Oil Industry Kills California Assembly Bill to Support Biofuel Expansion
by Peter Waldman (Bloomberg BusinessWeek) The oil industry did some intellectual gymnastics last week over California’s low-carbon fuel standard, a 2007 mandate that gasoline refiners reduce the carbon intensity of their transportation fuels 10 percent by 2020. After arguing for years that there simply aren’t enough low-carbon fuel alternatives around to meet the rule’s requirement, the fossil fuel companies killed a bill in the state assembly May 29 aimed at—yes—bolstering the supply of low-carbon fuels.
The proposed legislation, called AB 2390, was meant to address what biofuels producers call their biggest hurdle in expanding production: high financing costs stemming from regulatory uncertainty. The bill would have allowed the state treasurer to make long-term commitments to purchase carbon credits at preset prices from producers developing biofuel projects—credits the state could then sell to petroleum refiners that need them to meet their obligations under the low-carbon fuel standard. As it stands now, amid legal challenges to the state mandate and the oil industry’s aggressive lobbying campaign against it, the credits’ price has plummeted by roughly half since last year. That volatility has made it expensive for biofuel producers to obtain project financing, hampering expansion plans, according to Chuck White, director of regulatory affairs in Sacramento for Waste Management (WM) of Houston.
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“The oil companies don’t want the low-carbon fuel standard to survive, so it’s not in their interest to enter long-term contracts,” says Julia Levin, executive director of the Bioenergy Association of California, a green fuels trade group. “And without long-term contracts, it’s very difficult to provide developers the certainty they need to take to the bank.” READ MORE
