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California Low-Carbon Rule Faces Threats, Despite Success

California’s low-carbon fuel rule has been successful, displacing 6.2 percent of total gasoline and diesel volume in 2012 with cleaner burning transportation fuels, but it still faces legal threats and other challenges, such as a shortfall of biofuels, according to report.

The report, conducted by researchers at the Institute of Transportation Studies at the University of California, Davis, reviewed compliance of the low-carbon fuel standard for 2011 through December 2012 and includes an examination of credits and deficits generated and fuel volumes, carbon intensity of fuels and credit trading and prices.

LCFS mandates a reduction of greenhouse gas emissions from the state’s transportation fuels, such as diesel and gasoline, by at least 10 percent by 2020 compared to 2010 levels. The carbon intensity reductions outlined in the law include tailpipe emissions and all other emissions associated from the production, distribution and use of transport fuels within the state.

The standard, which has been implemented by the California Air Resources Board since January 2010, began with required reductions of 0.25 percent in 2011 and ramped up to 0.5 percent and 1 percent in 2012 and 2013, respectively.

Companies can comply with the law by buying cleaner fuels or carbon credits from other businesses, cutting emissions along their fuel supply chain or producing more low-carbon fuels.

By the end of 2012, the program recorded net excess credits of 1.285 million metric tons of carbon dioxide equivalent. This bank of excess credits represents about half of that needed to meet the 2013 LCFS obligation, according to the report. Of these net credits, 78 percent were generated from ethanol, 12 percent from natural gas and bio-based gases, nine percent from biodiesel and one percent from electricity.

Despite these successes, the law is still under threat from several lawsuits and the lack of cleaner-burning biofuels.

Fuel companies are still mainly using corn-based ethanol to comply, according to the report. That doesn’t help companies because CARB has given corn-based ethanol a carbon intensity score similar to conventional gasoline.

California’s low-carbon rule has faced legal battles and has been criticized by oil stakeholders since it was enacted. Three years ago, the trucking industry, oil refiners and lobby groups sued to stop implementation of LCFS.

Earlier this year, LCFS lost the support of Chevron, a California-based oil company now leading a lobbying and public relations campaign to weaken the law.

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