California Courts Reconsider Ethanol-Related Greenhouse Gas Issues

By Todd J. Guerrero | November 03, 2008
In March, Time magazine published an article in which its author concluded that with respect to global warming, biofuels aren't part of the solution but instead part of the problem.

Time based its conclusions in part on a study by Tim Searchinger, published in February in Science. The study, titled "Use of Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," found that corn-based ethanol, instead of producing up to 20 percent carbon dioxide savings, instead nearly doubles greenhouse gas emissions over 30 years and increases greenhouse gas emissions for 167 years.

The theory in the study was that converting unused forest or grasslands to grow biofuel feedstock releases more previously stored greenhouse gas emissions than is saved on a life-cycle basis by replacing gasoline with biofuels. Reaction from biofuels supporters and experts was swift, including at least one point-by-point refutation and reference to other studies that raise serious questions about the assumptions used by Searchinger, et al.

EPM readers are of course familiar with this policy and scientific debate. But now it appears that the courts will soon be weighing in on the question of whether biofuels, and specifically ethanol, effect climate change.

In late September, oil refining giant Tesoro Corp. filed an action in Superior Court in Sacramento, Calif., seeking to invalidate and stay enforcement of the California Air Resources Board's recent adoption of regulations that require refiners to increase the amount of ethanol in California gasoline.

At issue in the litigation is CARB's adoption of amendments to the California Reformulated Gasoline Regulations. The new CaRFGs will require refiners to increase the amount of ethanol in California gasoline from the current level of 5.7 percent to 10 percent by Dec. 31, 2009.

In its petition, Tesoro makes essentially two claims. First, the company argues that in adopting any changes to CaRFG regulations, CARB must first assume that any new amendments "maintain or improve upon emissions and air quality benefits" achieved by previous CaRFG regulations. In adopting the new regulations, Tesoro argues that CARB failed to follow this standard because the additional ethanol blending required by the new amendments will result in additional ethanol production, presumably causing increased greenhouse gas emissions. As evidence that increased ethanol production will lead to negative greenhouse gas impacts, Tesoro cites as authority the same Searchinger study reported in the March 2008 Time article.

Tesoro further alleges that CARB also failed to evaluate the cost that the amendments will visit upon refiners and California consumers. Under separate provisions of California law, before CARB can adopt or amend any standard relating to motor-vehicle fuel specifications, CARB must determine the cost-effectiveness of the new standard. Previously, CARB had estimated it would cost $200 million to $400 million in capital improvements to make the refinery modifications required to bring gasoline into compliance with the new regulations.

Citing a report from the California Energy Commission, Tesoro alleges that the estimated cost to consumers and businesses of the CaRFG amendments will be 4.2 to 5.6 cents per gallon, or $716 million to $1.1 billion per year.

A response from CARB is expected in the first quarter of 2009.

Todd J. Guerrero is an attorney practicing with the Agribusiness and Energy group at Lindquist & Vennum PLLP. Reach him at tguerrero@lindquist.com or (612) 371-3211.