The 9th U.S. Circuit Court of Appeals has upheld California’s low-carbon fuel standard, a program expected to be a key part of the state’s efforts to cut greenhouse gas emissions. The decision could aid California’s efforts to create an alternative fuel industry.
The California Air Resources Board adopted the standard four years ago. It includes a “life cycle” analysis for a fuel’s “carbon intensity.” It takes into account carbon emissions generated during a fuel’s production and transportation to market -- along with those created during its combustion.
Makers of fuels with lower "carbon intensity" scores, like biofuels, will get pollution credits they can sell to producers of more carbon-intense fuels like petroleum. The credits can be used to lower a fuel producer's yearly pollution totals below the threshold mandated by the "cap and trade" program established by AB32. That's the California’s law mandating the reduction of greenhouse gases to 1990 levels by the year 2020.
Critics says the low-carbon fuel standard could trigger higher prices at the pump because it will increase the costs of making gasoline.
Once in place, regulators say the standard will account for a tenth of the cuts necessary to achieve the goals of AB 32.
A coalition of out-of-state ethanol producers, refiners and truckers sued to strike down the standard in federal court. The argued it violated the U.S. Constitution because it exceeded the state’s authority by interfering with interstate commerce.
A federal district court judge argeed, ruling two years ago that the Commerce Clause precluded the standard.
The state’s lawyers, along with environmental groups including the Natural Resources Defense Council, appealed the decision, contending that the federal Clean Air Act gives California the authority to lower emissions through this kind of regulation.
Today’s ruling from a three-judge appellate panel overturns the district court decision.