Planning Commission raises voluntary community benefit options in P66 biofuel conversion
The Contra Costa County Planning Commission discussed a community benefit of $0.25 per barrel refined for the proposed P66 biofuel conversion and then approved the project with only voluntary commitments.
In a special meeting on March 30th to certify the Final Environmental Impact Report for the Phillips 66 (P66) Biofuel conversion, Commissioner Ross Hillesheim brought up a suggestion from a community member that called for a $0.25 per barrel “return to source” community benefit for the City of Rodeo. Commission members Kevin Van Buskirk and Bob Mankin also expressed interest in the idea.
Planning Department Director John Kopchik said that one of the conditions of approval calls on P66 to enter into a voluntary community benefits agreement and the details of that agreement would ultimately be approved by the Planning Commission. He also noted that the project is in the last phase of approval so long as the commission’s decision is not appealed.
After the discussion Council Members voted unanimously to approve the Biofuel conversion that P66 has dubbed Rodeo Renewed. The planning commission staff recommended some changes in the language of the proposal relating to “track-out” onto roadways during the construction process and odor management was changed to include the word “prevention” along with increased consultation with the air district and regular monitoring reports but the voluntary community benefit agreement was not changed.
This is the second refinery biofuel conversion to go before the Planning Commission this month. The previous week the Commission unanimously approved the Martinez Renewable Fuels Project which will convert the Marathon Refinery to process tallow and vegetable oils into renewable diesel. Once completed the Marathon project would have the capacity to produce 48,000 barrels of renewable fuels per day. This would be one of the largest renewable fuels production facilities in the world, second only to the neighboring P66 project which would have a daily capacity of 67,000 barrels.
California’s Low Carbon Fuel Standard (LCFS) has spurred a number of renewable fuels projects across the state. LCFS is a subsidy scheme that requires the producers of fuels with higher carbon intensity (CI) to purchase credits from producers of fuels with a lower CI such as electric vehicle charging, hydrogen and biofuels. Producers of biofuels can also take advantage of the federal tax credits under the Renewable Fuel Standard. The combination of subsidies has made the conversion to biofuels particularly attractive in California especially during lag in fuel prices created at the height of the Corona virus pandemic when both the P66 and the Marathon projects were proposed.
The LCFS was developed by the California Air Resources Board (CARB) in 2009 in response to an executive order issued by then Governor Arnold Schwarzenegger. CARB representatives spoke as part of the project presentations for both the P66 and Marathon conversions. CARB’s Deputy Executive Officer for Climate Change Research Rajinder Sahota explained during the meeting that CARB uses a “Well to Wheel” life cycle analysis that includes emissions from the production of feedstocks, transportation of those feedstocks to the refinery, production emissions at the refinery, transportation to fueling stations and tailpipe emissions to determine the carbon intensity of fuels. “Crop based emissions from soy oils also include emissions from land use change,” said Sahota.
Environmental organizations and community members expressed specific concern about land use change and possible increase in food commodity prices driven by the use of vegetable oils for fuel. Land use change can refer to peat bogs, rainforest, prairie grasslands or other existing ecological systems that are converted for agricultural production.
During the public comment period, organizational representatives and individuals referred to a study entitled Environmental Outcomes of the US Renewable Fuel Standard (RFS) by Lark et al. published this year. As mentioned the RFS is a federal subsidy designed to encourage biofuels which is similar in structure but less aggressive than California’s LCFS. The study found that the RFS had produced significant changes in land use and food prices.
“[T]he RFS increased corn prices by 30% and the prices of other crops by 20%, which, in turn, expanded US corn cultivation by 2.8 Mha (8.7%) and total cropland by 2.1 Mha (2.4%) in the years following policy enactment (2008 to 2016). These changes increased annual nationwide fertilizer use by 3 to 8%, increased water quality degradants by 3 to 5%, and caused enough domestic land use change emissions such that the carbon intensity of corn ethanol produced under the RFS is no less than gasoline and likely at least 24% higher,” wrote Lark et al.
In her presentation in support of the project CARB representative Sahota said, “Concerns have persisted since the beginning of the program that somehow LCFS would redirect food crops to fuels. There is no data to support that at this time. However, this is an area that we will continue to monitor and engage with stakeholders over the next year.”
The Lark study was included with a letter submitted for public comment by the National Resource Defense Council and endorsed by several social justice and environmental organizations including the Center for Biological Diversity, 350.org Contra Costa, Communities for a Better Environment and the California Environmental Justice Alliance.
The letter from environmental organizations included over 100 pages of comments pointing out “deficiencies” in the DEIR. The letter called attention to potential dangers related to the increased use of hydrogen to process renewable feedstocks and provided detailed comments on the DEIR’s assessment of land use change and climate impacts. The letter also claimed that DEIR used an incorrect baseline emissions level to estimate the total emissions reduction from the project.
NRDC argued that the baseline was incorrect because P66 Rodeo and the Santa Maria Refinery, which are connected via pipeline, are facing a decline in crude stocks that are available through existing permits, pipelines and transport terminal infrastructure. The letter claimed that the planned closure of the Santa Maria Facility creates a supply shortage for the Rodeo Refinery that would only allow the plant to run at half its capacity. And without a permitted increase in crude delivery over the P66 marine terminal this bottleneck condition could lead to near-term closure of the Rodeo Refinery.
According to the comment letter, if a baseline that reflected the declining supply of crude feedstocks had been used to evaluate emissions reduction of the project the emissions reduction benefit for the project would be drastically reduced and could even constitute a net increase in emissions.
The EIR for the project revealed a list of unavoidable impacts related to rail traffic and loading and unloading activity that could expose sensitive areas to pollutants or invasive species. This prompted the planning department staff to produce a statement of overriding consideration which, under CEQA, allows a reviewing agency to approve a project with unmitigated environmental effects if the agency determines that the project benefits outweigh the adverse impacts.
Charles Miller, the superintendent of the John Swett Unified School district which serves students in the Rodeo area said in his comments at the meeting that P66 has been a responsive and supportive community partner for the school district and had raised over $2 million in a period of 10 to 15 years for the district’s career academy which is a pipeline for students to work at P66. He added that the refinery has demonstrated their concern for the safety and well-being of students by contacting him immediately if an “issue or need” arises.
Richard Lukini whose written comments spurred the commissions’ discussion of the $0.25 per barrel community benefit surcharge expressed his appreciation for P66 support of the Rodeo Community Recreation Project that he started. He also praised P66 for providing heavy equipment, manpower and funding for local wildfire prevention. “A corporate good neighbor is an asset to our community,” he said.
Lukini went on to describe a vision for how the funds from the per barrel surcharge might be used, “This revenue shall be returned to the community of Rodeo for building new recreation facilities, maintaining those facilities, civic projects and community clean-up and maintenance.” Lukini estimated that a production rate of 60 thousand barrels a day would generate $4.5 to $5.5 million a year.
Reverend Anthoney A. K. Hodge, pastor of the Zion Hill Baptist Church and director of the New Horizons Career Development Center in Rodeo said that P66 has supported the center in providing employment assistance services, life skills and parenting training. He also mentioned P66 support of a GED program and a “Breathe Easy” program which provides equipment for people with respiratory health issues.
Commissioner Jeff Wright spoke first during the final deliberations section of the meeting.
“It is a raw point for me when one has to go through a tremendous gauntlet to get to a certain point, they have to dot all the i’s and cross all the t’s and meet all these requirements and pay all these fees and then we as a commission want to impose greater requirements. I am particularly speaking in terms of a community benefit. It sounds like P66 has been a pretty good corporate neighbor based upon the report from those in the community who have benefited by their effort. I think that once they have come through the gauntlet and if there is something that needs to be a requirement at the permit stage then it has to be at the front end. The project, in my estimation will greater benefit than cost,”
Commissioner Mankin added that some county projects could only get funded through this kind of return to source program but he agreed that the community benefit should be voluntary considering that the project developers had been through such a long approval process.
Commissioner Van Buskirk expressed the value of taking incremental steps in the transition away from fossil fuels. “I hear so much of folks that want to just shut down the refineries, and decommission them. We are not ready for that, families are not ready for that.”
Commissioner Bandari expressed enthusiasm that the project moves the county forward in terms of reducing the impact of fossil fuels while preserving jobs that support the local economy.
Hillesheim and Amin suggested that planning department staff make note of the commissioners’ views on issues like the inclusion of representatives from the City of Rodeo in discussions of the community benefit, a clear definition of the transition period and strengthening the odor management plan. The commission unanimously approved the project with no additions to the staff recommended changes.
“I love the idea of compromise, the most progressive state, the most progressive government in the world working with the oil companies to find common ground for the next stage,” said Commissioner Hillesheim.
