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California Biodiesel Alliance News

California's Biodiesel Industry Trade Association  

September 2015      

In This Issue
We begin this issue by announcing that ADM has joined CBA as a full voting member with a special welcome to Ron Cardwell, who is representing the company on CBA's board of directors.

ARB's September 25th vote to readopt the LCFS was covered by many media outlets. Here we bring you the National BIodiesel Board's take on the news and our own article on that and the adoption of the Alternative Diesel Fuel (ADF) Regulation, which happened the same day.

A snapshot of California's epic legislative efforts to combat global warming is presented in a brief article on the related bills, most of which passed and are awaiting action by the Governor. It begins with the CBA-sponsored AB 1032, which we expect he will sign.
Don't miss the heartwarming story from New Leaf Biofuel and check out the Policy section for important updates on state and federal issues, including how you can help on the tax credit and RFS.

Save the Date:  CBA's 5th annual California Biodiesel Conference will be held on February 24, 2016. This one-day event will take place the day after CALSTART's 2016 Low Carbon Fuels Summit at the same venue, the Capital Ballroom in downtown Sacramento. Details will be posted on our Home page as they are finalized.
To view back issues of this newsletter and CBA Email Alerts 

click on the "View CBA Email Newsletter Archive" button on our Home page.   
California Air Resources Board Votes to Readopt LCFS and Adopt ADF
Takes Major Steps Toward Much-Needed Regulatory Stability

Cal/EPa Building
ARB offices - Cal/EPA Building in Sacramento
On September 25th, the California Air Resources Board (ARB) voted to readopt the Low Carbon Fuel Standard (LCFS) and to adopt the state's first-ever regulation on the commercialization of alternative diesel fuels (ADF), under which biodiesel will be the first fuel to be regulated. Biodiesel will come into the ADF regulation as a Stage 3A fuel, having completed the requirements of Stages 1 and 2. Both regulations take effect January 1st, 2016 and constitute important benchmarks in the process of moving toward the regulatory certainty needed by California's biodiesel industry and the low carbon fuels sector. 

CBA and the National Biodiesel Board have invested many years of concerted and coordinated effort to ensure biodiesel's accurate inclusion under LCFS and that the best possible ADF regulation was put in place.
Low Carbon Fuel Standard (LCFS)
Because the court in the POET, LLC v. California Air Resources Board case found inadequacies in ARB's compliance with the California Environmental Quality Act (CEQA) and the Administrative Procedures Act (APA), the LCFS had to be readopted. ARB staff took the opportunity to include clarifications and enhancements based on what they had learned in administering the regulation since its implementation in 2011. Importantly, ARB is sticking with the original LCFS goal of a 10% reduction in the carbon intensity of fuels by 2020. The regulation includes a new compliance curve to reach that goal, beginning with an immediate jump to 2% from the 1% level it has been held at for several years during the re-adoption process, then ramping up steeply from there.
The core elements of the program remain the same, but enhancements include cost containment through a price cap and Clearance Market; allowing fixed rail and electric and hydrogen forklifts to generate credits; and several refinery-related measures, including allowing them to generate credits for GHG emissions reduction projects.
Other key changes include a two-tiered system under which all new and existing CI scores must be calculated using the CA GREET 2.0 spreadsheet. GREET 2.0 has been updated using the latest science. This will result in pathways and CI scores specific to each fuel, a new requirement.
Conventionally produced first-generation fuels, such as biodiesel and starch- and sugar-based ethanol, fall under Tier 1. Tier 2 fuels are next-generation fuels, such as cellulosic alcohols. Tier 1 fuels produced using an innovative method, such as the use of low-CI process energy sources, may move into Tier 2. ARB will be conducting a GREET 2.0 workshop in October (TBD).
Updates to ILUC values include reductions for soy biodiesel to 29.1 g/MJ and canola biodiesel to 14.5 g/MJ and a new value for palm oil biodiesel of 71.4 g/MJ. Corn ethanol, sugar cane ethanol, and sorghum ethanol ILUC penalties are now reduced to 19.8 gCO2/MJ, 11.8 gCO2/MJ, and 19.4, respectively.

Alternative Diesel Fuels Regulation (ADF)
Reporting requirements for all producers, importers, blenders, and sellers of biodiesel in the state begin on January 1st, 2016 for the ADF regulation, but the actual implementation of the pollution control levels and fuel specifications requirements do not begin until two years later on January 1st, 2018. 

The ADF regulation modeled ARB's findings of biodiesel's emissions characteristics and took into account related offsetting factors -- factors in the commercial market that effectively offset NOx emissions, such as new technology diesel engines (NTDEs), fuels, and feedstocks -- to establish pollution control levels. These are the levels above which NOx mitigation will be required. Low blends of biodiesel may be used without mitigation, depending on the time of year (high or low ozone season) and feedstock saturation (as determined by ASTM specifications for cetane level).
Specifically, blends above these pollution control levels must employ an ARB-approved NOx additive or ADF fuel formulation:  
  • High saturation feedstock (cetane of 56 or greater): B10 year round.
  • Low saturation feedstock (cetane lower than 56): B10 in low ozone season - November 1st to March 31st.
  • Low saturation feedstock (cetane lower than 56): B5 in high ozone season -  April 1st to October 31st.
The regulation includes fleet and retail exemptions for B20 with mitigation where use is only in light and medium duty vehicles or heavy duty vehicles with NOx neutral technologies such as NTDEs. 

A program review by ARB staff will be completed by the end of 2019. It will determine the program's 
efficacy and will take into account offsetting factors and any other factors that may affect biodiesel's NOx emissions. 

A sunset provision will kick in when heavy duty vehicles with NTDEs comprise 90% of all actual vehicle miles traveled by heavy duty vehicles in the state, which is expected to occur by the end of 2022, according to ARB staff.

NBB will be working with CBA to find a NOx reduction additive that will allow all feedstocks to blend to B20 year round. 
All those affected are especially encouraged to read the text of the regulations (listed below) and related documents. The Initial Statement of Reasons (ISOR) docs for both regulations were posted on the regulatory pages on December 30th, 2014 and will be helpful supplements to the regulatory language until the Final Statement of Reasons docs are posted (note that the ISOR docs do not include information on 15-day changes).
The LCFS regulation proposed text, incorporating all 15-day changes (PDF - 877K).  
The ADF regulation proposed text, incorporating all 15-day changes (PDF - 316K)

Nation's Strictest Regulatory Board 
Affirms Biodiesel as Lowest Carbon Fuel
America's Advanced Biofuel as much as 81 percent better than petroleum

Sep 28, 2015 I  By the National Biodiesel Board
Sacramento - In a fight to reduce greenhouse gas emissions, California's Air Resources Board has spent years looking for the cleanest, most efficient ways to cut carbon. Turns out, biodiesel is at the top of the list.

Friday the board finalized California's revised Low Carbon Fuels Standard. The new standard affirms America's Advanced Biofuel reduces greenhouse gas emissions by at least 50 percent and often by as much as 81 percent versus petroleum. This gives biodiesel the best carbon score among all liquid fuels.

"Biodiesel is the most sustainable fuel on the planet," said Don Scott, National Biodiesel Board director of sustainability. "Low carbon alternatives can also be low cost alternatives when we use diverse supplies of renewable resources.  This validates that California's carbon reduction goals are obtainable."

As part of the state's low carbon fuel standard, the Air Resources Board has refined comprehensive lifecycle analysis to quantify the carbon intensity of conventional and alternative fuels. More than seven years of analysis have gone into addressing questions including indirect land use change.   

California's lifecycle model incorporates all the impacts for producing a fuel's raw materials including conversion and transportation.  The model also includes the indirect economic impacts of growth in global agriculture - making it one of the most thorough and rigorous evaluations ever done to quantify the environmental footprint of biofuels.

The findings echo what the USEPA determined five years ago in establishing the federal Renewable Fuel Standard (RFS). Under that program, biodiesel qualifies as an Advanced Biofuel, with the US EPA analysis showing that it reduces carbon emissions from 57 percent to 86 percent.

"California's analysis, which has been validated by independent academic review, provides confidence that biodiesel is, without question, a more sustainable alternative for transportation fuel.  The commercial success of the growing biodiesel industry suggests goals to further reduce greenhouse gases and displace imported petroleum are appropriate and achievable.  With a focus on carbon reduction and the national policy to support it, biodiesel could reduce carbon emission by 40 million tons annually," said Scott.  

The estimates provided for likely fuel pathways include:

ULSD (standard diesel)
102.76 g/MJ
99 (CaRFG) g/MJ
Corn Ethanol
80.09 g/MJ
Compressed Natural Gas
79.46 g/MJ
Used Cooking Oil
Corn oil
51.83 g/MJ
19.87 g/MJ
32.83 g/MJ
50.23 g/MJ
28.68 g/MJ

These scores are reported in grams of carbon dioxide equivalent per megajoule of fuel. All off the feedstocks listed for biodiesel are used in significant volumes.  Weighting these scores by the amount of each feedstock used nationally in 2014, suggests that the average biodiesel in the market has a carbon intensity of 38.4 g/MJ.- giving it the lowest carbon intensity of any category of liquid or gaseous fuel, and making it competitive with electric vehicles as a carbon mitigation strategy.

Biodiesel is America's Advanced Biofuel and is made from readily available, renewable resources. Produced in nearly every state in the nation, the biodiesel industry supports some 62,000 jobs from coast to coast.   

Inspired Leadership 
Shepherds California's Climate Action Legislation

Despite unprecedented oil industry lobbying in year one of the 2015-2016 state legislative sessions, which just concluded, several important climate-related bills passed and are awaiting action by the Governor. 
AB 1032 (Salas) will remove barriers to biodiesel use by correcting a problem with the taxation of off-road dyed diesel. 
AB 692 (Quirk) requires each state agency that is a buyer of transportation fuels to buy at least 3% of very low carbon transportation fuels beginning January 1st, 2017 and increasing by 1% per year thereafter until 2024.
SB 350 (DeLeón), the target of a multimillion dollar lobbying effort by the oil industry that attempted to eviscerate the power of the California Air Resources Board with a poison pill, passed after the 50% reduction in petroleum use was removed. The hugely important target of 50% renewable electricity by 2030 for the state's three largest utilities remained intact. A recent impassioned news conference by the Governor, the Speaker of the Assembly, Toni G. Atkins, and President Kevin DeLeón revealed the zeal and commitment of these leaders to what they know will be a protracted battle. It's worth a watch!
SB 32 (Pavley),  to establish a 40% GHG reduction target by 2030 and codify the AB 32 goals of an 80% cut by 2050, will become a two-year bill. The author of this bill and the historic, inspired, and hugely ambitious original master legislation that has made California a world leader in climate action, Senator Fran Pavley, said in a recent news release that "Assembly Bill 32 in 2006, took two years of coalition-building to overcome opposition."


Making Clean Fuel and Raising a Son in Barrio Logan

New Leaf Logo
One day in 2011, 27-year-old David De La Peňa walked into New Leaf Biofuels on Newton Street in the Barrio Logan area of San Diego and asked for a job.

He had been working in construction, 50 miles away from his home, in San Marcos. As the recession slowly killed off construction jobs, he started to look for something close to his home in Barrio Logan. 

He had a new baby son and he needed to be near his family and needed to spend less on gas.
David had a lead on a job at a sandblasting plant down the street, so he started there and just kept going. "I went to 20 or 30 plants on Newton. I knocked on every door," he says.

New Leaf, a small plant that makes biodiesel out of recycled fryer oil from San Diego restaurants, hired him.

They put David to work in what they call "the yard," where a particular used fryer fragrance and a thin coat of cooking oil cling to everything. A couple of adopted street cats hang around waiting to be fed and the trucks regularly pull up to deliver oil. David started out doing maintenance, cleaning up and off-loading oil from trucks-sending the oil through the auger and shaker to clean it before it goes into giant tanks inside the plant.

Now, four years later, David has worked his way up to be a plant operator. He blends and tests the fuel, monitoring it on several computer monitors as it goes from fryer oil to a biodiesel that you can run in any diesel vehicle.

Because he can operate the whole plant and knows how to run the yard too, he's become a valued member of the staff. He's a quiet person with a gentle but determined demeanor that endears him to his boss and co-workers. But his job at New Leaf has been far from a sure thing. He's seen his co-workers laid off and he's been through two rounds of pay cuts as oil company lawsuits against California's  Low Carbon Fuel Standard (LCFS), together with constant stopping and starting of federal incentives by Congress, have provided an unstable market for biodiesel and alternative fuel startups like New Leaf.
"New Leaf lives and dies by the state and federal policies that allow biofuels to compete with fossil fuels," explains New Leaf's CEO, 38-year-old Jennifer Case.

New Leaf started in 2006 as a result of a federal tax credit signed by President George W. Bush in 2005. In 2006, California passed its clean energy law, AB 32, known as the Global Warming Solutions Act, which requires the state to reduce emissions and encourages a market for cleaner, lower carbon fuels like biodiesel. According to the Air Resources Board, fuel recycled from waste grease reduces greenhouse gas emissions by 82 to 88 percent compared to petroleum diesel.

The federal incentive for products like New Leaf's biodiesel is facing its fourth lapse. Congress reinstates it retroactively every time, but with quite a lag between lapse and re-adoptions that causes a lot of small biofuel plants to go out of business, Jennifer explains. That makes California's 
LCFS all the more important.

"We have to be competitive with fossil fuel. That's why these incentives exist. There's an added cost to blending biodiesel because the infrastructure doesn't exist. Without the incentives, there's virtually no way to make biofuels profitable," she explains.

Jennifer spends a lot of her time lobbying to keep in place the policies designed to overcome the market advantage giant fossil fuel providers enjoy, with their established and subsidized infrastructure and economies of scale, even as they get a free pass on their pollution costs. Sadly, the fact that biofuels are better for our air doesn't guarantee their success.

Jennifer was the first woman on the National Biodiesel Board and is a board member of the California Biodiesel Alliance. "I am passionate about this industry. I wouldn't have survived the last five years if I hadn't been," she says, as her blue Nikes step off the treadmill she keeps in her office in a humble building on the edge of the plant's yard.
"We're providing these jobs in an industry that's new and exciting but you have so much on your shoulders," she continues.

New Leaf has about 22 employees now. But last June, in the face of legal challenges to the LCFS, the company laid off half its staff, idled the plant back to one-third of its capacity and cut pay by 10 percent. Despite that, they got another investor, in large part because the LCFS looked like it would be readopted, Jennifer says.

Because of the pay cut, David, a single father, had to cut back on little trips he does with his four-year-old son, also named David.

But as things have improved, New Leaf restored everyone's salary and paid all of its employees back what they had lost while wages were cut. New Leaf also provides medical and dental benefits for David and little David, who looks like a little scholar in eyeglasses he's worn since he was a baby. Quiet and shy like his dad, the two have a special bond. His dad carefully holds his hand as they walk down the street.

Because he's taking care of his son with help from his family, working close to home is really important for David, who works the swing shift from 3 -11:30 pm. On the way to work, he drops little David off with his grandma, who lives two blocks from New Leaf. His aunt picks little David up at 4:30 and takes care of him until she goes to work at Children's Hospital at 6 a.m. David takes care of little David until he goes to work and the cycle repeats every weekday.

David's father and grandmother have lived in Barrio Logan for 40 years. Homes line one side of Newton St. and small industrial plants line the other. A few blocks from New Leaf, an amazing taco restaurant, Las Cuatro Milpas, draws visitors from all over and a line forms out the door and down the street every day at lunchtime, just a block from Chicano Park under the freeway overpass. The neighborhood organized to keep Chicano Park, where little David likes to play, from being developed. Every available cement wall and pillar is covered in beautiful bright colors, traditional Chicano murals commissioned from local artists. Chicano Park seems to embody both the urban grit and fierce local pride of Barrio Logan.

"People from this neighborhood knock on our door and ask for jobs all the time. We love that," Jennifer says.  David's uncle now works in the yard at New Leaf as well. And she hopes she can keep them both.

In July, California's Air Resource Board will look to formally readopt the LCFS but also improve and strengthen it. This is "the only shred of hope," Jennifer says. "We're just hanging in there."

NOTE: See the original article with great photos at:  http://upliftca.org/portfolio/david-de-la-pena/


French fries  Beautiful oil   French fries

CBA continues its work on behalf of the BIofuels Initiative, a low-carbon biofuels coalition effort to secure funding from Cap and Trade proceeds for in-state production and infrastructure. Though funding of this kind was not allocated in the Governor's original investment plan, we remain optimistic that our efforts are moving this agenda forward, and were pleased to see language regarding the value of low-carbon biofuels in the program's 2nd draft Investment plan. 

See lead article above. ADF rulemaking details are available here: http://www.arb.ca.gov/regact/2015/adf2015/adf2015.htm.    

See lead article above. LCFS rulemaking details are available here: http://www.arb.ca.gov/regact/2015/lcfs2015/lcfs2015.htm.     
The UC Davis Institute of Transportation Studies and the California Energy Commission conducted joint workshops on September 17-18 to discuss insights on the growth of biofuels and biomethane in California, progress achieved to date, critical barriers, and requirements needed to boost commercialization. CBA board members Russ Teall, Joe Gershen, and Harry Simpson were invited as speakers.

The State Water Board sent out a notice to underground storage tank owners and operators announcing that new revised federal UST regulations were issued on July 15th, 2015. According to the document, the Water Board is reviewing the federal regulations to see if new California statute and regulations are in order.  The notice says that a switch in fuels to a blend above B20 would require the owner to notify the CUPA 30 days prior and that owners/operators must demonstrate compatibility for as long as the substance is stored. Click here to download the notice. 

See our Regulatory Matters webpage for information on compliance issues.   

See article above.

Please contact the Washington office of the National Biodiesel Board (NBB) at 202-737-8801 for questions on these federal policy issues. Visit their Fueling Action webpage for more info.       

TAX INCENTIVE --- These two notes are directly from the NBB:

"Producer's Tax Credit Advocacy: 
NBB was among more than 2,000 businesses and organizations to sign a letter urging Congress to quickly pass a long-term tax extenders package that reinstates important tax provisions such as the $1-per-gallon tax credit. This is a powerful show of unity in the business community for stable, predictable tax policy. The letter was sent to every member of Congress. To view the letter and the businesses and organizations who signed it, visit here.

Please contact your members of Congress today and urge them to quickly reinstate the biodiesel tax incentive as a domestic production credit, as the Senate Finance Committee supported unanimously in July by adopting S. 1946. Talking points and a template advocacy letter for communicating with your lawmakers can be found  here on our Fueling Action advocacy website to help guide your discussions. See the documents on the right side of the page. We must make sure that lawmakers are hearing from our industry regularly about the importance of the tax incentive and the benefits of reforming it as a producer's credit."
CBA and its members have been working to get Op Ed letters published in local newspapers expressing the importance of the RFS to our state's biodiesel industry. We hope you'll join us and send us a link to your article soon!
  NBB Fueling Action Logo


ADM: Feeding your Food Business 
If you are reading this and are not yet a member, please Join Us! CBA offers several membership levels with the following annual dues.
Producer Board Member
* Production greater than 8 million gallons per year: $10,000
* Production less than 8 million gallons per year: $5,000

Marketer Board Member
* Sales greater than 8 million gallons per year: $10,000
* Sales less than 8 million gallons per year: $5,000

Other Board Member: $5,000
Applicants for CBA's Board of Directors must print and fill out the Voting Membership Application from our Join Us webpage and email or mail it to Celia DuBose at the address listed there.

NOTE: Dues amounts apply whether your business is based inside or outside of California and regardless of where your fuel is sold.

Non-voting memberships are as follows:
* Gold: $3,000
* Silver: $2,000
* Bronze: $1,000

INDIVIDUAL MEMBERSHIP (includes nonprofit organizations): $100
* Students/veterans: $25

Membership benefits include:
* Your company's logo, link, and description on our Members webpage (Business membership and above).
* Participation in CBA's in-person member meetings.
* Participation in policy discussions and legislative/regulatory visits in Sacramento.
* Internal email communications on important industry issues as they arise.
* A discount on CBA events.

Anyone can sign up to get this CBA monthly newsletter. Visit our Home page and add your email address (on the left -- scroll down).  
Just click on the "View CBA Email Newsletter Archive" button on our Home page (scroll down on the left).

Thank you for your commitment to biodiesel and for your time and effort on behalf of our industry. I look forward to continuing to work with you.    


Celia DuBose

Executive Director

California Biodiesel Alliance