Comment Log Display

July 8, 2015


Dear Sir/Madam,


Enerkem appreciates the opportunity to submit comments on the
modified text for the proposed re-adoption of the Low Carbon Fuel
Standard (LCFS).

Enerkem is a leading waste-to-biofuels and chemicals company. We
produce clean fuels and green chemicals from non-recyclable
municipal solid waste, thus helping diversify energy sources while
offering a sustainable alternative to landfilling and incineration.
Our facility in Edmonton, Alberta (Canada) is the world’s first
commercial biorefinery to use municipal solid waste to produce
biomethanol and ethanol. We are currently developing biorefineries
in North America and globally, based on our modular and
standardized manufacturing approach and using our proprietary
biofuels technology, developed in-house since 2000. 

The LCFS makes California a very attractive market for the low
carbon ethanol to be produced at our Edmonton biorefinery
(currently beginning operations), and also an attractive investment
environment for developing future Enerkem facilities in the state.

We would first like to thank the Air Resources Board for taking low
carbon fuel producers’ concerns into account following the first
15-Day Modified Regulation Order by removing the limitations on the
sale and transfer of credits generated under provisional pathways.
Dropping this limitation removes a significant barrier to financing
of projects to develop new capacity for low carbon fuel production
in California and for the California market.

This change, while very important, does not resolve all issues
relating to new low carbon fuel production facilities. The proposed
rule still requires that facilities be in “full commercial
production” for at least one full calendar quarter before even
applying for a new pathway. The rule places new facilities in an
extremely difficult commercial position, by effectively requiring
facilities to be in commercial production but without possibility
to sell the fuel produced. Considering the time from submission of
a new pathway application to publishing of the CI, new facilities
would, in effect, have to be in “full commercial production” for
approximately one year before being able to sell fuel into the
California market.

This places a significant damper on any plans to develop new low
carbon fuel production facilities in California, as it is unclear
how such facilities could sell fuel produced during the first year
of commercial operations. The uncertainty concerning revenue
streams following plant construction, and the barrier to selling
fuel in the first year of operations, will undermine financing for
projects utilizing innovative fuel technologies and thereby hinder
attainment of the Air Resources Board’s aggressive CI and petroleum
reduction goals.  

The provision also creates a barrier for out-of-state new
production facilities that could potentially supply low carbon fuel
to the California market, as without a CI it is nearly impossible
to secure off-take agreements for low carbon fuel. 

Enerkem urges the Air Resources Board to remove the requirement to
have been in full commercial production for one quarter prior to
applying for a new pathway, in order to encourage the production
and commercialization of new low carbon fuels such as municipal
waste to ethanol. 

Enerkem believes that the power of the Executive Officer to adjust
the number of credits or reverse any provisional credit in the
producer’s account, until the provisional CI has been successfully
corroborated by operational records covering a full two years of
commercial operation, is sufficient to enable verification of
carbon intensity data from new production facilities. However, if
the Air Resources Board considers it necessary to have operational
data to verify the proposed carbon intensity of the new pathway at
the time of application, greater flexibility could be afforded to
companies by allowing some of this data to come from the company’s
existing pilot or demonstration facilities or from commissioning
activities at the facility for which the pathway is being
requested.

If the Air Resources Board wishes to limit pathway applications to
commercial facilities that are being built, rather than leave the
door open to the creation of pathways for which commercial projects
have not yet been developed, Air Resources Board could consider
requiring an independent engineering review and a site visit to be
included with the application for a new pathway.

We thank the Air Resources Board for the opportunity to submit
comments on the modified text for the proposed re-adoption of the
Low Carbon Fuel Standard (LCFS), and hope that the Board will make
the small changes necessary to enable low carbon fuel producers to
secure the financing required to develop new production facilities,
which will be needed to achieve the Board’s greenhouse gas
emissions reductions goals.


Sincerely,

Marie-Helene Labrie
Senior Vice-President, Government Affairs and Communications