Sierra Club
Sierra Club Press Release

For Immediate Release

Contact: Eddie Scher, 415-977-5758

Reporter Memo: Clean Fuel Standards—Progress in California and the Northeast

This week, the 9th Circuit Court of Appeals stayed a lower court decision that had put a halt on California’s implementation of its Low Carbon Fuel Standards – a set of rules that will significantly reduce the state’s greenhouse gas emissions associated with transportation fuels. The 9th Circuit decision allows California to move forward with its implementation and enforcement of the Standard.

Also this week, a coalition of environmental groups delivered a letter to 11 Northeastern Attorneys General establishing that a Northeast Clean Fuels Standard is legal and should move forward.

Clean Fuel Standards require industry to reduce carbon pollution through a mix of low carbon fuels and the trading of carbon credits. These programs are designed to reduce GHG emissions by limiting pollution emitted by high-carbon fuels, such as tar sands, oil shale, corn ethanol and other high carbon biofuels. California led the way developing their program to achieve the AB32 mandate to reduce state GHG emissions to 1990 levels by 2020. A Northeast program for 11 states is also in development.

California Low Carbon Fuel Standard (LCFS) litigation. On Monday, 4/23, the 9th Circuit Court of appeals stayed a District Court decision and allowed California to proceed with implementation and enforcement of the state’s new fuel standard. The litigation, brought by industries opposed to cleaner fuels, will continue to move through the courts. Monday’s decision allows companies that have already entered into contracts to buy and sell carbon credits under the new rules to proceed with the program, resulting in an immediate and meaningful cut in the state’s greenhouse gas emissions. The parties will begin briefing the merits of the 9th Circuit appeal in late May.

Northeast Clean Fuels Standard Program. Yesterday, legal experts from a coalition of environmental groups delivered a letter to the 11 NE Attorneys General involved in the NE Clean Fuel Standard. The communication is a response to an earlier letter sent by the oil industry front group, the Consumer Energy Alliance, claiming that the standard wouldn't pass legal muster. According to legal experts, the standard is  legally defensible and should move forward - despite API's efforts to derail the standards and bring tar sands to the NE. 

Background on California Low Carbon Fuel Standard

The LCFS was promulgated as an early action item to ensure CA meets its AB32 mandate of reducing GHG emissions in California to 1990 levels by 2020. The LCFS is a regulation adopted by the California Air Resources Board (CARB) that applies to transportation fuels that are sold and consumed in California. The standard aims to reduce GHG emissions by reducing the fuel-cycle, carbon intensity of transportation fuels used in California. The LCFS reduces emissions not only by encouraging the use of alternatives to petroleum-based transportation fuels, but also by estimating - and reducing - all GHG emissions caused by the use of ethanol, including from the extraction, refining, and transportation of the fuel. Under the rule, transportation fuel providers must calculate the "carbon intensity" of their fuels and compare these values to the statewide average carbon intensity level for the year. The standard implements a trading program for the fuel providers, such that providers whose scores are below the statewide average can obtain credits that they can either sell to providers whose scores are above the average or bank for years when they exceed the statewide average level.

Two lawsuits were brought against CARB by an association of Midwest ethanol farmers and the petroleum industry. The District Court held that the standards discriminate against interstate commerce and issued a preliminary injunction that halted California's enforcement of the rule. The state of California and environmental defendant intervenors (Sierra Club, NRDC, EDF, CLF, and others) appealed and requested a stay of the injunction decision during the pendency of the litigation. The 9th Circuit granted that stay, which lifts the injunction and allows California to move forward with implementation of its LCFS.