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California Biodiesel Alliance News
California's Biodiesel Industry Trade Association April 2016 |
A new Calendar feature on our Regulatory Matters webpage, linked to from our Home page, includes policy-related meetings that we follow as well as events like CBA's upcoming Lobby Day in Sacramento. In addition to what's listed there, CBA's lobbyist, Louie Brown, attends or monitors all relevant meetings of state agencies, including the California Air Resources Board (ARB) and the California Energy Commission (CEC), as well as those related to the legislation CBA is supporting or following.
We lead with an important article on our work on the California Biofuels Cap & Trade Initiative, a coalition effort to secure funding from auction proceeds for in-state low carbon biofuels production. We bring you the comments CBA presented at the recent CEC biofuels funding workshop and Ron Kotrba's stat-filled article on California demand, which is reprinted from Biodiesel Magazine. There's more that we hope you find helpful and cause for celebration -- including New Leaf BIofuels' 10 year anniversary and BQ-9000 certification!
Thanks to those of you who reached out to Senators Boxer and Feinstein as part of our recent industry push to get a production incentive included in the FAA bill. An article on what happened to the tax extenders in that bill is included, and the Policy section has more on that from the National Biodiesel Board (NBB).
There are important workshop dates and info in the lead article on biofuels funding and in the Policy section on ARB's upcoming ADF regulation reporting requirements.
Happy Earth Day! The NBB points out that "April 22nd is a great day to celebrate the fact that the 2.1 billion gallons of biodiesel used last year reduced carbon emissions by 18.2 million metric tons, which is the equivalent of removing 3.8 million cars from the road, planting 466 million trees, or preserving 14.9 million acres of mature forests."
To read back issues of this newsletter, click on the
"View CBA Email Newsletter Archive" button at the bottom of our Home page.
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State Budget Proposal Includes $65 Million for Low Carbon Biofuels
CBA Lobbyist Leads the Charge
In addition to strategizing the who, what, and when involved in his skillful shepherding of CBA's other legislative and policy initiatives, CBA's lobbyist, Louie Brown, leads weekly meetings of the California Biofuels Cap & Trade Initiative, a coalition effort to secure $210 million from auction proceeds for in-state low carbon biofuels production incentives.
Toward this goal, Louie has organized meetings with the Governor's office and key legislators and is now setting up the second CBA Lobbying Day of the year to be held in May in Sacramento. CBA credits his leadership for the increasing recognition of the value of biofuels -- long an under emphasized element of the state's climate solutions strategies -- by key state government staff and officials, as evidenced by the proposed funds. The funds are Cap and Trade auction proceeds allocated through the state budget's GHG Reduction Fund (GGRF), which is administered by the California Air Resources Board (ARB).
ARB'S LOW CARBON FUELS INCENTIVE: $40 MILLION
The Governor's 2016-17 Budget Proposal now includes a new element to ARB's Low Carbon Transportation Incentive program -- $40 million for "per gallon" subsidies for in-state producers of low carbon fuels with a certified LCFS fuel pathway. As proposed, benefitting disadvantaged communities, lower CI scores, and sourcing from feedstocks produced in-state provide for additional "per gallon" subsidies.
We consider this very important progress toward the Biofuels Initiative goal and look forward to continuing to work to create the best program possible.
CBA Board President, and our representative in the Biofuels Initiative coalition, Russ Teall, participated in ARB's April 4th workshop that discussed this proposal and will attend the April 19th follow-up work group meeting in person. Others are encouraged to join the teleconference, which will discuss the details of the draft proposal, incentive options, and a potential cap. The call is: 1:30 p.m. to 3:30 p.m. PST. Dial-In #: (800) 369 1188 Passcode: 4659304. To attend in person (Sacramento), contact ARB staffer Jason Crow to check for space availability (916) 323-7525, [email protected].
CALIFORNIA ENERGY COMMISSION (CEC) BIOFUELS GRANTS: $40 MILLION
If approved, the $25 million in the Governor's budget proposal designated for biofuel program grants under the CEC's Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP) will be the subject of a special workshop. See the article below and the CEC blurb in the Policy section for more related info.
SB 1402 (PAVLEY)
Louie, along with other Biofuels Initiative coalition partners, testified in support of Senator Fran Pavley's bill SB 1402 at a recent hearing. CBA is following this bill closely and engaging with staff to help shape the final language. The bill would define the parameters of an incentive-based program to support and increase the in-state production of biofuels.
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CBA Comments on CEC's Biofuels Draft Solicitation Concepts
On March 30th, CBA's written comments were supported by Joe Gershen, CBA's representative on the California Energy Commission's (CEC) Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP) Advisory Committee, and read into the record by CBA Board President Russ Teall at the CEC's public workshop for the Biofuels Program of the ARFVTP. The workshop discussed the new CEC effort to set up a permanent public forum for planning California biofuel investments and gathered input for an upcoming biofuel production solicitation, likely in 2016 Q2.
"1. We are concerned that the proposed solicitation only allocates $17 million for biofuels out of the current Investment Plan budget of $20 million. In FY 12/13 $18M was awarded, in FY 13/14 $23M was awarded, and in FY14/15 $20M was awarded. Can you have staff provide an accounting of biofuel budgets and actual allocations for the past 5 years? We understand that the $3 million PON released last year for early stage projects took money from "future" solicitations. We would ask for a more streamlined process that gets PONs out in a timelier manner -- as is done with other funding categories, which often have 2 or 3 PONs in a year -- to avoid this kind of reallocation.
As you know, we have been commenting for years that the funding for biofuels should be increased commensurate with our obvious, real and immediate contributions. Since biofuels have been providing close to 90% of LCFS GHG reductions, we feel it would be more appropriate to increase the allotment in the approved ARFVTP budget rather than decrease it.
2. The biofuels sector has been asking that the allotment be divided equally into silos, one each for diesel substitutes, gasoline substitutes and bio-methane, but we do not see that spelled out in this Biofuels Draft Solicitation Concepts document, even though this has been successfully occurring in recent program budgets.
3. $5,000,000 for small projects should be eliminated as a separate category because it is not appropriate for all of the biofuels silos, and diesel substitutes in particular would suffer in this category. At this stage of development, there is no reasonable ROI on any diesel substitute category project of under 1 Mgpy. CBA suggests that there be a minimum project production limit of 1 Mgpy. If there are some small projects eligible for funding in one or two of the 3 silos then that amount should come from those categories' silo(s). Furthermore, the last PON issued in this category was exclusively for small, pilot projects (PON-14-602, issued October 2014), while commercial scale projects have not had an opportunity to apply since January 2014 (PON 13-609).
4. There is a demonstrated historic likelihood of success for expansion of existing projects versus new projects by inexperienced promoters using un-vetted technologies. This should be reflected in the scoring of proposals.
5. We think that there should not be a production capacity multiplier as suggested in the Concepts document because one large project could use up all of the funds in a silo. The elimination of the multiplier will maintain diversity of projects being funded and spreads out investment risk by awarding multiple projects in each silo.
6. Maximum awards for each project should be $2M (with no additional multiplier) so there can be 2 to 3 awards in each silo.
7. ARFVT Program benefits are designed to address California climate policy with a priority on carbon reduction. It is important to maintain program focus on actual GHG reductions (volume of biofuel produced multiplied by CI reduction) as the highest return of program benefits for the investments made, and should be reflected as such in scoring criteria.
8. In-state biofuels plants are providing well-paid jobs as well as tremendous health and economic benefits in disadvantaged communities. CBA thinks our suggested modifications will best support the continuation of these benefits for all of California."
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Staff announced at the meeting that the additional $25 million in the governor's budget proposal for 2016-'17 in potential biofuel program grants under the CEC's ARFVTP will be the subject of another workshop, if approved.
Meeting details are here: http://www.energy.ca.gov/altfuels/notices.
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(New Leaf Biofuel)
New Leaf Biofuel Celebrates 10 Years, New Fuel Quality Certification
Biodiesel producer continues growth, diversification of California fuels
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AN DIEGO, Calif. - New Leaf Biofuel has reason to celebrate. The southern California biodiesel producer's ten year anniversary comes hand in hand with a new fuel quality accreditation. Ten years providing environmentally friendly biodiesel, produced from renewable, recycled resources is a significant milestone for the young biodiesel industry.
"New Leaf Biofuel is thrilled to provide cleaner-burning Advanced Biofuels to the marketplace to help diversify our fuel supply and reduce emissions for ten years now," said New Leaf President Jennifer Case. "We are committed to seeing the use of clean, renewable biodiesel continue to grow for years to come."
Started in 2006, New Leaf Biofuel is a San Diego based biodiesel production company whose goal is to provide Southern California communities with an environmentally sound vehicle fuel source, produced from renewable or recycled resources, and grown and manufactured in the United States. All of the fuel they produce is made from recycled cooking oil collected from area restaurants.
New Leaf Biofuel is also celebrating its new recognition as a BQ-9000 producer. BQ-9000 is a voluntary fuel quality program designed to ensure biodiesel is produced and maintained at or above the industry standard. This is a milestone achievement that serves to further New Leaf Biofuel's efforts to create and provide the highest quality biodiesel available.
"We have always been focused on producing the very best fuel," said New Leaf plant manager Lucas Altic. "The acceptance of New Leaf Biofuel into the BQ-9000 program validates all of our hard work and attention to quality fuel that our team gives every day. Fuel quality is important because it gives our customers confidence that the fuel is going to perform the way it is supposed to every time they turn the key."
The BQ-9000® program is administered by the National Biodiesel Accreditation Program and is a cooperative and voluntary program for the accreditation of producers and marketers of biodiesel fuel. The program is a unique combination of the ASTM standard for biodiesel, ASTM D6751, and a quality systems program that includes storage, sampling, testing, blending, shipping, distribution, and fuel management practices.
Made from an increasingly diverse mix of resources such as soybean oil, recycled cooking oil and animal fats, biodiesel is a renewable, clean-burning diesel replacement that can be used in existing diesel engines. It is the first and only commercial-scale fuel produced across the U.S. to meet the EPA's definition as an Advanced Biofuel - meaning it reduces greenhouse gas
emissions by more than 50 percent when compared with petroleum diesel. It is produced in refineries from coast to coast.
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(Biodiesel Magazine)
Importing to Meet California Demand
The U.S. imported a record volume of biomass-based diesel in 2015. Imports of biodiesel and renewable diesel soared to an estimated 670 million gallons in 2015, up from 510 million gallons in 2014, according to U.S. EPA data. This increase in imports is particularly interesting because 2015 was a year with no forward-looking $1-per-gallon blender's tax credit, and, for 11 months of the year, no RFS targets were in play. In 2013, however, an increased RFS mandate over 2012 coupled with a forward-looking tax credit made for another record year of imports. Nearly 350 million gallons biodiesel entered the U.S. in 2013, and more than 200 million gallons of renewable diesel from Neste Corp.'s Singapore production facility alone entered U.S. ports. That's according to Susan Olson, who leads the ag and biofuels division at Genscape Inc., which hosted a webinar March 3 titled "Impacts of International Trade on the U.S. Biofuels Market." U.S. production in 2015 remained flat at about 1.42 billion gallons, compared with around 1.47 billion gallons in 2014 and 1.50 billion gallons in 2013.
Olson says biodiesel imports to the U.S. have been much more substantial since 2013. "The core factors influencing this are RFS increases, California's low carbon fuel standard (LCFS), foreign exchange rates and the existence -- or nonexistence -- of the blender's tax credit," she says. In 2013, imports saw a big jump, from less than 50 million gallons in 2012 to nearly 350 million in 2013. The make-up of countries exporting biodiesel to the U.S. has changed since 2013, too. Argentina and Canada have increased their flows while the EU is not exporting much to the U.S. at all now, Olson says.
U.S. imports are expected to grow even more this year over 2015's record volumes, Olson says, primarily because of the forward-looking tax credit that is in effect through the end of this year, and the additional 170 million gallons of biomass-based diesel growth in RFS volume obligations. Olson adds that diesel prices continue to be too low for exports from Argentina to North Africa to be economical, and entrants into the CARBIO survey program -- an EPA-approved alternative feedstock tracking mechanism for RFS registration to generate RINs -- have implemented the program over the past year. Imports from Argentina are expected to increase by 20 to 25 percent in 2016, totaling upwards of 240 million gallons this year, Olson says. She adds, however, that Argentina's recent increase in export taxes is worth watching, as it could affect projected volume increases.
Matthew Stone, managing director of Prima Markets, provides some perspective to the Argentinian export tax hike. He says the Argentinian government caused a lot of confusion by mistakenly publishing a tenfold hike in the biodiesel export tax in its official journal following the Oct. 25 election. "In actual fact," Stone says, "biodiesel export taxes were actually reduced to zero through November and December from 3.31 percent in October, rising to 1.69 percent in January and 3.89 percent in February." At press time, Argentina raised export taxes yet again, from 3.89 to 6.4 percent through March. As to why Argentina did this, Stone says, "They are balancing their ambition to turbocharge Argentina's agriculture-based exports against the need to keep cash rolling into the treasury coffers." He says so far this uptick in export taxes from 1.69 percent in January to 6.4 percent through March has increased costs by $35 a ton, or nearly 12 cents a gallon.
Of 2015's 670 million gallons of imports, a majority of those specific biodiesel volumes entered the U.S. through the Gulf Coast, followed by the East Coast, then into California and on through the Midwest via Canada.
The California Market
The carbon market developing in California as a result of AB 32 (The Global Warming Solutions Act of 2006) and LCFS is a pioneering achievement, one only rivaled by Germany, Stone says. "The transition toward carbon savings is the main justification for biofuel's existence," says Stone, who gave a presentation at the 2016 National Biodiesel Conference & Expo in Tampa, Florida, titled, "Global Biodiesel: Preparing to Cut Carbon." Stone highlighted California and Germany as two unilateral carbon pioneers, and he said carbon will be the main driving force of this industry moving forward.
The LCFS was readopted in 2015, and legacy pathway and carbon intensity (CI) values associated with the various feedstocks for biodiesel and renewable diesel will expire Dec. 31, according to Shelby Neal, director of state governmental affairs for the National Biodiesel Board. "California Air Resources Board is doing things differently now," Neal says. "Before, it had default pathways, but now every producer goes in and enters their own numbers, and each fuel has its own CI." This new approach takes more variables into account, such as individual processing techniques and transportation, to name a few. "Having said that," Neal says, "they do have reference values because people want an idea of what it is, but these are generally worst-case scenarios."
Soy, canola and distillers corn oil biodiesels were the most affected by the changes; soy and canola CI reference values improved compared to their previous CIs-moving from 83.25 to 51.83 and 62.99 to 50.23, respectively-while distillers corn oil increased significantly from a CI of 4 to 28.68. Tallow also improved from 40.18 to 32.83. Used cooking oil increased slightly from 18.44 to 19.87.
"California is the only market in the U.S. at the moment that allows producers to differentiate pricing based on the carbon credentials of their product, and this has already had a tangible effect on import flows," Stone says. "This is something that's going to develop this year, and we can take away lessons as to how to develop and gain insight into wider U.S. and overseas markets as policy develops to carbon savings. This is a trend producers are well-advised to get ahead of."
Biodiesel Magazine caught up with Stone and Prima Markets' analyst Heather Zhang after the NBC in Tampa, Florida, to further discuss the California market, which Stone calls "red hot" right now.
Though biodiesel and renewable diesel imports to California in 2015 are rather anticlimactic compared to overall U.S. imports, Zhang says they are on the rise and expected to grow in coming years. Zhang says biodiesel imports in 2015 topped out at 44.6 million gallons, 4.6 million of which were from Argentina. According to Stone, California imported slightly more than 32 million gallons of biodiesel in 2014.
"Argentina is not really relevant as a supply source to the LCFS biofuel economy at present because none of the pathways registered under CARB is from Argentina, to the best of my knowledge," Zhang says. "That means Argentine biodiesel consumed in California can't be counted toward LCFS offsets." Stone says unless Argentinian biodiesel producers successfully register under CARB, he doesn't expect the volume to go up. "Inflows will be restricted to just occasional shipments, perhaps to plug some shorts or because of other logistical issues," he says.
Of the 40 million gallons of biodiesel that can generate LCFS credits, Zhang says 20.4 million gallons came from Korea, 18 million from Canada and 1.5 million from Taiwan. "These volumes represent material declared customs cleared at California ports," Zhang says. "So the figures don't necessarily mean these volumes have actually been sold for consumption within California, especially the Argentina portion. We estimate, however, that most of the biodiesel imported into California ends up being consumed in-state excluding Argentina biodiesel."
The import volumes to California provided by Genscape via Olson are more robust than Zhang's and Stone's. "Our independent access to customs records and proprietary ship tracking indicate 56 million gallons of biodiesel imported to California," Olson says. "These shipments came from Canada, South Korea and Argentina." The conversion factor used is 300.8 gallons per metric ton.
"For biodiesel, the things to watch are additional shipments from South Korea and potential movement of biodiesel into California from Argentina," Olson says. In addition, she points out that a new, RFS-qualified biodiesel producer in Hong Kong just registered in February. The company is ASB Bio-Diesel Hong Kong, and it carries a 30 MMgy production capacity. "New producers registering for LCFS is a trend we are tracking," Olson adds.
California imported nearly 126 million gallons of renewable diesel in 2015, up from about 107 million gallons in 2014, Stone says. Again, Genscape's figures on renewable diesel imports in 2015 are higher than Prima's, as Olson says 164 million gallons entered California ports last year. "These shipments all came from Neste's Singapore facility," Olson says, adding that the conversion factor used for renewable diesel is 339.3 gallons per metric ton. "The majority of renewable diesel product we get into the U.S. is from Neste's Singapore plant. Seventy-nine percent of renewable diesel imports from Singapore enter California ports. Neste is definitely taking advantage of the LCFS credit, as well as RINs and the blender's tax credit." She says if additional waste feedstock or new qualified feedstock streams become available for renewable diesel production in Singapore, there would be an increased potential for qualified LCFS deliveries to California in 2016. "We're continuing to monitor deliveries on a weekly basis as the year continues," Olson says.
Neste is currently the only source of renewable diesel imports to the U.S., and its financial reporting indicates the renewable diesel production capacity utilization rate at its three facilities (two in Europe and one in Singapore) is 94 percent, meaning there's not a lot of room for production supply increases. However, as Olson points out, the company's 2015 split for product sales was 31 percent to North America and 69 percent to Europe, with a 4 percent shift toward North America from 2014 to 2015. With the forward-looking federal blender's credit, increased RFS volume obligations and higher LCFS GHG reduction requirements pushing up carbon credit prices, Olson says the economics could shift more product to the U.S. When Neste was asked whether the company will shift shipments from Europe to North America to take advantage of the favorable economics currently in play, Osmo Kammonen, senior vice president of communications and brand marketing for Neste, responded, "Our first priority is take care of our customer commitments. With the rest of the volumes, we look for the best market at any given time. Therefore, it is difficult to predict the shifts between markets."
Consumption of both biodiesel and renewable diesel in California topped out at an estimated 285 million gallons, according to Neal, who adds that CARB's final numbers on this aren't out yet. "California is really kind of a microcosm of the national picture," he says. "From a volume standpoint, it's been a really positive, impressive picture. California consumption has gone from 14 million gallons in 2011 to 285 million gallons in 2015. Do the math on that and we've gone from a decimal point to 8 or 9 percent of diesel fuel in California, which is probably the third-highest blend rate in the country behind Illinois and Minnesota."
In-state production of biomass-based diesel in California last year topped off at around 33 million gallons, or just 12 percent of demand. "We are enjoying the environmental benefits of the LCFS, but the vast majority of the economic benefit is being enjoyed by South America, Asia and other parts of the United States," says Jennifer Case, president of San Diego-based New Leaf Biofuel and chair of the California Biodiesel Alliance.
Brazilian Sugarcane Ethanol
The discussion on imports of advanced biofuels into California would not be complete without highlighting the importance of Brazilian sugarcane ethanol to meeting the LCFS mandate. According to Will Martin, lead ethanol analyst at Genscape, CARB plans on a lot of Brazilian ethanol hitting the ports. "It's how they plan on meeting the mandate initially," he says. Overall, ethanol imports into the U.S. are relatively small at less than of 1 percent of consumption, Martin says.
According to Martin, California received a considerable amount of Brazilian ethanol in the latter part of 2015, which coincides with a dramatic increase in LCFS credit prices. "We've seen them jump from $40 to $120 already," Martin says. "So there's the potential for a lot more imports into California. That'll be one of the major factors looking toward 2016-are those LCFS credit prices going to keep encouraging imports into California? Right now, it's unclear whether that arbitrage window is still open, just based on how much more expensive Brazilian ethanol is at the moment. And who knows where LCFS credit prices are going?"
Stone says last July the price was about $50, after spiking from the $20s in June. "The readoption of the LCFS scheme confirmed the need for obligated parties to secure tickets against their carbon offset requirements over the next few years," Stone says. "The compliance scheme is set to get steadily tougher, stoking a scramble for short covering against pending offset obligations. Given the ticket scheme is currently price-capped at $200, some participants were scrambling to secure tickets at lower prices to offset their obligation given fears that the price spiral would soon send ticket prices toward the cap."
From Q2 through Q4 2015, three California ports -- Los Angeles, San Francisco and Carquinez Straight -- imported a total of more than 40.6 million gallons of Brazilian ethanol, according to Martin. "A major player in this is the LCFS market and the price of those credits," Martin says. Stone adds that the Brazilian domestic ethanol price is high compared with low U.S. domestic prices. "The price relationship between the U.S. and Brazilian markets might start to change when the new Brazilian sugar crop harvest gets into full swing from April, and supply starts to reemerge," Stone explains, adding that most of the LCFS market is expecting ticket prices to continue rising. "California has sufficient sources of supply to cover immediate requirements, but the market is not likely to become oversupplied because it is faced with sharp rises in yearly compliance," he says.
Foreseen Growth
The new LCFS implementation schedule is less linear and more like a hockey stick, so demand for advanced biofuels will pick up increasingly through 2020. In 2015, a 1 percent reduction in GHGs from transportation fuels was required; in 2016, this is doubled to 2 percent; in 2017, it moves to 3.5 percent; in 2018, the reduction requirement is 5 percent; in 2019, the target is 7.5 percent; and finally, in 2020, a 10 percent reduction in GHGs from transportation fuels must be met. According to Neal, CARB laid out what it calls "illustrative scenarios" on what sort of biodiesel and renewable diesel demand this stepped increase in GHG reductions might provide. CARB's illustrative scenario is 379 million gallons for 2016; 460 million gallons for 2017; and 785 million gallons for 2023.
"Five years ago, in-state production was just 3 million gallons a year," Neal says. "Then, last year, it was above 30 million gallons. On a percentage basis, that's a tenfold increase in five years. In-state capacity is now 75 MMgy." He says the LCFS never really took off like people thought. "People made investments and they thought it would be smooth, but it got stuck in neutral for a few years. This had a significant effect on our members. Now, implementation is going well, the lawsuits have been dealt with and the future is more certain. But we're facing an onslaught of imports. The dollar is strong, there's weak demand in China and India for diesel, we have robust RIN and LCFS prices, and the blender's tax credit. Add all those up and it makes sense why California is swamped with foreign product." Neal says restructuring the federal biodiesel and renewable diesel blender's tax credit to a producer's credit "would go a long way in straightening out this issue." Domestic product still has the advantage, he says, and there is a lot of growth to be had in California.
"The LCFS scheme should start altering feedstock pricing patterns in the U.S. to reflect the advantage that low carbon waste fuels in particular enjoy under the LCFS program relative to the feedstock-undifferentiated RFS program," Stone says. "To an EU observer used to higher prices for waste fuels than those for agriculture-based fuels, it makes little sense to see low carbon waste feedstock such as corn oil price at a discount to soybean oil, although this is quite natural given the format of the RFS program. The uptake of LCFS-style schemes in neighboring states and Canadian provinces will accelerate this trend."
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See the original article with graphics, photos, and contact info for Ron Kotrba here.
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(ARB)
Air Resources Board Releases Proposed Strategy to Reduce Impact of Powerful Climate Pollutants
April 11, 2016
NEWS RELEASE 16-13
SACRAMENTO - The Air Resources Board today released a new draft of California's Short-Lived Climate Pollutant Strategy to drastically reduce the near-term climate impacts of these potent pollutants. Short-lived climate pollutants (SLCPs) are chemical agents with an outsized global warming impact up to thousands of times stronger than carbon dioxide.
These agents include methane, black carbon (soot) and hydrofluorocarbons (HFCs) -- chemicals most often used as refrigerants, aerosols and in insulation. Together, these pollutants represent about 12 percent of California's total annual greenhouse gas emissions inventory, but pose an immediate danger to the state and must be dealt with on a highly accelerated timeframe.
"Science tells us that making cuts in emissions of these powerful climate pollutants will reduce the near-term impacts of climate change as we phase down fossil fuel carbon dioxide emissions," said CARB Chair Mary D. Nichols. "Actions to reduce emissions of short-lived climate pollutants also improve air quality and reduce related health risks, hospitalizations, and medical expenses."
Short-lived climate pollutants were recognized by scientists early on as major contributors to global warming, but the super pollutants took a back seat as nations first targeted carbon dioxide, the more pervasive and long lived greenhouse gas.
Now that broad reaching efforts to address carbon dioxide are underway across the globe, the international community is turning its attention to reducing the potent super pollutants -- and California is leading the way.
Governor Edmund G. Brown emphasized the need for addressing super pollutants by making their reduction over the next decade one of the Five Pillars of the State's 2030 climate program development. Governor Brown is also actively supporting implementation of the draft Strategy by including $215 million in his proposed 2016-2017 budget to support a range of immediate actions.
"The impact of these super pollutants is real and the fight against climate change must include a strategy to aggressively reduce them," said Governor Brown.
The payoff for investments to cut the super pollutants will be seen in the near term --over the coming 15 years --while the larger efforts to turn the tide on carbon dioxide gain traction and ratchet down emissions over the coming decades. We now know that immediate action on cutting super pollutants in California would reduce damage to forests and crops, lower background ozone and help clean the air in the state's most polluted regions, including the Central Valley.
This need for focused and immediate attention on super pollutants was recognized by the Legislature in Senate Bill 605 (2014), authored by Senator Ricardo Lara (D-Bell Gardens).
This year, Senator Lara introduced the Short-Lived Climate Pollutant Reduction Act of 2016 (Senate Bill 1383), which would codify the targets identified in this Proposed Strategy: reducing human-caused black carbon emissions by 50 percent, and methane and HFCs 40 percent below current levels by 2030.
This would cut greenhouse gas emissions by 94 million metric tons of carbon dioxide equivalent (MMTCO2e) annually under the approach that measures the impact of these super pollutants over a 20-year span. That is roughly the equivalent of the greenhouse gases associated with all the electricity (both in-state and imported) used in California in 2013.
Short-Lived Climate Pollutants:
These pollutants trap heat at many times the level of carbon dioxide, but also tend to have a shorter lifetime in the atmosphere, ranging from a few days or weeks to about 10 years.
Methane:
Methane is the most abundant of the short-lived climate pollutants in California. Nearly 60 percent of California's methane emissions are produced by agricultural activities, primarily at dairy farms. California is the nation's largest dairy state, home to 20 percent of U.S. milk production, and milk is the state's leading agricultural commodity. In 2014, California's dairy industry generated a record $9.4 billion -- as much as the state's almond, walnut, and pistachio industries combined.
Reducing dairy methane emissions:
The Strategy calls for cutting manure methane emissions from dairies by 75 percent by 2030, which would reduce overall methane emissions from California's dairy industry (including enteric fermentation emissions from cows) by more than 40 percent. To meet these goals, following approval of the final Strategy, CARB will open a collaborative rulemaking process to address dairy manure emissions. Working with CDFA, local air and water quality districts, dairy farmers, environmental justice communities, and other stakeholders -- the regulatory process will consider available financial incentives and market support and potential economic impacts in order to identify appropriate timelines and requirements for the industry.
"In the San Joaquin Valley, environmental justice communities are at the epicenter of SLCP emissions and their impacts," said Tom Frantz of the Association of Irritated Residents (AIR) and member of the AB 32 Environmental Justice Advisory Committee (EJAC).
"I'm pleased to see one of EJACs priority recommendations included here. We look forward to continuing work with state agencies and the dairy industry to achieve the goals identified in this plan, including bringing economic and health benefits to disadvantaged communities."
In addition, the Proposed Strategy also sets a goal to reduce enteric fermentation emissions from the dairy industry by 25 percent in 2030. The coordinated approach of incentives and regulation will aim to develop a competitive, low-carbon dairy industry in California, cutting overall methane emissions by more than 26 million metric tons of carbon dioxide equivalent in 2030, a 50 percent reduction of dairy methane emissions.
Effectively eliminate disposal of organic waste in landfills:
The Strategy also calls for reducing methane emissions by cutting the flow of organic waste into landfills and putting it to beneficial use - through food recovery and rescue programs or by creating compost or renewable energy and fuel. This could reduce emissions from organic disposal, provide access to healthy foods in food insecure communities, and generate investment and new jobs in building and maintaining new or expanded compost and anaerobic digestion facilities. Working together, CalRecycle and CARB will have a regulation in place by 2018 to effectively eliminate disposal of organics in landfills by 2025.
"Methane is an incredibly powerful global warming agent, but instead of losing it to the atmosphere, we can recover it from organic waste and put it to good use," said Los Angeles Mayor Eric Garcetti. "I am excited to partner with the State on this critical effort."
The Proposed Strategy also calls for effectively implementing regulations currently under development at CARB and the CPUC to cut methane emissions by 45 percent from oil and gas exploration, extraction, pipeline and storage facilities by 2025.
Black Carbon:
California has already reduced black carbon emissions by more than 90 percent in the last 50 years, primarily through the state's stringent diesel regulations. The Proposed Strategy highlights additional state efforts such as working with local air districts to reduce black carbon from home woodstoves to achieve an additional 3 million metric tons of reductions by 2030. In his proposed 2016-2017 budget, Governor Brown included $40 million to incentivize clean woodstoves.
The Strategy also notes the need for further efforts to reduce black carbon from wildfires in the state's forests, including $140 million for CAL FIRE in the Governor's budget to support forest health and resiliency programs, approaches to foster increased private investment in forest management, and to convert larger amounts of wood waste into biofuel.
Hydrofluorocarbons (HFCs):
The Proposed Strategy acknowledges that the most effective way to achieve significant reductions in HFC emissions is a global phase-down of their use under the Montreal Protocol. If a global agreement to do so is not reached, California will consider developing its own phasedown, as Europe has done and other countries are considering.
For short-term, Governor Brown's proposed budget includes $20 million for incentives to replace high-GWP HFCs with more climate friendly alternatives. CARB will also develop bans on the use of high GWP refrigerants in sectors and applications where lower-GWP alternates are feasible and readily available.
Economic, Health, Environmental Analysis:
The report evaluates the economic, public health and environmental justice implications of the proposed new measures along with a detailed environmental analysis. In particular, projects that utilize organic waste or dairy manure to provide transportation fuel can capture significant value from credits under the State's Low Carbon Fuel Standard and federal Renewable Fuel Standard.
Next Steps:
CARB will host workshops to discuss the Proposed Strategy prior to its May 19 Board hearing when staff will present the Proposed Strategy as an informational item.
A final Reduction Strategy, including comments received on the environmental analysis, will be voted on by the Board in the fall. Any specific proposal generating regulatory action will be subject to its own separate public process with workshops, opportunities for stakeholder discussion, consideration of environmental justice impacts, and legally required analyses of the economic and environmental impacts.
The Proposed Strategy is available here: http://www.arb.ca.gov/cc/shortlived/shortlived.htm.
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(The Hill)
Energy Tax Breaks Dropped from FAA Bill
By Melanie Zanona - 04/12/16 03:12 PM EDT
The Senate is dropping plans to include energy tax breaks in legislation reauthorizing the Federal Aviation Administration after lawmakers were unable to reach a final deal.
Sen. John Thune (R-S.D.), chairman of the Commerce, Science and Transportation Committee, told reporters on Tuesday that the FAA measure will now only contain standard revenue provisions.
Democrats had been pressing leadership to attach renewable energy tax breaks they claim were unintentionally left out of a tax extenders package Congress passed in December. They said last week they had a general agreement to add the energy tax breaks to the FAA bill, but had yet to unveil final details.
"It just got too complicated and it was taking too long," Thune said. "A decision was made to go with a clean finance title, the way we've always handled FAA reauthorizations in the past."
Chuck Schumer (D-N.Y.) said the GOP didn't have the votes.
"It's highly likely that if every Democrat had voted for the tax provision there wouldn't have been the 60 votes," Schumer said. "Almost everything that was added was asked by the Republican side to try to get enough votes. They just didn't have the votes. I don't believe they could have gotten 16 votes."
Finance Chairman Orrin Hatch (R-Utah) acknowledged that the energy add-ons were pulled from the measure, but wouldn't speculate as to why.
The shift comes after an aggressive push from conservative groups to oppose the proposal, which they called an unrelated carve-out for special interests. Several organizations threatened to step up pressure on the House if the Senate moved ahead with the plan and said they would key vote against the FAA bill if it included the energy tax breaks.
Minority Leader Harry Reid (D-Nev.) said pressure from groups backed by billionaire conservative activists Charles and David Koch was the reason that so many Republicans refused to back the legislation.
"The reason it went down is that the Koch brothers ... paid for 34 different groups that looked like they're environmental groups, of course they're not," Reid said. "They're the ones who killed this bill."
Thune acknowledged last week that they needed to address Democrats' concerns about the energy tax extenders to secure enough votes for passage.
Some lawmakers began jockeying to tack on other amendments, including provisions to extend tax breaks for carbon capture and advanced nuclear power facilities and to reduce tax regulations on breweries, cideries, wineries and distilleries.
"The Democrats were insisting on other tax provisions being apart of it. The wheels started to come off," Thune said. "It got bogged down, and we need to move a bill."
It's unclear if enough Democrats will still support the underlying FAA bill. Other Democrats are threatening to filibuster the measure if there isn't a vote on a pilot fatigue amendment.
The FAA's current legal authority expires July 15.
Timothy Cama and Jordain Carney contributed to this report.
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(JDSupra)
EPA Signs Final Rule Granting Partial CDR Exemptions For Biodiesel Products
On March 23, 2016, Bloomberg BNA Daily Environment Reportannounced that EPA signed a final rule exempting manufacturers of six biodiesel chemicals from reporting processing and use information under the Chemical Data Reporting (CDR) rule under Section 8(a) of the Toxic Substances Control Act (TSCA). In 2014, BRAG filed a regulatory petition to exempt the chemicals, requesting the same exemption that EPA currently provides to manufactures of petroleum-based versions of the chemicals. The rule was originally issued as a direct final rule in February 2015 before being withdrawn due to a single comment. This final rule is consistent with the original proposed rule that was issued on July 22, 2015, and applies to manufacturers of:
- Fatty acids, C14-18 and C16-18 unsaturated, methyl esters (Chemical Abstracts Service (CAS) No. 67762-26-9);
- Fatty acids, C16-18 and C-18 unsaturated, methyl esters (CAS No. 67762-38-3);
- Fatty acids, canola oil, methyl esters (CAS No.129828-16-6);
- Fatty acids, corn oil, methyl esters (CAS No. 515152-40-6);
- Fatty acids, tallow, methyl esters (CAS No. 61788-61-2); and
- Soybean oil, methyl esters (CAS No. 67784-80-9).
As with all the chemicals currently afforded partial exemption status, the biodiesel chemicals would no longer be eligible for the partial reporting exemption if they were to become the subject of a TSCA Sections 4, 5(a)(2), 5(b)(4), or 6 rule (proposed or final), an enforceable consent agreement, a Section 5(e) order, or relief granted under a civil action under Section 5 or 7. BRAG is pleased that EPA was able to complete the rulemaking process in time for the CDR reporting cycle starting in June 2016. The partial CDR exemption will save manufacturers about two weeks of time that would typically be spent preparing processing and use data for Form U.
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(DOMESTIC FUEL)
EIA Begins Tracking Biofuels by Rail
Posted April 5, 2016 by Joanna Schroeder
This week marked new data being compiled by the U.S. Energy Information Administration (EIA) including data on ethanol and biodiesel being transported by railroads. With this addition, EIA now reports on monthly rail movements for crude oil, ethanol and biodiesel.
According to EIA, adding movements of ethanol and biodiesel by rail to existing movements between Petroleum Administration for Defense Districts (PADDs) by pipelines, tankers, and barges provides more complete data on inter-PADD movements of biofuels. In addition, incorporating ethanol and biodiesel movements into regional volumetric balances also improves supply estimates for finished motor gasoline and distillate fuel oil.
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(DOMESTIC FUEL)
Merle was Biodiesel Supporter
Posted April 11, 2016 by Cindy Zimmerman
Back in the early years of the biodiesel industry, Merle Haggard was one of the stars who came out in support of the American-made biofuel.
The country music legend who died last week at the age of 79 made a legendary appearance at the 2007 National Biodiesel Conference, holding a press conference and performing for those in attendance. During the press conference Merle said that he was learning about the benefits of biodiesel. When asked what attracted him to the renewable fuel source his answer was "the smell." He also was happy about how the development of biodiesel was helping American farmers.
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CALIFORNIA INDUSTRY NEWS
Posted March 30, 2016 by R.J. Heim
SMITHFIELD, R.I. -- A father and son team will be flying a small Cessna airplane from Rhode Island to California next month, but it's what's in the tank that makes this trip special.
The plane is fueled by renewable, sustainable biodiesel.
On April 16, weather permitting, Ross and Aedan McCurdy will take off from North Central Airport in Smithfield. In the tank: diesel fuel made from oil squeezed out of Camelina plant seeds mixed with regular aviation jet fuel.
"Plants like Camelina, they don't take a lot of water or fertilizer. They can grow in northern climates. The seeds are 40 percent oil that can be turned in to fuel," said Ross McCurdy about why he's so psyched about the trip.
He's also a teacher at Ponaganset High School, and he did a bio flight a few years back to Kitty Hawk, North Carolina. The biofuel in that plane was made from recycled cooking grease, but this coast-to-coast trip will make the history books.
"This is not an experimental aircraft. It's not experimental fuel. All certified, and this will be the first flight," Ross McCurdy said.
After leaving Smithfield, the McCurdys will be stopping off at six airports before they get to Santa Monica to top off their tank with 10 five-gallon drums of biofuel.
Renewable, sustainable biofuel makes us less dependent on foreign oil, and it's more efficient. On top of the fact that one acre of Camelina makes 50 gallons of fuel.
"The typical (aviation gasoline) engine uses about 13 to 14 gallons per hour, and this one uses about eight, eight and a half gallons per hour. So, 30 to 40 percent savings in fuel," Ross McCurdy said.
Not to mention spectacular! Aedan McCurdy said he can't wait.
"It's just a lot of fun. You can see everything from just a different view," he said.
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