California Forum

Why a low-carbon fuel standard is good for transportation and California

Sonia Yeh
Sonia Yeh

The op-ed “Markets point to leaning more on cap and trade” (Viewpoints, Feb. 1) mischaracterized the aim and effectiveness of California’s Low Carbon Fuel Standard program. The conclusions should be scrapped, not the fuel standard.

Since 2011, California’s Low Carbon Fuel Standard has exceeded its policy targets. Industry has increased the supply of clean fuels (biofuels, electricity, biogas, natural gas and hydrogen) and reduced the carbon intensity of existing fuels. Under the LCFS, the most polluting companies buy credits and companies with the best green tech earn credits. The program itself sends a strong price signal to clean-fuel innovators and investors.

The impact to consumers has been to expand the choice of fuels in California while having a negligible price impact, adding less than 0.6 cents to a gallon of blended gasoline last year. The cap-and-trade program added approximately 9 cents per gallon. While high-carbon fuel producers could see their costs to comply with the program increase over time, the program’s higher credit prices would also provide greater incentive to invest, driving innovation and enabling us to reach our climate goals sooner.

The author’s narrow economic criticism of LCFS was fundamentally flawed and overlooks political realities. While politically feasible carbon taxes and cap-and-trade policies may be effective in incentivizing carbon reductions in the electricity sector in the short term, they simply will not provide price signals sufficient to bring necessary clean, very low-carbon technology to market. A strong policy push is needed. The good news is that, according to research from the National Academies and others, the investments in low-carbon fuels and vehicles can deliver large and significant public and private benefits.

Given everything at stake, it is time to demand real change toward cleaner fuels. LCFS is the only fuels policy that requires oil companies to invest in low-carbon alternatives – either directly or by purchasing credits from low-carbon fuel producers.

The program has proved effective and efficient and is a model for the rest of the world, including Oregon, the European Union and Canada. Getting rid of it would be a big mistake.

Sonia Yeh is a researcher at the Institute of Transportation Studies at UC Davis and Fulbright Distinguished Chair Professor in Alternative Energy Technology at Chalmers University of Technology, Sweden. She can be contacted at slyeh@ucdavis.edu.

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