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Cali Gets a Low-Carbon Fuel Standard — Oh My!

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The California Air Resources Board, that thorn in the sides of automakers and the Bush-era EPA, has just approved the country’s first mandate for low-carbon fuels. The new rule, which won a landslide 9-1 victory yesterday at the state agency, will require producers, refiners, importers and blenders of gasoline and diesel sold in California to cut the overall “carbon intensity” of their fuels. In short, clean up or get out.

More specifically, the rule demands reduction of the greenhouse gas emissions resulting from the entire process of extracting (in the case of oil) or cultivating (in the case of biofuels), transporting and consuming a fuel, by at least 10 percent in the next decade. Starting in 2011, the California agency, known as ARB, will weigh a fuel’s average emissions against the amount of energy it produces to determine its carbon intensity.

According to an announcement from the California agency, known as ARB, the rule is meant to give a boost to alternative fuels, such as those derived from algae, wood, straw and switchgrass. How much of a boost? By 2020, ARB expects electricity, biofuels, hydrogen and other “clean alternative fuels” to replace 20 percent of the fuel used by cars in the state.

Unsurprisingly, not everyone’s thrilled with the idea — or at least the execution. As the Los Angeles Times reports, the ethanol industry, which has found an advocate in General Wesley Clark, takes issue with ARB’s decision to include land use effects — the climate impact of switching land over to grow energy crops — in its calculations, while not dinging the oil industry for the carbon footprint of U.S. military forces protecting oil reserves in the Middle East. The CEO of ethanol giant POET called the regulation “well-intentioned but significantly flawed,” as the New York Times notes.

ARB also said it expects the new standard to “drive the availability of plug-in hybrid, battery electric and fuel-cell powered cars while promoting investment in electric charging stations and hydrogen fueling stations.” So for companies working on next-gen fuels, cars, energy storage and infrastructure (including a lot of startups), yesterday’s vote could mean ka-ching. And not just in California, because what’s the thorniest aspect of the ARB? It tends to be a trendsetter.