Transportation's Role in Reducing U.S. Greenhouse Gas Emissions ...

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2
cost per mile, while others are likely to decrease it. (It is the cost per mile, and not any upfront
capital cost or savings, which affects consumer behavior with respect to VMT.)
Therefore, it is difficult to make blanket characterizations of how the rebound effect might
affect the GHG benefits estimated in this section.
Policy Implications
Low-carbon fuels suffer from the “chicken-and-egg” dilemma – consumers are not likely to
buy alternative fuel vehicles in the absence of an extensive distribution network, nor will
manufacturers have the incentive to develop or offer such vehicles in mass if consumers
are not demanding the fuel. Low-carbon fuel policies will have to address this dilemma to
increase the use of these fuels. Policies should address the various barriers faced:
encouraging the purchase of flex fuel or other alternative fuel vehicles, expanding
distribution networks for low-carbon fuels, and research and development to advance
these fuels (and vehicles that can use them) into a commercially viable product.
A carbon fuel standard mandates that fuel suppliers meet, on average, minimum
percentage requirements for reductions in greenhouse gas emissions compared to
conventional fuels (e.g., gasoline, diesel). A carbon fuel standard allows fuel suppliers to
determine how to most cost-effectively meet the standard through any combination of fuel
strategies. This fuel-neutral approach rewards lowest carbon results without choosing
winners and losers in the development of improved fuels and technologies. By providing
certainty over future demand for low-carbon fuels, it also encourages vehicle
manufacturers to design vehicles that support the use of such fuels (such as bi-fuel or flexfuel
vehicles capable of running on both gasoline and ethanol).
California’s low-carbon fuel standard provides one model for this approach. In January
2007, Governor Schwarzenegger called for the establishment of a Low-Carbon Fuel
Standard (LCFS) by Executive Order (CEC, 2009). In response, the California Air
Resources Board (CARB) adopted a resolution to implement the new standard on April 23,
2009 (CARB, 2009a). The CARB standard will reduce GHG emissions from the
transportation sector by about 16 mmt in 2020 by lowering the carbon content of
transportation fuels used in California. This reduction by 2020 represents a 10 percent
reduction of the total GHG emission from the statewide mix of transportation fuel. The
LCFS will contribute to the State’s efforts of reducing GHG emissions to 1990 levels by
2020 (CARB, 2009b). Eleven Northeast and Mid-Atlantic states intend to establish a
regional LCFS initiative as well (Connecticut Department of Environmental Protection et
al., 2008).
The LCFS is imposed on transportation fuel providers in the State, establishes performance
standards that fuel providers must meet each year beginning in 2011, and uses market
mechanisms to spur the steady introduction of lower carbon fuels. The carbon intensity of
a fuel, expressed in terms of grams of CO2 equivalent per megajoule, is established by
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