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Bio-energy has tremendous potential to nudge California toward energy independence, but it faces formidable regulatory and economic obstacles, energy industry executives told the California Energy Commission and other officials who serve on the state Bio-energy Interagency Working Group. Regulators are working to overcome current roadblocks, they said. ?Biomass is capable of meeting multiple policy objectives: petroleum reduction, climate change, renewable energy, waste disposal, and environmental goals,? said Susan Brown, Energy Commission bio-energy action plan lead staff. Yet compared to its potential, bio-energy has barely made a dent in California energy consumption, Energy Commission data show. The state has 985 MW of biomass power capacity, compared to peak demand of about 50,000 MW. It burns 900 million gallons a year of bio-fuels?mostly ethanol made from corn?according to Energy Commission data. While that is 35 percent of the ethanol burned nationally, California motorists consume 18 billion gallons a year of gasoline and diesel fuel. Biomass power is growing in absolute terms, but not keeping pace with other generation technologies, noted Paul Clanon, California Public Utilities Commission executive director. Biomass, he said, is decreasing as a percentage of the total power purchased by the state?s utilities. ?The big issue is making this transition from first generation to second generation bio-fuels,? said Hal La Flash, Pacific Gas & Electric director of renewable energy policy and planning. In the electricity industry, La Flash said, use of dispersed biomass has been hampered by the cost of collecting and hauling material to relatively large centralized generation facilities. ?You burn up the economics, either the financial or environmental economics,? he said. However, building a series of distributed generation units with capacities of 10 MW closer to the source of the materials would improve the economics of biomass power. Another major boost to biomass power economics would be to develop greenhouse gas emissions protocols, coupled with an ?active carbon market,? said La Flash. The combination of protocols that allow quantification of greenhouse gas emissions and a market that allows sale of carbon credits could provide an additional source of revenue for biomass plant operators. He noted, for instance, that the development of a protocol for managing manure is likely to boost the prospects for increased use of methane from the state?s dairy industry. Likewise, La Flash said that a coming ban on open burning of agricultural waste in the San Joaquin Valley could provide material that could be turned into both bio-oil and synthetic gas. The left over char could be added to agricultural soil and would in fact represent sequestered carbon. La Flash urged the state to help fund development of technology to enable such use of agricultural waste. Even as technology advances, numerous regulatory barriers continue to make it difficult to build bio-energy projects, said Ruth MacDougall, Sacramento Municipal Utility District, biomass program manager. The problem, she said, is that ?regulatory silos? are ?usually focused on controlling a single element despite existence of cross-agency benefits.? For instance, dairy manure digesters can have a negative impact by percolating salts from waste into the Central Valley water table, but they also have the potential to reduce emissions of smog-forming nitrogen oxides and greenhouse gases, MacDougall noted. New technologies, such as better liners for waste ponds, and better manure management techniques could help solve the sale problem. The California Environmental Protection Agency is examining how to solve the salt contamination problem, said CEC member James Boyd. Likewise, the lack of standards is hampering the advancement of bio-fuels for transportation. The California Air Resources Board is addressing the standards issue by amending its gasoline standards and developing new standards for bio-diesel, said Robert Sawyer, Air Board chair.

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