Work continues on the high priority issues identified in the work plan:

1. July 2010 Status ReportSubgroup 2:Issues Related to Co-Product CreditsAlan Glabe (ARB), Phil Heirigs (Chevron), Paul Hodson (European Commission), Stephen Kaffka (U.C. Davis),Don O’Connor (S&T)2, Mark Stowers (POET)Presented to the LCFS Expert Workgroup July 15, 2010Sacramento, CA

2. Task 1: Identify Methodologies and Inputs Used to Assess Co-Product Impacts in ARB’s Current Carbon Intensity Estimates and those Used in Other Researchers’ LCA Modeling • Work continues on compiling information on the treatment of co-products in various LCA evaluations. This is taking the form of a spreadsheet table that identifies the fuel pathway, co-products from that pathway, the co-product accounting method and assumptions, value of the credit, and the basis for the estimates.

3. Task 2: Identify, Prioritize, and Analyze Issues Related to Co-Product Impacts that can be Addressed in the Short-Term Work continues on the high priority issues identified in the work plan: • Diet substitution effects/displacement ratios for co-products used in animal feed – A meeting was held on June 30 with a number of animal nutrition and feed experts (a summary follows). Another meeting is planned for late-July/early-August.

4. Animal Feed and Nutrition Expert Meeting Summary • A number of invited experts met with members of the Co-Products Subgroup on June 30 to discuss biofuel co-product feed issues: - Galen Erickson (University of Nebraska-Lincoln) - Dave Fairfield (National Grain and Feed Association) - Kirk Klasing (UC Davis) - Fred Owens (Pioneer Hi-Bred International) - Richard Zinn (UC Davis) • Dr. Owens presented information on his research into variability of DGS and its impact on nutritional value and trace compounds. • Dr. Erickson presented data on recent work he and others at UNL have done on animal feed displacement for DGS. • Dr. Klasing gave an overview of the biofuel co-product feed situation for poultry and swine.

5. Animal Feed and Nutrition Expert Meeting Summary Key Take-Aways... • There is considerable variability in DGS used in feedlots. • The forage diet used in conjunction with DGS should be accounted for in estimating impacts (e.g., corn stocks and other agricultural residue are often used – this is observed in reduced alfalfa acreage in Nebraska). • The ultimate mix of feed material depends on economics. • Given the above, experts within the beef cattle, dairy cattle, poultry, and swine arenas have been asked formulate four or five different diets that reflect different combinations of diverse feed mixtures reflecting possible feed price changes. This will allow for estimating a range of potential co-product estimates for different animal types.

6. Animal Feed and Nutrition Expert Meeting Summary Key Take-Aways (Continued)... • There was a discussion of whether the U.S. feed market might become saturated with DGS as corn ethanol volumes increase to 15 BGY. Although saturation may become a regional issue, it is thought that DGS at the 15 BGY level can be absorbed into the U.S. feed market because it displaces soybean meal (SBM) and there is strong worldwide demand for SBM. • Several points are worth highlighting with respect to Dr. Erickson’s work: - Some animal species see an increase in feed efficiency when DGS is used and some do not. - For some species DGS will replace SBM and in other species it will not. - There are no species where DGS replaces only corn and does not show an increase in feed efficiency.