BILL ANALYSIS �
AJR 21
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: AJR 21
AUTHOR: Olsen
AMENDED: As Introduced
FISCAL: No HEARING DATE: August 21, 2013
URGENCY: No CONSULTANT: Rebecca Newhouse
SUBJECT : FEDERAL RENEWABLE FUEL STANDARD PROGRAM
SUMMARY :
Existing federal law , under the Clean Air Act, establishes the
Renewable Fuels Standard Program, which, among other things,
defines and establishes different categories of renewable fuels,
sets volume requirements for each one, and requires the U.S.
Environmental Protection Agency (US EPA) to set annual standards
for the blending of renewable fuels in gasoline, based on
gasoline and diesel projections from the Energy Information
Administration.
This bill :
1) Makes various findings relating to the federal Renewable Fuel
Standard (RFS) program and the impact of the federal program
on corn prices, food cost increases and decreased dairy
production capacity in California.
2) Urges the United States Congress to enact House Resolution
1462, the Renewable Fuel Standard Reform Act of 2013 that
would revise the requirements of the existing federal RFS
program.
COMMENTS :
1) Purpose of Bill . According to the author, "This bill would
encourage Congress to support the "RFS Reform Act" in
Congress. This act would eliminate corn based ethanol
requirements, cap the amount of ethanol that can be blended
into conventional gasoline at 10 percent and require the EPA
to set cellulosic biofuels levels at production levels. This
AJR 21
Page 2
Act, and AJR, would assuage some of the cost pressures on
farmers in CA 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 author
further notes that "The current law is deficient in that it
does not provide flexibility in years with droughts or bad
crop yield. The fix to these stringent regulations are House
Resolution 1462 (RFS Reform Act) which would change some of
the renewable fuel standards, specifically with regard to
ethanol."
2) Background .
The federal Fuels Standard . The RFS program was created under
the Energy Policy Act of 2005, and established the first
renewable fuel volume mandate in the United States. As
required under the Act, the original RFS program (RFS1)
mandated 7.5 billion gallons of renewable fuel to be blended
into gasoline by 2012.
Under the Energy Independence and Security Act of 2007, the
RFS program was changed to do the following (RFS2):
Expand the program to include diesel, in addition
to gasoline;
Increase the volume of renewable fuel required to
be blended into transportation fuel from 9 billion
gallons in 2008 to 36 billion gallons by 2022;
Establish new categories of renewable fuel, and set
separate volume requirements for each one;
Require the US EPA to apply lifecycle greenhouse
gas performance threshold standards to ensure that each
category of renewable fuel emits fewer greenhouse gases
than the petroleum fuel it replaces.
The different classes of renewable fuels under RFS2 include
conventional, advanced, and cellulosic. Conventional biofuels
are defined as ethanol from corn starch. Advanced biofuels
are renewable fuels (or fuels derived from certain renewable
biomass) other than ethanol derived from corn starch that have
a lifecycle greenhouse gas emissions at least 50% lower than
emissions from gasoline. Cellulosic biofuels, or biofuels
from cellulose or lignin derived from renewable biomass, must
AJR 21
Page 3
achieve a 60% greenhouse gas reduction relative to
conventional fuels. Conventional ethanol (such as corn
ethanol) from new facilities must be 20% lower than
conventional petroleum fuel on a greenhouse gas basis,
although a significant fraction of ethanol was grandfathered
in and exempted from meeting this requirement.
As noted in AJR 21, the 2013 requirement of
corn-starch-derived ethanol of 13.8 billion gallons represents
over 80% of the total renewable fuel mandate (16.55 billion
gallons of renewable fuels). The fraction of corn starch
ethanol allowed in 2022 drops to just over 40%, with advanced
biofuels required for 21 of the 36 billion gallons of
renewable, blended fuel.
According to the Center for Climate and Energy Solutions, RFS2
will reduce greenhouse gas emissions by 138 million metric
tons in 2022, which is equivalent to taking about 27 million
vehicles off the road.
1) HR1462 . House Resolution 1462, introduced in April of this
year and referred to the House of Representatives subcommittee
on Energy and Power, would amend the federal RFS2 to:
a) Require renewable fuels qualify as advanced biofuels,
which would exclude corn-based ethanol and require all
biofuels required under the Act to have a lifecycle GHG
emission 50% lower than gasoline.
b) Revise the renewable fuel standards by decreasing the
volume of renewable fuel that is required to be contained
in gasoline sold or introduced into commerce in the United
States in 2014 through 2022 (ranging from an 80% decrease
in earlier years to a 40% decrease in 2022).
c) Eliminate the separate advanced biofuel volume
requirements for those years.
d) Prohibit the US EPA from allowing the introduction of
gasoline into commerce containing greater than 10% ethanol.
e) Revise the method in which cellulosic ethanol
projections are generated, using the volumes determined for
AJR 21
Page 4
the calendar year to equal the projected volume of
cellulosic biofuel for the following year.
2) Environmental and economic impacts of crop-based fuels .
Approximately 40% of corn grown in the United States is
diverted for ethanol production. Direct environmental impacts
resulting from the use of food-based crops for fuels include
significant water use for irrigation purposes and fertilizer
and pesticide use, which can affect surrounding water quality
and release greenhouse gas emissions, and other air
contaminants.
Indirect environmental impacts for food-based fuels primarily
include land use changes. A land use change effect is
initially triggered by a significant increase in the demand
for a crop-based biofuel. For example, when farmland devoted
to food and feed production is diverted to the production of
that biofuel crop, supplies of the displaced food and feed
crops are reduced. Supply reductions cause prices to rise,
which, in turn, stimulates increased production. If that
production takes place on land formerly in non-agricultural
uses, a land-use-change impact results. The specific impact
consists of the carbon released into the atmosphere from the
lost cover vegetation and disturbed soils in the periods
following the land use conversion.
3) LCFS vs. RFS . In January 2007, Governor Schwarzenegger issued
Executive Order S-01-07 in which he ordered the establishment
of a statewide goal of reducing the carbon intensity (a
measure of the direct and indirect GHG emissions associated
with each of the steps in the full life-cycle of a
transportation fuel) of California's transportation fuels by
at least 10% by 2020 and ordered ARB to establish a low-carbon
fuel standard (LCFS) for the state. ARB adopted the LCFS
regulation in April 2009, and it took full effect a year
later.
The federal and state fuel policies are substantially
different. The RFS2 mandates the use of biofuels. Because of
this type of mandate, federal and international biofuel
policies have been implicated in numerous articles as
potential contributors to deforestation and food shortages,
since crops are diverted for fuel purposes, and other land is
AJR 21
Page 5
adapted to accommodate additional crops for consumption.
Unlike the RFS, the LCFS includes all transportation fuels,
including electricity, natural gas, and hydrogen as well as
biofuels. Second, it is a performance standard, requiring
reduction of a fuel's carbon intensity over a certain period
of time, instead of mandating the use of a specific type of
fuel. Because of this performance standard, the LCFS is
considered to be much more effective policy at stimulating
innovation since fuel suppliers are rewarded for reducing
carbon emissions at every step in the energy supply chain from
cultivation and extraction to fuel processing, transport, and
distribution, unlike under RFS2.
On July 19, 2012, the multi-institutional National LCFS
Project (a collaboration of researchers from UC Davis, Oak
Ridge National Laboratory, Carnegie Mellon University and
others) released the national LCFS study that recommended
replacing or enhancing the RFS with a national LCFS. The
study found that, when compared to the RFS2 policy alone, a
national LCFS combined with the RFS2 could significantly
reduce the magnitude of the resulting global cropland
expansion, and environmental and social impacts associated
with that expansion.
By focusing on the lifecycle GHG performance of fuels, an LCFS
policy provides incentives for feedstocks that do not require
additional land, such as waste and agricultural residues, or
feedstocks that require less cropland than food-based crops,
such as algae.
4) Cellulosic ethanol production estimates ? HR 1462 requires
that the estimates for cellulosic ethanol available for the
following year be strictly based on the cellulosic ethanol
produced in the preceding year. This method may neglect other
factors, such as infrastructure development and investment,
and technological advances that could result in significant
increases in cellulosic ethanol production in the following
years.
5) Ethanol maximum . HR 1462 prohibits the US EPA from allowing
more than 10% by volume of ethanol blended in gasoline into
commerce. If ethanol is produced sustainably with large
reductions in GHG emissions and significantly reduced direct
AJR 21
Page 6
or indirect environmental impacts, as is the case with
cellulosic ethanol, it is unclear why there should be a
prohibition on its use in petroleum above that amount.
6) Amendment needed . Although the economic concerns outlined in
the findings of AJR 21 are valid issues that surround the
federal RFS, HR 1462 is an imperfect solution to a complex
problem. HR 1462 would prohibit biofuel derived from corn
starch from qualifying under the Renewable Fuels Program, but
does not limit other food-based fuels that may have similar
indirect land-use. In addition, the federal policy would
remain a biofuels mandate, instead of a performance based
standard, like the state's LCFS, which promotes innovation, is
fuel neutral, systematically takes into account direct and
indirect environmental impacts using carbon intensity from
lifecycle analyses and incents feedstocks that do not require
additional land, such as waste and agricultural residues,
giving preference to non-food based fuels.
Instead of urging Congress to enact HR 1462, the resolution
should be amended to instead urge Congress to enact RFS reform
that implements a performance-based fuel standard of reduced
carbon intensity, as well as increased environmental and food
supply sustainability.
7) Related legislation . AB 523 (Valadao) Chapter 183, Statutes
of 2012 prohibits projects producing ethanol derived from
edible corn from receiving funding under the Alternative and
Renewable Fuels and Vehicle Technology Program after July 1,
2013.
SOURCE : Author
SUPPORT : California Cattlemen's Association
California Poultry Federation
OPPOSITION : None on file