Low-carbon fuel standard plan draws heavy hitters of big oil, big auto

| Thursday, September 13, 2007

Representatives from the world’s biggest fuel, diesel and automotive manufacturers were among those who filled the California Air Resources Board auditorium to glean direction of the powerful agency’s next regulation step – reducing the amount of carbon in car and truck fuels.

Diesel for heavy-duty trucks didn’t get too much attention, but it’s clear that it’s on the table.

Reps from BP Amoco PLC, ConocoPhillips, Exxon Mobil, Chevron, PGE, DaimlerChrysler, General Motors, Mitsubishi, Bosch Corp. and several other transportation-related companies and trade associations packed CARB’s low-carbon fuel standard meeting Thursday, Sept. 13, to get a glimpse of the rule before it becomes law.

In June, CARB approved an early-action measure to develop a low-carbon fuel standard with a goal of reducing the carbon intensity of transportation fuels by at least 10 percent by 2020. The agency wants to begin enforcing the new carbon fuel standard by January 2010.

“2020’s just the start,” said Dean Simeroth, CARB branch chief.

Early next year, the agency expects to have draft legislation, which it plans to formally present in late 2008.

The low-carbon fuel standard has three overarching goals:

  1. Use near-term technologies to make a quick impact;
  2. Stimulate new technologies by the middle of the 21st century; and
  3. Respect related objectives such as economic growth and keeping energy costs low.

California’s five largest oil sector businesses would be regulated, along with “a few smaller national and regional firms,” according to CARB.

The agency plans to allow fuel producers to earn credits by exceeding the low-carbon standard. Fuel companies may turn and trade credits for time periods when they don’t meet the standard, or could sell those credits to other fuel producers.

Aside from a few brief mentions of diesel and biodiesel, the three-hour meeting didn’t address heavy-duty diesel trucks and how the low-carbon fuel standard could affect truck drivers.

According to a report from the University of California-Davis, “A Low Carbon Fuel Standard for California Part II: Policy Analysis,” CARB could decide to ignore diesel sales while lowering carbon intensity in fuel to 12.4 percent.

The report, written in part by CARB Board Member Daniel Sperling, also suggested a separate option of assigning a higher carbon intensity value to heavy-duty trucks while a lower value could be assigned to light-duty vehicles.

“In this case, diesel would have no target carbon intensity but incentives would exist to reduce the carbon content of the other fuels and apply those credits against the now-lower gasoline target,” the policy analysis read.

The meeting again showed the power and influence of CARB and how the aggressive agency can affect standards in other states and in the world.

Bob Larson, an Environmental Protection Agency official, told audience members that agency is working to publish a notice of proposed rulemaking by November with President Bush’s goal of reducing petroleum consumption by 20 percent by the year 2017.

Larson said last spring’s U.S. Supreme Court decision forcing the EPA to regulate greenhouse gases, combined with Bush’s goal could result in a federal fuel standard somewhat similar to California’s.

CARB commissioned and received a report for developing a low-carbon fuel standard this year. The standard is one of several early action items CARB approved as part of California Assembly Bill 32 – which granted the agency power to research, write and enforce regulations of greenhouse gas emissions such as carbon dioxide linked to global warming.

“The schedule is very tight,” Simeroth said.

Stakeholders may learn more about the fuel standard regulation and submit comments at future workshops on the issue that CARB plans to host every four to six weeks beginning in October.

“To make this successful, it’s got to be implementable,” Simeroth said.

– By Charlie Morasch, staff writer
charlie_morasch@landlinemag.com

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