As California motors its way toward a more secure, less volatile and more efficient economy, the financial benefits provided by the Low Carbon Fuel Standard are noteworthy. We and the hundreds of businesses we represent applaud the state’s Air Resources Board for its re-adoption last month of this landmark transportation policy.
The LCFS works because it provides certainty to California businesses. Certainty breeds confidence and confidence fuels investment. The LCFS requires a 10 percent reduction in the carbon intensity of transportation fuels by 2020, as measured on a lifecycle basis. That means from cradle to tailpipe, the cleaner fuels of today and the future would emit fewer dangerous greenhouse gases into the air than conventional fuels.
The intent of the program – to reduce emissions from the transportation sector and diversify fuels so we aren’t reliant on one resource we have little control over – has spurred investment in and innovation of a suite of lower-carbon fuel and vehicle technologies. The end result is an increasingly diverse fuel supply, which puts more renewables and advanced vehicles into use – offering California businesses and consumers alternatives to conventional and often expensive options.
The LCFS has taken on added significance in California’s transformation to a low-carbon economy given Gov. Jerry Brown’s stated commitment to cutting petroleum use in half by 2030 – the LCFS is one tool in the state’s toolbox that will help us reach that goal.
No one has eyes more securely on the road toward fuel diversity than fleet owners and operators, who want policy longevity and regulatory consistency so they can make smart investments. Some industry leaders whose ubiquitous vehicles you spot multiple times a day charged ahead early, investing in the best, most technologically advanced fleets while ultimately saving on the bottom line. In the process, their forward thinking demonstrates to peers and competitors that by diversifying vehicles and fuels, they reduce the impacts of volatile oil price spikes, decrease operation costs and reduce harmful carbon emissions.
Low-carbon fuels can – and with the air board’s recent action, likely will – replace over a quarter of the gasoline and diesel used by vehicles in the Pacific Coast region by 2030. By displacing gasoline and diesel, and shifting the composition of vehicle fleets toward alternative fuel vehicles, this region can set an example for other states and nations to follow.
The LCFS does not mandate a one-size-fits-all approach. Carbon-intensity reduction targets can be met in a variety of ways from the use of conventional biofuels, electric drive, natural gas and advanced cellulosic biofuels. That is to say, decarbonizing the economy is not reliant on a silver bullet, but instead silver buckshot. Numerous technologies exist today that can be deployed for oil-saving and climate mitigation benefits.
But that doesn’t mean we take off our lab coats and go home. We should not underestimate the ingenuity of our deep reservoir of scientists, engineers and chemists directing their talents to constantly improving the technologies we need to lead us toward a 21st century fuel supply.
California boasts more than 40,000 businesses serving advanced energy markets, and these businesses employ more than 430,000 people. The LCFS is driving strong investment in alternative fuels, and is expected to result in $1.4 billion to $4.8 billion in energy and environmental security benefits by 2020 while also creating thousands of jobs. The LCFS, working together with the state’s emissions cap on transportation fuels, is expected to result in $10.4 billion in avoided costs related to energy insecurity, health care and climate change by 2020.
California was the first in the nation to implement a Low Carbon Fuel Standard, and now we are poised to continue this leadership role in the marketplace of clean fuels. This is what our state does best. Identify an issue. Seek a solution. Chart a course of action others soon follow. With sustained government and industry commitment we can meet – or even surpass – the LCFS’ original goal while driving new investment and job creation.
John Boesel is chief executive of Calstart, which works with business, fleets and government to develop and implement clean, efficient transportation solutions. Ruben Guerra, founder of Municipal Energy Solutions, is chairman and chief executive of the Latin Business Association, the nation’s largest Latino business trade organization.
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