carbon fuel standard for that year. Deficits, by comparison, show the “excess” emissions incurred by selling a fuel whose carbon intensity is higher than the low carbon fuel standard, compared to selling a fuel that exactly meets the standard for that year. In this step, emissions are calculated in grams of CO2 equivalent, while in the next step emissions are converted into metric tons of CO2 equivalent. CO2 equivalent, or CO2E, is a unit of measurement that combines CO2 and other greenhouse gases like methane and nitrous oxide into one number. It describes, for a given mixture and amount of greenhouse gases, the amount of CO2 that would have the same global warming potential.
Step 5: Convert the grams of CO2 equivalent into metric tons of CO2 equivalent
Greenhouse gas emissions are most commonly expressed in metric ton units. There are 1,000,000 grams per metric ton (g/metric ton), so the final step in the calculation is to divide the result from step 4 by 1,000,000.
The following two calculations of Carbon Credits and Deficits are theoretical and for demonstration purposes only. Credits or Defects is a direct consequent of the State law covering its carbon cap-and-trade program, should one even exist. Entities stated in these calculations maybe exempt from the program and not liable for their carbon emissions.
