California Governor Sets Low Carbon Fuel Standard

SACRAMENTO, California, January 18, 2007 (ENS) - Electric, hybrid and hydrogen vehicles got a power boost today as California Governor Arnold Schwarzenegger signed an Executive Order establishing the world's first greenhouse gas standard for transportation fuels - the Low Carbon Fuel Standard.

Because greenhouse gas emissions "pose a serious threat to the health of California's citizens and the quality of the environment," the Executive Order states, a statewide goal shall be established to reduce the carbon intensity of California's transportation fuels by at least 10 percent by 2020.

California is the world’s 12th largest source of carbon dioxide, the most prevalent greenhouse gas that blankets the Earth, trapping the Sun's heat close to the planet and raising the global temperature.

"Like the rest of the nation, California relies excessively on oil to meet its transportation needs," Governor Schwarzenegger said today. "In fact, 96 percent of our transportation fuel is oil. And that means our transportation fuels are responsible for more than 40 percent of California's greenhouse gas emissions."

With alternative fuel vehicles as a backdrop, California Governor Arnold Schwarzenegger announces his Low Carbon Fuel Standard. (Photo courtesy Office of the Governor)

"Reducing the carbon content of transportation fuels sold in California by just 10 percent means we will replace 20 percent of our gasoline consumption with lower-carbon fuels, more than triple the size of the state's renewable fuels market, and add seven million alternative fuel vehicles to our roads," the governor said.

The Low Carbon Fuel Standard applies to all refiners, blenders, producers or importers of transportation fuels in California. It may be met through market-based methods by which providers exceeding the performance required by the standard will receive credits that may be applied to future obligations or traded to providers not meeting the standard.

To meet the standard, fuel providers may purchase and blend more low-carbon ethanol into gasoline products, they can purchase credits from electric utilities supplying power to electric passenger vehicles, diversify into low carbon hydrogen as a product, or use new strategies yet to be developed.

"Right now, entrepreneurs from around the world are investing billions of dollars in clean technologies and alternative fuels. With this initiative, we are saying invest in California," invited Schwarzenegger.

California environmentalists support the Low Carbon Fuel Standard. “There is nothing more important than taking immediate action to begin cutting global warming pollution from our state’s biggest polluters, said Environment California Global Warming Advocate Jason Barbose.

Toyota's Camry hybrid runs on both a gasoline engine and an electric motor that can put energy into the batteries as well as draw energy from them. (Photo courtesy Toyota)

The new policy was well received by the energy industry.

Thomas King, CEO of the Pacific Gas and Electric Company, said, "By signing the Low Carbon Fuel Standard Executive Order, Governor Schwarzenegger is taking a key step in leading the nation's fight against climate change."

"Any policy aimed at avoiding the potential environmental disasters associated with global warming must find ways to reduce our reliance on petroleum-based fuels," said King. "We are committed to doing our part and have seen first hand the significant benefits of alternative fuels on reducing carbon intensity."

At the signing ceremony in Sacramento, Clean Energy President and CEO Andrew Littlefair said the new standard will be good for his business as a provider of vehicular natural gas to the refuse, transit, shuttle, taxi, trucking, airport and municipal fleet markets.

"Natural gas vehicles are available today - they are both reliable and proven," Littlefair said. "In fact, the Ports of Los Angeles and Long Beach intend to deploy over 5,300 clean natural gas trucks over the next five years to help mitigate port pollution impacts."

Natural gas vehicles provide near-zero emission benefits for smog and soot pollution and can provide a clear bridge to a renewable hydrogen future, Littlefair said, adding, "Most importantly, natural gas is low in carbons, reducing greenhouse gas emissions as much as 20 percent vis a vis a comparable gasoline or diesel vehicle. In fact, biomethane from landfills, agricultural operations, and other natural sources can deliver even greater climate change benefits."

From his office in Wilmington, Delaware, DuPont Executive Vice President and Chief Innovation Officer Thomas Connelly said his company sees the new standard as providing opportunities for new technologies it is developing.

"We are actively researching and developing a suite of advanced, high-performance fuels and other bio-based energy alternatives," Connelly said. "These alternatives will expand the fuel options for drivers by introducing new technologies that include advanced biofuels such as biobutanol and ethanol from cellulosic feedstocks.

Ford Focus hydrogen fuel cell demonstration car powered by Ballard fuel cells. (Photo courtesy Ballard)

This analysis will become part of the State Implementation Plan for alternative fuels and will be submitted to the California Air Resources Board for consideration as an early action item under AB 32, the Global Warming Solutions Act.

This law, enacted last September, requires that the state’s global warming emissions be reduced to 1990 levels by 2020. The reduction will be accomplished through an enforceable statewide cap on global warming emissions that will be phased in starting in 2012.

The Air Resources Board, ARB, is directed to complete its review of the Low Carbon Fuel Standard protocols for adoption as an early action no later than June.

The ARB will also begin a regulatory process in the summer of 2007 to implement the Low Carbon Fuel Standard to be completed no later than December 2008.

In 2005, there were more than 24 million vehicles registered in California - more than one per licensed driver.

Statewide gasoline consumption was almost 16 billion gallons in 2005 which is second only to the entire United States and slightly more than that of Japan, a country with four times the population of California.

Currently, there are 80,000 hybrids and 240,000 flex-fuel vehicles on California roads, together accounting for only 1.3 percent of all cars in California.

Some industry experts would like to see a national cap and trade market for carbon dioxide emissions, an idea the Bush administration has resisted.

In a keynote address at the Inaugural U.S. Point Carbon Conference in Washington, DC Wednesday, Paul Hanrahan, President and CEO of the AES Corporation, one of the world's largest power companies, said that any U.S. greenhouse gas emissions legislation adopted to address climate change should be structured as a nationwide cap and trade program rather than a series of state or regional programs.

“National cap and trade domestic regulation will be more effective than a set of regional programs with different rules and set-ups that are not interlinked or interoperable,” Hanrahan said. He emphasized that U.S. carbon policy should be "expansive, efficient, equitable and equivalent."

Hanrahan said AES would support a national cap and trade program that applies to all economic sectors that produce greenhouse gas so that each source contributing to the problem of global warming bears part of the cost of the solution.