New Year Sure to Bring Greenhouse Gas Policies

By Shelby Neal | January 01, 2009
If you are like many people, following the debate over global climate change didn't make its way onto your list of New Year's resolutions. But let me give you a number that may cause you to reconsider: 10 billion. This figure represents the size, in gallons, of the diesel market that may be affected by state carbon reduction policies by the end of this decade. And since these policies are thought to result in B20 mandates (if biodiesel is deemed to be a low-carbon fuel) or complete bans on biodiesel (if it is not), you might want to rethink your New Year's to-do list.

If this is the first you have heard about the biodiesel industry being affected by climate change policy, you shouldn't feel too bad. Low-carbon fuel standards, as they are often called, are a relatively new phenomenon brought on by recent changes in the nation's political makeup. Allow me to explain.
Until fairly recently, Republicans ran the show, and only a minority of them believe humans are causing global climate change. Democrats, on the other hand, overwhelmingly believe in man-made climate change-91 percent of Congressional Democrats, in fact. Since they now control most state governments, the Congress and soon the presidency, this has become a "hot" topic.

While the 111th Congress will surely unveil a carbon reduction policy, states aren't waiting around for it as is often the case with policies thought to be popular with voters. California and Connecticut, for example, are already implementing low-carbon fuel programs. All told, some 30 states are in the process of implementing or seriously considering low-carbon fuel standard policies.

So how do we in the biodiesel industry capitalize on these policies? In a sense, it is pretty simple-just make sure biodiesel's carbon dioxide benefits are measured accurately. Most government studies conclude that biodiesel offers a carbon dioxide reduction benefit of 60 percent to 80 percent compared to petroleum-based diesel. That's pretty darn good, but this is before including a factor for a controversial theory called indirect land use change (ILUC), which is championed by the now-powerful environmental lobby.

The ILUC theory goes something like this: U.S. biodiesel policy increases crop prices by raising demand for soybean oil. Brazilian farmers, eager to cash in on high prices, convert rainforests into soybean fields. Since rainforests sequester lots of carbon dioxide, a carbon penalty is attributed to biodiesel that renders it worse for the climate than even petroleum-based diesel fuel.

The most noteworthy problem with this theory is that very little actual evidence exists to support it. Despite this rather obvious problem, however, some politicians and government regulators are rushing ahead and including significant factors for ILUC, simultaneously pleasing the environmental community and puzzling the scientific one.

For our part, the NBB remains committed to a scientific, fact-based approach. That is why we are funding a substantial amount of third-party research on biodiesel's life cycle carbon dioxide emissions. Ultimately, we understand that state low-carbon fuel standard policies mean hundreds of millions of gallons of potential sales to our members, so we are doing everything possible to make sure biodiesel is accurately represented. While winning this issue in the states will be a huge challenge, and the outcome is far from assured, our New Year's resolution is to do everything possible to bring about victory.

Shelby Neal
Director of State Regulatory Affairs
National Biodiesel Board
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