A clash over renewable-fuel policies

WASHINGTON —  California and the federal government want drivers to use more renewable fuels in their cars and trucks. That’s where the trouble lies.

The state and federal governments share a goal, but have adopted very different ways to reach it. The resulting conflict has contributed to a snarl that reaches from fuel pumps in Los Angeles to sugar cane fields in Brazil.

Along the way, the dispute has divided environmental groups and the oil industry, pitting allies against each other.

It’s even possible that the conflicting policies, both aimed at reducing global warming, could actually make things worse, some scientists said.

“There is the possibility of some very strange, very dramatic things happening,” said Jeremy Martin, senior scientist in the Clean Vehicles Program of the Union of Concerned Scientists.

What effect, if any, the disagreements will have on prices at the pump remains unclear.

Sacramento in 2007 set a ceiling on the amount of carbon dioxide and other gases that vehicles statewide can emit. The goal was to lower the ceiling gradually, leaving refiners to decide how best to reduce the carbon content of their fuels.

“We didn’t want to dictate that you have to go in a certain direction,” said Mike Waugh, transportation fuels chief at the California Air Resources Board. Markets change in unexpected ways, he said, and state regulators were planning for that.

Washington made a different choice.

Under a deal hammered out late in the administration of George W. Bush, environmentalists, the ethanol lobby, oil companies and investors in advanced biofuels agreed on a compromise. The plan called for the federal government to set quotas for how many millions of gallons of different types of renewable fuels should be blended into gasoline each year.

The federal standards were meant to provide a clear road map for investment in new types of renewable fuels, such as alcohol made from wood chips or fast-growing grasses, while also protecting the market for ethanol made from corn, a fuel with politically influential backers in Iowa and other Midwestern states.

Washington’s projections on how much of the new-style renewable fuel would be available in the U.S. have turned out to be wildly wrong. There is very little of it.

Federal regulators have nonetheless been slow to exercise their authority to relax the quotas. That has sent fuel suppliers scrambling. The hunt is taking them all over the world, with potential unintended consequences.

One of the easiest sources for additional, inexpensive renewable fuel is Brazil, which makes large amounts of ethanol from sugar cane. That alcohol fuel can substitute for “cellulosic” ethanol -- the stuff made from switch grass and wood chips -- that federal rules dictate.

But a buying spree from America could force prices in Brazil to soar.

Brazilians, who have managed for decades to curb their greenhouse gas emissions through the use of sugar cane fuel, would then have to fall back on dirtier fuels imported from other places, including the U.S.

“The situation quickly becomes untenable” unless U.S. regulators change course, according to a paper published in December by the United Nations Food and Agriculture Organization.

Environmentalists and some elected California officials worry about a potential second problem: A flood of Brazilian ethanol coming into the U.S. to meet the federal requirements would undercut innovative efforts to meet the state’s more flexible renewable fuel rules, they said.

Another alternative to wood chips and grass endorsed by the Environmental Protection Agency is ethanol made from soybeans. But much of the world’s soybean crop currently goes to make cooking oil, Rep. Henry A. Waxman (D-Beverly Hills) said at a recent hearing.

If fuel suppliers start buying up soybeans, the price will go up, he said, and alternative sources of cooking oil, such as palm oil, do more harm to the environment.

“You could wind up in the end doing something that is much worse for the climate,” said Jonathan Lewis, senior counsel with the Clean Air Task Force in Boston. “Palm oil has been a climate disaster.”

Such quandaries have spurred debate in Congress and upended alliances among lobbyists. Most environmentalists are loath to retreat from the federal mandate for renewable fuels; they would prefer to reform it. But some environmental groups have joined oil company executives in calling for the mandate to be scrapped.

The American Petroleum Institute launched an advertising campaign to pressure Congress to repeal the mandate, but Royal Dutch Shell and BP, both of which have invested in biofuels, have peeled off the effort.

“We’re at a situation now where what appeared to be a good political compromise ... doesn’t appear to be working,” Rep. Joe L. Barton (R-Texas) said.

California officials would like other states and the federal government to adopt their approach: Mandate a steady reduction in the “carbon intensity” of fuel, but let companies figure out for themselves how to get there.

“We have a lot more flexibility,” Waugh said. “We have a fundamentally different program.”

But the state’s approach has gained little traction in Congress. There are too many industries that see too much risk in the way California is going. The federal mandate ensures that billions of gallons of corn ethanol gets blended into the fuel supply, and the corn lobby is exercising its considerable influence.

Waugh is optimistic nonetheless. Federal regulators have signaled they may use their authority to recalibrate the quotas, he noted. It’s reasonable to expect that regulators will step in to prevent policies intended to reduce greenhouse gases from creating more of them, he said.

But others said there is a bigger underlying problem: The pace of clean-fuels innovation has been too slow.

“I have a good deal of faith in properly motivated marketplaces to help find solutions,” Lewis said. “But we have this enormous federal policy that hasn’t succeeded. So far we have not seen biofuels ramping up that quickly.”

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