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Low Carbon Fuel - Where's it Going?

Brady Irwin is a research analyst for Whole Energy Fuels Corp, a provider of support and distribution services for biodiesel and biofuel producers in Washington, Oregon, California, and British Columbia since 2006. See whole-energy.com

In the fall of 2013 the governors of Washington, Oregon and California, along with the Premier of British Columbia, gathered to sign the Pacific Coast Action Plan on Climate and Energy.

This event has laid the groundwork for the establishment of a Pacific Coast Collaborative climate policy, a set of harmonious regional policies for fuel and energy greenhouse gas mitigation for western North America. The Action Plan can be viewed in full here.

 

I was fortunate enough to attend the Pacific Coast Low Carbon Fuel Standard Roundtable discussion in Vancouver last week. At the meeting industry leaders, government officials, and NGO representatives traveled from their homes in Washington, Oregon, California, and British Columbia to share the state of climate policy in their respective regions and discuss strategies for moving forward with collaborative policy action.

As a Washington native who attended UBC, and now working for a biofuel distributor with operations in all three states and the province, I was overjoyed at the opportunity to return to the beautiful city of Vancouver to discuss the future of the biodiesel and biofuel industry, and the region I call home.

It was inspiring to see a group of individuals, many of whom compete in industry, come together to work toward the common goal of sustainable fuel policy.

Sustainable Fuel Policy

Renewable and low carbon fuel producers face a tremendous challenge in negotiating these policies across the table from the established petroleum industry. To stand up to the incredibly entrenched and unfathomably well-funded conventional fuel producers, supporters of clean fuel alternatives must work together at all levels.

Which leads me to the core philosophy of the meeting: harmonization.

As it stands, there are two Low Carbon Fuel markets on the West Coast—California and British Columbia. Washington and Oregon are in the process of developing their own fuel policies to meet the unique needs of their constituents. However, with unique needs comes disparity between the various fuel markets.

The harmonization of policies across borders creates a market environment that promotes efficient allocation of biofuel, resulting in the maximum industry health and consumer satisfaction. The greater the disparity between regional policies, however, the greater the inefficiency in product allocation, leaving both consumers and producers worse off.

The question then becomes “How then can we craft our fuel policies to address jurisdictional concerns while servicing the much greater problem of climate change?” While a number of strategies and solutions were discussed, my own takeaways from the roundtable discussion are as follows:

Similar carbon accounting mechanisms

While all parties recognize and respect the needs of region-specific lifecycle carbon accounting systems (LCA), a standardization of the protocols for establishing system boundaries within the different regional carbon models will go a long way toward synchronizing policies. This includes the definition and quantification of the carbon intensity between conventional petroleum fuels and the various different ways of extraction and refining biofuels.

Umbrella third party verification

Regardless of the model used to calculate the lifecycle carbon, the input data submitted by the various refineries needs to be the same. So policies should be crafted enabling a single verification standard to apply to all of us.

Transparency

Transparency is critical, not only for market efficiency, but also for keeping consumers and lawmakers informed. This includes market transparency both in the biofuel credit markets, and in the scientific justification and research behind the different policies.

Timeline synchronization

We recognize that the long-term success of market controls will depend on the legislation’s ability to react to changes in the biofuel market over time. While the timetable for the legislative process varies from region to region, actions within fuel carbon market will need to synchronize across jurisdictions to prevent market volatility and limit arbitrage. When I look at the list of objectives for successful fuel policy harmonization, this will likely be the most challenging.

Cooperation

The low carbon fuel producers on the West Coast must be united in our message of renewable fuel. Our unity needs to surpass regional and industry borders, and include public awareness. If we can work together as renewable fuel stakeholders, our synergy will far outpace individual interests pursing the goal alone.

Achieving a truly harmonized Pacific Coast Climate Action Collaborative will certainly be a difficult task. As challenging as it is to unify the actions of a single region, directing and managing climate policies across multiple jurisdictions is will be a monumental challenge: but it is achievable.

If we turn our attention to the Renewable Portfolio Standard in the United State we can see how a distributed model works in application. Each state has its own renewable energy portfolio mandate and incentive structure, yet participants are able to interact across jurisdictional boundaries. This took a tremendous amount of cooperation between the states, and has resulted in the creation of a new governing agency, but the results have been commendable.

The Entire West Coast of North America

Having a Low Carbon Fuel Standard endorsed and implemented by the entire West Coast of North America will strengthen our regional capacity to foster growth and investment for the renewable fuel industry as a whole.  It will reward localized production and reduce the infiltration of out-of-state products that are undercutting local producers and creating dramatic economic obstacles, such as we see in California right now.

The harmonization will not be perfect immediately, and it will need to evolve as our industries and technologies advance. However, a regional partnership that spans from B.C. to Southern California will allow for a more effective approach to climate policy development and adoption.  

Climate change does not respect international boundaries. It is a burden that the whole of humanity must tackle, and it will take an effort that supersedes both nationalism and regional differences.

The harmonization effort that is implicit in the Pacific Coast Collaborative has the potential to set the standard for collaborative climate policy throughout North America. Regardless of the outcome, the fact that our leaders have set us on the path toward cooperative climate action makes me proud to call the West Coast my home.