Web exclusive posted Oct. 27, 2008 at 11:37 a.m. CST

Just days after releasing the draft regulation for the California Low Carbon Fuel Standard, the California Air Resources Board received a letter from members of the New Fuels Alliance, an organization of advanced biofuel developers and supporters who are calling into question the board's intent to enforce indirect effects.

The letter was signed by executives and chief executive officers from 25 biofuel companies, including New Generation Biofuels, Renewable Energy Group, Sustainable Biodiesel Alliance, and Primafuel Inc. Leading advanced biofuel investor Vinod Khosla with Khosla Ventures, and top advanced biofuel researcher Dr. Frances H. Arnold also signed the letter.

The letter noted that the industry generally supports research on indirect effects of any kind, including CARB's subset indirect land use change (ILUC), but warned that enforcing indirect effects prematurely or in a piecemeal way would be catastrophic for advanced biofuel development. "There is no model today that comes close to capturing the interplay of economic, institutional, technological, cultural and demographic variables inherent with quantifying the indirect impact of any fuel," the letter stated.

"The biofuels industry is firm in its commitment to produce sustainable fuels," said Brooke Coleman, executive director of the New Fuels Alliance. "But we are equally adamant that renewable fuels be subjected to the same regulatory standard as other fuels participating in the low carbon fuel standard (LCFS). As it stands today, biofuels are held to a higher standard than all other fuels, including oil."

According to the alliance, the proposed LCFS regulation would be the first in history to enforce indirect, market-mediated effects against any product in the world, and to date, the regulation only applies indirect effects against biofuels. "For months CARB has been promising to investigate the indirect, market-mediated effects of other fuel pathways," Coleman added, "but it hasn't happened."

Earlier this year, 27 leading scientists and researchers expressed similar concerns in a letter to CARB, that said "[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 relatively 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."

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 California governor or 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."

Proponents of including indirect land use change in the LCFS insist that indirect land use change impacts exist, and therefore must be included. But the New Fuels Alliance letter directly questioned this rationale. "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," the letter stated. "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."

"We have a very difficult situation emerging here," Coleman said, "in which the author of the GREET model on which the LCFS is based -- Dr. Michael Wang -- says that today's biofuels are not causing indirect land use change in other countries, while ARB staff is proposing to penalize today's and tomorrow's biofuels for indirect land use change in other countries. And while we debate who's right, we are nowhere with regard to analyzing and discussing the indirect effect of other fuel pathways."

"We are not even close to understanding the indirect effects of all these fuels, indirect land use change included, well enough for a regulation to assign a carbon score to a single gallon of fuel," added Duncan McFetridge, a spokesman for the California Renewable Fuels Partnership, which is affiliated with the New Fuels Alliance. "The GTAP model being used by CARB was not designed or peer-reviewed for this type of work." The New Fuels Alliance believes that the right policy outcome is to enforce the LCFS based on direct impacts, including direct land use change, and set deadlines for investigating the various indirect impacts of the multiple fuel pathways.

"It is very difficult to buy into the hysteria that biofuels are today causing Brazilian rainforest deforestation when exports of corn and soybeans have not dropped in recent years and the prices of these commodities track up and down with oil prices not biofuel demand," Coleman added. "So before any of this starts happening in the real world let's take the time to get it right, for all fuels."

"The regulatory actions in California are critical not just because of the size of the state's fuel market and the ongoing need for affordable motor fuel, but because many other states and regions in the country are looking to California for leadership on this issue," McFetridge said. "For CARB to pick winners and losers, by virtue of holding certain fuels to tougher standards, goes against the very intent of the LCFS."

For additional information, including copies of the letters cited, visit http://www.newfuelsalliance.org/.