January 9, 2007

CALIFORNIA: Governor Targets Fuel Emissions

Governor Schwarzenegger has announced new targets for gasoline producers to hit in a continuing state campaign to lead the nation in innovative public policy regarding fuels and vehicle emissions.

According to the L.A. Times -

The order could also usher in a new generation of alternative fuels in California, experts say, as refiners consider adding ethanol or other biofuels into gasoline blends. It could also mean a shift of part of the state's auto fleet to hydrogen or electric power.

According to the white paper, a drop of 10% in carbon released by vehicles in California would translate to a 20% drop in gasoline consumption and more than triple the size of the state's renewable-fuels market.

Transportation accounts for more than 40% of California's annual greenhouse gas emissions, and the state relies on petroleum-based fuels for 96% of its transportation needs.

The white paper suggests that a shift to lower-carbon fuels could be supplemented by creation of a market that would trade credits that could be used to satisfy state requirements to lower greenhouse gas emissions.

For example, high-carbon-fuel makers could meet their mandate by purchasing credits from electric utilities that supply low-carbon electrons to electric passenger vehicles.

The mandate also would provide a significant boost to the state's fledgling alternative-fuels industry, said Bill Jones, chairman of Pacific Ethanol of Fresno, the state's leading biofuel producer. Jones was a former California secretary of state and longtime state legislator.

Here is an abridged version of today's announcement as presented on the Governor's website...

Gov. Schwarzenegger Issues Directive to Establish World's First Low Carbon Standard for Transportation Fuels

Continuing his historic leadership to reduce greenhouse gas (GHG) emissions and lower California's reliance on foreign oil, Governor Schwarzenegger today announced he will issue an Executive Order establishing a groundbreaking Low Carbon Fuel Standard (LCFS) for transportation fuels sold in California. By 2020 the standard will reduce the carbon intensity of California's passenger vehicle fuels by at least 10 percent. This first-of-its kind standard will support AB 32 emissions targets as part of California's overall strategy to fight global warming.

The LCFS requires fuel providers to ensure that the mix of fuel they sell into the California market meets, on average, a declining standard for GHG emissions measured in CO2-equivalent gram per unit of fuel energy sold. By 2020, the LCFS will produce a 10 percent reduction in the carbon content of all passenger vehicle fuels sold in California. This is expected to replace 20 percent of our on-road gasoline consumption with lower-carbon fuels, more than triple the size of the state's renewable fuels market, and place more than 7 million alternative fuel or hybrid vehicles on California's roads (20 times more than on our roads today).

The LCFS will use market-based mechanisms that allow providers to choose how they reduce emissions while responding to consumer demand. For example, providers may purchase and blend more low-carbon ethanol into gasoline products, purchase credits from electric utilities supplying low carbon electrons to electric passenger vehicles, diversify into low carbon hydrogen as a product and more, including new strategies yet to be developed.

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