California’s Low Carbon Standard Rules Spark Controversy

January 31st, 20129:55 am @

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WASHINGTON – An article in yesterday’s Washington Post assessed California’s efforts to modify the standards of gasoline. The state’s proposition, to lower the amount of carbon in fuel sold in the state, has sparked a public battle that to date has prevented the rule from being enforced. And in light of a strong opposing lobbying effort as well as tight state budgets, the Post speculated the “ambitious climate policy” might not ever get off the ground.

“To us, it’s the most credible and powerful mechanism we can put in place,” said Dan Sperling, a member of California’s Air Resources Board. “It’s an incentive to invest in other things besides oil.”

However, oil industry officials maintain the standards are too complex and could not be met, given the current supply of petroleum alternatives. Furthermore, they say the change would increase gas prices.

“[T]he policy “sounds really good at the 30,000-foot level,” said Charles Drevna, president of the American Fuel and Petrochemical Manufacturers. “When you get down to terra firma, it’s a giant energy tax and a fuel rationing scheme.”

The proposed new standards assign carbon intensity values to nearly 250 types of crude along with ethanol, electricity, and hydrogen, calling for a 10% reduction of overall content of fuel sold in the state by 2020. Accordingly, refiners would have to mix low-carbon fuels into existing blends or buy credits to offset the amount of fuel they sell that exceeds the standards.

The focus of the standards is to reduce greenhouse gas emissions, which the state projects would fall by 23 million tons in 2020.

UC-Davis researchers analyzed the proposal and concluded a low-carbon fuel standard would lead to an extra 16 to 19 cents per gallon at the pump for consumers. The Consumer Energy Alliance, a coalition of oil and gas companies, estimated the standard would increase the cost of fuels for consumers by up to 170%.

Last month, a federal district judge ruled that California’s proposed fuel standard was unconstitutional because it discriminated against out-of-state ethanol. The state is appealing the ruling as well as an injunction that bars it from enforcing the rule.

Tupper Hull, a spokesman for the Western States Petroleum Association, said California’s standards would be “incredibly costly and disruptive to a stable and secure supply of transportation fuels, noting its members, have “become increasingly concerned about whether the program they were designing was feasible.”

Article source: http://www.nacsonline.com/NACS/News/Daily/Pages/ND0131122.aspx