To strengthen a significant California climate policy, UCLA legal researchers are offering guidance for policymakers to address four challenges that would help the state further reduce carbon pollution from transport fuels.

Transportation is now the largest source of greenhouse gas emissions in both California and the country. While several U.S. and state policies seek to reduce transport emissions through improved vehicle efficiency or increased funding for public transit, California’s Low Carbon Fuel Standard controls greenhouse gas emissions associated with transport fuels. The recommendations contained in the new Pritzker brief from the Emmett Institute on Climate Change and the Environment at UCLA School of Law address the unique challenges this policy faces due to complex technology and markets in the transport sector.

Implemented in 2011, the LCFS is an important piece of California’s comprehensive program to reduce greenhouse gas emissions across the state. The program’s initial targets reduced carbon emissions for California fuels to 10 percent below the 2010 baseline by the year 2020. In 2016, California updated its statewide greenhouse gas emissions target to require reduction to 40 percent below 1990 levels by 2030. This year policymakers are considering even more stringent emissions targets for California vehicle fuels through 2030. Revisions to the fuels policy would take effect in 2019.

In the new report, UCLA School of Law researchers suggest strategies for the Low Carbon Fuel Standard to anticipate a changing mix of fuel technologies and also how the program can adjust targets over time and respond to related climate policies in California and other jurisdictions.

“The Low Carbon Fuel Standard goes where no policy has gone before, cutting pollution from transport fuels across their entire lifecycle, from extraction to combustion,” said Ted Parson, Dan and Rae Emmett Professor of Environmental Law at UCLA Law and lead author of the paper. The other authors of the paper are Sean Hecht, Julia Forgie and Jesse Lueders. “The Low Carbon Fuel Standard is a pillar of California’s climate strategy.”

Under its current targets, the LCFS is projected to cut total emissions by 15 million metric tons carbon dioxide equivalent (CO2e) in 2020, or more than a quarter of projected reductions from all California greenhouse gas policies that year. Use of alternative and innovative fuels in California has increased to almost 10 percent of total supply.

The Low Carbon Fuel Standard has survived three legal challenges from regulated industries. Lawsuits continue today, but have thus far resulted only in implementation delays and modest program revisions. The report’s authors are optimistic about the program’s long-term legal prospects.

One point of controversy has been the Low Carbon Fuel Standard’s use of life-cycle assessment to calculate carbon intensity targets. The program targets emissions from fuels not just when they are burned in the vehicle, but also when fuels are extracted, processed and transported, as well as emissions resulting from converting land to biofuel production from other uses. Life-cycle analysis gives a more accurate assessment of a fuel’s total environmental impact, but involves multiple estimates of uncertain quantities.

Critics have complained that LCFS is too costly because it singles out transport. One critique suggests other, more cost-effective strategies are available elsewhere to reduce emissions. But these critiques look only at short-term costs and benefits of the policy, while the policy’s goal is instead to promote innovation in pursuit of large, long-term emissions reductions in a uniquely complex sector.

“Although the Low Carbon Fuel Standard has attracted significant controversy and opposition, it is well designed to target the uniquely challenging market and technological conditions involved in reducing emissions from transportat fuels,” Parson said.

The California Air Resources Board is now considering amendments to broaden the program’s coverage and strengthen its targets, aiming to reduce each fuel’s emissions intensity 20 percent below 2010 levels in 2030. Parson and Hecht recently submitted a comment letter to the California Air Resources Board based on findings in this study.

The authors identify four challenges policymakers should address for the policy to reach a more ambitious 2030 target:

• Maintaining neutrality over alternative fuels and technologies: The Low Carbon Fuel Standard is designed to make no preference for specific fuel types, but as knowledge and experience with low-carbon fuels develops, a preferred fuel mix may emerge. Policymakers should prepare to manage the transition to this preferred endpoint. 
• Setting the scope of activities and energy sources covered by the policy: The expansion of the program to cover electric drive vehicles and technologies for carbon capture and sequestration poses challenges for policymakers seeking to set boundaries for the Low Carbon Fuel Standard. Policymakers should keep careful control over the pace of expanding Low Carbon Fuel Standard credits for technologies. 
• Adjusting how fast the emissions-reduction target is tightened over time: Policymakers must adjust the policy’s carbon intensity targets over time to advance the dual aims of providing effective incentives for low-carbon fuel innovation and avoiding market disruptions. To balance these aims, California Air Resources Board should consider strengthening the ambition of its 2030 target, with incremental relaxations later if needed.
• Managing interaction with related federal and California policies: the Low Carbon Fuel Standard interacts with several other policies on fuels and emissions, especially the federal Renewable Fuel Standard (RFS) and California’s cap-and-trade system. If other jurisdictions adopt policies similar to the Low Carbon Fuel Standard, California policymakers should be prepared to coordinate the California standard’s credit system with other programs and consider slightly relaxing California targets if demand outpaces innovation in low-carbon fuel supply.