California Biodiesel Alliance News
California's Biodiesel Industry Trade Association
Air Resources Board was announcing 100% compliance with the LCFS,
Western States Petroleum Association (WSPA) launched a PR effort to undermine it. CBA began engaging with pro-LCFS forces to fight back, as we did at the peak of last year's legislative session. This adds to our intense advocacy on behalf of our industry and in-state biofuels production incentives in Sacramento.
As always, we are working closely with the NBB on federal issues and will send CBA members to DC to lobby for the extension and reform of the federal tax credit next month. You can help now! See the Action Alert in the Policy section (federal) below!
Another of the many updates not to be missed in the Policy section is that ARB will hold a workshop in the next few months to discuss new ADF reporting requirements for 2018, TBD, so stay tuned.
California is not only becoming"
the nation's de facto negotiator with the world on the environment,
but according to a Bloomberg editorial,
California Leads U.S. Economy, Away From Trump
, "California's economy is bigger than ever, rivaling the U.K. as No. 5 in the world, when figures for 2016 are officially tabulated. California is the chief reason America is the only developed economy to achieve record GDP growth since the financial crisis of 2008 and ensuing global recession, according to data compiled by Bloomberg. Much of the U.S. growth can be traced to California laws promoting clean energy, government accountability and protections for undocumented people."
Back Issues of this newsletter are available in the Archives on our Members Only webpage.
CBA Lobbies for Biofuels Initiative Funding and More
as Cap and Trade Extension Legislation Advances
Early this month, CBA board members met with key legislators and the Governor's office to discuss a range of issues, with a focus on urging the appropriation of $65 million in Cap and Trade funding for the California Biofuels Initiative effort to increase the in-state production and use of low carbon biofuels.
California Biofuels Initiative
Supporting CBA's leadership on the
, Senators Henry Stern and Ben Allen and Assemblymembers Joaquin Arambula, Rudy Salas, and Adam Gray sent a letter this month to the chairs of the Senate and Assembly Budget Committees and Subcommittees in support of this request to use auction proceeds for biofuels incentives. The letter argues that this funding will result in dramatically reducing greenhouse gas emissions and air pollution from the transportation sector, create in-state jobs, and boost economic development throughout California.
Cap and Trade Program Update
Last month, a Court of Appeals ruling in the
California Chamber of Commerce's lawsuit against the
Cap and Trade program
upheld the legality of California's auction design
Chamber had unsuccessfully argued that the program, which requires companies to buy permits to release greenhouse gas emissions, functions as an unconstitutional tax because it was not approved by a two-thirds vote of the Legislature, and is now appealing to the State Supreme Court.
eflecting the ruling, this month's very strong California-Quebec
carbon auction results signaled a very welcome rebound. P
ermits to release greenhouse gases during 2017 or later were sold out, according to the California Air Resources Board, and prices rose above the minimum as demand exceeded supply.
Governor Brown, citing the strengths of the current Cap and Trade program, including that 50 percent of its auction proceeds benefit disadvantaged communities, said this month that he is confident lawmakers can come to an agreement with a two-thirds vote on extending the program past 2020 by the June budget deadline.
One bill authored by
Senator Wieckowski's (
) would provide an entirely new trading system starting in 2020 with allowances and offsets from the old program not transferring over; include a "price collar" with both a floor and a ceiling; and add a border-adjustment tax to prevent "leakage." Lawmakers have also introduced
, which would tie businesses' ability to receive greenhouse gas allowances to their emissions of toxic pollutants. Environmental justice groups backing the bill argue that climate policies should also address the conventional air pollution that tends to be clustered in poor neighborhoods and communities of color. CBA supports the extension of Cap and Trade, but hasn't yet taken a position on proposed legislation.
Barriers to Biodiesel Adoption
Also during CBA's early May meetings at the Capitol, o
ur industry discussed with the Governor's staff and others the need
to remove barriers to biodiesel adoption in the state
. This includes a request for B20 to be stored in Underground Storage Tanks without materials compatibility documentation (consistent with US EPA regulations); a solution to certain onerous DMS signage requirements; and an end to the Department of General Services (DGS) policy prohibiting the purchase of biodiesel by state agency fleets.
California Clean Fuels Rule Reports 100 Percent Compliance
Low Carbon Fuel Standard helps replace 480 million gallons of diesel fuel with renewables in one year
|The CalEPA bldg is home to
the Air Resources Board
May 16, 2017
SACRAMENTO - Further evidence that renewable transportation fuels are rapidly replacing fossil fuels was presented today when the California Air Resources Board (CARB) released the 2016 Compliance Report for the Low Carbon Fuel Standard (LCFS). It shows 100 percent compliance with the regulation.
"Full compliance is further evidence that the LCFS is working as designed," said Executive Officer Richard Corey. "This means that cleaner, renewable fuels encouraged by the program are now replacing hundreds of millions of gallons of fossil fuel every year and significantly reducing greenhouse gas emissions, as well as other pollutants."
The LCFS requires transportation fuel producers to reduce the carbon intensity of their fuels 10 percent by 2020. Greenhouse gas (GHG) emissions are counted at all stages of production, known as "well-to-wheel" life cycle analysis.
The LCFS was developed to help California achieve AB 32's 2020 reduction target of a return to 1990 levels of GHG emissions. The program is also important for reaching the 2030 GHG reduction target set by the Governor and the Legislature. That new target requires GHG emissions 40 percent below 1990 levels.
The program is providing consumers with an increasing volume of cleaner fuels. As an example, in 2016, renewable liquid fuels displaced over 400 million gallons of diesel, and more than 80 million gallons were displaced by renewable natural gas.
There are 224 companies reporting in the LCFS. Of those, 54 generated credit deficits for fuels with carbon intensity above the desired baseline and were required to make up for the shortfall. All obligations were fulfilled.
In 2016, the industry continued to over-comply with the regulation, generating 9.1 million credits against 6.8 million deficits.
Since the start of the program in 2011 it has generated credits representing 25.6 million metric tons of greenhouse gas emission reductions. That equals over-compliance of 9.7 million metric tons, and means that GHG emission reductions are occurring ahead of schedule.
Full 2016 compliance information is available
Learn more about the LCFS
CBA Joins Broad Coalition in Fighting Back against WSPA Attacks on LCFS
Motivated by this month's
Western States Petroleum Association (WSPA)
attacks in a Twitter campaign, an End LCFS website, and a series of regional business meetings designed to build grassroots opposition to California's Low Carbon Fuel Standard (LCFS), CBA has joined a coalition effort in reaching out to key state officials urging them to stay the course on the state's successful
CBA is proud to be one of 155 vehicle fleet operators, vehicle manufacturers, fuel producers, and industry groups who sent a letter to the same officials and the Governor supporting the LCFS. The letter states: "The LCFS is needed to ensure that California fulfills its statutorily-mandated greenhouse gas emission reduction targets. But as our experiences show, the LCFS is foremost an economic development engine. The LCFS promotes competition by rewarding all technologies that deliver low-carbon energy for transportation, and the policy is creating innovation for California across a range of industries, including biodiesel, biomethane, dimethyl ether, ethanol, hydrogen, next generation biofuels, renewable natural gas, and vehicle electrification."
Big Oil attacks on the LCFS, which surfaced during last year's legislative session, were successfully defeated with significant help from the alternative fuels sector and the broad range of environmental and community groups that support the many health, economic, and environmental benefits of this crucial carbon-reduction program that is lighting a critical carbon reduction path for the world to follow.
California LCFS May See More US Biodiesel
San Francisco, 3 May (Argus) - A tax credit under consideration by the US Congress could increase the use of domestic biodiesel in California's low-carbon fuels market.
Senator Charles Grassley (R-Iowa) last week introduced a bill that would extend a federal $1/USG biodiesel tax credit for three years but direct it to fuel producers instead of blenders. The previous blender's credit, which expired at the end of 2016, allowed foreign importers to take advantage of the subsidy.
Grassley's proposal could tamp the flow of imported biodiesel into California and encourage more west coast production. Industry representatives are confident that domestic production could meet any gap in foreign supplies to help meet demand for California's Low-Carbon Fuel Standard (LCFS).
"There is plenty of extra capacity in the US right now that is not being utilized," said Jennifer Case, president of US biodiesel company NewLeaf Biofuel and chair of the California Biodiesel Alliance. "Changing to a production credit would give the kind of signal that American companies need to turn on their machines at full speed."
California took in significantly
of biodiesel last year, when the alternative fuel accounted for just over 19pc of credits generated under the LCFS. If the national market is any indication, much of that volume was supplied by foreign producers. US imports of biomass-based diesel hit
in 2016 ahead of the expiration of the blender's credit.
The industry is freshly optimistic after a recent
froze LCFS diesel target at this year's level but spared the program's biodiesel component from elimination. Any subsequent disruption to biodiesel producers will depend on how quickly the California Air Resources Board fixes an analysis related to NOx emissions from the fuel. The state told the court it would need as little as nine months, which would allow the program to fully resume by early 2018.
Despite potentially losing out on the tax credit, importers may still find the opportunity to generate LCFS credits too lucrative to ignore. The National Biodiesel Board, a trade association representing the US biodiesel industry, said "significant imports" would still come into the state because of the program.
Argus assessed LCFS credit prices at $76.50/metric tonne yesterday.
But some foreign producers are facing additional headwinds. The Commerce Department recently launched an
into whether Argentinian and Indonesian biodiesel companies are dumping subsidized fuels onto the US market.
California's LCFS mandates a 10pc reduction in the carbon intensity of fuels by 2020. This year's target is 3.5pc. The program measures compliance in terms of credits and deficits. Fuels with carbon-intensity scores below annual targets generate credits, while fuels with higher scores generate deficits.
California Forecasts Robust Growth in Biodiesel, Feedstock Demand
Posted May 22, 2017 by Graham Noyes
Over the past decade, California has developed a complex policy framework pertaining to greenhouse gas (GHG) emission reduction including policies that drive demand for low carbon fuels. The original authorizing statute was the Global Warming Solutions Act of 2006 (AB 32) and set GHG reduction mandates for 2020. In 2016, AB 32 was extended and expanded by a pair of bills: 1) SB 32 that established a 40 percent GHG reduction requirement below 1990 levels by 2030, and 2) AB 197 that established environmental justice and legislative oversight provisions. These three laws form the statutory foundation authorizing the full range of GHG regulatory programs in California, including the low carbon fuel standard (LCFS). The California Air Resources Board (ARB) is the agency with primary authority over GHG regulations in the state, and is responsible for planning how to achieve the overall reductions, for measuring progress, and for administering the LCFS.
The ARB proceeding that forecasts how GHG reductions will be achieved across the entire economy is known at the Climate Change Scoping Plan. The original scoping plan was approved by the ARB governing board in 2008. The first update to the scoping plan was approved on May 22, 2014. Due to the passage of SB 32, the board is in the midst of approving a second update with a public board meeting set for June 22-23 when final approval is likely.
The final proposed scoping plan provides ARB's projections regarding the quantity of GHG reductions that can be achieved from the use of low carbon fuels in the LCFS, including biodiesel and renewable diesel. The specifics of these projections cannot be determined by the scoping plan document itself but instead by analyzing the models underling the scoping plan. The key models for these purposes are the PATHWAYS model and the Biofuels Supply Module.
To ARB's credit, the agency conducts its proceedings with high degrees of transparency, public participation and engagement with stakeholders. Consistent with this, ARB staff provided valuable feedback regarding the nature of these models and the quantities of biodiesel, renewable diesel and alternative jet fuel forecast to be supplied to the California market between 2018 and 2030. These forecasts all include California's existing LCFS requirement of a 10 percent reduction of carbon intensity (CI) in its transportation fuel market between 2010 and 2020.
Within the scoping plan, there are six different scenarios modeled. This article focuses on the three of these scenarios that contain the most biofuels modeling: 1) The reference scenario wherein there are no modifications to existing policies (business as usual or BAU) and the LCFS remains at a 10 percent reduction level; 2) scoping plan A wherein cap-and-trade is extended and the LCFS ratchets down another 8 percent to achieve an 18 percent CI reduction by 2030; and 3) alternative No. 1 wherein there is no cap-and-trade program and, to compensate for this, the LCFS ratchets down another 15 percent to achieve a 25 percent CI reduction by 2030, and California institutes a renewable diesel credit of $0.34 per gasoline gallon equivalent (GGE). Note that all of the following demand projections are in GGEs.
Looking first at biodiesel, the ARB models project California biodiesel demand at 265 million GGE in 2020 under all three scenarios. In later years, however, biodiesel demand increases most rapidly under the BAU scenario, reaching 791 million in 2025 and 806 million in 2030. Under scoping plan A, biodiesel increases to 761 million in 2025, but demand then slides to 741 million in 2030. Under alternative No. 1, biodiesel enjoys strong growth to 630 million in 2025 but decreases to 548 million in 2030, likely due to the impact of the renewable diesel credit.
Renewable diesel is forecast by ARB to experience even more rapid growth in California. In 2020, it is at 740 million GGE in all three scenarios. Under the BAU scenario, renewable diesel increases to 843 million in 2025, then drops down to 548 million in 2030. Under scoping plan A, renewable diesel demand increases to 1.2 billion in 2025, and 1.1 billion in 2030. In the most bullish scenario, with the help of the renewable diesel credit in alternative No. 1, renewable diesel achieves 1.6 billion of demand in 2025 and increases to 1.8 billion in 2030.
On the topic of alternative jet fuel (AJF), ARB is currently evaluating a proposal brought forward by Airlines for America (A4A) and a group of fuel producers that I represent to expand the LCFS program to enable AJF uploaded in California to generate credits on an opt-in basis. However, as this is a proposed regulatory change, AJF has not yet been integrated into the various demand scenarios.
Turning to the issue of feedstock, California's demand profile is quite distinct from the national average due to the premium credit value that fuels produced from low carbon feedstocks receive in the LCFS program. The following figures from ARB's 2016 LCFS reports represent not the relative percentage from a volume perspective, but instead from a credit-generating perspective based on GHG reduction. From this vantage point, biodiesel and renewable diesel produced from roughly equal quantities of distillers corn oil and tallow generated about 73 percent of the LCFS credits; used cooking oil was next prominent with 21 percent credit share; and canola, fish oil and soy collectively generated the remaining 6 percent of the credits. ARB lumps distillers corn oil with the other top-producing feedstocks as wastes or residues rather than "conventional crop-based fuel generation."
Looking to the future, the PATHWAYS model takes a similar approach and does not differentiate other than between waste and nonwaste feedstocks. In 2020, biodiesel is anticipated to be derived 100 percent from waste feedstocks under all three scenarios, and renewable diesel is 83 percent waste-derived. In 2025, nonwaste feedstocks deliver about half of the feedstock to both fuels in all scenarios except alternative No. 1 wherein biodiesel continues to be 100 percent waste-derived. In 2030, under the BAU scenario, feedstock remains at about half waste oil for biodiesel and renewable diesel. With a more robust LCFS, there are higher waste oil feedstock penetration for both fuels. Under the third scenario in 2030, with a renewable diesel credit, the feedstock mix is 62 percent waste for renewable diesel and 72 percent for biodiesel.
ARB does not provide forecasts regarding the specific types of waste and nonwaste feedstock that will be used for low carbon fuel production under these scenarios. However, a key component of the Biofuels Supply Module is the USDA's billion ton study, so that study should be cross-referenced for additional insight. ARB welcomes input to both its scoping plan and Biofuels Supply Module from the industry.
to access scoping plan documents and to submit a comment.
See the original article with author details and photo in Biodiesel Magazine
Biodiesel Tax Credit Change Supported by Treasury Secretary
Posted May 30, 2017
Treasury Secretary Steven Mnuchin said he would support a plan backed by Sens. Chuck Grassley, R-Iowa, and Maria Cantwell, D-Wash., that would provide a tax credit to biodiesel producers rather than to the fuel blenders.
"Sounds like a good plan and I look forward to working with you on the details of that," Mnuchin said May 25 at a Senate Finance Committee hearing about President Donald Trump's proposed Fiscal Year 2018 budget.
The plan would boost domestic production of biofuels, rather than subsidize imports, Grassley said. The amount of fuel imported in 2016 doubled from the previous year, he said. During the hearing, Mnuchin largely declined to give specifics about what types of tax policies the administration is interested in, beyond those included in a one-page plan released in April. He said the administration is reviewing all tax ideas and will give more details in the future, after reaching consensus with lawmakers in the House and Senate.
The bipartisan bill, the American Renewable Fuel and Job Creation Act of 2017, extends the "clean-fuel incentive" for three years and reforms the incentive by transferring the credit from the blenders to the producers of biofuels. The switch ensures that the tax credit incentivizes domestic production and taxpayers are not subsidizing imported fuel.
Grassley told Mnuchin the legislative proposal is "very much aligned with the president's America First agenda." With biofuel imports nearly doubling from 510 million gallons to almost one billion gallons in 2016, Grassley said "this change is critical to ensure the credit is supporting the domestic industry rather than subsidizing foreign imports that often already receive favorable treatment from their home country." He told Mnuchin that,
"So, it's not really a question, but for you to understand that from Argentina we're getting all this biofuel and the taxpayers of the U.S. are subsidizing that import just like we're - we're attempting to incentivize domestic production. And so, we want to change it so that we don't subsidize that import."