California's Low Carbon Fuel Standard: A Debate

Absract from Daniel Sperling:

The low carbon fuel standard (LCFS) is being implemented in California and the EU and is under serious consideration in over 10 states and Canadian provinces.  The LCFS provides a promising and durable policy framework to decarbonize transportation fuels.  It is performance based, harnesses market forces (through credit trading), and utilizes lifecycle principles.  Though one might prefer more theoretically elegant policies such as carbon taxes and cap-and-trade, those other instruments are not likely to be effective in the foreseeable future with transport fuels.  They would not be sufficient to induce large investments in electric vehicles, plug-in hybrids, hydrogen fuel cell vehicles, and advanced biofuels.  The implementation of LCFS faces various political, scientific, and implementation challenges, but that is not surprising for a policy that aims to transform the oil and biofuels industries.

Abstract from Dr. David Stern:

Challegnes to Meet a Low Carbon Fuel Standard (LCFS)

As part of AB32, California's Climate Change Act, the California Air Resource Board (CARB) has enacted a Low Carbon Fuel Standard.  The LCFS mandates a reduction in fuel life-cycle carbon intensity (CI), versus a petroleum fuel (gasoline/diesel) baseline.  At low CI reduction targets, increased use of biofuel is needed to meet the target, but higher CI reduction targets (e.g., 10%) are infeasible without large numbers of electric vehicles, large use of very low CI biofuels, or both. 

This talk will review the challenges in meeting the LCFS, and why LCFS is a complex, cost ineffective, and non-transparent policy to reduce GHG's.

• On a cost per unit GHG reduction, transportation-fuel-related cost reductions substantially exceeds the cost of other GHG reductions
• If policy goals are to promote biofuels or to electrify the fleet, direct and transparent regulations are better ways to meet these goals
• If the policy goal is GHG reduction, the most efficient and cost effective approach is a broad based, revenue-neutral carbon tax

Our discussion will also review principles to consider in policy development.  If society chooses to implement climate policy, such policies should: ensure a uniform and predictable cost of GHG emissions, let market prices drive the solution, minimize complexity, maximize transparency, and adjust to future developments in climate science and the economic impacts of climate policies.

Panel: 

• Dr. David Stern, Advanced Fuels Senior Advisor ExxonMoil Refining and Supply Company
• Professor Dan Sperling, Director, Institute of Transportation Studies at the University of California, Davis