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Leading Ethanol Groups Challenge California LCFS

posted on December 29, 2009

Hello, I'm Mark Pearson. As 2010 begins, the nation continues to dig out both figuratively and literally. As work crews remove snow from the streets, progress also can be seen in the nation's steady but bumpy economic road to recovery.

Consumer Confidence rose for the third month in a row as Americans were more upbeat about the future. Though in positive territory, the New York Conference Board's numbers were far short of indicating the economy was "solid."

With an extra shopping day thrown in for good measure, retailers sang songs of joy as sales numbers were more than 3.5 percent higher than last year. Even with the good news from MasterCard's SpendingPulse Index, some analysts predict a one percent decline when the final tally is made in January.

Prices paid for homes rose for the fifth time in as many months. The positive news was tempered by the fact only 11 of 20 metro areas tracked by the Case-Shiller Index saw an increase.

And the weaker dollar strengthened on speculation the Federal Reserve will raise interest rates in the New Year.

All the news did little for the Dow Jones Industrial Average which was off slightly for the week but still managed highs not seen since October of 2008.

Positive news last month also fueled ethanol producer optimism when the Environmental Protection Agency left the door open to a 50 percent increase in the blend-rate. But, ethanol producers have been effectively blocked from the California market, where landmark rules for greenhouse gas emissions were adopted early last year. This week, the ethanol industry took matters into its own hands.


Leading Ethanol Groups Challenge California LCFS

Growth Energy and the Renewable Fuels Association, two leading ethanol promotion groups, are challenging the constitutionality of California's proposed low-carbon fuel standard. In a lawsuit filed late last week, the two organizations claim the state's low-carbon fuel standard, or LCFS, is not based on science and is inconsistent with the U.S. Constitution.

The California Air Resources Board voted to adopt the LCFS in April of last year against opposition from the ethanol industry. The standard would allow the state of California to regulate greenhouse gas emissions from automobiles and calls on fuel blenders, refiners and importers to achieve carbon reductions of 10 percent for their entire fuel mix by 2020.

Growth Energy and the Renewable Fuels Association argue the LCFS penalizes corn-based ethanol for so-called international indirect land use changes --–a theory that postulates farmers in other countries will tear up virgin ground to grow crops for food in response to corn being diverted to ethanol production.

According to a joint statement, both groups believe closing California's borders to the predominately corn-based fuel will change how corn is farmed and ethanol is produced all over the country. And they contend, the LCFS denies the people of California an opportunity to clean the air and create jobs while strengthening economic and national security.

In a written statement to Market to Market, a spokesman for the California Air Resources Board said, "We feel their claims have no merit. This is a regulation designed to provide California consumers with a range of cleaner, low-carbon fuels and we intend to defend it vigorously in court."

The LCFS is scheduled to be implemented in 2011.


Tags: biofuels California ethanol news renewable fuels