Stating Carbon Fuel Standards: BIO World Congress Eyes Taking Low-Carbon Fuel Standards Beyond California

by Chris Clayton (DTN The Progressive Farmer) The uncertainty of the federal Renewable Fuels Standard and political fights with the petroleum industry are giving more weight to the need for major biofuel states to consider their own low-carbon fuel standards.

After years of pushing for a federal low-carbon fuels standard, the Governors' Biofuels Coalition is turning more attention to states with governors who want to reduce greenhouse gas emissions or governors in states with large renewable fuel industries, said Larry Pearce, executive director of the coalition.

"We can't get significant policy work done on the federal level that we need to get done," Pearce said.

Pearce said more than a decade ago the group was getting senators to co-sponsor legislation for a national low-carbon fuels standard, but those kinds of initiatives have largely ground to a halt in Washington, D.C., he said.

"The petroleum industry is largely dictating what we do now and it's a nightmare," Pearce said.

Noyes (Graham Noyes, a California attorney and executive director of the Low Carbon Fuels Coalition) later added, "There are robust discussions going on in the Midwestern states. Many of the ethanol states, I think, are seeing the value of the low-carbon fuel standard in a few of the states and wondering why there isn't something more like this closer to home rather than sending everything to California."

With the California standard, efficiency and process improvements in producing biofuels have become monetized, Noyes said. "That creates a big driver and has really driven carbon intensity in the ethanol space down, and in other energy spaces," Noyes said.

Carbon credits in California for corn ethanol are selling at 37 cents a gallon, which compares to 12 cents a gallon reported right now by EPA for a D-6 Renewable Identification Number (RIN). The California program is also driving E85 growth as much 30% to 35% a year as well.

"California's program is substantially outperforming the Renewable Fuels Standard in terms of its value per gallon," Noyes said.

Governors looking to address greenhouse gas emissions largely don't have a way to reduce emissions unless they consider a low-carbon fuels standard, Pearce said.

Smithfield Foods announced just last month it was constructing new biogas systems at its swine operations in Missouri and Utah. The company stated over the next decade it would build "manure-to-energy" projects in nearly 90% of its finishing operations in North Carolina, Utah and Virginia, and nearly all of its Missouri finishing operations. Smithfield is partnering with natural gas companies to capture those California RNG credits from those carbon intensity scores. READ MORE