California governor signs carbon executive order

18 January 2007 23:53  [Source: ICIS news]

TORONTO (ICIS news)--California Governor Arnold Schwarzenegger signed on Thursday an executive order that provides for a low carbon fuel standard (LCFS), aiming to cut the carbon content in transportation fuels sold in the state and reduce greenhouse gas emissions (GHS).


The measure bodes well for the state’s renewable fuels market, which could triple in size, according to the California state government.


It also stands to benefit chemical and fertilizer companies with exposure to the agrochemicals and agricultural sector.


US chemicals major DuPont said it welcomed Schwarzenegger's orde. The company said it applauded California's market-based approach and pointed to its investments in biobutanol and ethanol from cellulosic feedstocks.


The standard requires fuel providers to ensure that the mix of fuel they sell into the California market meets, on average, a declining standard for GHG emissions. It will look at the full life-cycle carbon impact of fuels but does not mandate the use of ethanol or any specific biofuel.


The standard could eventually put more than 7m alternative fuel or hybrid vehicles on California’s roads, compared with 320,000 such vehicles on the roads today, the California government said in a statement.


The overall objective is to cut by at least 10% the carbon intensity of passenger vehicle fuels sold in California by the year 2020 while helping to cut back on the state’s reliance on oil


The standard applies to all refiners, blenders, producers or importers of transportation fuels in California who may meet it through market-based methods.  


Those exceeding the standard will receive credits that may be applied to future obligations, or could be traded to others who are not meeting the LCFS.


According to University of California estimates, the state’s GHS reduction goals could increase its economic output by $60bn (€46bn) and create more than 20,000 new jobs.


The order follows legislative initiatives in California last year, which committed the state to drastic reductions in greenhouse gas emissions.


($1 = €0.77)

By: Stefan Baumgarten
+1 713 525 2653

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