Comment Log Display

Dear Chair Nichols,

Enerkem appreciates the opportunity to provide comments regarding
the concept paper developed by the Air Resources Board (ARB),
Cap-and-Trade Auction Proceeds Second Investment Plan (Second
Investment Plan).  

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.
Converting residual wastes into renewable low-carbon liquid fuels
reduces greenhouse gas (GHG) emissions by displacing the use of
fossil fuels in transportation, and reduces emissions of methane—a
potent greenhouse gas—resulting from the landfilling of organic
wastes.

Our facility in Edmonton, Alberta (Canada) is the world’s first
commercial biorefinery to use municipal solid waste (MSW) to
produce biomethanol and ethanol. We are currently developing
biorefineries in North America and globally using our proprietary
biofuels technology, developed in-house since 2000. We are actively
exploring opportunities to invest in future waste-to-biofuels and
renewable chemicals facilities in the State of California.

Enerkem supports ARB’s Second Investment Plan and believes that
investment of Greenhouse Gas Reduction Fund (GGRF) funds in the
concepts outlined in the Plan will make a significant contribution
to reducing GHG emissions in California. We have a number of
specific comments and recommendations in relation to the areas of
Enerkem’s business and technical expertise: the potential for
emissions reductions and economic development relating to waste
diversion and the production of low carbon fuels and chemicals.

Incentivizing in-State production of low carbon fuels:

Given that the transportation sector is the economic sector with
the greatest emissions in California, responsible for 37% of all of
State GHG emissions, we strongly agree with the Concept Paper’s
inclusion of low carbon fuels as an essential part of ARB’s Second
Investment Plan. Low carbon liquid fuels such as those produced by
Enerkem can be added to the gasoline pool and used in today’s
vehicles and with existing storage, blending and distribution
infrastructure. They can be blended into gasoline at levels of up
to 15% for most existing conventional passenger vehicles and up to
85% for use in Flex-Fuel vehicles, of which there are an estimated
one million vehicles on the road in California today. 

Currently, much of the renewable fuel used in California is
imported. With the right policy signals however, California can
encourage the build-out of in-State production capacity for low
carbon renewable fuels. Growing in-State production capacity for
these fuels will help to achieve the deep emissions reductions that
California is targeting—by increasing the supply of low-carbon
fuels on the California market—as well as drive economic
development in California’s Disadvantaged Communities. Enerkem
therefore supports the inclusion of incentives for in-State
production of low carbon renewable fuels in the Second Investment
Plan, as proposed in the draft Investment Concepts for
Transportation and Sustainable Communities (Figure 3, p. 12) in the
Draft Concept Paper. 

Such incentives, to be effective, should be designed to instill
investor confidence and overcome the significant challenges
associated with financing of innovative technology projects.
Programs and policies that address project financing—including
capital grants, loans and loan guarantees, as well as tax and
production incentives—are the most effective approaches for
attracting private investment. In addition, such programs need to
have sufficient time frames to allow for the planning, permitting
and construction of commercial-scale facilities.

The Draft Concept Paper further recognizes the importance of
investing in waste-to-fuel technology in the list of draft
Investment Concepts for Natural Resources and Waste Diversion
(Figure 7, p. 21). Enerkem supports the proposal to reduce methane
emissions from organic waste by investing in equipment and
infrastructure to create transportation fuel from residual biomass.
However, to ensure that the opportunity for reducing GHG emissions
through the conversion of urban wastes is captured, we recommend
that the Second Investment Plan specifically identify the use of
mixed non-recyclable MSW, and industrial and commercial wastes, for
such ends.

Economic and environmental benefits for Disadvantaged Communities:

Waste-to-biofuels facilities are uniquely positioned to co-locate
with existing waste management and/or petroleum refining
infrastructure. Because conventional waste treatment and refining
infrastructure generates air pollution and carries other
environmental risks that can negatively impact public health, many
potential sites for developing new waste-to-biofuels facilities are
located in areas designated as Disadvantaged
Communities—communities that are disproportionately affected by
environmental pollution and home to low-income and vulnerable
populations.

Siting new innovative waste-to-biofuels facilities in such
communities will have numerous positive impacts locally on public
health and economic development, including:
• Diversion of waste from landfills decreases air pollution as well
as other environmental nuisances that negatively impact public
health including odours, noise and dust;
• Siting of waste-to-biofuels facilities near waste transfer
stations reduces the volume of waste being sent to landfill and
thereby reduces the transportation emissions associated with
transportation of wastes;
• Waste-to-biofuels facilities generate high quality jobs and
stimulate the local economy. For example, an independent study by
Doyletech Corporation evaluated that 610 direct and indirect jobs
were created during the construction of the Enerkem Alberta
Biofuels facility in Edmonton, Canada, while 152 direct and
indirect permanent jobs are created during operations. Net local
economic benefit is estimated at $50 million USD annually.

Beyond the communities where facilities are located, growth in
clean domestic infrastructure for waste conversion and production
of biofuels and renewable chemicals will bring economic advantages
for all of California. Benefits include securing inward investment,
developing new industry expertise in a range of existing and
emerging technologies and providing security of supply. Once a
California-based industry is established, these companies will be
able to export this technology and its associated service sector
elsewhere in the United States and around the world, maximising the
return on the initial investment. 

Technology and end-use neutrality to maximize GHG emissions
reductions and economic benefits:

Enerkem supports the use of GGRF funds to drive further reductions
in GHG emissions. The Draft Concept Paper indicates that organic
waste is responsible for more than half of the State's methane
emissions and rightly identifies the importance of diverting waste
from landfill to reduce emissions of methane. However, on p. 20 of
the Concept Paper, only composting and anaerobic digestion are
mentioned as available technologies for redirecting organic matter
from landfill for generation of energy and other useful products.
As other technologies exist for converting organic material to
biofuels and renewable chemicals and bioproducts—including
Enerkem’s proprietary thermochemical technology—we wish to stress
the importance of technology neutrality in the Second Investment
Plan. Programs to incentivize organic waste diversion and
conversion of wastes to biofuels and other useful products should
be technology and end-use neutral, and prioritize projects solely
on the environmental benefits that can be delivered, in order to
maximize the emissions reductions achieved by the Plan.

Technology and end-use neutrality is particularly important in the
context where we see a growing convergence of the biofuels and
chemicals industries. Increasingly, companies are developing
integrated biorefineries that can produce a range of end-products,
including biofuels, biobased chemicals, electricity and a variety
of co-products. The multi-product approach allows to capture
greater value from wastes and residues and to mitigate market risk,
thereby increasing the potential for waste conversion and the
associated emissions and other environmental benefits. 

We look forward to further engaging with ARB over the process to
develop the Second Investment Plan, to ensure that GGRF funds are
invested wisely and yield the highest possible dividends in terms
of GHG reductions, other air quality benefits, petroleum reduction,
benefits to Disadvantaged Communities, and the expansion of
California’s clean economy. 

Sincerely,

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