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February 24th 2016

Capitol Plaza Ballroom


California's Biodiesel Industry

California currently has 7 biodiesel production plants, with 3 plants under construction, and major expansion underway at several of the state's largest plants. In 2014, instate production reached 25.96 million gallons, and we hope to see significantly increased volumes in 2015.

Governor's Signature on Tax Bill to Boost California's Biodiesel Industry

On October 4th, California Governor Jerry Brown signed AB 1032 into law, correcting a tax problem and clearing the way for a significant increase in the volumes of biodiesel blended in the state. The bill, introduced by Assembly Member Rudy Salas and sponsored by the California Biodiesel Alliance, amended Section 60501 of the Revenue and Taxation Code by adding biodiesel to the law allowing for refunds on non-taxable fuel.

Beginning January 1, 2016, refunds will be available through the State Board of Equalization (BOE) on the portion of the non-taxable (dyed) biodiesel removed from the terminal to those that can show they have already paid tax on that fuel. Currently, the law imposes an excise or "road tax," on diesel fuel, and allows reimbursement for the amount of such taxes to entities who have used tax-paid fuel in certain nontaxable uses (for which it is dyed red).

The problem is that clear biodiesel is typically sold to refiners and fuel wholesalers then transported by truck from the production facility to fuel terminals. Thus, biodiesel producers are required to pay the state fuel tax on their biodiesel sales, and must then charge the buyers for such taxes. However, refiners and fuel wholesalers have not been able to receive a refund or credit for the tax paid on the biodiesel when the biodiesel is blended with dyed diesel fuel for non-taxable use and removed from the terminal. Until now.

"Our industry estimates that the problem may be effectively preventing biodiesel from being blended into 15-30% of the diesel volume depending on how much dyed diesel that terminal is handling," said Harry Simpson, President of Crimson Renewable Energy and CBA board member."The problem affects every terminal and refinery rack in the state that is blending, or contemplating blending, biodiesel," he added.

Read the text of the law, which includes details of how to apply for the refund.

Biofuels Initiative Launched
to Secure Funding from Cap & Trade Proceeds

The California Biofuel Initiative, a proposal to allocate $210 million from Cap and Trade auction proceeds to low carbon biofuels, has built an impressive list of supporters since it was launched a few months ago. The supporting coalition, which includes biofuels producers, industry associations, and other stakeholders, has come together to make the case that low carbon fuels are available now and must be aggressively scaled up if Governor Brown's goal of reducing petroleum use in the state by 50 percent by 2030 is to be met.

An important element of the proposal includes not just concern about reaching the climate change goals of AB 32, but also that biofuel production and infrastructure should be encouraged in disadvantaged communities as put forth in SB 535. That law calls for stimulating employment and economic improvement in those communities as defined by CalEnviroScreen.

The funds would be split equally among three biofuel types (diesel alternatives, gasoline alternatives, and biogas/syngas) based upon stimulating (1) California-based biofuel production; (2) the low carbon intensity of biofuels, and (3) the benefits to disadvantaged California communities. Each category would tailor spending on production and infrastructure based on the needs of their biofuel type.

CBA has hired Sacramento lobbyist and biodiesel specialist, Louie Brown of Kahn, Soares, and Conway, LLP, who is leading weekly meetings with the Biofuels Coalition partners to develop the legislative strategy required to secure funding through the Cap and Trade program.

View the proposal and the current list of supporters here. An informational video is also being put together to show the breadth and depth of California's biofuel and renewable transportation industry. Any signatories are welcome to submit video clips for inclusion. The draft "CA Biofuels Montage" can be seen at

For further details and to add your organization's name as a signatory to the Biofuels Initiative, call Russ Teall at 805-689-9008 or email him at

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Air Resources Board Votes
to Readopt LCFS and Adopt ADF

Takes Major Steps Toward Much-Needed Regulatory Stability

On September 25th, the California Air Resources Board (ARB) voted to readopt the Low Carbon Fuel Standard (LCFS) and to adopt the state's first-ever regulation on the commercialization of alternative diesel fuels (ADF), under which biodiesel will be the first fuel to be regulated. Biodiesel will come into the ADF regulation as a Stage 3A fuel, having completed the requirements of Stages 1 and 2. Both regulations take effect January 1st, 2016 and constitute important benchmarks in the process of moving toward the regulatory certainty needed by California's biodiesel industry and the low carbon fuels sector.

Many years of concerted and coordinated efforts by CBA and the National Biodiesel Board have been invested to ensure biodiesel's accurate inclusion under LCFS and that the best possible ADF regulation was put in place.

Low Carbon Fuel Standard (LCFS)

Because the court in the POET, LLC v. California Air Resources Board case found inadequacies in ARB's compliance with the California Environmental Quality Act (CEQA) and the Administrative Procedures Act (APA), the LCFS had to be readopted. ARB staff took the opportunity to include clarifications and enhancements based on what they had learned in administering the regulation since its implementation in 2011. Importantly, ARB is sticking with the original LCFS goal of a 10% reduction in the carbon intensity of fuels by 2020. The regulation includes a new compliance curve to reach that goal, beginning with an immediate jump to 2% from the 1% level it has been held at for several years during the re-adoption process, then ramping up steeply from there.

The core elements of the program remain the same, but enhancements include cost containment through a price cap and Clearance Market; allowing fixed rail and electric and hydrogen forklifts to generate credits; and several refinery-related measures, including allowing them to generate credits for GHG emissions reduction projects.

Other key changes include a two-tiered system under which all new and existing CI scores must be calculated using the CA GREET 2.0 spreadsheet. GREET 2.0 has been updated using the latest science. This will result in pathways and CI scores specific to each fuel, a new requirement.

Conventionally produced first-generation fuels, such as biodiesel and starch- and sugar-based ethanol, fall under Tier 1. Tier 2 fuels are next-generation fuels, such as cellulosic alcohols. Tier 1 fuels produced using an innovative method, such as the use of low-CI process energy sources, may move into Tier 2. ARB will be conducting a GREET 2.0 workshop in October (TBD).

Updates to ILUC values include reductions for soy biodiesel to 29.1 g/MJ and canola biodiesel to 14.5 g/MJ and a new value for palm oil biodiesel of 71.4 g/MJ. Corn ethanol, sugar cane ethanol, and sorghum ethanol ILUC penalties are now reduced to 19.8 gCO2/MJ, 11.8 gCO2/MJ, and 19.4, respectively.

Alternative Diesel Fuels Regulation (ADF)

Reporting requirements for all producers, importers, blenders, and sellers of biodiesel in the state begin on January 1st, 2016 for the ADF regulation, but the actual implementation of the pollution control levels and fuel specifications requirements do not begin until two years later on January 1st, 2018.

The ADF regulation modeled ARB's findings of biodiesel's emissions characteristics and took into account related offsetting factors -- factors in the commercial market that effectively offset NOx emissions, such as new technology diesel engines (NTDEs), fuels, and feedstocks -- to establish pollution control levels. These are the levels above which NOx mitigation will be required. Low blends of biodiesel may be used without mitigation, depending on the time of year (high or low ozone season) and feedstock saturation (as determined by ASTM specifications for cetane level).

Specifically, blends above these pollution control levels must employ an ARB-approved NOx additive or ADF fuel formulation:

  • High saturation feedstock (cetane of 56 or greater): B10 year round.
  • Low saturation feedstock (cetane lower than 56): B10 in low ozone season - November 1st to March 31st.
  • Low saturation feedstock (cetane lower than 56): B5 in high ozone season - April 1st to October 31st.

  • The regulation includes fleet and retail exemptions for B20 where use is only in light and medium duty vehicles or heavy duty vehicles with NOx neutral technologies such as NTDEs.

    A program review by ARB staff will be completed by the end of 2019. It will determine the program's efficacy and will take into account offsetting factors and any other factors that may affect biodiesel's NOx emissions.

    A sunset provision will kick in when heavy duty vehicles with NTDEs comprise 90% of all actual vehicle miles traveled by heavy duty vehicles in the state, which is expected to occur by the end of 2022, according to ARB staff.

    All those affected are especially encouraged to read the text of the regulations (listed below) and related documents..

    LCFS Docs:
    The LCFS regulation proposed text, incorporating all 15-day changes (PDF - 877K).

    ADF Docs:
    The ADF regulation proposed text, incorporating all 15-day changes (PDF - 316K)

    Biodiesel Industry RFS Comments Leave No Stone Unturned

    In written comments submitted to the Obama administration, CBA called for higher volumes under the pending modest RFS proposal establishing Biomass-based Diesel volumes for 2014-2017. The comments began with a bang: "In 2014, as a result of the poor market conditions created by the lack of a strong biodiesel mandate, four of California's eleven biodiesel plants closed their doors. Other plants scaled back production, laid off workers, deferred expansion projects, and lost investment opportunities."

    The comments call for biodiesel standards of not less than 2 billion gallons for 2016 and 2.3 billion gallons for 2017 and cite arguments from the National Biodiesel Board (NBB), which has worked tirelessly on this issue of critical importance to the health of the biodiesel industry.

    It is not uncommon for CBA's comments, especially on California matters where we work closely, to state that we support the technical comments of the NBB. However, in this case, CBA repeatedly referenced arguments put forth in the NBB's case for higher volumes, which total 150 pages and detail our industry's case on the broad range of issues upon which the EPA will make its final decision.

    The NBB's comments, based on months of work by staff and the RVO Working Group, include an unprecedented level of technical and economic analysis and documentation on points ranging from the technical and performance qualities of the fuel to production capacity, imports, and feedstock supplies. They can be viewed or heard (via podcast) here.

    The EPA has said it plans to finalize the rule by November 30th after taking into consideration the many thousands of public comments they have received.


    The Lead Commissioner Report version of the 2015-2016 Investment Plan Update for the Alternative and Renewable Fuel and Vehicle Technology Program was adopted at an Energy Commission Business Meeting on April 8th. The new plan allocates $20 million for all biofuels production with no infrastructure investment funding offered. For more information:


    The State Water Board has sent out a notice to underground storage tank owners and operators announcing that new revised federal UST regulations were issued on July 15th, 2015. According to the document, the Water Board is reviewing the federal regulations to see if new California statute and regulations are in order. The notice says that a switch in fuels to a blend above B20 would require the owner to notify the CUPA 30 days prior and that owners/operators must demonstrate compatibility for as long as the substance is stored.

    Biodiesel is an advanced biofuel made from waste or virgin vegetable oils or animal fats. It is a sustainable, cleaner-burning, diesel fuel replacement that meets strict quality specifications. Biodiesel derived from waste can reduce greenhouse gas emissions up to 86%.