Low Carbon Standard to "fuel" Renewable Energy Market

World's first greenhouse gas standard for transportation fuels will spark research into alternatives to oil such as cellulosic ethanol.

The Low Carbon Fuel Standard (LCFS) proposed by California Governor Arnold Schwarzenegger earlier this week is expected to triple the size of the California renewable fuels market and place more than 7 million alternative fuel or hybrid vehicles on the state's roads by 2020.

Schwarzenegger announced on Tuesday he will issue an Executive Order to establish the LCFS for all transportation fuels sold in California in order to reduce the carbon intensity of the state's passenger vehicle fuels by at least 10 percent by 2020.

The standard calls for fuel providers to ensure that the mix of fuel they sell into the California market meets, on average, a declining standard for greenhouse gas (GHG) emissions measured in CO2-equivalent gram per unit of fuel energy sold.

"The governor's goal will be to reduce the carbon intensity of our transportation fuel use 10 percent by 2020. What that means is that fuel providers will have to meet a declining standard of carbon intensity between now and 2020 on a grams per BTU basis and we'll do that looking at the full life-cycle of the fuel production process -- what is known as well to wheel," said Dan Skopec, Undersecretary for the California Environmental Protection Agency during a press briefing on Tuesday.

The LCFS will use market-based mechanisms that allow providers to choose how they reduce emissions while responding to consumer demand. For example, providers may purchase and blend more low-carbon ethanol into gasoline products, purchase credits from electric utilities supplying low-carbon electrons to electric passenger vehicles, diversify into low-carbon hydrogen as a product and more, including new strategies yet to be developed.

By: Sara Parker