Comment Log Display

I am writing to share a number of suggestions members of the
National Biodiesel Board (NBB) believe would enhance the “Proposed
Regulation to Implement the Low Carbon Fuel Standard,” published
March 5, 2009.  Thank you, in advance, for your consideration of
our industry’s recommendations.

First, I would like to express our appreciation for the high level
of cooperation shown by the Air Resources Board (ARB) staff up to
this point in time.  While we continue to believe the
implementation schedule for diesel is unnecessarily back loaded and
we continue to have one significant difference of opinion on the
lifecycle assessment for soy-based biodiesel, when taken as a
whole, we feel the ARB is doing a commendable job, particularly in
light of the immensely challenging time constraints the agency has
been given.  So it is on this basis, and with the understanding
that ARB staff will continue to work collaboratively on potentially
difficult issues like indirect lifecycle greenhouse gas (GHG)
impacts, that we offer our support for moving forward with the
draft regulation.

With regard to specific comments, the NBB wishes to communicate
the following points related to issues that will be considered by
the board for approval this week:

1.	We continue to be puzzled by the ARB’s resistance to
accelerating the diesel implementation schedule, particularly in
light of a study we forwarded to staff which conclusively shows
price and supply should not be concerns.  It is important to note
that, under the current schedule, the low carbon fuel standard
(LCFS) will not begin requiring more biodiesel to be sold in the
state than is currently sold until at least the fourth year of the
program.  And California biodiesel plants’ current production
capacity will likely not be exceeded until the fifth year of the
program.  Ultimately, this overly cautious implementation schedule
will only serve to delay development of a California-based industry
that has significant potential for improving the environment and
supplying green jobs during a historically challenging economic
time.


2.	With respect to the CA-GREET model for soy-based biodiesel, the
ARB should, in our view, use a consistent co-product allocation
method.  Employing the displacement method for corn-based ethanol
and the energy allocation method for soy-based biodiesel defies
logic given their inherent and rather obvious similarities.  No
other government does it this way.  This decision is particularly
harmful because the chosen methods result in the worst possible
assessment for each fuel.  And in the case of soy-based biodiesel,
the error is compounded because the ARB adds GHG emissions
associated with the inefficiency inherent in livestock feed uptake
to the oil/biodiesel side of the equation.  This is illogical since
the amount of energy that animals metabolize has nothing to do with
the oil/biodiesel side of the GHG assessment; those GHG emissions
should be counted on the meal side since they are related 100
percent to livestock feeding within the animal production industry.
 Further, it is important to understand that soybean oil has
historically been viewed by the soybean industry as a by-product
rather than a co-product.  Even with the development of biodiesel,
the majority of the value of a soybean continues to reside in the
meal.  As such, it is common knowledge that farmers grow soybeans
for the meal and not the oil.  This makes it doubly inaccurate to
add GHG emissions associated with meal/livestock feed to
oil/biodiesel.

3.	With respect to the lifecycle analysis for direct emissions
related to petroleum-based diesel production, it is difficult to
understand why the ARB would only assess the fuels that are
produced in-state, since these fuels merely comprise one-third of
the fuels sold in California.  It has been said that this data is
difficult to obtain, so one is left to conclude that the default
value in GREET is simply being used by the ARB for the sake of
convenience.  Given that many view GREET’s assessment of petroleum
to be favorable to that industry, we urge the ARB to reconsider its
decision to not conduct a full lifecycle assessment of
petroleum-based diesel fuels produced outside California.

4.	We wish to point out that the “system boundaries” of the direct
emissions models for petroleum-based diesel and soy-based biodiesel
are inconsistent in so far as GHG emissions related to oil
exploration and oil well drilling are not included in the ARB’s
assessment while GHG emissions associated with soybean planting are
included in the ARB’s emissions figure.  Clearly, a direct parallel
exists between oil well drilling and soybean planting. 
Unfortunately, this goes unrecognized in the ARB’s model,
compromising its accuracy.  As such, we respectfully request that
this difference in system boundaries be remedied by adding GHG
emissions associated with oil exploration and drilling to the
petroleum-based diesel total.

Regarding issues related to indirect impacts associated with GHG
lifecycle analysis that were included in the draft regulation but
will not be considered for approval by the board this week, we have
the following comments.

1.	We respectfully urge the ARB to take its time with regard to
work on indirect land use change (ILUC) modeling.  While we support
investigating this issue fully, and wish to participate in and
contribute to the effort in any way possible, we are keenly aware
that the data and models needed to properly assess this issue are
not yet available.  Since the LCFS is not, in a real sense,
implemented until 2011, and more biodiesel will not be required
until 2014 than is currently sold in the state, we see no reason to
rush to judgment on this issue in the very near term.  Rather than
prematurely publishing a half-baked result, we recommend
investigating ILUC until January of 2011 when the LCFS is actually
implemented but could still be met quite easily with
California-produced ultra low carbon biodiesel from recycled
cooking oil.  This approach would be much more in keeping with
generally accepted scientific principles.  It is also interesting
to note that the European Commission is employing just such a
strategy by moving forward with implementation of its renewable
fuels mandate, but not including a factor for ILUC until 2017. 
While we are not advocating for the ARB to wait until 2017 to
address ILUC, we do feel strongly that a one-year deferral would
inform thought on this issue significantly by providing more time
for data gathering and model improvement and development.

2.	In our view, the fact that the ARB has indicated it will not
perform an assessment of indirect GHG impacts associated with
petroleum-based diesel represents a flaw in the agency’s analysis. 
While ARB staff are on record indicating this information is
difficult to find and would likely result in only minor
modifications to petroleum’s GHG reduction assessment, the same
statements could also be made about soy-based biodiesel as it
relates to global land use changes and the causes of those changes.
 In the latter case, rather than using a factor of zero as the ARB
has for petroleum-based diesel, the agency has, in truth, simply
ventured a guess to derive a “temporary” number – a number which,
by the way, is quite large.  Ultimately, this is clearly an
instance in which petroleum diesel and biodiesel are treated very
differently, resulting in a less accurate analysis, in general, and
a less favorable analysis for biodiesel, in particular.

3.	The ARB does not include historical yield trends in its
modeling.  With all due respect, this is a catastrophic error that
could distort the modeling results by a factor of 80 percent or
more.  At the most recent ARB public workshop, John Sheehan from
the University of Minnesota presented data from a model he
developed with the Natural Resources Defense Council which showed
that once a historical yield trend is included in the analysis, the
ILUC factor becomes zero because the higher productivity of
agricultural land means there is more than enough crops available
to address both energy and food needs.  The NBB, as strongly as
possible, encourages the ARB to reconsider its position on this
issue.  Although the ARB’s current approach is simpler and easier,
it distorts the final results immensely, perhaps to the point of
needlessly cancelling the only compliance pathway capable of
meeting the ten percent diesel reduction target.

4.	As a follow-on to point number three above, the ARB should
recognize the GTAP model’s major weakness – that it assumes supply
and demand are always in equilibrium.  The ARB should address this
shortcoming by adding a component to the model that can account for
increasing yields, which would allow the model to show greater
supply than demand over the long-term.  Since substantial data
exists showing supply and demand in the agriculture industry are
never in balance, it is difficult to understand why the ARB would
use this model for long-term forecasting.  (Notably, one of the
ARB’s own peer reviewers made this same point in his recent
response to the draft regulation by stating that GTAP should not be
used for forecasting periods longer than 15 years).  This
limitation of the GTAP model is precisely why the ARB was unable to
verify its ILUC model against 2001-2007 corn data.  Of course, this
is not entirely unexpected since the GTAP model was never intended
for the purpose for which it is being used by the ARB.
5.	Page X-4 of the proposed regulation states that “The lowest
cost way for many farmers to take advantage of these higher
commodity prices is to bring non-agricultural lands into
production.”  This assumption causes the ILUC model to predict that
a significant amount of new land will be brought into agricultural
production, artificially increasing the ILUC factor and thus
decreasing biodiesel’s GHG benefits.  We would be interested in
seeing any data the ARB has that shows clearing land for additional
plantings is less expensive than improving agricultural practices
such as purchasing higher quality seed varieties.  Based on our
calculations, the math does not come close to supporting this
assumption, meaning the ARB believes farmer-businesspeople will
consistently – and on a long-term, worldwide basis – make decisions
counter to their economic best interest.

6.	With respect to GHG modeling, the ARB mentions the words “full
transparency” in the draft regulation on multiple occasions.  We
are pleased to state that this has been the case with regard to the
direct emissions model, CA-GREET.  To date, however, this has not
been the case with respect to ILUC/GTAP modeling.  ARB staff have
indicated at public meetings that the GTAP model is publicly
available.  Unfortunately, this is only technically true because to
gain access to the model one has to pay Purdue University a sum of
approximately $9,000.  And even if one musters the financial
resources to access the GTAP model data, he or she still would not
know what assumptions had been changed by ARB staff and contractors
because that information has not been made available to the public.
 Given the extreme importance of the ILUC modeling effort to the
biodiesel industry and the fact that the ARB appears to be moving
forward on this issue at a very rapid pace, we would hope all data
related to this work would be made publicly available in the very
near term so that organizations such as ours could participate
meaningfully in the effort.  As it stands currently, we have
contracted with a noted expert in the field to analyze ARB’s work
who is unable to do so because no significant information has been
released.

7.	While we have a high level of confidence in the intellectual
integrity of the ARB, we cannot help but note that most governments
and organizations which employ a peer review process mismanage it
by hand picking a few like-minded junior professors from a small
set of geographically diverse institutions.  Typically, these
exercises have the effect of rubber stamping the agency’s views
rather than informing the process.  As such, we urge the ARB to be
exceptionally thoughtful with regard to how it manages the peer
review process.  Specifically, we suggest a fully transparent and
unbiased process that focuses on soliciting opinion from the
premier North American experts in this area.

Thank you, in advance, for your kind consideration of our
comments.  Again, we very much appreciate the cooperation of ARB
staff and the opportunity to work with the agency on this important
policy.  If you should have any questions, I hope you will feel
free to call me at any time.