BILL ANALYSIS �
AJR 21
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Date of Hearing: July 1, 2013
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AJR 21 (Olsen) - As Introduced: May 20, 2013
SUBJECT : Federal Renewable Fuel Standard Reform Act of 2013.
SUMMARY : Urges Congress to swiftly enact House Resolution (HR)
1462, the Renewable Fuel Standard Reform Act of 2013.
Specifically, this bill :
1)Makes findings relative to the existing federal Renewable Fuel
Standard (RFS) program and the effect of the program on the
economy.
2)Urges Congress to swiftly enact HR 1462, the Renewable Fuel
Standard Reform Act of 2013, that would revise the
requirements of the existing federal RFS program.
EXISTING LAW :
1)Under the federal Energy Policy Act of 2005, creates the RFS
program that establishes the first renewable fuel volume
mandate in the nation. Requires 7.5 billion gallons of
renewable fuel to be blended into gasoline by 2012.
2)Under the federal Energy Independence and Security Act of 2007
(RFS2), expands the RFS program to include diesel fuel, in
addition to gasoline. Requires an increase in the volume of
renewable fuel required to be blended into transportation fuel
from 9 billion gallons in 2008 to 36 billion gallons by 2022.
3)Requires the California Energy Commission (CEC), in
partnership with the California Air Resources Board (ARB), to
develop and adopt a State Alternative Fuels Plan to increase
the use of alternative fuels without adversely affecting air
quality and water quality or causing negative health effects
pursuant to AB 1007 (Pavley), Chapter 371, Statutes of 2005.
4)Requires a 10% reduction in the carbon intensity of
transportation fuels by 2020, as measured on a lifecycle
basis. The goals of the Low Carbon Fuel Standard regulation
are to reduce greenhouse gas emissions from the transportation
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sector, diversify the transportation fuels sector, and to spur
investment and innovation in lower carbon fuels.
FISCAL EFFECT : Unknown
COMMENTS : Under existing federal law, the RFS program was
established in 2005 and revised in December 2007, as part of the
federal RFS2. The RFS2 requires that 36 billion gallons of
biofuels be sold annually by 2022, of which 21 billion gallons
must be "advanced" lower carbon biofuels and the other 15
billion gallons be corn ethanol.
Currently introduced in Congress, HR 1462, the Renewable Fuel
Standard Reform Act of 2013, would revise the requirements of
the existing federal RFS2 program. HR 1462 would eliminate
corn-based ethanol requirements, and limit the amount of ethanol
that can be blended into conventional gasoline to 10%. Further,
HR 1462 does not eliminate but readjusts the advanced cellulosic
biofuel levels to actual industry production levels.
According to the author, this bill would encourage Congress to
support the RFS Reform Act of 2013 that would essentially
eliminate corn-based ethanol requirements currently contained in
the federal law. Further, she indicates that HR 1462 "would
assuage some of the cost pressures on farmers in California who
cannot afford to have 40% of corn crops used for renewable
fuels, especially in light of recent droughts that have
drastically reduced corn crop yield."
The recent shift from utilizing ethanol as a biofuel derived
from corn started in January 1, 2012, when federal corn ethanol
subsidies ended. The federal tax credit, which cost the federal
government nearly $6 billion in 2011, went to gasoline refiners
that mixed ethanol with gasoline. The federal government,
through the RFS2 and until the expiration of the federal tax
credit, had promoted ethanol and other biofuels as a way to
reduce dependence on imported oil. Upon the termination of that
federal tax credit for corn ethanol, Ms. Michal L. Rosenoer, a
policy analyst with the environmental group Friends of the
Earth, expressed that the end of the tax credit showed that
"ethanol is no longer a sacred cow. The end of this giant
subsidy is a win for taxpayers, the environment, and people
struggling to put food on the table. Production of ethanol,
with its use of pesticides and fertilizer and heavy industrial
machinery, causes soil erosion and air and water pollution. And
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it means that less land is available for growing food, so food
prices go up."
The California Legislature expressed similar anti-corn ethanol
sentiments in approving AB 523 (Valadeo) Chapter 183, Statutes
of 2012, that prohibited the use of state funds for corn
ethanol. AB 523 made projects for the production of ethanol
that is derived from corn ineligible for funding, after July 1,
2013, from the Alternative and Renewable Fuel and Vehicle
Technology Program (created pursuant to AB 118 (Nunez) Chapter
750, Statutes of 2007).
Although HR 1462 would result in a marked shift of renewable
fuels strategy away from the use of corn-based ethanol, it still
maintains a focus on the use of advanced, cellulosic biofuels to
meet sustainable fuels use goals. According to a Global Biofuel
Market Analysis RNCOS report (November 29, 2011), "The global
biofuel industry has been witnessing rapid growth over the past
few years in the backdrop of depleting fossil fuels and
degradation of environmental conditions. Many economies have
turned their attention to next-generation biofuels which have
shown a notable growth in the recent years. These biofuels are
inherently more efficient than first-generation biofuels. The
report infers potential feedstocks for the next-generation
biofuels that include forest residues, industry residues,
agricultural residues (corn stover), municipal waste, and
sustainable biomass crops including jatropha, camelina, and
switchgrass. Cellulosic ethanol, a second-generation ethanol,
is the only foreseeable renewable feedstock for sustainable
production of transport fuels. Cellulose-based biofuels offer
substantial advantages over current corn ethanol; they can be
grown at low cost on marginal land where they will not compete
with traditional food crops. The market for cellulosic ethanol
will amount to around $75 to $140 billion worldwide by 2020."
This resolution would urge Congress to pass HR 1462, in the
hopes that the federal bill would eventually be enacted, thereby
redirecting the nation's effort in reaching sustainable fuels
goals by limiting the use of corn-based ethanol while
maintaining focus on the use of advanced, cellulosic biofuels.
Support : Writing in support of this bill, the California
Poultry Federation indicates that the RFS mandate results in
diminished corn supplies for livestock and food producers,
resulting in higher corn prices and that "these increased prices
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have put many out of business in the agricultural sector and
have increased costs on consumers through increased food prices
in grocery stores and restaurants."
Related federal bill : S 1195 (Goodlatte), would eliminate the
federal RFS allowing ethanol to compete in the free market.
REGISTERED SUPPORT / OPPOSITION :
Support
California Cattlemen's Association
California Poultry Federation
Opposition
None on file
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093