April 15, 2009 - Washington – A group of 12 leading advanced and cellulosic biofuels companies today urged the state of California’s Air Resources Board (ARB) to delay the inclusion of indirect effects, including indirect land use change, in its Low Carbon Fuel Standard (LCFS).

Agreeing that broad commercialization of lower carbon fuels is essential, the companies cautioned ARB that their current methodology unfairly penalizes first- and second-generation biofuels in favor of petroleum and threatens the development of next generation ethanol technologies.

In written comments submitted today to ARB, the companies state: 

“We strongly recommend the delay of inclusion of indirect effects in the LCFS regulation until more appropriate analytical tools are developed and rigorous peer review is conducted. Additionally, if ARB is truly committed to fairly enforcing market-mediated effects on a level playing field, the Board should immediately initiate a comprehensive research effort that examines the indirect effects of all fuels.”

Further, the companies point out that selectively assigning penalties for unproven indirect effects would chill investment in the next generation of biofuels and erode market certainty. To that end, the letter states: 

“The successful development, commercialization, and sustained production of second-generation biofuels is largely contingent upon continued market opportunities for the first generation of biofuels. Securing financing for second-generation biofuels projects in today’s economy is challenging enough; but the negative signal sent to potential investors by the enforcement of selective and questionable penalties against biofuels may be insurmountable.” 

This critique comes from those companies that are actually investing significant resources to develop cellulosic and advanced biofuel technologies. Their position directly contradicts the point of view of several California leaders, including ARB member Dan Sperling who recently told the Sacramento Business Journal that ARB’s current methodologies will help biofuels, “especially those that use cellulosic or biomass feedstocks.”

At the heart of the companies’ concerns is the asymmetrical application of penalties for highly uncertain indirect carbon effects. These penalties are applied only to liquid biofuels and not to petroleum or other fuels like electricity for plug-in vehicles. For example, ARB has overlooked many direct and indirect greenhouse gas impacts of petroleum production such as methane flaring, methane emissions from tailing ponds, and certain other emissions from other oil refinery operations.

The comments to ARB were jointly submitted by Abengoa Bioenergy; BioEnergy International, LLC; BlueFire Ethanol Fuels, Inc.; California Ethanol & Power, LLC; Ceres, Inc.; Coskata; Iogen Corporation; Novozymes; Pacific Ethanol; Qteros; Verenium; and ZeaChem Inc. All of these companies are members of the Renewable Fuels Association.

The comments will be available on ARB’s website shortly at http://www.arb.ca.gov/lispub/comm/bccommlog.php?listname=lcfs09.

A copy can also be found here.