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Overlooked: The Other Carbon Standard

Corn ethanolA groundbreaking environmental law gained traction last week – no, not that one. Amid all the noise about the EPA’s carbon standard for power plants, news outlets had little to say about California’s low-carbon fuel standard (LCFS), which the 9th US Circuit Court of Appeals upheld by lifting a partial injunction set by a district court in 2011.

The standard requires transportation fuel providers to reduce the carbon intensity of their fuels on a “well-to-wheel” basis – including production, refining and shipping – by 10 percent by 2020. The providers can meet the standard by blending with low-carbon ingredients or by buying credits, write D. Cameron Prell, Dana Palmer, Lisa Sharp, Neal Cabral and Bernadette Rappold of McGuireWoods LLP.

Plaintiffs against the standard included the Rocky Mountain Farmers Union, California Dairy Campaign, Consumer Energy Alliance, American Trucking Associations and the American Fuel & Petrochemical Manufacturers Association – as well as ethanol groups Growth Energy and the Renewable Fuels Association. The RFA has said the standard “virtually eliminates” domestic ethanol, instead favoring imported ethanol and “futuristic fuel technologies such as hydrogen and the electric car,” according to Ethanol Producer Magazine.

The earlier decision found that the standards favor biofuels produced in California, in violation of constitutional commerce laws, but the latest ruling rejects this argument.

According to Sahir Surmeli of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC, the decision will help companies developing next-generation biofuels, which have suffered from financing challenges. The road will still be bumpy, he says, but biofuels should form a “meaningful part” of the transportation fuel mix within 10 years. The McGuireWoods attorneys note that the court was unusually effusive in favor of the standard, even going so far as to say the state “should be encouraged to continue and to expand its efforts to find a workable solution to lower carbon emissions, or to slow their rise.”

The case may not be over yet, however. The challengers to the law could still seek en banc review from the 9th Circuit, or appeal the decision to the US Supreme Court.

Picture credit: Alternative Heat via flickr

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