Tradable Market Expected for Low Carbon Fuels

By Published On: October 26, 2007

Oil companies and firms that develop fuels that emit 10 percent less carbon than conventional petroleum resources will be able to trade the associated carbon credits. This potential carbon market arising out of the Low Carbon Fuels Standard will be separate from the broader trading market expected to be created by the California Air Resources Board under the state’s climate protection law, AB 32. “It will have a life of its own,” said Dean Simeroth, CARB’s chief of criteria pollutants, during an October 24 Low Carbon Fuels standard workshop. He said the petroleum sector was large and complex and its individual firms familiar with intra-sector trading. If a cap-and-trade market is created for the energy market and other stationary sources of emissions under AB 32, the alternative fuels trading market will likely “morph into” it, Simeroth added. During the morning workshop, also discussed were the difficulties of assessing what offsets to count, where to regulate emissions, and how to address major distribution issues related to the alternative fuels. For example, should a Midwest ethanol producer be able to get carbon offsets in the California market because climate change is a global problem? As far as distributing fuels that have a smaller carbon footprint, getting them to the East Coast is far more difficult than to the West Coast because of rail constraints. Development of a Low Carbon Fuels Standard is expected to take a full two years. It is expected to qualify as one of the air board’s early action carbon reduction measures.

Share this story

Not a member yet?

Subscribe Now