California Governor Arnold Schwarzenegger on Tuesday called for the world’s first low-carbon fuel standard, a rule that would reduce carbon emissions from transportation fuels in the state by 10 percent by 2020.
Once it’s put in place by the state’s Energy Commission and Air Resources Board, the standard will require fuel refiners and sellers to replace 20 percent of passenger-vehicle fuels with lower-carbon fuels. The standard is part of the move to reduce greenhouse gases in California under the Global Warming Solutions Act signed into law in September, which mandates that 2020 emissions match those of 1990.
The move is expected to more than triple the size of California’s renewable fuels market and add more than 7 million alternative fuel or hybrid vehicles, 20 times current numbers. It could be a harbinger of policy change in the rest of the country and the world, as the European Union is also considering a similar measure. It’s also likely to spark another round of investment and innovation in fuels, companies said.
“Today’s announcement is very important news for California entrepreneurs and investors,” said Bob Epstein, head of Environmental Entrepreneurs (E2), who added that more than $500 million was invested in alternative fuels last year. “If you know how to make fuels that don’t use oil and reduce carbon, California is the place to be.”
Environmentalists say the standard could make a big difference because transportation fuels in California contribute a significant portion of greenhouse gases. California relies on petroleum alone for 96 percent of its transportation needs.
And transportation fuels make up 40 percent of the greenhouse gases in the state, said Linda Adams, secretary of the California Environmental Protection Agency. This standard alone could go 10 percent of the way toward fulfilling the goal set by the global warming law, removing 13 million tons of carbon dioxide, she said.
In a statement, Chevron said it "shares the concerns of government and public alike on the issue of greenhouse gas emissions," but did not indicate that it endorsed or opposed Gov. Schwarzenegger's move. Other oil companies could not be reached for comment, and did not speak at the press conference in San Francisco.
David Crane, a senior advisor to the governor, said oil companies are aware of the standard. “We believe we have their support,” he said. “We weren’t able to arrange for anyone [from the oil companies] to be here, but you will soon hear from them.”
Robert Sawyer, chair of the California Air Resources Board, said the agency plans to make decisions about how to put the standard in place over the next few months, with those decisions taking effect over the next year and a half.
Dan Skopec, undersecretary of the California Environmental Protection Agency, said the Environmental Protection Agency will look to fuel companies to provide information about the carbon content of their fuels. The agency will audit that information and make sure it’s correct, he said.
The intention is to leave the decisions up to refiners and sellers as to exactly how to meet the standard.
That leaves the door open for new fuels still being developed or invented, Mr. Skopec said, who also mentioned cellulosic ethanol—ethanol from materials like wood chips, corn stalks, and switchgrass, which has less carbon than carbon from starches like corn, wheat, and sugarcane—as a goal.
“The government is not predicting winners and losers; the market will decide what the best fuel is based on economics, needs for consumers, and carbon content,” Mr. Skopec said.
The standard is an important signal to the investors, some of which have been burned by short-term, wavering government policies in the past, that demand for these fuels will be secure for at least 13 years, he said.
It could also spark an early version of carbon trading in the state, another opportunity for new business models. Fuel providers able to produce more low-carbon fuel than required will get credits they can bank or sell, Mr. Skopec said.
Bill Jones, former secretary of state and the chair of Pacific Ethanol, said the standard deals with the problems of greenhouse gases and energy independence without leaving out economics. He bragged that the company’s ethanol plant in Madera, California, generated jobs and brings $1 million in taxes to the city’s coffers.
The standard “allows everyone to go out and work hard and maybe come up with some new solutions that might surpass what we have now,” he said.
Gov. Schwarzenegger plans to introduce the standard during his state of the state speech Tuesday evening, asking California to “blaze the way” for the U.S., China, and the rest of the world.
“Our cars have been running on dirty fuel for too long,” according to an excerpt from his prepared statements. “Our country has been dependent on foreign oil for too long. I ask you to set in motion the means to free ourselves from oil and from OPEC. I ask you to encourage the free market to overthrow the old order. California has the muscle to bring about such change. I say use it."
Source : Red Herring
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