California Adopts a Low-Carbon Fuel Standard

April 29, 2009

The California Air Resources Board (CARB) adopted a regulation on April 23 that aims to achieve a 10% reduction in greenhouse gas (GHG) emissions from California's transportation fuels by 2020. The new Low-Carbon Fuel Standard (LCFS) is aimed not at reducing the total amount of fuel consumed, but rather the GHG emissions associated with each gallon of gasoline or diesel fuel sold, or associated with the equivalent amount of substitute fuel sold. The shorthand expression for this goal is a 10% reduction in the GHG intensity of the fuels. Meeting the LCFS is expected to account for almost 10% of the total GHG emissions reductions needed to meet the state's mandate of reducing its total GHG emissions to 1990 levels by 2020. A number of other measures related to fuel economy, mass transit, and reducing vehicle use will further cut the state's GHG emissions from transportation.

The LCFS is mainly intended to diversify the state's transportation fuels and boost the market for alternative-fuel vehicles. The standard will apply to major providers of transportation fuels, each of which will be required to achieve a specified GHG intensity for the fuels it sells each year. Fuel providers that achieve lower GHG intensities will generate credits, which can be sold to fuel providers that fail to meet their specified GHG intensity. In addition, non-traditional suppliers of clean fuels, such as electric utilities or biogas producers, can "opt-in" to the program and earn credits for their sales of low-carbon transportation fuels. This allows the LCFS to provide incentives for electric vehicles and other alternative-fuel vehicles. The LCFS takes effect in 2010 for reporting purposes, but compliance isn't mandatory until 2011. The standard aims to encourage new fuel technologies by placing most of the GHG intensity reductions near the end. For instance, the GHG intensity drops by only 5% by 2017, then drops another 5% in the final three years.

The technically difficult part of the LCFS is its attempt to account for the "life-cycle" GHG emissions of all fuels. For biofuels, that includes such factors as the emissions associated with the fertilizer used for the crop; the energy used to grow, harvest, and transport the crop; the energy used to convert that crop into fuel; and the energy used to deliver that fuel to market. The LCFS includes standard values for fuels produced by different pathways, including 11 different pathways for ethanol produced from corn, but it seems to neglect such options as using landfill gas or manure to power a corn ethanol refinery. However, the LCFS does provide a process for fuel providers to petition for the use of different GHG intensities for their specific fuels. The LCFS also attempts to account for GHG emissions associated with land use changes caused by growing corn and sugarcane, an approach that corn ethanol producers have taken issue with. See the CARB press release, the full regulation (PDF 1.2 MB), and the response from the Renewable Fuels Association, an ethanol trade group. Download Adobe Reader.