The California Air Resources Board recently adopted regulatory amendments to the state’s Low Carbon Fuel Standard (LCFS), affirming its commitment to the climate-change program.
Although WSPA has not opposed the goals of the LCFS, which requires a 10 percent reduction in the carbon intensity of gasoline and diesel fuel by 2020, we have become increasingly concerned about the feasibility of the program and its impact on fuel providers and the California economy.
WSPA recently hired Sierra Research, Inc. of Sacramento to take a close look at the LCFS and determine for itself if the program is feasible and affordable. The conclusions reached by Sierra, after looking at a great deal of government data and forecasts, are disturbing. Among them:
- Based on biofuel forecasts by the U.S. Energy Information Administration, California biofuel supplies will be inadequate for compliance with the Low Carbon Fuel Standard (LCFS) by 2015 when LCFS requirements start to become much more aggressive.
- Based on CEC biofuel price forecasts, even if the biofuel supplies CARB staff believes will be available are available, transportation fuel costs in California could increase dramatically;
- Even if supplies are available, the total cost of acquiring special biofuels in California in order to comply with the LCFS, could, based on CEC biofuel price forecasts, be as much as $54 billion between now and 2020.
We also have communicated our concerns about the LCFS to Gov. Jerry Brown.
WSPA is not advocating the LCFS be abandoned at this time. But we did ask CARB to take a few reasonable steps to ensure this well-intentioned program does not unduly disrupt the transportation fuels market or injure the California economy. Those steps are:
- Conduct annual reviews and analyses of LCFS program feasibility and costs in order to make adjustments if and when they are necessary;
- Develop appropriate triggers to identify market disruptions so the program can be halted or altered;
- Develop and analyze alternative approaches to reducing GHG emissions from transportation fuels that may be a better approach than the current policy, and;
- Initiate a thorough analysis of the potential cumulative impacts on the cost and availability of transportation fuels in California from numerous climate change regulations being implemented by CARB.
CARB accepted some of our recommendations and rejected others. In doing so, it signaled that California will continue down the Low Carbon Fuel Standard path. All Californians who care about the job and fuels markets should be aware of the potential impact the LCFS program could have on fuel costs and the economy. We think it deserves careful monitoring and additional analysis.