Low carbon fuel standard is a boon for California

Then-Gov. Arnold Schwarzenegger examines the engine of a FlexFuel Chevy Tahoe after signing an executive order establishing the world’s first low fuel carbon standard in 2007.
Then-Gov. Arnold Schwarzenegger examines the engine of a FlexFuel Chevy Tahoe after signing an executive order establishing the world’s first low fuel carbon standard in 2007. Sacramento Bee file

As our state’s investor-in-chief, my job is all about smart investing for the future and for the benefit of all Californians. That’s why I support our low carbon fuel standard and look forward to its re-adoption by the California Air Resources Board this week.

California has grown accustomed to pioneering energy policies ahead of the rest of the nation and the world. Since we rank among the 10 largest global economies, the standards we incubate here often influence decisions by other states, the federal government and other countries. When California gets it right, jobs are created, the economy grows and we enjoy a cleaner environment.

We are getting it right with the low carbon fuel standard.

It is a first-of-its-kind, market-based approach to lowering transportation carbon emissions and is just one part of the state’s comprehensive strategy for tackling climate change and building a clean energy economy. Pollution from the transportation sector accounts for about 40 percent of our state’s greenhouse gas emissions. Think of it this way: Every gallon of gasoline you burn in your car releases nearly 20 pounds of carbon dioxide into the air.

The Natural Resources Defense Council projects that the average California household will save nearly $800 a year by 2020 and $2,000 by 2030 from policies that make cars more efficient, fuels cleaner and transit more available. According to a recent study by the International Council on Clean Transportation, clean fuel standards will result in the use of 400,000 fewer barrels of gasoline and diesel per day by 2030 in California and the Pacific Northwest. Oregon has approved a clean fuels standard similar to California’s, and British Columbia also has a clean fuels standard.

As the state’s treasurer, I have been closely tracking the economic impacts of this and other related policies. In the four years it has been in effect, the low carbon fuel standard has worked and will continue to return benefits. California is already home to more than 40,000 advanced energy businesses that employ nearly 500,000 people. A report by the consulting firm ICF International finds that a strong fuel standard could net 9,100 new jobs for California’s economy, and perhaps more depending on what technologies and industries our clean energy policies continue to attract.

The fuel standard, requiring a 10 percent cut in the carbon intensity of fuels by 2020, tells entrepreneurs and fuel producers that there will be a steady and growing demand for cleaner options. It levels the playing field. Newer and cleaner fuels compete with older and dirtier fuels; this competition encourages innovation, leads to an increasingly diverse fuel supply and puts more renewables and advanced vehicles in the marketplace.

The alternative fuels market is already developing much faster than expected. The ICF analysis found that meeting the 2020 target is feasible, and that it is driving investment in cleaner fuels, including ethanol, biodiesel, renewable diesel and biogas, as well as cleaner production processes. In addition, the analysis found that the standard will result in $1.4 billion to $4.8 billion in societal benefits by 2020 from reduced air pollution and increased energy security.

Since its implementation, the low carbon fuel standard has reduced carbon emissions by about 9 million metric tons – the equivalent of removing nearly 2 million passenger cars from the road for one year. Its re-adoption by the air resources board is critical to reinforcing our state’s leadership role in the clean fuels market and ensuring Californians a vibrant, healthy environment for generations to come.

John Chiang is state treasurer.