California Dreamin’

Doug Durante, Clean Fuels Development Coalition

The decades long hate-love-hate relationship between California and ethanol is trending the wrong way.

With 29 million cars on the road and a nearly 14 billion gallon gasoline market, the state of California is a market unto itself. With 1.4 billion gallons of ethanol in the gasoline mix and another 100 million gallons going to E85, it can be argued ethanol saved the state's low carbon fuel standard. For years there was essentially nothing other than internal combustion engines on the road and the gasoline that powered them was decarbonized, thanks to ethanol being added. The credits generated by those ethanol gallons were sold and traded to make the program work, at least on paper. That was the love part. Now the hate part.

A quick refresher for those who wisely do not get mired in the nuances of the Clean Air Act: California is essentially allowed to enact its own standards as long as they are more stringent than federal standards. This is in recognition of the 39 million people that live in the state and the serious pollution they create and must deal with. This environmental autonomy has led the Legislature to swing for the fences and propose drastic mitigation programs that have sputtered and continually come up against practical realities. People would be surprised to know that three of the past five governors have been Republicans, so the state is not a complete left wing, all blue, hippie haven. But pollution is pollution and there have been bi-partisan attempts to figure this out.

Unfortunately, for two decades or more, the state relied on modeling that denied ethanol use, based largely on since-debunked concerns of NOx emissions. They eventually allowed it but at very low levels and dragged their feet as they slowly got with the rest of the country and allowed 10 percent blends. There were some ugly fights along the way with the California Air Resources Board (CARB) and the South Coast Air Quality Management District (SCAQMD) which had to control the brutal smog in the Los Angeles basin. They were fine with MTBE in their gas but not ethanol, even though both performed the same duty in terms of oxygenating fuels to reduce emissions. Some would point out the significant presence of Chevron, Phillips, Marathon and Valero in the state as a factor, refiners preferred MTBE in part because they controlled it. It should always be noted that despite the green image of California, it is the third largest oil-producing state in the U.S. When MTBE leaks started showing up in California water, both CARB and the AQMD did everything possible to not use ethanol.

While they did get to 10 percent blends, as of this writing they do not allow E15 - for reasons they could never really defend. However, in a very positive development, Democratic Gov. Gavin Newsome showed a little love and has directed CARB to get off their duffs and do whatever they have to do to approve E15. This was not a token act. In a letter to CARB, Newsome called it a "critical issue" and went as far as to say E15 can reduce fuel prices and increase supply, although he inexplicably added "with little or no harm to the environment," a reminder of the old CARB prejudices.

Will it be too late? Will corn ethanol at any volume again be penalized in the state? Consistent with their history of overreach, now that the RFS and better science have won the day and E10 is in all California gasoline, California lawmakers are again moving the goal posts in an effort to absolutely force feed EVs. Previous legislative and regulatory efforts called for certain percentages of vehicles to be EVs over time, now they are essentially saying the heck with it, let's just ban internal combustion engines and force this down the throats of the public.

For years I have cautioned against total reliance on a Low Carbon Fuel Standard as an effective policy driver, warning that it was always vulnerable based on whoever got to define low carbon. When the LCFS first came along, they loved ethanol when the ethanol allowed them to say the LCFS was working. But now they are updating the LCFS regulations and proposing new sustainability and "climate-friendly" farming programs that could keep corn ethanol out of the market. The Renewable Fuels Association (RFA), Growth and others have done a good job challenging the proposed regs. RFA comments keyed on the assumption of land use changes and a "fundamentally flawed" and arbitrary methodology. CARB defends their actions saying they are guarding against "the rapid expansion of biofuel production and biofuel feedstock demand." Good grief, we certainly wouldn't want to see expansion of biofuels, but they may be OK with the rapid expansion of imported gasoline. Let me explain.

For us ethanol supporters, they are adding insult to injury as all this is happening as a major Phillips refinery is closing down rather than meeting new air quality standards. This refinery is estimated to supply 8 percent of the state's gasoline, an amount ethanol could easily make up with an E20 or higher blend while lowering costs and reducing pollution. Instead, the Los Angeles Times reports that it is almost certain that California will make up this shortfall with imports from a range of foreign countries. It would come in by barge, at a high cost and spewing marine emissions into the LA harbor.

EPA reportedly is set to approve the California proposal to ban gasoline powered cars by 2035. Rather than set standards and establish reasonable requirements, the state is making a huge mistake. Punishing ethanol as a means of getting yet one more obstacle out of the way in the effort to go all EV is at best bad judgement and at worst, heavy handed. Liquid fuels are not going anywhere and ethanol is the most cost-effective means of decarbonizing those fuels. Maybe at some point the state will come to its senses.