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Thank you, Your Honor, I do have a few questions for this witness.

David Pettit

Posted June 21, 2012

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I've been a litigator my entire career.  I love trial court work.  Few things are more fun during a trial than cross-examining an expert witness who is making things up. 

I was thinking about this Tuesday during an industry-sponsored conference in Sacramento on California's low carbon fuel standard (LCFS).  My colleague Simon Mui has blogged on the state of play at the conference here

One topic at the conference was a study commissioned by the Western States Petroleum Association (WSPA), a frequent critic of the LCFS.  Not surprisingly, given who paid for it, the report predicts dire consequences for California if the LCFS continues in force. 

It’s one thing to present a report to a room of people, but it’s another thing to put a study like the one WSPA paid for under the kind of scrutiny it would get in court.  As U.C. Davis professor and California Air Resources Board member Dr. Daniel Sperling pointed out forcefully at the same conference, the entire study is based on three assumptions, none of which turns out to be true or backed up by the report itself. 

First, the study assumes that the number of advanced technology vehicles in California will remain "small" in California through the second LCFS compliance period (ending in 2017).  The study does not contain any analysis, or even a number, showing what Boston Consulting assumes this "small" number to be.   It assumes (without analysis) limited adoption of plug-in electric and natural gas vehicles, and ignores the requirements of California's zero-emission vehicle law. 

Second, the study assumes "no commercially available cellulosic ethanol" during this period.  "Cellulosic" in this sense means feedstock that doesn't have sugar in it; so, no corn.  This assumption ignores the fact that the very purpose of the LCFS is to help spur development of these fuels. 

Third, the study assumes that oil refineries have no way to comply with the LCFS but to stop selling gasoline.  This ignores the fact that, right now, the LCFS system is working as designed and there is no basis for assuming that the feedstocks for low carbon intensity fuels will suddenly go away between now and 2017.  Indeed, as Dr. Sperling pointed out, the historical record shows continually increasing -- and cheaper -- supplies of ethanol.  

These assumptions are the three-legged stool on which the entire WSPA study rests.  Once Dr. Sperling, or a cross-examining lawyer, kicks each leg away, the study collapses.  A stiff cross examination in court would reveal that the WSPA study doesn’t have a leg to stand on.

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Jeff HazleJun 22 2012 11:57 AM

1. If BCG is even mildly competent as a consultant then they are not assuming that the number of advanced technology vehicles will remain "small" (although they may be guilty of imprecision). The number of these vehicles currently in use is known and a little homework reveals automakers' plans to produce them. From the vehicles' price, availability, and what we know of consumer acceptance and technology development it is reasonable to make a projection of the number of these vehicles that will be deployed.
2. BCG doesn't have to assume cellulosic ethanol will not be available. It is a reasonable projection from where we are today (zero commercial production) and what we know of the technology's development (still unproven) and its economics (not attractive).
3. I don't think anyone is ignoring the fact that the purpose of the LCFS is to spur development of low carbon fuels. What you choose to ignore is its failure to actually spur development on a schedule that makes the LCFS feasible. (The LCFS shares this trait with the federal EISA (2007) which legislated that 250 million gallons of cellulosic ethanol would be available in 2011. Actual production? zero.)
4. The third assumption listed above isn't really an assumption. It's a conclusion. If sufficient alternative technology vehicles aren't on the road and cellulosic ethanol isn't available then California has no way to comply with the LCFS, much less the oil refineries .

BSJun 22 2012 12:42 PM

I love California's progressiveness. The rest of the country tends to benefit from their bad investments....

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