California Biodiesel Alliance Response to Air Resources Board Draft Biodiesel Policy

Here is a copy of the letter the CBA sent ARB regarding the draft biodiesel policy.

June 23, 2006

VIA EMAIL

Robert Okamoto
Industrial Section
California Air Resources Board
Sacramento, CA

RE: Biodiesel Policy

Dear Mr. Okamoto,

The California Biodiesel Alliance (CBA) strongly supports the inclusion of biodiesel into the California transportation fuels portfolio. We applaud the Air Resources Board’s (ARB) draft biodiesel policy. The policy will begin the process of breaking down the regulatory logjam biodiesel has faced in California.

The California Biodiesel Alliance (CBA) is a diverse association of biodiesel feedstock suppliers, producers, fuel marketers and distributors, technology providers, fuel retailers, consumers and advocates. The CBA is affiliated with the National Biodiesel Board (NBB) as the California State Chapter with support from and direct access to the NBB and its resources. Our mission is to promote increased use of high quality renewable biodiesel in California.

We would like to draw your attention to our strong support of the following specific items in the draft policy:

First, we strongly supports ARB's proposal to "consider B20 and below as California diesel fuel."

Second, we strongly support ARB's proposal to "allow use with verified technologies."

Third, we strongly support ARB's proposal to "initiate biodiesel research and study the impact of biodiesel use in California." We encourage ARB to publish the specifics on what tests will be done, who will be expected to pay for them (state vs. industry) and a timeline for such testing. Providing a road map for this process will be a great assistance to the biodiesel industry and other stakeholders.

We would also like to draw your attention to a few specific items in the draft policy where we have concerns.

First, we are concerned about the uncertainty that biodiesel blends between B21 and B50 face. The ARB needs to establish a procedure to remove this uncertainty as soon as practicable. Blends between B21 and B50 are important and need your support. Such blends are currently being used by Marin County and both Santa Monica and San Francisco have plans to begin using such blends in the near future. These blend levels are frequently sought by biodiesel users who are motivated to use higher blends as a means of further reducing emissions and increasing the renewability of their diesel fuel. B21-B50 are common blend levels that fleets use when implementing staged biodiesel programs where they start with lower blends like B20 and slowly increase the percentage of biodiesel in the blend until they reach blends up to B100 (which as you know is really B99.9 for excise tax reasons).

Second, the draft policy states that "NOx emissions may increase." We greatly appreciate ARB's recognition of recent testing data that shows NOx emissions increase, decrease, or remain the same depending on the biodiesel feedstock, engine type and engine duty. We encourage ARB to revise the statement "NOx emissions may increase" and replace it with something more nuanced along the following alliance: "recent data indicates that NOx emissions may increase or decrease depending on a number of factors including, but not limited to, biodiesel feedstock, engine type, engine duty and testing protocols.”

Third, we would appreciate some clarity and around the statement "widespread use of biodiesel may require ARB to set specifications to ensure CARB diesel emissions benefits." As you know, regulatory uncertainty is harmful to the growth of the emerging biodiesel industry. Accordingly, anything you can do to reduce uncertainty would be greatly appreciated.

We would like to take this opportunity to remind you of some of the key benefits of biodiesel.

Including biodiesel in the California transportation fuel portfolio will:
· Take the lead to meet Governor Arnold Schwarzenegger's GHG reduction and biofuel production goals;
· Lower costs to clean the air, ground and waterways of diesel pollutants and improperly disposed waste; and
· Add to the state’s job and tax base by supporting Californian and American farmers;
· Decrease fleet maintenance costs while increasing employment and innovation within the renewable energy sector;
· Assist in the transition toward a diverse transportation fuel portfolio necessary for the growth of our economy.
· Reduce health care costs to state residents caused by diesel pollutants;

Biodiesel is the fastest growing alternative fuel in the US market. It:
· Is a clean burning renewable fuel,
Can be produced in California using crops grown in California that will benefit California farmers (canola, mustard, cotton seed, walnuts, flax, etc.);
· Contains no petroleum, but it can be blended at any level with petroleum diesel to create a biodiesel blend;
Adds lubricity to Ultra Low Sulfur Diesel without the risks associated with un-tested additives
Mitigates or reduces many of the problems of diesel including emissions and bio-contamination from spill, and
· Is simple to use, biodegradable, nontoxic, and essentially free of sulfur and aromatics.

In 1998, the National Renewable Energy Lab (NREL) showed the ratio of energy in biodiesel to fossil energy used to produce it was 1:3.2. A recent study of energy balance by the University of Idaho demonstrates a slightly higher energy balance of 1:3.8. These energy balance numbers are based on soy crops. Many alternative feedstocks can be used for biodiesel production such as animal fats, inedible kitchen greases and experimental algae that dramatically increase the energy balance and carbon sequestration ratios.

Biodiesel diversifies our energy supply and stabilizes our fuel prices. While biodiesel has historically cost slightly more than petroleum diesel, biodiesel has more recently maintained price or gone down in price as compared with petroleum diesel, which saw an increase of 40% last year alone. Biodiesel's role in providing enhanced lubricity, decreased exposure to toxics and support of American farmers makes any price difference negligible at best. By diversifying our energy supplies with a clean renewable fuel that is 100% compatible with petroleum diesel, CARB will help provide California residents some relief to our current diesel only economy. As volatile petroleum prices jump even higher, biodiesel can provide energy stability and dramatic economic savings.

Biodiesel is also a direct benefit to American farmers. With continued California innovation, biodiesel can be grown (at least in part) by our strong California agricultural community. Direct economic benefits to farmers, production and transportation jobs and state taxes created by biodiesel production could add millions to the California economy.

At a variety of blend levels, the performance, economic, environmental and social advantages of using biodiesel in our on-road and off-road diesel engines is the most cost-effective alternative to diesel fuel available today.

We urge you to adopt the draft biodiesel policy. We also encourage you to continue biodiesel testing through ARB’s existing programs and to establish a policy for the use of biodiesel blends between B21-B50.

Please let us know if the California Biodiesel Alliance or any of its members can provide assistance to you in these important matters.

Sincerely,

/s/ Eric M. Bowen

Eric M. Bowen
Acting Chairman
California Biodiesel Alliance