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California Biodiesel Alliance News

California's Biodiesel Industry Trade Association  

September 2013    

In This Issue
LCFS Upheld by U.S. Ninth Circuit Court of Appeals: Major Victory for California
California's Ground-Breaking Transportation Policies Resulting in Big Changes to the Market and Big Benefits to Consumers
CBA Promotes Biodiesel at AltCar Expo and Conference
RFS is Under Attack! Join us in Raising the Volume on This Issue
REGULATORY AND POLICY ISSUE UPDATES
CBA WELCOMES NEW MEMBERS: Edgewater Refining, Inc
WHO'S WHO IN CALIFORNIA BIODIESEL: Matt Horton, Propel Fuels

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We are happy to begin by welcoming Edgewater Refining, Inc. as our newest Bronze level business member.

  

After almost a year in process, the Ninth Circuit Court upheld LCFS this month, which is great news for our industry, our state, and beyond! Also, there's good news about the price-lowering benefit of green transportation fuel policies and on CBA's efforts to get out the good word about biodiesel. Matt Horton, CEO of Propel Fuels, whose company is an excellent example of the incentivizing effects of LCFS, is featured in the Who's Who interview.  

  

No time to rest, though. We need your help in working to defend the federal Renewable Fuel Standard, a cornerstone policy for our industry. This is a critical time given the unpredictability of developments in Congress. Please see the article below and take action! 

 

   2014 Conf Logo

Our 2014 conference will be co-located with the National BIodiesel Board Conference in San Diego. We expect to go live with online conference registration soon.

 

Please check our Home page for updates. 

 

   

To view back issues of this newsletter and CBA Email Alerts 

click on the "View CBA Email Newsletter Archive" button on our Home page.  

LCFS Upheld by U.S. Ninth Circuit Court of Appeals 

Major Victory for California  

 

Ninth Circuit Court
U.S. Ninth Circuit Court of Appeals,
San Francisco


On September 18th, in a major victory for California, the U.S. Ninth Circuit Court of Appeals reversed a 2011 district court ruling that the state's Low Carbon Fuel Standard (LCFS) violates the dormant Commerce Clause of the U.S. Constitution by discriminating against interstate commerce. The decision in the case Rocky Mountain Farmers Union v. Corey rejected the arguments of LCFS opponents that the full lifecycle analysis used under LCFS to assign carbon intensity scores of transportation fuels (including where and how fuel is produced and transported) discriminates against out-of-state ethanol.

 

The court used strong language in support of the need for the program for California (and beyond), our state's special right to establish it, and the validity of the science behind it:

 

"Congress of course can act at any time to displace state laws that seek to regulate the carbon intensity of fuels, but Congress has expressly empowered California to take a leadership role as to air quality. If GHG emissions continue to increase, California may see its coastline crumble under rising seas, its labor force imperiled by rising temperatures, and its farms devastated by severe droughts.

 

California should be encouraged to continue and to expand its efforts to find a workable solution to lower carbon emissions, or to slow their rise. If no such solution is found, California residents and people worldwide will suffer great harm. We will not at the outset block California from developing this innovative, nondiscriminatory regulation to impede global warming. If the Fuel Standard works, encouraging the development of alternative fuels by those who would like to reach the California market, it will help ease California's climate risks and inform other states as they attempt to confront similar challenges."

 

Regarding the subtleties of the dormant Commerce Clause, the court held that LCFS neither facially discriminates against out-of-state ethanol nor does it result in unequal treatment between states that is not facially discriminatory: 

 

"Each factor in the default pathways is an average based on scientific data, not an ungrounded presumption that unfairly prejudices out-of-state ethanol, whether it is an average value for the use of coal in a boiler or for the shipment of raw corn from the Midwest to California.


The Fuel Standard performs lifecycle analysis to measure the carbon intensity of all fuel pathways. When it is relevant to that measurement, the Fuel Standard considers location, but only to the extent that location affects the actual GHG emissions attributable to a default pathway. Under dormant Commerce Clause precedent, if an out-of-state ethanol pathway does impose higher costs on California by virtue of its greater GHG emissions, there is a nondiscriminatory reason for its higher carbon intensity value. See id. Stated another way, if producers of out-of state ethanol actually cause more GHG emissions for each unit produced, because they use dirtier electricity or less efficient plants, CARB can base its regulatory treatment on these emissions. If California is to successfully promote low carbon-intensity fuels, countering a trend towards increased GHG output and rising world temperatures, it cannot ignore the real factors behind GHG emissions."

 

The case is not yet completely settled as the court did send the question of whether LCFS discriminates against out-of-state ethanol, in purpose or actual effect, back to the district court. However, experts are pointing to the strong language in the Ninth Circuit Court's opinion as an indication that the California Air Resources Board (CARB), the state agency that runs the program, and has successfully defended it against more than one lawsuit, will again prevail. To that point, the Ninth Circuit Court also removed the lower court's injunction against LCFS, but CARB had previously appealed that ruling and won.   

 

LCFS, which is a huge economic driver for the biodiesel industry, has been a great success, with over-compliance and excess credits generated from its first year in 2011, even while under threat from repeated challenges.  

 

Whether the U.S. Supreme Court would agree to hear the case is, of course, unknown. We will definitely keep you informed.    


California's Ground-Breaking Transportation Policies Resulting in Big Changes to the Market and Big Benefits to Consumers   


 

BIodiesel Pump

There is no question that California has long been a pioneer in its development of policies that help mitigate the effects of climate change. An important example of this effort is California's suite of transportation policies that encourage the use of low-carbon fuels, vehicle efficiency, and sustainable development. These programs in conjunction with the federal Renewable Fuel Standard, not only address climate change and air quality issues and create jobs, but also have the added benefit of lowering fuel prices at the pump, according to a new policy briefing document prepared by economists from the Environmental Defense Fund (EDF) and the University of Wyoming.

 

Entitled Impact of California Transportation Policies on Long Term Fuel Diversification, Fuel Producer Market Power, and Motor Vehicle Fuel (Gasoline and Diesel) Prices, the document forecasts that the market share held by lower carbon fuels in California, assuming full policy implementation, could rise to as much as nearly one quarter of the car and truck market by 2020, or 3.7 billion gallons of alternative fuel (in gasoline gallon equivalents). It goes on to detail how the diversification of California's fuels market will put increasing downward pressure on prices, which are now set by the handful of oil companies who control import and production of over 90 percent of our state's fuel market.

 

The policy briefing document is featured in a post on EDF's California Dream 2.0 blog, entitled Seeing Green: Emission Reducing Fuel Policies Help Lower Gas Prices. Highlighting EDF's climate and energy work in California, it focuses on the organization's efforts to ensure that "California can leverage market-based environmental policies to revitalize its economy, protect its quality of life and retain a leading edge in global innovation."

 

In the article, Tim O'Connor and Shira Silver summarize the benefits of California fuel policies in the following way: "With increased consumer choice from options such as natural gas vehicles, biodiesel and electric cars - overall consumer choice goes up and prices go down.  This healthier market would result in fewer price spikes at the pump and a more sustainable transportation system."  

 

To read the article and download the policy briefing document, see: http://blogs.edf.org/californiadream/2013/09/05/seeing-green-emission-reducing-fuel-policies-help-lower-gas-prices/. For questions, please contact Tim O'Connor at toconnor@edf.org. 

 

CBA Promotes Biodiesel at AltCar Expo and Conference
 

Joe Gershen, Crimson Renewable Energy,
and Jim Bennett, IWP
People who attended the City of Santa Monica's 8th annual AltCar Expo and Conference this month were able to learn about biodiesel both at the Expo, where CBA had a booth, and during the Annual AltCar Tech Debate where we presented our message along with speakers from GM, Ford, Honda, and others.

Member company representatives Joe Gershen, of Crimson Renewable Energy, and Jim Bennett, of IWP, talked to attendees from CBA's booth and were joined by former CBA intern and biodiesel enthusiast, Leilah Franklin.

Joe, who is CBA's Vice Chairman, participated in the discussion during the Annual AltCar Tech Debate panel, which focused on alt fuels and vehicle stakeholders' perspectives on where this burgeoning market is headed. The entire panel agreed that there really is no debate, but rather synergies. 

On the panel Joe pointed out, "Most of the general public cannot comprehend how a B5 blend can be helpful in reducing carbon. However, the annual demand for 200 million B100 gallons, which the blending of B5 into the California fuel pool will constitute as a result of state and federal policies in the next couple of years, is equivalent to taking almost half a million petroleum-powered cars off the road - or putting that many electric or fuel cell vehicles ON the road."

From this perspective, biodiesel can be seen as a leader of the pack!
Defend the Renewable Fuel Standard (RFS) 
  

NBB Fueling Action Logo  

RFS is under attack!   Join us in raising the volume on this issue.  

 

If you have not already done so, please visit the NBB's Fueling Action webpage and send their letter to the Administration calling for a 2014 volume increase. This page has all the background, inspiration, and contact info you need. NBB says that "efforts to undermine or severely weaken the program could gain momentum at any moment, and we don't know where that could lead given the unpredictable nature of Congress."

 REGULATORY AND POLICY ISSUE UPDATES

French fries Beautiful oil  French fries

  

  

CALIFORNIA AIR RESOURCES BOARD: ADF RULEMAKING PROCESS
Air Resources Board staff hosted it third and final public workshop on September 5th to discuss regulatory concepts for establishing fuel requirements for alternative diesel fuels (ADF). The final rule is to be adopted in this fall. The draft regulation and related information can be found at:
CALIFORNIA AIR RESOURCES BOARD: LOW CARBON FUEL STANDARD (LCFS)
See lead article above. 
 

CALIFORNIA ENERGY COMMISSION (CEC): AB 118 FUNDING

A solicitation is expected soon. The CEC adopted its 2013-2014 Investment Plan Update for the Alternative and Renewable Fuel and Vehicle Technology Program at a Business Meeting on May 8th. All details of the plan, which allocates $23 million for Alternative Fuel Production facilities, are posted at: http://www.energy.ca.gov/2012-ALT-2/. Interested parties are encouraged to subscribe to the CEC's Alt Fuels Listserv on that page to stay informed of upcoming solicitations.

  

DIVISION OF MEASUREMENT STANDARDS (DMS)

There is no policy update this month. CBA has been involved in the fuels working group of the California Department of Food and Agriculture's Division of Measurement Standards (DMS) consortium, which is designed to find solutions to fiscal challenges facing the program due to mandatory General Fund reductions. DMS is involved with biodiesel standards, testing, and labeling.
 

STATE WATER RESOURCES CONTROL BOARD: UST REGULATIONS

There is no policy update this month. CBA urges compliance with the new 2012 permanent regulations governing UST storage of biodiesel. See our Regulatory Matters webpage for more information and links to the State Water Board website that posts the new compatibility forms from equipment manufacturers. The Water Board list is constantly being updated as new and revised forms come in, but revised forms are not labeled as such. Also, please be advised that your CUPA may require engineering approvals for non-integral secondary containment (sumps and UDCs).    

   

CALIFORNIA LEGISLATIVE ISSUES     

AB 8, which would extend AB 118, Carl Moyer, and AB 923 incentive funding through 2023 has passed the Assembly and the Senate and is expected to be signed by Governor Jerry Brown. This is great news, and we do expect this bill to become law soon. 

     

FEDERAL ISSUES
See article above on the call to action on the Renewable Fuel Standard (RFS)!

 

This month, the EPA issued a final rule to expand the definition of heating oil in the regulations for the RFS. The new definition confirms that biodiesel can be used for heating oil under the RFS to generate RINs. Additionally, it clarifies that biodiesel used to generate process heat, power generation, or other stationary functions are also approved for RIN generation. For our industry, the rule simply broadens the types of uses under which biodiesel can generate RINs under the RFS. To read more about the rule, visit the EPA's website at:

http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm 

  
CBA WELCOMES NEW MEMBERS     

 

Edgewater Refining, Inc. is engaged in the development of an energy park with refining facilities that will produce ASTM D-975 renewable ultra-low sulfur diesel that in every respect is similar to standard petroleum D-975 ultra-low sulfur diesel.
 




______  JOIN CBA AS AN INDIVIDUAL, A NONPROFIT, OR A BUSINESS  _____  

 

If you are reading this and are not yet a member, please join us. CBA offers membership levels with the following annual dues: $25 for students and veterans; $100 for individuals and nonprofit organizations; $500 (Bronze business level); and $2000 (Silver business level). Full voting board level memberships are available by application at $3000 (Gold) or $5000 (Platinum). Our Join Us webpage has details and an easy online membership fee payment process.
   

Membership benefits include:   

  • CBA's Email Newsletter with important industry updates and features about Who's Who in biodiesel in California and Action Alerts when your help can really make a difference.
  • Participation in internal email communications, policy discussions, and legislative and regulatory visits. 
  • Discount on CBA's annual California Biodiesel and Renewable Diesel Conference.
  • Your company's logo and link on our Members webpage ($500 level and up).  
  • Special recognition at events and in publications (Platinum members).    

_______   SIGN UP FOR EMAIL ALERTS  _____

 

Anyone can sign up to get CBA's special Alert emails, which we send out when we need biodiesel stakeholders and enthusiasts to take action on important issues facing our industry. Visit our Home page and add your email address.  

 

_______   VIEW PAST NEWSLETTERS AND EMAIL ALERTS  _____

 

Just click on the "View CBA Email Newsletter Archive" button on ouHome page.

WHO'S WHO IN CALIFORNIA BIODIESEL

        

 

Matt Horton 

CEO, Propel Fuels

 

In 2006, venture capital investor Matt Horton had already made a number of energy investments, including ethanol companies, based on his belief that the field was ripe for change and would see enormous growth in the next 25 years. And that year, he met the founders of Seattle-based Propel Fuels,who had a very compelling business plan and were selling the first retail consumer energy product that excited him - biodiesel. Matt's firm @Ventures invested in Propel's Series A round of financing, and that same year he bought the Jetta TDI he still drives today.

 

Propel's team had been looking at California because of its larger fuel and vehicle market, but the real interest came when they learned about funding opportunities though the Sacramento Metropolitan Air Quality Management District and the California Energy Commission's (CEC) AB 118 Alternative and Renewable Fuel and Vehicle Technology Program. In 2008, Propel moved its headquarters to California and began expansion into the state, and the following year Matt began his role as CEO. According to Matt, Propel felt the impact of the economic downturn during this transition - especially in the capital markets - and it was a long, tough process, but the company has succeeded, and Propel is now experiencing record sales.

 

Just in the last few years, Propel's achievements in growth and innovation include being recognized on the Inc. 500 list of the fastest growing private companies for its 1000 percent growth over a three-year period and placing 42 out of 100 on Forbes' list of America's Most Promising Companies as the highest ranked renewable energy company, earning particular praise for its "groundbreaking approach in a traditional industry."

 

Propel fulfills its mission of "Fueling Change" by building, owning, and operating a network that provides low carbon fueling here and in Washington State. Today, Propel has 40 stations offering E85 and B20 (B99 is also sold in Seattle) and has targeted a total of 200 stations reaching 75-80% of California's population. Much of Propel's business involves educating consumers on the value of its fuels. Matt says that, while they got a lot of publicity for their 2012 pilot sale of biodiesel made from algae, their most successful efforts are those aimed at increasing adoption among new customers, who then remain very loyal to the fuel. While E85 is their fastest growing segment (the adoption cycle is faster due to vehicle "Flex Fuel" labeling and OEM endorsements), biodiesel's sales growth has been steady, and this August, Propel sold more biodiesel than ever. This is a result of Propel's work building awareness, providing education, and correcting misconceptions about biodiesel, according to Matt.

 

When Propel launches a new fueling site, it's "high touch, hands on." The company uses direct mail and local PR to get the word out; offers $10 in free fuel to any first-time customer; brings in a team for 3 to 4 days to answer questions; and posts on each pump a 1-800 number that provides 24/7 customer support. Propel operates two models: their Clean Fuel Points, where they add biodiesel and E85 pumps to existing traditional stations; and their Clean Mobility Centers, where they start from scratch and offer additional green features like public transit education, bicycle tuning, and recycling. The latter, which have full Propel branding, provide additional income streams and are the strongest performing stations.  

 

Propel will soon announce that its customers have reached the milestone of 100 million pounds of CO2 avoided. Using the company's CleanDrive™carbon emission reduction tracking tool, Propel's customers are the first in the nation to have access to accurate, real-time individualized online reporting of each alternative fuel purchase relative to petroleum. And because the tool is compatible with major fleet fuel cards, businesses can determine when and how often their vehicles are using alternative fuel, which has been of notable value for fleet managers complying with alternative fuel-related mandates. Even customers buying conventional fuels at Propel stations are able to offset the carbon from those purchases, a program that has seen steady support.

 

"What we do best is reach out, educate people, provide opportunities for them to experience the fuel, and get them excited," Matt says. "One of the great things about being the retailer is that we can provide visibility for the industry's work with new and more advanced fuels, and we want to be the channel for bringing the best of those products to more and more communities." He is hopeful that E15 and E30 will one day be permitted at retail in the state of California and points out that some of the lowest carbon ethanol in the country is produced instate. Regarding renewable diesel, Matt says that it has some drawbacks, such as a lack of lubricity, but that there is a lot to like, including its compatibility with engines and existing infrastructure, and he believes it has a bright future. Propel is moving slowly on that front, taking care with sources so that their customers are comfortable with its sustainability aspects and, of course, hoping for the right cost characteristics.

 

As a panelist at the August Clean, Low Carbon Fuels Summit in Sacramento and in the recent Environmental Defense Fund/Environmental Entrepreneurs case study on biodiesel in California (in which Propel is featured), Matt has been outspoken about the fact that LCFS is working by incentivizing lower carbon fuels to come into the state. When asked about the company's previous plans to expand into other states, Matt says that they continue to review opportunities but that Propel remains focused on instate infrastructure thanks to LCFS and AB 118 grant incentives and other economics that have strengthened the company's business in the state.

 

In addition to securing private funding, Propel has received grants from the U.S. DOE and the CEC's AB 118 program to build E85 stations. Matt says that the CEC has been a great partner and credits the agency for knowing how to get real, immediate results toward the state's energy goals. In working to create a favorable policy environment, Matt stresses the importance of patience; spending time in Sacramento; building relationships with state agencies before you need them; meeting the legislative representatives from your district; and aligning with strong coalitions that are telling the same story.

 

CBA has been pleased that Propel, a member company, has devoted time and energy toward resolving underground storage tank and other policy issues. We look forward to continuing cooperation with Propel on LCFS defense and other shared goals going forward.

  

Thank you for your time and efforts on behalf of biodiesel. I look forward to working with you.  

 

Sincerely,

Celia DuBose

Executive Director

California Biodiesel Alliance