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California Biodiesel Alliance News
California's Biodiesel Industry Trade Association May 2016 |
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We begin this issue by welcoming both Lisa Mortenson of Community Fuels, who has rejoined CBA's board of directors, and new nonprofit member, the Low Carbon Fuels Coalition.
May was a busy month with CBA board members participating in a very productive retreat in San Diego on May 12th. Stay tuned as we bring new ideas to work on behalf of biodiesel in California. Already, for our successful Lobby Day on May 24th in Sacramento, we launched a new social media effort that saw industry and key state environmental NGOs tweeting and retweeting our messages and photos in support of
the California Biofuels Cap & Trade Initiative.
Please follow us @cabiodieselorg and join our Facebook group!
We lead with two related articles on this major CBA policy effort. First, is the news release for Lobby Day from the Biofuel Initiative coalition, which focuses on this effort to secure funding from auction proceeds for in-state low carbon biofuels production.
Also, we are very pleased to include a letter from environmental NGOs advocating for the bill to define the parameters of an incentive-based program to support and increase the in-state production of biofuels, Senator Pavley's SB 1402.
Don't miss the
Action Alert on the Biodiesel Producer's Tax Credit, an update from Canada, and the Policy Section, which has key updates that participants in the California biodiesel market should be aware of. It includes the latest information on funding for biofuels; links to the new FAQ and reporting form for the ADF regulation; a link to the presentation for the June 2nd LCFS workshop on a proposed mandatory verification program; a call for comments on the EPA's recent RFS proposal, and more.
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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(California Biofuels Cap & Trade Initiative)
While Clean Fuels Standard Thrives in California,
More Funding Needed for
In-State Biofuel Production to Spur Job Creation
May 23, 2016
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California State Capitol
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California's biofuel industry is calling on state legislators to allocate $210 million in the Governor's Greenhouse Gas Reduction Fund to incentivize in-state production of low carbon biofuels. For the first time, biodiesel, ethanol and biomethane trade associations and companies are united by the common goal of getting the Biofuel Initiative passed as part of this year's budget.
To meet Governor Brown's environmental goals, more than 7 billion gallons of low carbon biofuel will be needed annually in California by 2030. However, a large portion of California's low carbon fuels currently are imported from out of state and abroad. Through proper funding, California biofuels production could increase from 250 million gallons per year (mgy) in 2014 to 906 mgy in 2019, according to industry projections, creating meaningful employment for thousands of Californians in disadvantaged communities.
"California has adopted some of the most forward-thinking policies in the nation to combat climate change - including AB 32, SB 535, the Low Carbon Fuel Standard, and SB 350 - and it is up to state legislators to encourage and promote in-state biofuel production to achieve the Governor's goals," said Russ Teall, president of the California Biodiesel Alliance. "Investing in this initiative helps improve the environment, while creating jobs and providing energy security."
"The biofuels we produce lower the carbon content and give consumers more choices," said Neil Koehler, chief executive officer of Pacific Ethanol. "State investment needs to be prioritized for in-state production of biofuels that will pay back with local jobs, tax revenue and community growth."
A $210-million allocation of AB 32 cap and trade auction proceeds from the state budget's Greenhouse Gas Reduction Fund, administered by the California Air Resources Board (ARB), would:
- Create 24,750 direct and indirect jobs;
- Reduce greenhouse gas emissions by nearly 6,000,000 metric tons;
- Spur economic development of $11.5 billion;
- Displace 714 mgy of petroleum;
- Generate fuel tax revenues of $230 million; and
- Bring in other state and local tax revenues of $408 million.
"The transportation sector is responsible for nearly 40% of all carbon-related emissions in California. Methane released from agricultural and food processing facilities, wastewater treatment plants and landfills is far more potent than carbon as a greenhouse gas emission," said Johannes Escudero, CEO of the Coalition for Renewable Natural Gas. "California has an opportunity to reduce these emissions by investing GGRF funds in the development of biofuels, including in-state biomethane production facilities - projects that capture otherwise flared or fugitive methane from organic waste streams to produce the lowest carbon intensity transportation fuel available."
The allocation helps meet the climate change objectives of AB 32, which requires a sharp reduction of greenhouse gas (GHG) emissions, as well as SB 535, which serves to stimulate employment and economic improvement by encouraging biofuel production in disadvantaged communities.
Legislators will determine how much money to allocate toward in-state biofuel production by June 15, 2016, at which point the allocation will be included in the state's budget for Governor Brown's approval or veto.
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Editor's Note: See the most recent update in the Cap and Trade blurb of the Policy section below.
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Letter in Support of SB 1402 (Pavley)
From the Union of Concerned Scientists, NRDC, the American Lung Association of California, and the Environmental Defense Fund
May 20, 2016
The Honorable Ricardo Lara
Chair, Senate Appropriations Committee
California State Capitol
Sacramento, CA 95814
RE: SB 1402 (Pavley) - SUPPORT
Dear Chairman Lara,
On behalf of the undersigned organizations, we write to express our support for SB 1402, a bill to incentivize production of low-carbon fuels in California.
The use of low-carbon transportation fuels is an important solution to meeting California's air quality, climate change, and petroleum reduction goals. The bedrock policy that is expanding use of low-carbon fuels in California is the state's Low Carbon Fuel Standard (LCFS). This important policy is expected to help cut global warming pollution by over 70 million metric tons by 2020 -- the equivalent of removing about 15.5 million passenger cars and trucks from the road for a year. A recent analysis also showed that the widespread development of low-carbon fuels is necessary to meeting Governor Brown's goal of halving petroleum consumption by 2030.
1 In addition, the use of low carbon fuels and vehicles, as a result of the LCFS and cap and trade program, is expected to save $8.3 billion in pollution-related health costs between 2015 and 2025, including avoided hospital visits and lost work days.
2
SB 1402 would complement the state's strategy to diversify our fuel sources by expanding in-state production of cleaner fuels. To leverage private capital investment into the California low-carbon fuel production market, the state needs to also mitigate market risk through incentives. Historically, the state has underinvested in low-carbon transportation fuels and related infrastructure, despite the fuels sector's responsibility for the single-largest share of carbon emissions. The Legislative Analyst's Office found that since the inception of the state's major energy programs, California has spent nearly $15 billion on alternative energy and energy efficiency programs, but less than 5 percent has gone to clean transportation and fuels.
3
SB 1402 will direct the Air Resources Board to establish the California Low Carbon Fuels Incentive Program. The program will leverage both public and private dollars to expand the production of low carbon transportation fuels at new and existing California facilities. Through these incentives, SB 1402 will create well-paying 21st century jobs and provide the certainty to businesses to ramp up their investment in California. Importantly, the amendments we expect to be taken in the
Appropriations Committee will prioritize the use of low carbon, sustainable and underutilized feedstocks. We also appreciate that the amendments prioritize projects that create co-benefits, such as the reduction of short-lived climate pollutants, as well as economic and air quality benefits to disadvantaged communities.
We respectfully ask for your support for SB 1402.
Sincerely,
Jason Barbose
Western States Policy Manager
Union of Concerned Scientists
Bonnie Holmes-Gen
Senior Policy Director
American Lung Association in California
Simon Mui, Ph.D.
Director, California Vehicles & Fuels
Natural Resources Defense Council
Tim O'Connor
Director, California Oil & Gas
Environmental Defense Fund
Cc: The Honorable Fran Pavley
FOOTNOTES
1. ICF International. 2016. Half the oil: Pathways to reduce petroleum use on the West Coast. San Francisco, CA. Online at
www.ucsusa.org/WestCoastOil
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Editor's Note: See the most recent update in the Legislation blurb of the Policy section below.
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State Biodiesel Fuel Businesses
Must Register under Motor Vehicle Fuel Distributor Program (MVDP)
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ARB Headquarters in Sacramento
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During the Air Resources Board's (ARB) Alternative Diesel Fuel Regulation (ADF) workshop on May 23rd, CBA learned of a requirement that affects our industry by requiring registration for many biodiesel fuel businesses under the agency's Motor Vehicle Fuel Distributor program (MVDP).
The regulation defines a "motor vehicle fuels distributor" as: "any person who (1) refines, blends, or otherwise produces motor vehicle fuel, or (2) with an ownership interest in the fuel, transports or causes the transport of motor vehicle fuel at any point between a production or import facility and a retail outlet, or sells, offers for sale, or supplies motor vehicle fuel to motor vehicle fuel retailers." This requirement includes providing the physical location of all records pertaining to the production, purchase and delivery of motor vehicle fuel.
ARB staff has clarified that biofuel producers should register as a refiner and a distributor under the program.
To expedite the process, ARB is requesting that the registration form be emailed to Amanda Ciccarelli (lciccare@arb.ca.gov). They also are asking that the registration form sent to the following address rather than the P.O. box address printed at the bottom of the form:
California Air Resources Board
Attn: Amanda Ciccarelli
8340 Ferguson Ave
Sacramento, CA 95828
Please contact Amanda Ciccarelli with any questions at (916) 229-0523.
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Action Alert on Biodiesel Producer's Tax Credit
Please contact your member of the House of Representatives! The NBB is organizing the national mobilization to get cosponsors for the tax legislation recently introduced by House Representatives Kristi Noem, R-S.D., and Bill Pascrell, D-N.J. The bill would extend the biodiesel tax incentive through 2019 and change it from a blenders credit to a domestic production credit. CBA is working to get our California representatives to cosponsor the bill as part of this effort to demonstrate to House leaders that it has strong bipartisan support across the country and should be passed.
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(Advanced Biofuels Canada / Biocarburants avancés Canada)
Ontario Planning Low Carbon Fuel Standard and Biofuels Support
May 17, 2016
From the May 16th Globe and Mail, a report that the cabinet in Kathleen Wynne's Government of Ontario, under Minister Glenn Murray (Ministry of the Environment and Climate Change), is planning a low carbon fuel standard. The accuracy of the report has not been confirmed by the government.
"New lower-carbon fuel standards would require all liquid transportation fuels, such as gasoline and diesel, to slash life-cycle carbon emissions by 5 per cent by 2020. The plan will also provide $176-million in incentives to fuel retailers to sell more biodiesel and 85-per-cent ethanol blend. The government will also oblige natural gas to contain more renewable content, such as gas from agriculture and waste products."
The overall 2017-2021 plan will be publicly released in June, according to the story.
The many new programs will be paid for out of revenue from the province's upcoming cap-and-trade system, which is expected to be approved by the legislature this week and come into effect at the start of next year. Together, the cap-and-trade system and the action plan are the backbone of the province's strategy to cut emissions to 15 per cent below 1990 levels by 2020, 37 per cent by 2030 and 80 per cent by 2050.
The low-carbon fuel standard is projected to cut GHG emissions by two million tonnes, and the renewable content requirement for natural gas ('renewable natural gas') by one million tonnes.
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Advanced Biofuels Canada (ABFC) has been advocating with Ontario for over a year for renewable and low carbon fuel standard mandates (RFS, LCFS) and programs to scale up the commercial supply of renewable and low carbon fuels in Ontario.
Since this article was posted, Ian Thomson, President of the ABFC, has updated CBA that the government passed the Climate Change Mitigation and Low Carbon Economy Act. Within it, the Minister of the Environment is required to publish a Climate Change Action Plan (CCAP) by January 1, 2017. The contents of the CCAP were the subject of the Cabinet leak earlier this month.
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CALIFORNIA INDUSTRY NEWS
(MOTLEY FOOL)
Darling Ingredients' Green Diesel Operation is About to Get Much, Much Bigger
Posted April 16, 2016 by Steve Symington
Darling Ingredients may have endured extraordinary market headwinds in recent quarters, but that isn't stopping the rendering and biodiesel specialist from expanding its business in a big way. Earlier this week, Darling announced it will increase the annual production capacity of its Diamond Green Diesel facility in Norco, LA to 275 million gallons of renewable diesel, an increase of more than 70% from its current capacity of 160 million gallons. Diamond Green Diesel is Darling Ingredients' joint venture with Valero Energy.
The expansion won't happen overnight. But while the total cost and engineering analysis has yet to be finalized, Darling expects the project to be funded by Diamond Green Diesel's existing cash flow. Darling is also estimating a fourth-quarter 2017 completion for the project, and targeting a first-quarter 2018 ramp of production. In the meantime, Diamond Green Diesel should continue operating at full capacity with the exception of a 15- to 30-day downtime period for final tie-ins.
Darling also notes the expansion is an efficient investment; its incremental cost per gallon of renewable diesel production should be roughly half that of the green-field construction cost, thanks to logistics and processing facilities already in place.
But apart from its obviously attractive economics, what spurred this massive project? Darling Ingredients CEO Randal Stuewe elaborated, "Our Diamond Green Diesel joint venture continues to be a shining star in our portfolio of ingredients and our DGD team has successfully proven the technology works, producing the highest quality product to meet the expectations of our customers."
It seems an understatement to call Diamond Green Diesel a shining star for Darling of late, especially in light of the challenges facing the rest of its business. Last quarter, for example, overall revenue declined 19% year over year, to $809.7 million, thanks to a combination of sustained weakness in global commodity markets and the negative effects of foreign currency exchange.
More specifically, Darling's feed ingredients business saw revenue decline more than 22% year over year last quarter, to $472.2 million, as the segment in the U.S. suffered significant pricing pressure as raw-material volumes and finished-goods pricing declined to levels not seen since the early 2000s. At the same time, Darling's food ingredients business saw net sales decline 15.5%, to $272.2 million, but also saw impressive 70.7% growth in operating income, to $23.3 million, thanks to a solid performance from the company's Rousselot gelatin unit, which enjoyed strong demand, higher margins, and commissioned significant expansions in the U.S. and China.
To put that in perspective, Diamond Green Diesel alone achieved EBITDA of $177 million by producing 159 million gallons of renewable diesel last fiscal year, bringing Darling's share of that profit share to $88.5 million. In short, this offered an effective financial hedge to offset the weakness of Darling's core feed ingredients business.
Considering that weakness won't last forever -- and assuming all goes as planned with the development of DGD's expansion -- it should leave Darling Ingredients that much stronger when each of its segments are finally firing on all cylinders.
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California Energy Commission Awards Biodico $1.2 Million Grant
for 'Zero Net Energy Farms' Project
-- Biodico to Utilize Proprietary Technology
To Create Economically Viable Energy Efficient Farm of the Future --
-- Technologies to Stimulate Local Economy in Disadvantaged Regions --
Fresno and Ventura Counties, Calif. - May 18, 2016 - Biodico, Inc. today announced the California Energy Commission (CEC) awarded the sustainable biofuel and bioenergy company a $1.2 million grant for its "Zero Net Energy Farms" project, which would enable farms to generate all electrical and heating power needs from on-site renewable resources, while reducing greenhouse gas footprints.
The award was granted under the CEC's Electric Program Investment Charge (EPIC) Challenge to develop innovative and replicable approaches for accelerating the deployment of Advanced Energy Communities (AEC) located in economically disadvantaged areas.
Biodico is matching the CEC funds to develop a real world conceptual design that combines solar cogeneration, wind turbines, anaerobic digestion and gasification at Red Rock Ranch in Five Points, Fresno County, Calif.
"The Zero Net Energy Farms project leverages Biodico's proprietary technology to create an energy efficient farm by utilizing economically viable solutions," said Biodico President and Founder, Russ Teall. "Our goal is to establish a template for ranches, farms and other agricultural interests throughout California's Central Valley and beyond.
"This project comes at a particularly important time as California's agricultural community searches for more efficient ways to produce, process and store more than 400 food, fiber, flora and fuel crops, not to mention convert biomass into electricity, as biomass power plants continue to close," Teall added. "Equally important is the water/energy nexus: The production of on-site renewable energy reduces the consumption of water used to produce grid-based utility energy. As California agriculture continues to suffer the impact of water constraints, this has become extremely important."
Additional benefits of the project include increasing the security, reliability and efficiency of the electrical grid, as well as reducing the cost of expanding capacity to meet California's swelling population growth.
"There is a great need today for establishing a rational business case for tomorrow's energy efficient farm," said JJ Rothgery, Chairman of the Board at Biodico. "A Zero Net Energy Farm will help diversify power production and reduce the reliance on fossil fuels and water to generate electricity.
"The incorporation of these technologies will also enhance local economic development by providing jobs and an increased tax base," Rothgery noted.
The project is slated to commence in June 2016. For a video overview of Biodico, please visit http://bit.ly/biodico.
About Biodico: Biodico is a privately held company headquartered in Ventura, Calif. that (1) builds, owns and operates sustainable biofuel and bioenergy facilities, (2) conducts research and development with the U.S. Navy, and (3) collaborates with strategic joint venture partners to commercialize new technology and initiatives. The company and its management have been pioneers in the industry for the past 23 years, with an emphasis on using advanced, patented and proprietary technologies for the sustainable multi-feedstock modular production of next generation biofuels and bioenergy. Additional information about Biodico can be found on the company's website at http://www.biodico.com.
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