Industry's Exorbitant Cost Claims about Renewable Fuels Don't Hold Water

California’s Low Carbon Fuel Standard (LCFS), which requires oil companies to supply the market with cleaner, alternative fuels, had a big win on Monday when the Ninth Circuit Court of Appeals blocked a trial court’s injunction. The standard will now move forward as the case is still being heard, helping transition California to cleaner, alternative fuels that reduce our oil dependency and lower our carbon pollution.

Unfortunately, opponents are on the attack again. The California Trucking Association (CTA) released a report today claiming that increased supplies of renewable fuels will increase prices. But a review of the CTA analysis shows their cost claims just don’t hold up.

The study’s authors - Stonebridge Associates – did not use any of the cost estimates readily available from the multitude of peer-reviewed studies. They did not rely on any published numbers from renewable fuel companies, themselves, or those from the U.S. Department of Energy (DOE), the International Energy Agency (IEA), the U.S. Environmental Protection Agency (EPA), or the California Air Resources Board (CARB). (It should also be noted that Stonebridge lists CTA as a client on its web site, which implies that CTA hires the firm for legislative and policy consulting versus Stonebridge being an expert in independent research and analysis, which this report purports to be).

Instead, CTA pulled numbers from a single, draft scenario presented by one analyst at a government workshop last year. The scenario raised so many eyebrows and was so heavily redacted due to errors and methodological questions that it was never published in the final report.

CTA makes no mention of this. In fact,the actual cost assumptions weren't even reported anywhere in the study. In an earlier blog I showed how the oil industry association also used a virtually identical strategy to attack the standards.

In the figure below, I compare CTA’s cost numbers against different published technical studies. You can see that CTA’s cost numbers - again taken from a largely redacted analysis - are not only several times higher, but they increase over time! The increasing costs over time contradicts general industry experience that costs of new technologies fall over time due to innovation, economies of scale, and learning-by-doing. If they had simply used assumptions from the technical literature – as opposed to an unsubstantiated source -- they would likely have shown cost savings.