California Biodiesel Alliance News
California's Biodiesel Industry Trade Association
We participated in this broad-based effort by sending out a special alert to all biodiesel stakeholders in the state and writing to Administrator Pruitt and to President Trump, calling out the inconsistency between proposed further cuts to RFS volumes and his campaign promises. The State of California (represented by ARB, CEC, CalRecycle) followed up its recent strong public comment letter, which we published here last month, asking for higher RFS volumes with another letter specifically on the NODA.
Special thanks go out to the NBB for their ongoing relentless work on this central policy for our industry. CBA will participate, as always, in NBB's lobby event on Capitol Hill next month. We include the NBB's release cautioning against calling it a victory that Pruitt backed away from the NODA in a letter to Senator Grassley and others. We also include the NBB's release on this month's important biodiesel dumping case.
But, because the fuel tax hike begins tomorrow, November 1st, we begin with a brief article on this issue, which appeared in this newsletter when the law was passed earlier this year.
This month, CBA submitted comments on the 2018 Amendments to the Low Carbon Fuel Standard (LCFS) presented at ARB's September 22nd workshop and joined a coalition letter to ARB Chairwoman Mary Nichols, responding to the state's potential interest in banning internal combustion engines. Both letters are excerpted in this issue.
The policy section below has updates on the upcoming 2018 ADF compliance requirements, the AB 32 Scoping Plan, the CEC's ARFVTP 2018-2919 Funding Plan, the NBB call for young scientists, and more.
As many of you know, the October Argus California Carbon & LCFS Summit, scheduled to take place in Napa Valley, was cancelled due to fires in the region. Our special thoughts go out to the victims of what did turn out to be devastating and widespread fire damage in Northern California.
Registration Opens Soon!
CBA'S SEVENTH ANNUAL CONFERENCE
MARCH 1, 2018 -- CAPITOL BALLROOM, SACRAMENTO
Back Issues of this newsletter are available in the Archives on our Members Only webpage.
SB 1 Raises Fuel Taxes Beginning November 1, 2017
SB 1, the Governor's $52-billion tax-and-fee fuel tax bill to repair California's roads and put more dollars toward transit and safety, secured the two-thirds majority votes needed in each house to pass in April of 2017.
The new taxes take effect November 1, 2017. At $5 billion-a-year, the 10-year program will increase vehicle registration fees, add an annual fee on electric vehicles, and raise taxes on all fuels. SB 1 increases diesel excise tax by 20 cents a gallon to 36 cents and increases diesel sales tax to 5.75 percent (from its current 1.75%).
CBA met with the author to request exemptions for biodiesel, without success. Under the new law, the state is prohibited from requiring pollution controls that would compel truckers to upgrade their trucks within the first 13 years on the road or before they reach 800,000 miles travelled.
NBB Holds Firm In Its Request for 2.5 Billion Gallons of Biomass-Based Diesel, 4.75 Billion Gallons of Advanced Biofuels
EPA Letter Does Not Include a Commitment to Raise Biomass-Based Diesel Volumes
WASHINGTON, D.C. - Yesterday the National Biodiesel Board (NBB) responded to the U.S. Environmental Protection Agency's (EPA) Notice of Data Availability (NODA), focusing on the advanced biofuel standard for 2018 and the 2019 volume for biomass-based diesel under the Renewable Fuel Standard (RFS). Late yesterday, EPA also released a letter providing assurances to a group of U.S. senators on different aspects of the RFS program. The letter did not commit to raising the 2019 biomass-based diesel volume higher than 2.1 billion gallons, as proposed.
"Flat volumes of biodiesel show that the Trump administration is considering implementing policies that will harm the American biodiesel industry. We are going to continue to work closely with the EPA and the White House to help them understand that a robust biodiesel industry is what the law requires. We cannot settle for the biomass-based diesel volume remaining flat at 2.1 billion gallons," said Doug Whitehead, chief operating officer at the National Biodiesel Board.
Although NBB appreciates that further cuts won't be pursued, volumes higher than 2.1 billion gallons of biomass-based diesel are warranted and must be granted for the industry to continue to grow.
EPA states in the letter that "preliminary analysis suggests that all of the final RVOs should be set at amounts that are equal to or greater than the proposed amounts, including at least 2.1 billion gallons for biomass-based diesel in 2018 and 2019."
NBB submitted comments on the NODA, tackling head-on the myths being perpetrated about the biodiesel industry's ability to produce. The U.S. biomass-based diesel industry can generate 2.6 billion gallons right now and has the additional registered capacity to ramp up production even higher with sufficient continuing support from the RFS volumes. In other words, it is clear that domestic production alone could generate substantially more than the 2.1 billion-gallon volume in EPA's proposed rule.
Specifically, NBB noted that neither (1) the expiration of the biodiesel tax credit nor (2) the Department of Commerce's preliminary determination to impose countervailing duties on unfairly traded, imported Argentinian and Indonesian biodiesel warrant reduced or flattened volumes of biomass-based diesel:
- "The expiration of the tax credit does not affect existing production capacity, which is more than sufficient to meet much higher volumes. Indeed, the advanced biofuel volumes have been met in past years even when the biodiesel tax credit has not been in place before the compliance year began. ... Whether or not the biodiesel tax credit is extended, the RFS itself will provide sufficient and strong incentives for the advanced biofuel and biomass-based diesel volumes to be met, just as in past years when the biodiesel tax credit was not in place."
- "Likewise, the Department of Commerce's preliminary determination will not reduce biodiesel production or affect the availability of biodiesel for obligated parties. Any reductions in Argentinian or Indonesian imports will be replaced by domestic production or imports from other countries. At most, if the determination is finalized, it will level the playing field by ensuring that imports come in at a fair price."
EPA also in its letter stated that they have "not taken any formal action to propose this idea, nor will EPA pursue regulations" regarding allowing RINs for ethanol exports. The issue was still alive when NBB submitted its comments: "The biomass-based diesel industry and other renewable fuel producers have relied on EPA's regulations for a decade to plan and invest in production capacity, distribution networks and technological innovations. EPA has not presented any justification sufficient to meet its heightened burden for overturning its prior regulation given renewable fuels producers' significant reliance interests." This concept of allowing RINs from exported fuels would have dramatically reduced the energy security benefits of the RFS because the volumes exported would come at the expense of fuel available for domestic consumption.
NBB was pleased to see EPA back off earlier attempts to misuse the waiver authorities. In the comments, NBB argued:
- First, EPA may not use its general waiver authority because there is neither an "inadequate domestic supply" of advanced biofuels nor a "severe harm [to] the economy or environment of a State, a region, or the United States." EPA cannot redefine "domestic supply" as "domestic production" and thus exclude imports. Such a redefinition is foreclosed by the statute, decisions of the D.C. Circuit and EPA's own regulations. And the ordinary compliance costs of obligated parties do not constitute "severe economic harm" to a "state, a region or the United States."
- Second, EPA may not use its biomass-based diesel waiver authority because there are no emergency circumstances constituting a "severe feedstock shortage or other market disruption" that would warrant a 60-day waiver in the biomass-based diesel volume. The concerns described in the NODA are not the type of major shocks to the biomass-based diesel supply for which the biomass-based diesel waiver provision was designed.
- Third, EPA may not further reduce the 2019 biomass-based diesel volume under the statutory factors in the RFS. Those statutory factors, which EPA fails to consider properly in either the proposed rule or the NODA, instead demonstrate that an increase in the biomass-based diesel volumes are warranted.
"We are thankful for our champions' relentless efforts to present the facts and legal arguments to the EPA. Their dedication to the jobs we represent are why we have begun to make progress with the agency. But we can't stop now, because flatlined biomass-based diesel volumes spell trouble for many of our smaller producers and the larger agricultural economy. Such action is also not in line with the intent of the law to grow the biofuels market in the United States," said Doug Whitehead.
The industry has routinely surpassed the annual biomass-based diesel volumes and currently comprises the vast majority of advanced biofuel production (roughly 93 percent).
Unfortunately, EPA's proposal would halt the progress of the biomass-based diesel industry and thwart Congress's intent to increase advanced biofuel production. For the first time, the proposed rule lowers the advanced biofuel volume from the previous year and does not increase the biomass-based diesel volume.
Biomass-based diesel has been a great success story of the RFS. The biomass-based diesel industry has grown to support more than 64,000 jobs throughout its supply chain. The industry also provides benefits to American farmers and livestock producers by creating demand for the surplus oils from commodity crops and reducing the price of soybean meal. Lastly, biodiesel keeps wastes out of landfills, as well as the nation's waterways. Stagnant volumes will cost thousands of jobs in rural areas and severely harm America's farmers.
Representing roughly 150 members, NBB will continue to work with EPA to address these concerns and to raise the volumes in the final rule expected next month.
CBA Further Comments on 2018 LCFS Amendments
Supports NBB on Key Technical Issues
In response to proposals presented at the California Air Resources Board's (ARB) September 22nd workshop on the ongoing
rulemaking to amend
the Low Carbon Fuel Standard (LCFS), CBA submitted a letter of comment on a range of issues of concern to the biodiesel industry in the state. P
revious comments focused primarily on the proposed Third Party Verification Program, an issue that will have a major impact on CBA members and the industry at large. Below is an excerpt from this month's comments which
began by stating that these additional comments should be considered supplementary to those of our collaborating partner, the
National Biodiesel Board (NBB):
CI Reduction Schedule 2020 and Beyond
CBA is very concerned with ARB's consideration of a freeze in the CI reduction schedule beginning in 2020. Our industry has experienced first-hand the harmful effects of a stalled program. In the past, such freezes have caused reduced liquidity of carbon credit markets, plant closures, and layoffs. Even if planned, a freeze could have a chilling effect on innovation, investment and creativity. We urge ARB to continue to push the program forward each and every year until the state's goal is achieved.
"High Risk" Feedstock
CBA remains very concerned with ARB's characterization of UCO as a feedstock with higher risk for mischaracterization that requires chain of custody evidence to the point of origin. Programs like ISCC are not the answer because they will push smaller, community-sized plants out of the market due to the regulatory burden. Ultimately, the program will suffer as a result of fewer participants utilizing low carbon feedstocks.
Temporary Fuel Pathways
CBA finds the process of onboarding new producers troubling and believes it will likely deter new market participants. New producers should be able to use a more reasonable temporary pathway.
Conflict of Interest & Recordkeeping
CBA disagrees with the six-year limitation on 3rd party verifiers. Program participants should be free to use any verifier that is in good standing with ARB. The burden should be on the 3rd party verification company to demonstrate to the State of California that it is acting appropriately, and not burden the renewable fuel producers to alternate its vendors unnecessarily. We respectfully submit that ARB should lower the record keeping requirement to 5 years to correspond with industry best practices.
We urge ARB to carefully consider the comments by the NBB on this very serious issue as it has the potential to significantly disrupt plant operations as written.
CBA Joins R
enewable Biofuel Producers in Responding to
Internal Combustion Engine Ban
|The CalEPA Headquarters Building Houses ARB
This month, CBA joined with
renewable biofuel producers in sending a letter to Mary Nichols,
Chairwoman of the
California Air Resources Board (ARB), on an issue that poses an existential threat to our industry. Below is the text of the letter:
The undersigned organizations write to express our concern with comments and reports recently made to the media about the great state of California considering a ban of the internal combustion engine. Our organizations represent renewable biofuel producers, many of which are located or will soon be locating to California, which are responsible for a significant percentage of the transportation emission reductions that have been achieved in California since the passage of AB 32.
The comments, reported in the press, ignore the benefits biofuels provide in reducing CO2 emissions and the role advanced engines and hybrids will play in the future. Advanced combustion technologies utilizing renewable fuels are delivering major environmental and public health gains to California, as well as supporting the economy.
While focusing exclusively on non-combustible technologies, the state would place the public in harm's way by ignoring very real and substantial public health gains that are made through the consumption of biofuels in our transportation sector today. We agree that zero-emission technologies are important and must be a part of our transportation portfolio going forward. However, picking winners and losers for the future is counterproductive to our collective long-term goals. In order to meet the ambitious State targets, we must simultaneously displace petroleum with increasing amounts of biofuels and promote zero-emission technologies. These two strategies are complementary to one another and are not in conflict.
Our California low carbon fuels industry is at a pivotal point. Many investors are interested in our market because of the huge demand that exists. Those investments will only happen if there is certainty in the marketplace. The extensions of the Cap and Trade and Low Carbon Fuel Standard programs have helped in this area. However, such comments in the press are not helpful because it sends the message to our industry that we are not part of the state's long-term strategy.
We have been steadfast partners with the Governor and ARB for quite some time and would like to continue that effort into the future. We welcome the opportunity to meet with you in person to further discuss these issues.
Andy Foster, Aemetis
Russ Teall, Biodico Sustainable Biorefineries
Lyle Schlyer, Calgren Renewable Fuels
Jennifer Case, California Biodiesel Alliance
Thomas Lawson, California Natural Gas Vehicle Coalition
Todd Campbell, Clean Energy Fuels
Johannes D. Escudero, Coalition for Renewable Natural Gas
Tom Koehler, Pacific Ethanol, Inc.
cc: Mr. Richard Corey, ARB
NBB Fair Trade Coalition Wins
on Preliminary Question of Dumping
in Biodiesel Import Case
Commerce Department Finds That Argentina and Indonesia Unfairly Dump Biodiesel into US
October 23, 2017
WASHINGTON, D.C. - The National Biodiesel Board (NBB) Fair Trade Coalition won a preliminary antidumping determination from the Commerce Department regarding dumped biodiesel imports from Argentina and Indonesia. The Commerce Department found that biodiesel imports from Argentina and Indonesia are sold into the United States below fair value, and they imposed preliminary duties on imports from these countries based on the amount of dumping found.
"It is reassuring with each decision that the Commerce Department is reviewing the data and facts at face value. The law is clear, and violations of trade law shouldn't be ignored at the expense of the livelihoods of thousands of Americans employed or affected by biodiesel," said Doug Whitehead, chief operating officer of the National Biodiesel Board.
As a result of Commerce's ruling, importers of Argentinian and Indonesian biodiesel will be required to pay cash deposits on biodiesel imported from those countries. The cash deposit rates range from 54.36 to 70.05 percent for biodiesel from Argentina, and 50.71 percent for biodiesel from Indonesia, depending on the particular foreign producer/exporter involved. Cash deposit requirements will be imposed when this preliminary determination is published in the Federal Register sometime next week. The duty deposit requirements are in addition the deposits required pursuant to Commerce's preliminary countervailing duty determination in August, which confirmed that biodiesel producers in Argentina and Indonesia have received massive subsidies.
The NBB Fair Trade Coalition filed these petitions to address a flood of subsidized and dumped imports from Argentina and Indonesia that has resulted in market share losses and depressed prices for domestic producers. Biodiesel imports from Argentina and Indonesia surged by 464 percent from 2014 to 2016, taking 18.3 percentage points of market share from U.S.
manufacturers. Imports of biodiesel from Argentina again jumped 144.5 percent following the filing of the petitions. These surging, low-priced imports prevented producers from earning adequate returns on their substantial investments and caused U.S. producers to pull back on further investments to serve a growing market.
Between the preliminary and final antidumping determinations, the Commerce Department will audit the foreign producers to confirm the accuracy of their data submissions. Parties will file briefs on issues arising from the agency's preliminary antidumping duty determinations, and the Commerce Department will hold a hearing, with a final antidumping determination due early next year. A final determination by the Commerce Department in the companion countervailing duty determination is due to be announced in early November, with a final determination by the International Trade Commission connection with the countervailing duty case expected in December.
Download the fact sheet from the Commerce Department here.