Transportation Fuel Providers Clash with Officials

Competitors are staking their claims in California's multibillion-dollar-a-year gasoline and diesel market as state agencies develop a policy plan for the transition to alternative transportation fuels. But stakeholders also complain that the plan may tilt the alternative-fuels-market playing field, giving some players an unfair advantage. "We would really like to see more transparency in how you're putting together a plan," said Dave Modisette, California Electric Transportation Coalition executive director. He said the agencies appear to be working from a hidden "road map" that will not give electric vehicles, plug-in hybrid cars, and other alternative-fuel technologies an equal footing under the upcoming plan. "I'm disappointed this is more of a business-as-usual case," said Patricia Monahan, Union of Concerned Scientists senior analyst. She urged the agencies to set clear goals on how to advance technologies that will clean up smog and reduce greenhouse gas emissions in their upcoming plan. The blueprint - which the California Energy Commission and Air Resources Board must jointly complete by next summer under a 2005 law, AB 1007 - will lay the groundwork for new binding fuel standards aimed at minimizing the environmental impacts of transportation. It also will recommend how the state should prioritize financial incentives for alternative fuels. The planning proceeding parallels the state's development of its greenhouse gas emissions standards. The agencies also are developing the alternative-fuels blueprint as California considers tougher rules to reduce urban smog after air pollution reductions have stalled in many areas over the past several years (Circuit, Oct. 13, 2006). "Frankly, we're not debating the goals," said CEC member James Boyd at a joint agency meeting on the plan October 16. "The goals are set in the law. We're debating the plan to reach the goals." At issue was a draft alternative-fuels-market assessment by TIAX, a consultant to the commission in the planning proceeding. The agencies are using the assessment as a starting point for developing their policy recommendations on increasing the market share of alternative fuels in California. It shows that under current market conditions, biofuels - ethanol, biodiesel, and the synthetic fuel made from natural gas using the Fischer-Tropsch process - will gain significant shares, largely as blends mixed with gasoline and diesel fuel. TIAX projected little market share for other types of fuels, including electricity, natural gas, and propane. "My fear is we're headed into another silver-bullet approach where we look for two or three major solutions," said Modisette, whose coalition represents state utilities and other companies involved in electric transportation. While there are few electric vehicles on California streets, Modisette pointed out that there are 300,000 non-road electric vehicles in California, plus major plans for electrifying ships in ports, increasing ridership on electric commuter trains, and replacing diesel-powered refrigeration units on trucks with electric motors. The agencies appear to be downplaying the success of natural gas for transportation by relying on data that are out of date and do not reflect the recent growth of the clean fuel, said Michael Eaves, California Natural Gas Vehicle Coalition president. Sempra Utilities and Pacific Gas & Electric belong to the coalition. Eaves said use of natural gas as a transportation fuel is increasing rapidly in California because of its clean-air benefits and low cost compared to diesel fuel and gasoline. Others in his coalition voiced concern that artificially high assumptions for the future price of natural gas might tilt the playing field in favor of other fuels under the upcoming plan. Lorraine White, CEC project manager in the planning proceeding, defended the draft market assessment. Before planning how to promote the cleanest fuels, she said, the agencies must understand the current state of alternative fuels in the marketplace to identify barriers to their acceptance. The impacts of the plan are expected to be substantial in a state that burned 14.8 billion gallons of gasoline and 4.1 billion gallons of diesel fuel in 2004. California is seeking to cut its dependence on petroleum, as outlined in the CEC's 2003 and 2005 Integrated Energy Policy Reports. Under those reports, alternative fuels will have to account for 20 percent of the transportation fuel burned by 2020 and 30 percent by 2030, compared to just 6 percent today. In developing the policy blueprint, the CEC said, it will build upon the work of the state's bio-energy interagency working group, which Governor Arnold Schwarzenegger reinvigorated during the past year. The group of ten state agencies released a report earlier this year recommending that California "maximize the contributions of bio-energy toward achieving the state's petroleum reduction, climate change, renewable energy, and environmental goals" (Circuit, March 10, 2006). The CEC's staff maintained that the plan will assess all fuels equally to determine their environmental impacts and potential future role, setting five-year-interval goals for market penetration in 2012, 2017, and 2022. Another key study in developing the plan is expected to be a "well-to-wheels" fuel-cycle assessment by TIAX. It is set to examine emissions of smog-forming pollutants, greenhouse gases, toxic air pollutants, and water pollution from the point of fuel production to its ultimate consumption in vehicles, including intermediate steps. For instance, TIAX consultant Stefan Unnasch explained that increases in electricity production needed to make more alternative fuels - such as compressed natural gas or charges for battery electric vehicles or plug-in hybrid cars - likely will be met by burning additional fossil fuels at power plants. The analysis will account for the impacts of the added fossil-fuel generation. It also will assess the fuel economy of the various alternatives. The CEC plans to finalize its market assessment in November and its fuel-cycle assessment in January. After that, the two agencies will outline scenarios for analysis in the final plan, which is expected to be released with draft recommendations in April and submitted to the Legislature after being approved by both agencies in June, according to White. - William J. Kelly

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Transportation Fuel Providers Clash with Officials

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