Power Politics

Restrictions on Woody Biomass Must be Removed

By: John Nikoloff, President of ERG

ERG this week joined with 25x'25 and forestry partners in seeking to reverse federal policy that denies the use of a wide variety of woody biomass resources to meet the nation's renewable energy goals. Severely restricting the definition of eligible woody biomass in federal energy legislation makes no sense.  It is a policy that undermines the intent of those in Congress who say they want to create a renewable energy future that promotes energy independence, enhances national security, boosts the economy and improves the environment.

Woody biomass has multiple commercial applications in the battle for a renewable energy future - as a feedstock for cogeneration, as exemplified in Northumberland County by Viking Energy, with its cooperative relationship with  Furman's Foods replacing natural gas in the company's canning operations; as a thermal heating source, as at the Elk Regional Health Center; as fuel for business heating systems, as with the Dillon Floral Corporation in Columbia County; cofiring in coal to electric generating facilities; and as feedstock for cellulosic ethanol production, just to name a few.

Yet Pennsylvania has no state economic incentives specifically targeted to biomass included in the Alternative Energy Investment Act passed last summer.  Even the Energy Harvest Grant Program in DEP has been revised by the Department so that businesses are no longer eligible for those funds. 

At the federal level, despite almost a decade of interagency study and promotion, this potentially valuable piece of the future energy tapestry has been largely overlooked as the big battles center around coal, oil, ethanol and taxes - and in the case of the Waxman-Markey bill, it is precluded from the mix entirely in considering a national Renewable Electricity Standard.

Congress is considering wide-ranging energy and climate change legislation, including provisions that would require a significant percent of the nation's electricity to come from renewable resources by the year 2025. Yet, the Waxman Markey proposal would limit the renewable fuel feedstocks eligible to meet that mandate, picking up the extremely restrictive definition of eligible biomass contained in the Energy Independence and Security Act of 2007, which mandates 21 billion gallons of second-generation biofuels by 2022.

Neither EISA nor the Waxman-Markey draft proposal include such common sense feedstocks as thinning materials and woody residues from federal forests; most woody material from non-plantation, native or naturally occurring forest land; or the wide array of feedstocks from municipal solid waste. Furthermore, Waxman-Markey excludes all material from federal land, except that removed from within 200 feet of any man-made structure or campground. It is incredibly short-sighted to not include as a renewable energy resource the millions of acres of dead and dying trees that, with one spark, could go up in wildfires, releasing billions of tons of greenhouse gases.

This week, 68 national organizations joined together in an effort to bring sanity to this debate. The Chesapeake Bay Commission, 25 x '25, the American Farm Bureau Association, the American Forest Resource Council, the Environmental and Energy Study Institute and the National Association of Conservation Districts are among the dozens of groups telling policy makers that applying EISA's restrictions on the "use of most renewable forest biomass negates the many benefits of this critical energy source, including its contributions to lower carbon emissions, and jeopardizes our renewable energy goals."

Those of us who support the use of woody biomass as a renewable fuel are not looking to turn our forests into "fuel farms." In fact, many of us have consistently been telling lawmakers that strict rules and oversight on biomass harvesting and environmental concerns are necessary to ensure a sustainable biomass industry. The 25 x '25 letter lays out a set of principles to insure woody biomass policy will meet "our renewable energy needs, maintain forest sustainability and garner the support of a broad range of interests."

It is time for policy makers to correct this ill-conceived restriction and capitalize on the clean energy solutions America's forests can provide. Through sustainably managed forests we can provide much needed energy feedstocks while simultaneously improving soil, water and air quality.

California Air Resources Board sets Controversial Low Carbon Fuel Standard. Northeast States and PA to follow?

By: John Nikoloff

With much fanfare, the California Air Resources Board (CARB) finalized its Low Carbon Fuel Standard (LCFS), which is designed to reduce the carbon intensity of California's passenger vehicle fuels by at least 10 percent by 2020. The LCFS is the world’s first global warming standard for transportation fuels, and will require fuel providers in California to ensure that the mix of fuel they sell into the California market meet a declining standard for GHG.

On January 5, Pennsylvania joined the ten Mid Atlantic and Northeast States in seeking to develop a similar Low Carbon Fuel Standards in the region. ERG has talked with state and regional officials and learned that the Northeast States hope to draft a plan by the time they establish a MOU in late 2009. They have told ERG that they are “trying to be consistent with the system recently announced in California,” which has come under public fire.

The US House’s Waxman-Markey draft proposal would incorporate a LCFS into federal policy, an issue which is already generating opposition among Congressional rank and file.

Lack of a consistent policy for planning purposes could create havoc in the state’s refining, blending and distribution industries and markets, which are already facing unfunded mandates that require major capital expenditures to meet the needs of state and federal mandates for biofuels.

With a low carbon fuel standard, the government is trying to reduce GHGs in transportation fuels using a system equivalent to the state’s Alternative Energy Portfolio Standard for electric generation, using credits as equalizers. The net effect will likely be to promote biodiesel, cellulosic ethanol, renewable diesel from oilseeds, CNG, LNG and other advanced biofuels over ethanol.

But the LCFS is based on concepts that remain controversial, and scientists as well as the biofuels industry are pushing back, already getting concessions from CARB.

Under California’s LCFS, fuel refiners, importers, and blenders are required to ensure that the mix of fuel they sell meets, on average, a declining standard for GHG emissions measured in CO2-equivalent grams per BTU. CARB told Energy Resources Group that it expects this will decrease GHGs from transportation fuels by 10 percent by 2020, and would replace 20 percent of on-road gasoline and diesel consumption with lower carbon fuels.

To accomplish this, each fuel provider has to demonstrate, on an annual basis, that the fuel mix provided to the market met the established state standard, if necessary, by using credits purchased from others, similar to the cap and trade concept. Under the California LCFS, fuel providers will have at least three different options for compliance: blend or sell an increasing amount of low-carbon fuels; use previously banked credits; and purchase credits from fuel providers who have earned credits by exceeding the performance levels required.

Fuel providers have flexibility to choose what types of fuels in what volumes they sell as long as their sales-weighted average meets the standard. In this way, the theory is that the market will determine the least-cost and most consumer-responsive outcome for the fuel mix while ensuring decreasing GHG emissions.

However, there is significant concern in the biofuels industry about the standards that California adopted, and CARB’s use of the theory of indirect land use change (ILUC) in the carbon score of ethanol in particular to set the C02 equivalencies. With ILUC included in their regulation, average ethanol produced from corn goes from 30 percent fewer greenhouse gas emissions than gasoline to roughly equivalent.

The logic behind ILUC is that increased demand for corn for ethanol will lead, through increased prices, to more crops being planted elsewhere - and that the planting of these crops can cause land clearing and subsequent GHG release. These hypothetical crops are not part of the actual biofuels life cycle, but are part of the life cycle of other products. ILUC theory proposes that these crops become part of the biofuels life cycle.

The federal Energy Independence and Security Act of 2007 requires that life cycle methods be used to determine the GHG performance of renewable fuels. But these methods have strict standards regarding technical issues and the concept of ILUC may not meet these standards.

The California Air Resources Board acknowledged the significant uncertainty in their indirect land use change penalty, and did commit to more study using an expert panel that includes industry representatives, and agreed to assess the indirect effects of other fuels before the California LCFS goes into effect in late 2011.

When CARB looked at the direct effects of all fuels, it found that ethanol emits about 30% fewer greenhouse gas emissions than gasoline. CARB decided to look at only one indirect carbon effect and assesses it only on ethanol, while ignoring the significant indirect effects of all other fuels, including petroleum. When you include CARB's creative accounting, ethanol essentially has a carbon score equal to gasoline.

The new CARB regulation is expected to boost biofuels production and usage and is aimed at diversifying the variety of fuels used for transportation. CARB told ERG that to produce the more than 1.5 billion gallons of biofuels that will be needed, more than 25 new biofuel facilities will have to be built, creating more than 3,000 new jobs, mostly in the state’s rural areas. Seeking to enhance private sector and federal investment into alternative fuel production and distribution, California is also providing funding to assist in the early development and deployment of the most promising low-carbon fuels.

The policy is intended to drive the production of advanced biofuels, most of which are not through the pilot and demonstration process, and are unavailable to the commercial marketplace. This is a case of government regulating in anticipation of scientific and economic breakthroughs, which remains to be realized. We expect a significant battle with individual states should the Northeast consortium decide to include ILUC as part of their estimating process. That has yet to be determined.

ERG will continue to work with state and federal officials to monitor the development of legislation, regulations and standards, and will seek to establish consistency to avoid serious market dislocation.