By Alejandro Lazo | CalMatters
California’s revamped Low Carbon Fuel Standard took effect Tuesday, despite fierce Republican criticism and increasing Democratic trepidation over its potential to raise gas prices.
The new rules — which expand a program to reduce climate-warming gases and clean the air — ratchet up requirements for cleaner fuels and broaden a $2 billion credit market aimed at cutting emissions from cars, trucks and freight.
No immediate hike in gas prices will occur and experts say the future impact is uncertain because it depends on how much the oil industry spends on buying credits and then passes it onto consumers. The previous fuel standard, which was set in 2011, added 9 cents to the cost of a gallon. A UC Davis researcher estimates the new standard could add 5-8 cents per gallon.
Gas prices in Southern California on Tuesday were roughly $4.40-$4.50, according to AAA. The Gas Buddy app showed myriad fuel stations were selling regular gas for under $4 a gallon.
The Newsom administration is bracing for more political attacks as Republican legislators have seized on the issue. Gov. Gavin Newsom’s office issued a fact-check memo defending the rule and saying the impacts are exaggerated, while Republicans in the Legislature and Congress say it would damage the economy because Californians already pay the most in the nation for gasoline.
Democratic lawmakers last week introduced legislation that would cap the price of the standard’s fuel credits in an effort to rein in price spikes at the pump. The measure is supported by one of the state’s most powerful Democrats, Senate President Pro Tempore Mike McGuire, who said it “will reduce costs for drivers across the Golden State while continuing to move our climate and energy goals full steam ahead.”
The new fuel standard is projected to reduce carbon dioxide-equivalent gases by 558 million metric tons through 2046, according to the air board’s economic assessment. Those reductions are equal to the emissions of more than 120 million cars on average in a year. Some critics say that is an overestimate, because some biofuels may not be as clean as reported.
Cleaner, low-carbon fuels include biofuels made from soybeans or cow manure. The program has been particularly successful in reducing the diesel used by medium and heavy-duty trucks. Over the 13 years, it has displaced 25 billion gallons of petroleum fuels, according to the air board.
The new standard was temporarily delayed earlier this year when the state’s administrative law office rejected it and sent it back to the air board to add more clarity to the rule.
Assemblymember Jasmeet Bains, a Bakersfield Democrat, last month called for the resignation of California Air Resources Board Chair Liane Randolph over concerns that the agency did not study the economic impacts of its new standard.
Randolph said in a statement that gas prices are “over a dollar per gallon cheaper than just a few years ago. Our efforts to deploy more zero-emission vehicles and reduce fossil fuel use is working to cut demand and create more competition in the fuels market, and the (fuel standard) is a big part of that effort.”
In an unrelated action, California’s gasoline excise tax, which is adjusted annually, increased 1.6 cents per gallon on Tuesday. The tax is primarily used to pay for roads and highways.
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