Argus California Carbon and LCFS Summit
October 5-7, 2015
Napa Valley, California
How will California’s aggressive new 40 percent reduction target for 2030 reshuffle the states existing policies in the power and transportation fuels sectors? What will Ontario’s likely linkage into the California-Quebec carbon market mean for trading dynamics? Is there enough low-carbon fuel available to support California's demand? How will a 50pc RPS affect REC pricing and trading in the WECC?
Join Argus, California Biodiesel Alliance and 200 senior level risk managers, traders and compliance and regulatory executives to discuss the impact of California’s post-2020 climate plans and federal emissions initiatives on the power and transportation fuels sectors.
Visit the conference website today!
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.
Biofuels Initiative Launched
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.
to Secure Funding from
Cap & Trade Proceeds
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 https://www.youtube.com/channel/UCByKEIwaO4WLjqPIHjzeWyw.
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 firstname.lastname@example.org.
CBA Takes It to the Next Level:
Since 2011, CBA has grown from a handful of businesses, working behind the scenes, to include over 40 feedstock suppliers, marketers and stakeholders, including all of the state's biodiesel producers. CBA is the recognized voice of California biodiesel, respected for our years-long efforts in the process of bringing biodiesel to market in the state and leading the charge to fight (or support) regulatory and legislative challenges that threaten (or strengthen) the biodiesel market in California.
Restructures Membership Dues To Raise Funds for State Legislative Strategy
Now, for the first time since 2011, CBA has revised our membership fee structure in order to take the next big step in promoting and growing our industry and to enable CBA to establish a stronger voice in Sacramento on regulatory and legislative issues that impact the California biodiesel market.
The CBA board, on December 9th, 2014 voted unanimously to raise membership dues as part of a plan to accomplish new goals through a legislative strategy designed to benefit our industry and educate a new batch of representatives in Sacramento about biodiesel and its importance under LCFS, the world's best transportation fuels carbon reduction model.
CBA wishes to thank all of the industry participants who have joined with us as members of our trade association. With your help we have moved from a biodiesel industry in its infancy to establishing a large commercial market for biodiesel, and are now reaching out to bring all producers and marketers participating in California's biodiesel marketplace under our growing tent. We are excited about this new phase of our work and look forward to achieving greater success in 2015 and beyond with your increased support.
See our Join Us webpage for details of the new membership structure.
NOTE: The contents of this article were sent to CBA membership this month in a special letter signed by CBA Chairman, Curtis Wright, and Executive Director, Celia DuBose.
CBA-Supported State Legislative Efforts Move Forward
The two main efforts CBA is focusing on have made important progress so far. AB 1032 has passed the House and all of the Senate committees. AB 1032 would allow for a refund for that portion of non-taxed dyed biodiesel removed from a terminal that buyers have already paid tax on.
Another CBA-supported effort, the Biofuels Initiative, to secure $200 million for biofuels from Cap and Trade Auction proceeds, continues to gain visibility and garner support. According to a recent OP Ed piece in the Sacramento Bee .... " that investment would also reduce greenhouse gas emissions by nearly 6 million tons annually and set the stage for even greater reductions. This initiative would also result in direct, long-term economic benefits, including creating more than 25,000 jobs in inland counties, and stimulating an estimated $11.5 billion in economic development." The article was written by Johannes Escudero, Executive Director of the Coalition for Renewable Natural Gas; Tim Cremins, Director of the California-Nevada Conference of Operating Engineers; and Jose Mejia Director of the State Council of Laborers.
Though funding of this kind was not allocated in the Governor's original investment plan, we remain optimistic that our efforts are moving this agenda forward, and are happy to see language regarding the value of low-carbon biofuels in the program's 2nd draft Investment plan.
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.
Biodiesel Industry Gets Last Word at ARB Board Hearing on
On February 19th, the California Air Resources Board (ARB) held the first of two much-awaited board hearings on the readoption of the Low Carbon Fuel Standard (LCFS) and the adoption of the Alternative Diesel Fuel (ADF) regulation.
LCFS Readoption and ADF Regulation Adoption
The biodiesel industry, wihich has been extensively involved for many years in the the agency's work on both regulations, turned out in force. Shelby Neal, Director of State Governmental Affairs for the National Biodiesel Board (NBB), Celia DuBose, Executive Director of the California Biodiesel Aliiance (CBA), and the state's major producers gave testimony, along with environmental NGOs and members of the alternative low carbon fuels sector, in support of both.
LOW CARBON FUEL STANDARD READOPTION
LCFS readoption proponents sited the program's many successes in lowering carbon emissions, displacing petroleum, creating jobs, diversifying the fuel pool, and providing a model that is already being exported to other states and countries.
Board Chair Mary Nichols talked about how well the regulation has been working and said she was disappointed in the comments from oil industry representatives who seemed to be even more opposed to the program than in the past.
An article in the Sacramento Bee the next morning, which focused on the petroleum industry's perspective, gave the biodiesel industry the last word. It ended with the statements from Shelby Neal: "Ten years ago, you were buying biodiesel by the jar. Now the industry is creating 1.4 billion gallons a year of the low-carbon fuel. We're here today, and we're affordable."
ALTERNATIVE DIESEL FUEL REGULATION ADOPTION
During the afternoon session, about a dozen proponents, and no opponents, gave public comment on the value of biodiesel to the state and thanked the agency for their approach to the proposed ADF regulation. In urging adoption of the regulation, under which biodiesel would be the first fuel to be regulated, our industry expressed appreciation to ARB staff for working with us over the years to come up with a framework that allows biodiesel to move forward while upholding state law for regulating the one criteria pollutant of concern in higher blends. The proposed rule allows a blend of B10 to be sold year round if it has a cetane level of 56 or greater, but only up to B5 in the high ozone summer season if it has a cetane of 56 or less (cetane levels correspond to NOx emissions).
The proposed regulation provides exemptions for light and medium duty fleets and for those with 90% New Diesel Technology Engines (NTDE) up to B20. It has an expected sunset date of 2023, when the use of NTDEs is expected to reach 90% and a review process that will provide for data on actual vehicle miles traveled as fleets turnover to NTDEs. CBA looks forward to continued discussions with ARB staff about their stated interest in pursuing flexibility for higher blends, as expressed at the hearing, and to the adoption of the best possible final ADF regulation.
We appreciated ARB staff's recognition, and that of the NGOs and members of the low carbon fuels sector, of the importance of maximizing biodiesel's health benefits, especially its reductions in toxic diesel particulate matter. Our industry comments repeatedly emphasized our desire to continue to bring that and other of biodiesel's many benefits to California, especially to communities that are economically disadvantaged and suffer disproportionately from diesel emissions-related diseases by creating jobs in those areas where many of our plants are located.
At the end of the day, ARB board member Sandra Berg expressed her appreciation for the cooperative process between ARB and the biodiesel industry that resulted in no comments opposing the proposed regulation.
BOTH REGULATIONS TO BE HEARD BY ARB BOARD IN SEPTEMBER
The ARB board will consider both regulations for a final vote on adoption in September in Diamond Bar. ADF rulemaking details and a link to CBA and NBB comments on the most recent proposed amendments are available here: http://www.arb.ca.gov/regact/2015/adf2015/adf2015.htm. LCFS rulemaking details and a link to the latest comments from CBA and NBB are available here: http://www.arb.ca.gov/regact/2015/lcfs2015/lcfs2015.htm.
CBA PARTICIPATES WITH NATIONAL INDUSTRY IN HILL VISITS ON RFS CALLING FOR HIGHER VOLUMES
This month, CBA board members Jennifer Case of New Leaf Biofuel and Doug Smith of Baker Commodities participated in the National Biodiesel Board's DC Fly-In and met with members of Congress and their staff regarding the EPA's Renewable Volume Obligation (RVO) proposal under the Renewable Fuel Standard program (RFS), which was recently released on May 29th. Jennifer and Doug met together with Rep. Juan Vargus (D-CA-51st) from the district where New Leaf is located. Jennifer met with staff for California Senators Feinstein and Boxer and for Rep. Scott Peters [D-CA52].
Doug, who participated in visits with the National Renderers Association, also met with Senator Mazie Hirono (D-HI); Senator Jon Tester (D-MT); Rep. Mark Takai (D-HI); Rep. Ed Royce R-CA-39th); Rep. Tulsi Gabbard (D-HI-2nd) and with staffers for Senator Ron Wyden (D-OR); Senator Brian Schatz (D-HI); Rep. Seth Moulton (D-MA-6th); and key committees, including both the Senate and House committees on agriculture.
Some 120 other producers and leaders from around the country made our industry's case that, while we are happy that the EPA has released numbers that call for growth in all fuel categories, the 2016 and 2017 RVO numbers for biodiesel (the "out years") do not adequately represent the capability of the biodiesel industry and should be raised. The proposed 2016 number is 1.8 billion, which is almost exactly what the national industry produced in 2013.
It is expected that the EPA's recent approval of a pathway for Argentinian biodiesel will substantially increase the available biodiesel supply by over 400 million gallons this year alone. The Argentinians exported over 400 million gallons to Europe in previous years, but Europe has now imposed substantial import duties, essentially closing the market to them. The U.S. is now the only place where the substantial volumes that exceed Argentina's own demand are able to go.
According to Doug, Senate and House members, as well as the Senate and House agriculture committee staff showed concern that these imports would affect the U.S. biodiesel industry, and made comments that they would pursue information to help curtail these imports over our domestic industry products. Many were not even aware of the Argentinian biodiesel situation.
Another issue at play is that, in response to the reduction of the statutory mandates for the "advanced biofuels" category, the RIN value for that category plummeted, which has opened the door for sugar-cane ethanol from Brazil to come into the market to fill that category. The EPA says in its proposal that their biodiesel volume numbers allow for a slow increase, recognizing that biodiesel would also go to help fill the rest of the "advanced biofuels" category. However, our industry is very concerned that this volume will be met by sugar-cane ethanol, which will not provide the biodiesel industry with the growth in the out years as EPA intended.
Please join us in asking that the 2016 and 2017 volumes be increased for both the "biomass-based diesel" and the "advanced biofuels" categories in order to accommodate all of the worldwide biodiesel, sugarcane, and other low carbon fuels that are coming into the market. Please highlight in your letters that the biodiesel industry is capable of producing 2.4 billion and 2.7 respectively for 2016 and 2017, and anything less than 2.0 and 2.3 billion would be unreasonable.
The NBB's Fueling Action center has a quick online way for you to support our industry's request and tell your story. Please take a moment to get your comments in before the July 27th deadline.
CALIFORNIA ENERGY COMMISSION (CEC): AB 118 FUNDING
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: