California’s proposed Low Carbon Fuel Standard

Until somebody comes up with a way to power a car with garbage, like the time-traveling DeLorean in “Back to the Future,” our options are limited: gasoline and diesel, electricity, natural gas, liquid coal, hydrogen or plant-derived biofuels such as ethanol. Most people on both the right and the left agree that if we want to decrease our reliance on foreign oil and/or slow the progress of climate change, we’re going to have to use less of the first two and focus on some combination of the remaining five. Yet pursuing the alternatives can cause environmental and economic damage that’s as bad as, or worse than, that of oil and gasoline. So how do we come up with regulations that encourage cleaner fuels and discourage destructive ones, without making technology decisions that are better left to the free market?

That’s the challenge the state of California is taking on by creating a Low Carbon Fuel Standard, which after more than a year of development and hearings by the state Air Resources Board is slated for approval Thursday. It’s a daunting task, all the more so because the state is trying to do something that hasn’t been tried before: regulate not just the direct “life-cycle” emissions from producing, transporting and using fuels, but the indirect emissions that result when land is converted to grow crops for biofuels.

This matters a great deal, because not all biofuels are created equal. Some of them, particularly ethanol produced from corn, raise food prices, pollute waterways as more fertilizer is spread over the fields, and encourage farmers in places such as Latin America to cut down more rain forest to grow crops. Yet measuring these indirect effects relies on untested and possibly unreliable science, which is why the biofuels industry is in an uproar over California’s proposed regulation.

The goal of the Low Carbon Fuel Standard is to lower the “carbon intensity” of fuels sold in California 10% by 2020. It does this by using complexformulas to score each type of fuel based on its life-cycle emissions; carbon intensity is calculated by comparing the amount of greenhouse gases emitted by a fuel over its life cycle with the amount of energy it produces. Starting in 2011, companies that sell fuel in California will have to lower the overall carbon intensity of their various fuels at a rate that will increase every year until 2020, or else buy credits from companies that sell cleaner fuels.

Oil company lobbyists have sought to persuade the air board to delay adoption of the rule, saying it could raise fuel prices and disrupt supplies because there may not be enough low-carbon fuel available to meet the standards. Yet state analysts believe that the rule will actually lower wholesale fuel prices, producing a “savings” of $11 billion over a 10-year period. Whether this money will be passed on to consumers in the form of lower prices or collected as profit by fuel providers is an open question.

Actually, the questions don’t end there. Fuel prices are affected by a host of unpredictable variables, so trying to predict them a decade in advance is usually a waste of time. And the new state standard is flexible; if it does produce price and supply disruptions, the air board can simply push back the schedule, giving fuel suppliers more time to comply.

The objections from biofuel producers are more troubling. They focus on a penalty for “indirect land use change” that would be applied only to biofuels when calculating their carbon intensity. This is triggered when production of a certain biofuel causes a rising demand for the plants it’s made from.

There are two types of biofuels: the first-generation fuels in mass production today, which are mostly made from food crops, and the second-generation fuels still under development. The latter can be made from nearly any kind of plant material, including wood chips, agricultural waste or native plants that require little watering or fertilizer, such as switchgrass and miscanthus.

Clearly, second-generation fuels -- also called “advanced biofuels” or “cellulosic ethanol” -- will have less negative environmental and economic impact than first-generation fuels. The indirect land use change penalty would give the advanced fuels a boost and discourage food-based fuels by calculating the carbon emissions that result when farmers convert land to grow biofuel crops and adding that number to the fuel’s carbon intensity score.

Corn ethanol, by far the most common biofuel in the United States, serves as an instructive example. Because of congressional mandates, ethanol production has risen dramatically in recent years. As American farmers began growing more of their crops for fuel instead of food, U.S. corn exports dropped and world corn prices rose sharply. Fields that were formerly used for crops such as soybeans and wheat were converted to corn, causing prices for those commodities to rise too. That prompted farmers in other countries to clear more forest land, which serves as a “sink” for storing atmospheric carbon, to grow corn, soybeans and wheat.

California plans to use a sophisticated computer model to calculate the environmental damage that results from such land use changes, and apply the penalty to land-intensive biofuels. According to some scientists, this model is inadequate. It can’t predict changes in weather, politics or agricultural technology that can have big impacts on land use. Further, the biofuels industry argues that it’s being unfairly singled out, because there is no indirect penaltycharged to other fuels, such as petroleum or electricity.

That last argument has little merit; the industry hasn’t identified any indirect effects from those fuels that are anywhere near as significant as the emissions created by land-use changes. And while the potential unreliability of the computer model is troubling, biofuels backers are overstating the problem. The model is based on the best science available, and it will improve over time as the science improves. Just because it isn’t perfect doesn’t mean it isn’t good. Moreover, it’s vital to include indirect land use changes in the fuel standard, because failing to do so would encourage environmentally unfriendly fuels and defeat the purpose of the initiative.

California’s efforts to regulate fuels are being watched very closely by other states and countries, many of which will base their own programs to clean up fuel supplies on the Golden State’s. It’s an ambitious and extremely worthy project that deserves to be approved Thursday.