When the standard was introduced in 2007, we were told it was a performance-based standard that would let the marketplace determine what fuels and technologies were best suited to lower California's collective carbon footprint.Ethanol from wood (cellulosic ethanol, as it is called) is fairly easy to make. The problem is hydrochloric acid is required (I'm going from my failing memory right now) which requires very costly metallurgy. I am not up on the new technologies but from what I know, nothing has reached commercial scale as of yet.
Now we're being told the only hope for the standard is to compel some industries (oil companies) to invest in technologies they may not feel are economically viable or are incompatible with their long-term business objectives.
The problem is that no amount of money can change the laws of physics. Unlocking the secret to producing huge quantities of energy from things like wood chips and municipal waste has proved to be more difficult than imagined in 2007 when the standard was introduced. As the U.S. Energy Information Administration has reported, "Progress on the commercialization of cellulosic biofuels has been slower than envisioned in 2007."
The other problem is you have to get the wood/cellulose to the plant. This is extremely expensive. Some companies are pushing "mini- plants" located within a few miles of the sources of raw materials to try to reduce this cost.
I would love another source of cheap fue to be found, but so far we haven't come up with much.