Biofuel Companies Question ARB’s Inclusion of Indirect Effects in Low Carbon Fuel Standard

Jose Michael

More than two-dozen advanced biofuel companies, joined by researchers and investors under the aegis of the New Fuels Alliance, submitted a letter to the California Air Resources Board (ARB) questioning ARB’s intent to include indirect land use change (ILUC)—or any kind of indirect effects enforcement against biofuels—as part of the agency’s Draft Regulation for the California Low Carbon Fuel Standard (LCFS) unveiled last week in Sacramento. (Earlier post.)

Signed by 25 biofuel company executives and CEOs, investor Vinod Khosla, and Dr. Frances H. Arnold, the letter notes that the biofuels industry generally supports indirect effects research, including its subset indirect land use change, but warns that enforcing indirect effects prematurely or in a piecemeal way would be catastrophic for advanced biofuel development.

We are aware that proponents of including ILUC in the regulation argue that a preliminary quantification of ILUC is better than ignoring the impact all together; that “zero” is not the right number for ILUC for biofuels. While it is likely true that zero is not the right number for the indirect effects of any product in the real world, enforcing indirect effects in a piecemeal way could have very serious consequences for the LCFS. For example, zero is also not the right number for the indirect impact of producing a gallon of petroleum, using more electricity from coal and natural gas, producing advanced batteries and hybrid vehicles, or commercializing fuel cell technology. Yet, to date, ARB has not devoted any significant LCFS rulemaking resources to investigating the indirect effects of other fuels. If ARB is to enforce indirect, market-mediated effects, they must be enforced against all fuel pathways. The argument that zero is not the right number does not justify enforcing a different wrong number, or penalizing one fuel for one category of indirect effects while giving another fuel pathway a free pass.

—New Fuels Alliance letter

Earlier this year, 27 scientists and researchers expressed similar concerns in a letter to ARB, saying, “[a]s researchers and scientists in the field of biomass to biofuel conversion, we are convinced that there simply is not enough hard empirical data to base any sound policy regulation in regards to the indirect impacts of renewable biofuels production. The field is relative new, especially when compared to the vast knowledgebase present in fossil fuel production, and the limited analyses are driven by assumptions that sometimes lack robust empirical validation.

To be clear, the renewable fuels industry supports the ongoing effort to better understand the indirect effects of the energy choices we make. But the enforcement of indirect effects of any kind, given the complexity and relative infancy of the field, must be done carefully and in a balanced way. Some members of the UC scientific community want to include ILUC in the LCFS. But this is not a consensus position. In addition to the 27 signatories of the June 24 letter to ARB, Dr. Michael Wang of Argonne National Laboratory, one of the foremost experts in lifecycle carbon assessment (LCA) field and author of the GREET model being used as the framework for the LCFS, recently stated, “indirect land use changes are much more difficult to model than direct land use changes. To do so adequately, researchers must use general equilibrium models that take into account the supply and demand of agricultural commodities, land use patterns, and land availability (all at the global scale), among many other factors. Efforts have only recently begun to address both direct and indirect land use changes … [w]hile scientific assessment of land use change issues is urgently needed in order to design policies that prevent unintended consequences from biofuel production, conclusions regarding the GHG emissions effects of biofuels based on speculative, limited land use change modeling may misguide biofuel policy development.”

—New Fuels Alliance Letter

The New Fuels Alliance emphasized that there are two distinct categorical problems with the draft regulation: (1) the public policy decision to enforce indirect effects of any kind is unprecedented, was not ordered by the Governor or the Legislature, and has not been publicly vetted; and, (2) the science of “indirect land use change” is extremely imprecise, and is therefore unreasonably dependent on the assumptions made by ARB staff.

It is misleading to suggest that the decision to include indirect effects in the LCFS is a scientific one,” the group says. “It’s a public policy decision. But the science itself is suspect as well.

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