California Air Resources Board Adopts Low Carbon Fuel Standard
On April 23, 2009, the California Air Resources Board adopted regulations to reduce greenhouse gas emissions from transportation fuels. The Low Carbon Fuel Standard (LCFS) will require transportation fuel providers to lower the life-cycle carbon intensity—or the amount of greenhouse gases emitted from the production, transportation, and combustion of the fuel per unit of energy contained in the fuel—10 percent below 2010 levels by 2020. Separate carbon intensity targets will be established for gasoline and diesel fuels and their respective alternative products. The regulation contains provisions to take into account both direct and indirect emissions; the latter includes, for example, emissions that result from land-use changes due to fuel production.
Compliance may be achieved in one of four ways: (1) by achieving the specified carbon intensity as an average of the products in the fuel mix, (2) by achieving the carbon intensity for each product in the fuel mix, (3) by purchasing carbon reduction credits from fuel providers that perform better than the LCFS for their own products, or (4) by using credits banked from previous years. This is expected to reduce lifecycle greenhouse gas emissions by 23 million metric tons of CO2e by 2020.
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