This month's guest editorial comes from Tom Waterman, publisher of The Ethanol Monitor, found at www.oilintel.com. The piece is reprinted with permission from the April 24th edition of The Ethanol Monitor.

 

On Thursday, April 23, the California Air Resources Board adopted the Low Carbon Fuel Standard calling for the reduction of greenhouse gas emissions from California’s transportation fuels by 10 percent by 2020. The new regulation is aimed at diversifying the variety of fuels used for transportation. It will boost the market for alternative-fuel vehicles and achieve 16 million metric tons of greenhouse gas emission reductions by 2020. ARB representatives describe the measure as the most important early-action called for under AB 32, the Global Warming Solutions Act (Nunez, 2006), according to the Air Resources Board.

“The new standard means we can begin to break our century-old dependence on petroleum and provide California with greater energy security” said ARB Chairman Mary D. Nichols. “The drive to force the market toward greater use of alternative fuels will be a boon to the state’s economy and public health – it reduces air pollution, creates new jobs and continues California’s leadership in the fight against global warming.”

According to ARB analyses, to produce the more than 1.5 billion gallons of biofuels needed, over 25 new biofuel facilities will have to be built and will create more than 3,000 new jobs, mostly in the state’s rural areas. Production of fuels within the state will also keep consumer dollars local by reducing the need to make fuel purchases from beyond its borders.

This very objective – to produce the biofuels in California – seemed to encourage the effort by ARB staff to apply damaging Indirect Land Use calculations to corn-based ethanol, as it would eliminate it as a fuel source in the state. I don’t think the staff purposely penalized corn-ethanol, but in giving any credibility to the Searchinger conclusions – which they obviously did – forced them to compromise on the final assessment of penalties to ethanol, as it landed almost in the middle of the “0” rate offered by the Renewable Fuels Association and the high end level put forth by Searchinger. That underscores the cloudy science of Indirect Land Use Changes.

As I watched the hearing unfold on Thursday, there were many observations I could make, not the least of which was the California Air Resources Board in large part has a very high sense of self-importance. The hearing was barely an hour old when the congratulations to staff were echoing through the auditorium for work done that was hardly laudable. Even as one Board member criticized staff for sloppy work, especially in the area of Indirect Land Use issues, along with simplistic charts and confusing explanations, the rest of the Board talked about how “superb” the effort was. There was one voice of reason on the Board who stated that letters from more than 300 very reputable scientists disputing the inclusion of cloudy science about Indirect Land Use issues should not be ignored.

Obviously this group senses the magnitude of their decision, and instead of being humbled by the prospect that it could impact millions of people and businesses, they seemed almost giddy at the prospect of leading the nation. Daniel Sperling could hardly contain his glee as he noted he was getting on a plane and flying to Washington to testify before Congress about the nation adopting a LCFS, using California as the model.

ARB’s Chairman Mary Nichols at one point recounted a conversation a few years ago with a noted scientist about biofuels and she remembered saying to him that “we should just outlaw biofuels that are grown.” His response was, and I’m paraphrasing, “good luck, but I would get on board if you had the nerve to do it.”

That U.S. based ethanol would be singled out in the Board’s effort to reduce the carbon fuel standard was written on the wall a few years ago and this “staff work” was a means to an end. Nichols kept saying that she had “reservations” about the prospect of a LCFS when she came to the position in 2007, as the work was already underway, but you wouldn’t know it by her gushing over their triumph.

She happily recounted every conversation and meetings she had with various stakeholders, as if any of these discussions had any bearing on the outcome. This Board, with the exception of two members, had long ago decided that they would change the world and disregard any scientific evidence or doubt about their conclusions. Several members did note that they could be wrong, but that worry did not change the outcome.

The regulation requires providers, refiners, importers, and blenders to ensure that the fuels they provide for the California market meet an average declining standard of ‘carbon intensity.’ This is established by determining the sum of greenhouse gas emissions associated with the production, transportation, and consumption of a fuel, also referred to as the fuel pathway.

However, it is not clear that ARB will ever truly consider the true sum of GHG emissions of fuels other than ethanol. Here’s some irony. The Brazilian Sugarcane Industry Association (UNICA) was quick to applaud the LCFS saying that while it continues to provide evidence that sugarcane ethanol’s carbon intensity is even lower than initially calculated by CARB, today’s decision means sugarcane ethanol will be in greater demand in California in the years to come.

“The verifiable 90 percent greenhouse gas reduction delivered by sugarcane ethanol provides a source of low carbon fuel that achieves the goals of California’s ambitious regulation, with room to spare,” said UNICA President & CEO Marcos Jank following the vote in Sacramento.

Corn-based ethanol is responsible for deforestation in Brazil’s rainforest, and naturally other worldwide land use issues. There are some higher ILUC penalties assigned to Brazil’s sugarcane industry, but the energy intensity is lower, thus an overall lower carbon assessment than U.S. produced corn-based ethanol.

As the chart here shows, the regulations require a sliding scale where reporting measures only are required in 2010, while a carbon intensity for gasoline and all substitute fuels falls annually through 2020 to a target of 86.27 grams of CO2 per megajoule (g/MJ). Today, California says that unleaded gasoline (CARBOB) is assessed at about an average 95.90 g/MJ while corn-based ethanol, produced in a dry mill plant in the Midwest is assessed at 69.4 g/MJ, with an added 30 g/MJ ILUC penalty, for a total of 99.4 g/MJ.

I have read the study again and again, and I cannot see how the staff arrives at 30 percent of the carbon intensity of corn-based ethanol can come from Indirect Land Use Changes. It defies logic, and obviously defies science.

At the end of the day, it seems to me that U.S. produced corn-based ethanol is punished more for deforestation of Brazil’s rainforest than is Brazil. While implementation is not yet clearly defined as the Board will review the contentious land use issues and perhaps adjust their conclusions by the end of 2009, but the ethanol industry has a challenge to push this issue because the Board resolved to review changes to the standard every three years thereafter.

Other states will surely latch on to the new California standard as evidenced by statements from a coalition 11 Northeast states including 10 members of the Regional Greenhouse Gas Initiative Massachusetts, New York, Connecticut, Delaware, Maine, Maryland, New Hampshire, New Jersey, Rhode Island, and Vermont, plus Pennsylvania. Here’s the problem. Very little coal is consumed in California, but plenty of coal is consumed in the Northeast U.S., which would virtually eliminate electric plug-in vehicles from the mix, if there was a fair carbon density penalty assigned. Sure the administration wants to upgrade the national grid to allow for more wind and solar power, but it won’t happen overnight.

California officials say they must assess the full climate change impact of corn ethanol under a law requiring a big cut in carbon emissions from transportation fuels. “CARB must encourage the use of cleaner alternatives like electricity, hydrogen and cellulosic ethanol,” board spokesman Dimitri Stanich said recently.

It is all well and good to try and save the world, but let’s not forget that without corn-based ethanol, there will not be cellulosic ethanol. The other “alternatives” including electric cars will require many more years of research, infrastructure advancements, etc., to provide meaningful reductions in carbon emissions. As long as coal – specifically dirty coal – is king, electric plug-ins are not the answer, and in fact, when studies are done that consider coal provides the U.S. with almost half of its electricity, we may see that electric vehicles are not the answer at all. Perhaps if “cold fusion” does in fact work, or a battery system that never needs an electric charge is developed, we might be on to something. But in the meantime, the ice is melting and we are still spending a lot of money to guarantee the flow of oil worldwide. CARB has just done its best to strip away the progress on reducing dependence on foreign oil.

CARB insists that if increased production of corn-based ethanol in the U.S. raises corn prices and accelerates the conversion of rainforests and other land to farmland worldwide, greenhouse emissions and loss of the carbon sink associated with such efforts must be included in biofuel’s total emissions. “Losing a carbon sink would defeat the purpose of this regulation to reduce greenhouse emissions,” Stanich said.

However, as I have asked in the past, where are the considerations for using oil? Where are the conclusions about doing nothing?