Comment Log Display

As a renewable fuel trader and now a part of the management team at
USA BIOENERGY, LLC, I want to briefly comment on the proposed hard
price cap on LCFS credits.  From strictly a trader's perspective
the imposition of a price cap on any commodity or tradeable credit
removes the freedom of the marketplace to set the price based on
supply and demand, which is a key to a market that works for
everyone.  If the demand is higher than the supply, the market has
an incentive to find ways to generate more supply.  Likewise if the
market is oversupplied, it sends a signal to producers and
potential producers that there is greater risk in bringing more
product or credits to market and these producers make adjustments
in their business or plans.

From a management team perspective of a company that is working to
build and operate renewable fuel production facilities, it is
counterproductive to potentially limit the financial return to a
project by placing an artificial cap on one of the primary revenue
streams of the business, that being LCFS credits and it threatens
the viability of building the facility and bringing more low-carbon
fuel to the California market.  This threat against the project
economics can be at least somewhat mitigated if concurrently an
LCFS credit price floor of say $150/metric tonne were to be
instituted, thereby ensuring that loss of upside revenue is at
least somewhat mitigated by reducing the downside risk associated
with lower LCFS credit values, overall providing greater revenue
certainty and increasing the odds of funding the project.

CARB must acknowledge and appreciate that the only way that
additional low-carbon fuel will be produced and be brought to the
California market is that a reasonable degree of certainty must
exist regarding LCFS credit pricing to enable these multi-million
dollar projects to be financed.  Without that revenue certainty,
CARB's drive to lower the GHG production within the state will
likely fail for lack of available low-carbon fuel due to inadequate
funding to build the necessary production facilities.

Thank you for your time.

Paul Oesterreich
VP of Fuel Strategies
USA BioEnergy, LLC