CA to Create World’s First Low-Carbon Fuel Standard

By Published On: January 12, 2007

To curb the largest source of greenhouse gas emissions in the state – more than those from power plants – and boost a burgeoning alternative-fuels market, the governor promised to order that fuels for cars and other motor vehicles be at least 10 percent less polluting by 2020. The state is supposed to set fuel performance standards, and the governor expects the market to handle the pollution decreases he’s calling for. “I ask you to encourage the free market to overthrow the old order,” Governor Arnold Schwarzenegger said January 9 during his State of the State address. “California has the muscle to bring about such change. I say use it.” When the executive order will be issued is not known. The governor’s spokesperson on January 11 would say only that it would be “in the near future.” The low-carbon rules are expected to reduce greenhouse gas emissions from the vehicles sector by 13 million metric tons over the next 13 years. The transportation fuel rules will be imposed on oil companies and other fuel suppliers to help meet the 25 percent carbon dioxide reduction target in California by 2020 under AB 32. That greenhouse gas reduction law mandates emissions cuts only from the electricity sector and the state’s other largest stationary sources of global warming gases. The new rules, however, would presumably keep AB 32’s CO2 reduction goals from being undermined by the transportation sector. An earlier, precedent-setting law in 2002 by Assemblymember Fran Pavley (D-Agoura Hills) restricting tailpipe emissions from autos has been in litigation with automakers. The U.S. Supreme Court is set to decide its fate. The newly proposed rule instead targets fuel extractors, refiners, and suppliers. The governor also urged legislators to appropriate funds needed to implement the global warming legislation. “That way we can become part of the world market that is already trading credits” for the reduction of greenhouse gases, he said. A cap-and-trade program is one of the voluntary measures on the table under AB 32. However, the governor is a strong proponent of a carbon market. The governor called for $24 million to fund the air board’s implementation of AB 32 in his proposed 2007-08 budget blueprint (see story on page 1). The California Air Resources Board is responsible for implementing AB 32, but its current budget does not include implementation funds. At this point, CARB is basically a one-person shop run by Chuck Shulock, assistant executive director, with some assistance from other staffers, said Jerry Martin, air board spokesperson. The air board is also charged with developing the low-carbon fuel standard with the California Energy Commission. The Energy Commission is analyzing the costs of alternative fuels under AB 1007. It plans to release its fuels study this summer and will send it to the air board along with a schedule to implement the low-carbon standard no later than June 2008. The carbon-reduction standard will qualify as an early voluntary CO2 reduction action under AB 32. The transportation carbon limits will apply to total greenhouse gases emitted during the entire fuel cycle – “from well to wheels” – whether from ethanol, hydrogen, or a new concoction. The output will be measured in grams per Btu. Fuel producers that reduce the carbon output of their fuel by more than 10 percent of the baseline would be able to bank those credits or sell them to other fuel producers, according to Dan Skopec, California Environmental Protection Agency undersecretary. “It is a needed first step,” said Roland Hwang, Natural Resources Defense Council vehicle policy director. “We need to go beyond 10 percent.” The transportation sector produces 41 percent of the state’s global warming gases. The CEC greenhouse gas emission inventory shows total 2004 emissions of 492 million tons, with transportation responsible for 200.2 million metric tons. Cars and other motor vehicles are also the largest and growing source of carbon dioxide emissions. The electricity sector is responsible for about 30 percent of the state’s CO2. No specific alternatives to replace fossil fuels were directly endorsed during a press conference prior to the governor’s State of the State speech. However, ethanol blends were listed as the top 2 of 10 possible fuel options. In addition, a California ethanol fuel producer founder, former Republican secretary of state and legislator Bill Jones, was the sole representative from the alternative-fuels industry promoting the governor’s new order. Also spotlighted were electric and plug-in hybrid vehicles. Pacific Gas & Electric plans “to provide the infrastructure for the new grid” to accommodate these less polluting vehicles, said Tom King, chief executive officer. GM is building plug-in hybrids and hopes to have some running by 2008. Another company, Phoenix Motorcars, is manufacturing a different kind of hybrid car, in which the gas is used solely to recharge the vehicle battery. It hopes to begin selling them by the summer of 2008, according to Efrain Ornelas, PG&E clean-air transportation department senior program manager. Phoenix is seeking subsidies from the Air Resources Board to help bring down the projected cost of the vehicle, which is estimated at $45,000. – Elizabeth McCarthy

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