More Funding Needed for In-State Biofuel Production To Spur Job Creation in California

biofuels California
Image courtesy of U.S. DOE.

California’s biofuel industry is calling on state legislators to allocate $210 million in the Governor’s Greenhouse Gas Reduction Fund to incentivize in-state production of low carbon biofuels. For the first time, biodiesel, ethanol and biomethane trade associations and companies are united by the common goal of getting the Biofuel Initiative passed as part of this year’s budget.

To meet Governor Brown’s environmental goals, more than 7 billion gallons of low carbon biofuel will be needed annually in California by 2030. However, a large portion of California’s low carbon fuels currently are imported from out of state and abroad. Through proper funding, California biofuels production could increase from 250 million gallons per year (mgy) in 2014 to 906 mgy in 2019, according to industry projections, creating meaningful employment for thousands of Californians in disadvantaged communities.

“California has adopted some of the most forward-thinking policies in the nation to combat climate change – including AB 32, SB 535, the Low Carbon Fuel Standard, and SB 350 – and it is up to state legislators to encourage and promote in-state biofuel production to achieve the Governor’s goals,” said Russ Teall, president of the California Biodiesel Alliance. “Investing in this initiative helps improve the environment, while creating jobs and providing energy security.”

“The biofuels we produce lower the carbon content and give consumers more choices,” said Neil Koehler, chief executive officer of Pacific Ethanol. “State investment needs to be prioritized for in-state production of biofuels that will pay back with local jobs, tax revenue and community growth.”

A $210-million allocation of AB 32 cap and trade auction proceeds from the state budget’s Greenhouse Gas Reduction Fund, administered by the California Air Resources Board (ARB), would:

  • Create 24,750 direct and indirect jobs;
  • Reduce greenhouse gas emissions by nearly 6,000,000 metric tons;
  • Spur economic development of $11.5 billion;
  • Displace 714 mgy of petroleum;
  • Generate fuel tax revenues of $230 million; and
  • Bring in other state and local tax revenues of $408 million.

“The transportation sector is responsible for nearly 40% of all carbon-related emissions in California. Methane released from agricultural and food processing facilities, wastewater treatment plants and landfills is far more potent than carbon as a greenhouse gas emission,” said Johannes Escudero, CEO of the Coalition for Renewable Natural Gas. “California has an opportunity to reduce these emissions by investing GGRF funds in the development of biofuels, including in-state biomethane production facilities – projects that capture otherwise flared or fugitive methane from organic waste streams to produce the lowest carbon intensity transportation fuel available.”

The allocation helps meet the climate change objectives of AB 32, which requires a sharp reduction of greenhouse gas (GHG) emissions, as well as SB 535, which serves to stimulate employment and economic improvement by encouraging biofuel production in disadvantaged communities.

Legislators will determine how much money to allocate toward in-state biofuel production by June 15, 2016, at which point the allocation will be included in the state’s budget for Governor Brown’s approval or veto.

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