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Corn+Soybean Digest

California Adopts Low-Carbon Fuel Standard

Over the objections of the ethanol industry, California on Thursday adopted a first-ever rule designed to reduce carbon emissions from transportation fuels, and spur the market for cleaner gasoline alternatives.

The low-carbon fuel standard, which the influential California Air Resources Board (CARB) approved by a vote of 9-1, was hailed by backers as an historic initiative that the rest of the U.S. and other countries were likely to emulate.

At least 11 other states are weighing similar rules and President Obama has called for a nationwide low-carbon fuel standard to help meet his goal of cutting greenhouse gas emissions more than 80% by mid-century.

The intent of the rule is to cut California's carbon emissions by 16 million metric tons over the next decade and replace 20% of the state's fossil fuels with cleaner options, such as electricity, hydrogen, natural gas and biofuels.

But ethanol industry officials and other critics say the measure is biased against biofuels – especially those made from corn – and will undermine the renewable fuels industry.

The centerpiece of the rule is a new standard requiring refineries, producers and importers of motor fuels sold in California to reduce the "carbon intensity" of their products by 10% by 2020, with greater cuts thereafter.

The standard requires that both direct and indirect greenhouse gas emissions during all stages of a fuel’s existence – production, transportation and consumption – be accounted for when calculating that fuel’s carbon footprint.

For biofuels – and no other fuels – the low-carbon fuel standard factors in the consequences of “indirect land use changes” such as plowing up grasslands or deforestation for large-scale corn or sugar cane cultivation on carbon emissions.

Critics charge that CARB’s model for assessing the indirect effects of land use is flawed and is selectively applied to ethanol only.

"Adopting this standard sets a dangerous precedent about the application of unproven science to industries across the country," says Renewable Fuels Association President Bob Dinneen. "This standard is based on flawed analysis and selectively enforced penalties against biofuels only.

“In unfairly penalizing ethanol, CARB is relegating California to more petroleum use as biofuels are the only viable alternative liquid fuel," he adds.

"We're disappointed with the Board's vote," adds General Wesley Clark, co- chairman of Growth Energy, a coalition of ethanol producers. "This was a poor decision, based on shaky science, not only for California, but for the nation," he says.

In a last minute attempt to ease such concerns, CARB director Mary Nichols on Wednesday wrote a letter to Growth Energy insisting that corn ethanol will play a key role in the California fuel market well into the next decade.

Nichols also pledged further review of the low-carbon standard to be completed by December 2011 and said the board would revise its regulation over time as science warrants.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

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