CALIFORNIA'S BIODIESEL INDUSTRY TRADE ASSOCIATION

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FOR THE 4TH ANNUAL




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February 4th 2015

Capitol Plaza Ballroom

Sacramento

Understanding the Unique Benefits and
Regulatory Landscape of Biodiesel
-- California's Advanced Biofuel


Discount for CBA Members - Join Us!

As an advanced biofuel, biodiesel is a key element in the success of our nation's efforts to combat climate change under the EPA's Renewable Fuel Standard because it lowers greenhouse gas (GHG) emissions by at least 50 percent. In California, where a greater percentage of biodiesel is made from second-use feedstocks, biodiesel's even lower GHG emissions profile is an important part of the state's success under its bellwether carbon reduction program the Low Carbon Fuel Standard.

And biodiesel's benefits just keep coming . . .

Join us at our 4th annual California Biodiesel Conference for a showcase of biodiesel's profile as a sustainable, cleaner burning alternative fuel bringing health and economic benefits to California, including those communities most in need.


CBA's 2014 California Biodiesel and Renewable Diesel Conference conference presentations are available on our About page.

Supreme Court Denies Appeal of California's Landmark Low Carbon Fuel Standard

Lower Court Decision Upholding Groundbreaking Clean Fuel Protections Will Stand


By Environmental Defense Fund | June 30, 2014

(Washington, D.C. -- June 30, 2014) The Supreme Court will not review a rigorous decision by the U.S. Court of Appeals for the Ninth Circuit that upheld California's Low Carbon Fuel Standard - common sense standards designed to reduce unhealthy air pollution, protect the environment and strengthen the state's clean energy economy.

The Supreme Court today denied petitions from large oil companies and corn-ethanol producers asking it to review and reverse the Ninth Circuit Court of Appeals' decision.

"The Supreme Court's decision today denying requests by big oil companies to review legal appeals challenging California's landmark low carbon fuel standard is welcome news for the millions of Californians at risk from the clear and present danger of climate change," said Tim O'Connor, Director of California Climate for Environmental Defense Fund, which was a party to the case.

"The Low Carbon Fuel Standard will protect the health of Californians while strengthening our clean energy economy," said O'Connor. "It is unfortunate that big oil companies are investing in litigation and obstructionism rather than investing in the innovation in cleaner low carbon fuels that is essential for our health and our prosperity."

The Low Carbon Fuel Standard is a policy created under California's groundbreaking climate change laws, known as AB32. It will reduce the amount of carbon pollution released from the fuels sold in California by 10 percent between now and 2020.

The measure will improve California's air quality, reducing serious health impacts like heart and lung diseases caused by air pollution, which in turn will save the state billions of dollars each year in health care costs.

The Low Carbon Fuel Standard is also designed to help the economy by stabilizing fuel prices and protecting Californians against future oil price shocks, and by driving innovations in business and technology that will create jobs. A recent report from EDF and the American Lung Association found that California's clean fuels policies will save over $10 billion by 2020.

The Ninth Circuit Court of Appeals upheld the Low Carbon Fuel Standard last September, saying:

"California should be encouraged to continue and to expand its efforts to find a workable solution to lower carbon emissions, or to slow their rise. If no such solution is found, California residents and people worldwide will suffer great harm. We will not at the outset block California from developing this innovative, nondiscriminatory regulation to impede global warming."

The LCFS has been in effect for more almost three years, and -- as intended - it is helping to bring innovative, cleaner fuels to California consumers.










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Bill to Stop Grease Theft
Signed by Governor



Assemblymember Chris Holden's bill AB 1566, a measure to increase penalties for grease theft and give law enforcement new tools in this effort, passed the state legislature with overwhelming support and was signed into law by Governor Brown in September. California's rendering industry, which has championed this cause, is pleased and would like to thank Assemblyman Holden for a well-written bill and for his and his staff's support.

This legislation comes not a moment too soon for our industry, which suffers millions of dollars a year in losses due to stolen grease. In January, at CBA's 2014 Biodiesel and Renewable Diesel conference, a panel on grease theft began with two videos of grease thieves caught in the act by Imperial Western Products. David Isen, the company's Asset Protection Manager, said in his presentation that in a high market, losses from theft are as high as up to 40 to 50 percent.

"Restaurants are finding that their used kitchen grease is a hot commodity that has sparked grease wars in a battle over who can cash in on the 'liquid gold' that is then converted into biodiesel fuel," explained Assemblymember Holden in a press release on May 23rd of this year. "This bill closes a loophole in enforcement code that will make it easier to stop the bad players."

Here's what the bill will do, according to an analysis posted on the California legislative information website: "Specifically, to incentivize program compliance, fines are increased for IKG transporters for IKGP violations, law enforcement will be allowed to impound a transporting vehicle involved in IKG theft to ensure the vehicle is safely taken off the streets and the IKG is appropriately transported by a licensed transporter, and licensed transporters and renderers will be required to provide specific identification on their transport vehicles and maintain detailed records in order for law enforcement to better identify illegal IKG transporters."


ALTERNATIVE DIESEL FUEL RULEMAKING
At its October 20th Alternative Diesel Fuel Regulation Workshop, the California Air Resources Board (ARB) presented the latest in a series of proposals based on their analysis of the agency's test data showing NOx neutrality up to B10 for animal fat biodiesel and NOx neutrality up to B5 or B10 for all other feedstocks, depending upon the time of year.

The most recent approach models the totality of biodiesel's emissions characteristics and related factors, concluding that a "safe harbor" level of B10 is acceptable without mitigation for animal fat biodiesel. The modeling shows B10 is acceptable without mitigation for all other feedstocks during the low ozone period and B5 is NOx neutral during the high ozone period. The ARB's Safe Harbor proposal would require mitigation for each gallon above B5 for Low Saturation Biodiesel and B10 for high saturation biodiesel.

Possible exemptions were discussed on higher blends of biodiesel of B20 or less in NTDEs based on recent studies showing no impacts from biodiesel on NOx in light and medium duty vehicles. Also discussed was a proposal to transition from qualitative descriptions of feedstocks (e.g. animal, soy) to one based on their performance value, cetane number or index.

Because NTDEs are NOx neutral with biodiesel, and the levels of NTDEs are increasing over time and expected to penetrate above 90 percent by 2023, it was presented that this would then eliminate the need for NOx mitigation.

The proposal was to begin reporting requirements on January 1, 2016 and per gallon NOx mitigation for blends above the Safe Harbor level on January 1, 2018.

CBA's comments supported a significance level of B20, a level at which biodiesel has been shown, in studies previously presented to the Air Resources Board, to have a self-mitigating emission profile due to the 50 percent or greater decreases in all other pollutants needed for ozone formation (PM and hydrocarbons). We requested that, at the minimum, ARB consider the following in order to assure that our industry is able to continue serving its public and private customers, and in hopes of growing and providing more of biodiesel's benefits:

  • A phase-in period of at least 3 years to allow for the significant changes associated with compliance.
  • B10 all year-round. This is necessary for the growth of our industry and as a means to ensure the availability of low CI fuels in the state.
  • A process for specific exemptions based on the health benefits of biodiesel. For example, a school system that wants to use B20 (or public fleets that serve vulnerable citizens subejct to diesel fuel's disease-causing emissions profile).
  • Exemptions for fleets that use 80% NTDEs and exemptions for light and medium duty fleets.
  • An NTDE provision that sunsets at a lower threshold.
  • Biodiesel producers should be allowed the option of using either a cetane test or a Celsius cloud point test for purposes of regulatory compliance.
  • Recognition that biodiesel and renewable diesel are both needed and should be optimized. (While renewable diesel is a valuable product, it does not have biodiesel's emissions reductions and benefits for PM, VOCs, and hydrocarbons.)

  • NBB and other CBA member companies, especially biodiesel producers, have gone on record with similar comments. A workshop to discuss regulatory language will be held in november. Related agency documents are posted here: http://arb.ca.gov/fuels/diesel/altdiesel/biodiesel.htm.


    CALIFORNIA AIR RESOURCES BOARD: LOW CARBON FUEL STANDARD (LCFS)
    LCFS RE-ADOPTION: CBA supports the comments of the National Biodiesel Board (NBB). NBB has submitted letters on technical issues, including indirect land use change (ILUC). See all comments posted by workshop date on CARB's 2014 LCFS Re-Adoption Letters webpage at: http://www.arb.ca.gov/fuels/lcfs/regamend14/2014lcfsletters.htm.

    LCFS READOPTION: Fuel Availability

    CBA's public comments responding to the information presented at CARB's September 25th Fuel Availability pointed out that the agency's own presentation cited that volumes of U.S. biodiesel are more than adequate to fulfill California market demands through 2020 and beyond. Recent statements by the National Biodiesel Board cite that U.S. production has grown from slightly over 1 billion gallons in 2012 to almost 2 billion gallons in 2013. A 2013 survey of CBA members showed that with a scenario of government policy and economic factors at a medium level of desirability in-state production could reach 71 million gallons in 2015 (more than double 2013 volumes) and up to 188.6 million gallons by 2020.

    LCFS READOPTION: Compliance Curves and Cost Containment

    On October 27th, CARB held a workshop announcing their intention to stick with the LCFS' original mandate of a 10 percent reduction in the carbon intensity of fuels by 2020. Staff presented different scenarios for ramping up to that goal between 2016 and 2020 based on their assumptions of fuel volumes and CIs and continuing to draw-down banked credits. Their projections show that banked credits should exceed 10 million by the end of the last quarter of 2015.

    Staff also presented their preferred cost containment mechanism, the Credit Clearance option, designed to allow "compliance in the event of tight credit supply in order to avoid the possibility of a low-probability but high-impact price spike." Staff is seeking feedback, specifically requesting comments on:

  • A price cap of $200/credit (1 MTCO2e) in 2016
  • An interest rate at 3 percent on accumulated deficits
  • The need for a price floor and where such a floor price should be set

  • Comments are due due November 17th. Please see the detailed meeting presentation at: http://www.arb.ca.gov/fuels/lcfs/lcfs_meetings/lcfs_meetings.htm.


    CALIFORNIA ENERGY COMMISSION (CEC): AB 118 FUNDING
    The following opportunity, which includes diesel substitutes, is excerpted from an 10.27.14 email notice from the CEC:

    Program Opportunity Notice PON-14-602

    Biofuels Early & Pre-Commercial Technology Development
    Alternative and Renewable Fuel and Vehicle Technology Program
    Pre-Proposal Abstract Due: December 17, 2014
    Deadline to Submit Full Proposals: March 26, 2015 by 3:00 p.m.

    The California Energy Commission's Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP) announces the availability of up to $3 million in grant funds for biofuels projects that are in the early/pre-commercial technology development stage. This solicitation will put emphasis on transformative technology solutions to significant biofuels industry problems that increase yields, productivity, or cost effectiveness of biofuel production; and/or that target a significant unmet need in California's biofuels industry.

    There will be one Pre-Application Workshop; participation in this meeting is optional but encouraged. The Pre-Application Workshop will be held through in-person participation, WebEx, and conference call.

    November 14, 2014: 10:00 am - 12:00 pm
    California Energy Commission, Hearing Room B
    1516 9th Street, Sacramento, CA 95814
    For more information: http://www.energy.ca.gov/contracts/transportation.html#PON-14-602.


    CALIFORNIA LEGISLATIVE ISSUES
    AB 1566, a bill making it harder for grease thieves to continue taking their very costly toll on our industry, was signed by Governor Brown.

    AB 2756, which included language that would have provided for a diesel tax refund to a supplier for that portion of biodiesel fuel removed from the terminal rack as a dyed biodiesel fuel, was vetoed by the Governor on 09/29/2014. His veto message did not mention anything related to this part of the bill. CBA will pursue this issue in the next legislative session.


    STATE WATER RESOURCES CONTROL BOARD: UST REGULATIONS
    The new permanent UST law that took effect in June of 2012 was discussed at CBA's January 20th conference by Laura S. Fisher, Chief, UST Technical Unit, State Water Resources Control Board. She explained that when UL does not include a specific approval for a substance to be stored, the owner or operator may submit an affirmative statement of compatibility from the manufacturer. Detailing that the new regulation applies only to double-walled components with an existing UL listing for petroleum and that statements may only come from the manufacturer of the component (and that If there are later conflicting statements, UL prevails), she clarified that the Water Board gathers these statements, reviews them, then posts them on their website (CBA did this prior to the new law).

    The agency also posts Leak Detection Equipment information for diesel, all of which is approved for B6 through B20 meeting ASTMD7467 and biodiesel B100 meeting ASTM D6751 whether or not these alternative fuels are included on individual data sheet (check their site for the few exceptions). She also let the group know that NBB has proposed to work with the National Leak Detection Workgroup on listing or testing equipment with blends B21 - B99 and to work with UL on testing and/or listing of biodiesel blends above B20.

    The new Affirmative Statement of Compatibility by Manufacturer forms can be found at the Water Board website: http://www.waterboards.ca.gov/water_issues/programs/ust/alt_comp_opt/soc.shtml.

    NOTE: The Water Board webpage is constantly being updated as new and revised forms come in, but revised forms are not labeled as such. Also, please be advised that your CUPA may require updated monitoring and response plans and engineering approvals for non-integral secondary containment (sumps and UDCs).

    The following is excerpted from an 10.27.14 email notice from the Water Board:

    ***IMPORTANT NOTICE***

    OWNERS/OPERATORS OF SINGLE-WALLED USTS

    The deadline for removal of all singled-walled USTs is December 31, 2025. Loans and grants are available through the RUST program to assist eligible small businesses to remove single-walled USTs and to replace them with double-walled USTs. If you are eligible for RUST funding, you cannot begin work until you have a grant or loan executed by the State Water Board. Upon UST removal, if a release has occurred, owners/operators may need to undertake corrective action (i.e., investigate and clean up the release). Filing a claim application with the UST Cleanup Fund, completing corrective action, and receiving reimbursement for eligible corrective action costs is a lengthy process. The deadline for submittal of a claim application to the UST Cleanup Fund for reimbursement of eligible costs for corrective action is December 31, 2024. The UST Cleanup Fund sunsets on January 1, 2026. Do not delay.

    Information on eligibility requirements for RUST grants and loans can be found at:
    http://www.waterboards.ca.gov/water_issues/programs/ustcf/rust.shtml. Information on eligibility requirements for reimbursement for corrective action by the UST Cleanup Fund can be found at:
    http://www.waterboards.ca.gov/water_issues/programs/ustcf/.


    FEDERAL ISSUES
    Below are updates on some key federal policy issues. Please contact the Washington office of the National Biodiesel Board (NBB) at 202-737-8801 for further details.

    BIODIESEL TAX INCENTIVE ISSUES
    Senate Majority Leader Harry Reid's vehement pledge to bring the tax extenders package, which includes the biodiesel tax credit, up for a vote this year was widely reported in the industry press. Senate Finance Committee Chairman Ron Wyden (D-Ore.) and ranking member Orrin Hatch (R-Utah) also support tax extenders, something that came up at that committee's recent hearing called "Reforming America's Outdated Energy Tax Code. NBB provided comments to the committee calling for the immediate reinstatement of the biodiesel tax incentive; for it to be revised as a production incentive instead of a blenders incentive; and for incentives that support stability and the long-term growth of renewable fuels.

    RENEWABLE FUEL STANDARD (RFS)
    Continuing our industry's relentless pursuit of higher biodiesel volumes under the RFS, the NBB met with the White House Office of Management and Budget (OMB) and other Administration officials in September. More than a dozen NBB members -- along with several economists and other experts -- sharing the best stories, data, and arguments supporting our case that the proposed volume of 1.28 billion gallons would constitute a severe cut and strike a devastating blow to our industry. According to the NBB, Chairman Steven J. Levy said,"We showed the true strength and diversity of U.S. biodiesel and made clear to the Administration that this is pivotal for our industry and for our shared national goals of boosting U.S. energy security, creating jobs and reducing harmful emissions with clean, alternative fuels.


    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%.