Calif. gets first low-carbon fuel rule in U.S.

By SAMANTHA YOUNG

Associated Press Writer

updated 3:55 p.m. ET April 24, 2009

SACRAMENTO, Calif. - When California air regulators adopted a mandate requiring low-carbon fuels, part of the state's wider effort to reduce greenhouse gas emissions, the state became the first in the U.S. to do so.

The California Air Resources Board voted 9-1 on Thursday to approve the standards, which are expected to create a new market for alternative fuels and could serve as a template for a national policy that has been advocated by President Barack Obama and Democrats in Congress.

Gov. Arnold Schwarzenegger said the rule would "reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure."

"I think we're creating the framework for a new way of looking at automotive fuels where no longer will gasoline derived by petroleum be the only game in town," board chairwoman Mary Nichols said.

The rules call for reducing the carbon content of fuels sold in the state by 10 percent by 2020, a plan that includes counting all the emissions required to deliver gasoline and diesel to California consumers — from drilling a new oil well or planting corn to transporting it to gas stations.

Transportation accounts for 40 percent of greenhouse gas emissions in the state.

"The emissions from this sector have traditionally grown in California at a rate that exceeds even our growth in population," Nichols said before the vote. "It has led to a host of environmental problems."

Board is hard on ethanol
Representatives of the ethanol industry have criticized the rule, saying state regulators overstated the environmental effects of corn-based ethanol. They also have criticized the board's intention to tie global deforestation and other land conversions to biofuel production in the United States.

The board has said Brazil converted rainforest into soybean plantations as a result of the growth in corn-based ethanol in the U.S. A formula being considered by the board would take into account the destruction of forests and grasslands elsewhere to grow fuel crops for U.S. demand.

The ethanol industry also said it was unfair to penalize it for agricultural land changes abroad.

"We are not convinced expansion of ethanol in the U.S. has caused or will cause land use changes," said Geoff Cooper, vice president of research at the Renewable Fuels Association.

John Telles, the dissenting board member, said before the vote that he had a "hard time accepting the fact that we're going to ignore the comments of 125 scientists" who questioned the agency's decision to estimate the emissions tied to land-use changes.

"They said the model was not good enough," he said.

BP, Chevron on board
Representatives for BP PLC and Chevron Corp. said their companies supported the new standards, with the caveat that the board periodically review the standards. The air board agreed to ensure that the most up-to-date science is incorporated into the rule and that the alternative fuels have become available as expected.

Under the low-carbon fuel standard, petroleum refiners, companies that blend fuel and distributors must increase the cleanliness of the fuels they sell in California beginning in 2011.

The petroleum industry warned that the state was moving too quickly without assurances that the alternative fuels they will be required to sell would be available for the market. Representatives asked the board to delay a decision until next year.

"It's frankly unclear to us how we will comply with this regulation," said Catherine Reheis-Boyd, chief operating officer of the Western States Petroleum Association.

The statewide efforts come two years after Schwarzenegger directed air regulators to develop a rule that would boost the amount of renewable fuels sold in the state.

Nichols said Thursday that a low-carbon mandate would reduce California's dependency on petroleum by 20 percent and account for one-tenth of the state's goal to cut greenhouse gas emissions by 2020.

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