California Regulators To Restore Unique Climate Change Program
California regulators are poised to restore a first-in-the-nation climate change program that requires a 10 percent cut in carbon emissions on transportation fuels sold in the state by 2020, despite oil industry objections that it could drive up gas prices.
After the program survived a lengthy legal challenge from fuel makers, regulators are expected to vote Friday on the clean fuel standard, which environmentalists and some business groups are hailing as one of California’s most important moves to reduce greenhouse gas emissions.
The California Air Resources Board estimates the economic impact to consumers would be a few cents per gallon, costing a typical commuter $5 to $21 extra in 2017, increasing to $12 to $48 annually in 2020.
“It is giving clear direction to the fuel-producing sector that this is the direction of the state,” said John Boesel, president and chief executive of CALSTART, a transportation business group that supports clean-energy technology.
The standard’s expected passage was a boost for Gov. Jerry Brown, who has vowed to intensify his fight against climate change after the oil lobby helped kill a Democratic legislative proposal earlier this month to slash statewide petroleum use by half in 15 years.
Unlike other rules the state has adopted requiring cleaner-burning fuel or more fuel-efficient vehicles, the standard, first proposed in a 2007 executive order from then-Gov. Arnold Schwarzenegger, calls for counting all the pollution required to deliver gasoline, diesel or alternative fuels to in-state consumers – from drilling a new oil well or planting corn to delivering it to gas stations.
In addition to tailpipe emissions, it includes factors such as whether an ethanol factory uses coal or natural gas to power production or an oil rig uses diesel fuel to drill.
Oil producers say the standard will cost consumers much more in a state with some of the highest gas prices in the nation as the companies try to comply with the mandate or face being shut out of the market.
Supporters say that industry can afford to make it work. They believe the program will encourage greater use of cleaner biofuels and electric vehicles, which can be cheaper to operate than those powered by gasoline or diesel.
The Western States Petroleum Association, which represents oil companies, said there are not enough quantities of low-carbon biofuels to allow refiners to comply with the regulations.
All fuels are measured against a baseline pollution standard. If a fuel falls above or below the baseline, it generates a credit or deficit that other producers can buy and sell to meet the target. It’s up to fuel producers to figure out how to meet the goal, whether by changing production methods, using ethanol or electric vehicles for transportation or buying credits on the market.
Regulators are targeting transportation fuels because California’s roughly 30 million vehicles account for about 40 percent of the state’s emissions. The rest comes from generating electricity and industrial manufacturing, as well as commercial, residential and agricultural uses.
After the rule’s initial adoption, out-of-state refiners and ethanol companies were among those who sued, arguing that transporting the fuels into California alone made them less competitive against in-state producers. They argued the law unconstitutionally limits interstate commerce.
The U.S. Supreme Court let stand a 2013 appeals court decision upholding the fuel standard. Opponents continue to challenge the state’s authority to regulate out-of-state production. Oil companies are also trying to block a similar standard enacted in Oregon, the only other state with a clean fuel standard.
Responding to concerns, California’s air regulators have proposed changes, including capping the price of credits to avoid price spikes. The board could also add provisions giving credit to refineries for using renewable hydrogen and making other investments to reduce pollutants.
While the reduction target has been frozen at 1 percent, state officials say the industry has met 2 percent of the goal as of last year.