BIO Comments on Preliminary Draft Regulation for the California Cap-and-Trade Program

Comments by Brent Erickson, Executive Vice President, Industrial and Environmental Section of the Biotechnology Industry Organization (BIO) to the California Environmental Protection Agency and Air Resources Board (January 11, 2010): ... The essence of the cap-and-trade program is the establishment of an aggregate cap on GHG emissions from all covered sectors and covered entities within those sectors. Within this aggregate cap, all sectors should be treated under a common accounting framework that counts GHG emissions consistently. Put simply, a ton is a ton and the State’s cap-and-trade program should not favor or penalize any covered sector or covered entity through inconsistent treatment of GHG emissions.

BIO is concerned that the PDR may contemplate inconsistent, discriminatory and unjustified treatment of GHG emissions associated with biofuels used in the transportation sector. BIO firmly believes that biofuels should play a pivotal role in reducing GHG emissions in transport. To do so, the cap-and-trade program must recognize biomass as a renewable energy resource that produces no net GHG emissions upon combustion. It is well-understood that the carbon content of biomass released upon combustion is offset completely by the uptake of atmospheric carbon in the biomass. Thus, biomass, when combusted as a fuel source, whether in power plants or in automobiles and trucks, produces no net GHG emissions that contribute to global warming. Expansion of biomass as a fuel source, including biofuels, will allow California to displace large volumes of fossil fuels, thereby achieving substantial and immediate reductions in the State’s GHG emissions.

… 2. Transportation fuel should be treated on a consistent basis, by measuring the

carbon content of fuel delivered to or for end users. This should be the rule for gasoline,

3. Biomass should be accounted for consistently as a “no net carbon” fuel. Biomass has no direct net carbon emissions due to the recycling of carbon in biomass. This is the rule proposed under section 95950 (b) (2) for biomass used in electricity generation and it should be the rule for biomass used in liquid biofuels. While the PDR leaves open the possibility of exceptions to this treatment of biomass used in electricity generation, none is proposed and, therefore, BIO believes that consistency and nondiscrimination require that biofuels be treated on the same basis as other biomass combusted in covered sectors.

… 1. Section 95950 of the PDR rests upon use of direct, rather than lifecycle, GHG emissions as the measure of an entity’s surrender obligation. Lifecycle considerations are not taken into account for biomass used in electricity generation. It would be discriminatory to account for lifecycle emissions, on top of direct emissions, for only one type of covered fuel, such as biofuels, or even for one covered sector, such as transportation.

2. The cap-and-trade program should not be designed to incentivize or penalize one particular type or use of fuels. As noted in the PDR (at p.39), the Low Carbon Fuel Standard (“LCFS”) is appropriately viewed as a legislatively mandated “transformational policy” applicable to transportation fuels only. The cap-and-trade program being adopted under AB 32 should be designed on the neutral and non-discriminatory principle that “a ton is a ton” for all covered sectors and fuel types. Any incentives that the State wishes to achieve for displacing the use of gasoline and diesel fuels in vehicles should be adopted as part of the LCFS or other statutorily mandated program. Transportation fuels should be covered under the cap-and-trade program, but should not bear special penalties or receive special incentives through special accounting rules for emissions from different fuel types. READ MORE