Plan Would Mandate Fuels Have Less Carbon
Plan would mandate fuels have less carbon
Ethanol industry fears punishment
April 21, 2009
SACRAMENTO – California is on the verge of adopting another landmark policy to curb greenhouse gas emissions and reduce demand for imported oil, this time by requiring fuel providers to cut the carbon intensity in gasoline and diesel by 10 percent by 2020.
If it approves the plan Thursday, the state Air Resources Board will extend its reach far beyond the tailpipe and take into account the emissions generated at every step of production – not just for petroleum, but also for cleaner-burning substitutes such as ethanol and other biofuels.
“For the first time, it holds fuel providers accountable,” said Bonnie Holmes-Gen of the American Lung Association of California, which supports the plan.
The goal, regulators say, is to reduce greenhouse gas emissions linked to global warming by 16 million tons and replace up to 3 million gallons of oil annually with alternative fuels.
But the approach has raised alarms from San Diego to Brazil. Farmers, scientists, investors and even a former national security adviser argue that the proposal could punish the struggling corn ethanol industry. In turn, that could discourage investment in alternatives and set back national efforts to develop biofuels that could help curb the nation’s appetite for oil.
“To put this burden on biofuels threatens to slow down or even preclude development of the biofuels industry precisely at the time we need to make the transition to the next generation of fuels,” said John Howe, a spokesman for Verenium, a Massachusetts-based company that operates San Diego-area labs exploring new sources of biofuels other than crops.
The air board’s proposal is another in a string of aggressive moves to reduce greenhouse gas emissions.
This one also provides more certainty, officials say, for those involved in California’s shifting transportation fuels market as they set a new course based on availability, demand and profits through 2020.
“What we’re trying to put in place is a durable and doable policy that sends the right investment signals,” said Anthony Eggert, the air board’s science and technology policy adviser.
In doing so, regulators hope to accelerate the production of the cleanest blends of transportation fuels, both gasoline and diesel, without forcing the industry to provide a specific type or mix.
Gasoline, different ethanols, liquefied natural gas and hydrogen, among others, are welcome as long as the overall carbon content of the fuel is reduced. Providers also could receive credits for investing in even cleaner fuels, such as battery-powered vehicles or waste-to-energy plants.
“The marketplace is going to decide which fuels are going to be the winner,” Eggert said.
Ethanol producers and some biofuel makers say they will be the losers.
Silicon Valley venture capitalist Vinod Khosla and former California Secretary of State Bill Jones, along with other influential ethanol industry leaders, urged Gov. Arnold Schwarzenegger to weaken the proposal during a private meeting last month.
Schwarzenegger had issued an executive order in 2007 laying out the 10 percent reduction goal. Last week, he suggested the state may need to be “flexible in some areas so we don’t chase business away or make businesses close down . . . We are working with everybody together to make sure we do it the right way.”
Much of the debate centers on grading ethanol. The new standards would assign poor grades to ethanol produced in coal-fired plants, or that displace fields once used for food production.
Regulators also want to take into account emissions indirectly generated from producing biofuels, such as the additional emissions generated when rain forests are cleared. The damage is twofold: the rain forest no longer sequesters carbon dioxide and the land is usually converted to grow crops for ethanol, such as Brazilian sugarcane.
“The real strength of this standard is it takes a comprehensive cradle-to-grave approach,” said Mary Nichols, the air board’s chairwoman.
But Tom Buis, chief executive officer of Growth Energy, a coalition advocating ethanol, insists that corn-produced fuel is being unfairly singled out.
“We’re not saying, ‘California, bail us out,’ ” he said. “We’re saying, ‘California, treat us equally.’ ”
President Ronald Reagan’s national security adviser, Robert McFarlane, warned in a letter to the governor that the complex standards could scare away investment in biofuels.
McFarlane, now part of the Washington-based Truman National Security Project, wrote: “This in turn will prolong the United States’ reliance on fossil fuels and deepen the damage caused by both our reliance on oil and by climate change.”
Corn ethanol interests also argue that they offer a bridge to the newer generation of biofuels that show promise, but are not ready to fill gaps in the market.
One of those is the emerging waste-to-fuel industry. Those on the technology’s ground floor see the state’s standards generating demand for their alternative fuels and spurring new investment. “This technology is ready for prime time,” said Ted Kniesche, a vice president of Fulcrum BioEnergy, which will open a biofuels plant east of Reno to turn municipal solid waste into 10.5 million gallons of ethanol a year.
But that doesn’t mean ethanol from corn will be squeezed out immediately, particularly since separate federal renewable fuel goals call for 15 billion more gallons from corn-based ethanol, he said.
“There’s no doubt corn ethanol will be part of the mix,” Kniesche said.
Holmes-Gen of the lung association advocates a quick transition from corn ethanol.
“The air board’s standard is a protection against these fuels that are not sustainable,” she said. “There is a competition between food and fuel in the marketplace. It’s a bad trend.”
Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita. Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol. Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program. Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector. On January 20, 2009, Florida Energy & Climate Commission amended RET Grant Agreement S0386 to increase Renergie’s funding from $1,500,483 to $2,500,000. By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is renewable, more economical, cleaner, and more efficient than unleaded gasoline. Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.