California to Set a Carbon Limit for Transportation Fuels

January 24, 2007

A photo of a fuel pump labeled E85 Ethanol.

California's Low Carbon Fuel Standard will encourage the use of renewable fuels, such as ethanol, throughout the state.
Credit: Warren Gretz

California Governor Arnold Schwarzenegger signed an executive order last week to establish a greenhouse gas standard for fuels sold in the state. The new Low Carbon Fuel Standard requires a 10 percent decrease in the carbon intensity of California's transportation fuels by 2020. The state expects the standard to more than triple the size of the state's renewable fuels market while placing an additional 7 million hybrid and alternative fuel vehicles on the road. The standard will help the state meet its greenhouse gas reduction goals set by Assembly Bill 32, which the governor signed last year.

The new fuel standard applies to all refiners, blenders, producers, or importers of transportation fuels in California and will use market-based mechanisms to allow fuel providers to choose the best way to meet the requirement. For instance, fuel providers can blend more ethanol or biodiesel into the fuels they sell; add a hydrogen fueling station; or offset the carbon content of the fuels by purchasing carbon credits from other sources, such as renewable energy facilities. The governor's executive order calls for the California Environmental Protection Agency to develop a draft compliance schedule by the end of June. See the governor's press release, which includes a copy of the executive order.