In a historic vote last night, California's Air Resources Board passed the implementing regulations for the nation's first low carbon fuel standard (LCFS) by an overwhelming 9-1.  This vote will put into action the LCFS first proposed by Governor Schwarzenegger as a key policy for meeting California's global warming goals. As has been the case for decades, California has again led the way in putting in place precedent setting environmental policy and put an important marker down that will favor cleaner fuels over high carbon fuels such as Canadian tar sands, liquid coal and oil shale. 

The approval of the California LCFS regulations gives a huge boost to efforts to pass a similar measure nationally.  Today all eyes will turn to Washington D.C. where the House Energy and Commerce Committee will debate a national LCFS in a lead up hearing before "mark up" next week on the Waxman-Markey global warming legislation. 

Low carbon fuel standards are a critical complementary measure to a cap on global warming pollution. The LCFS requires that the carbon content of fuels decline over the next decade, paving the way for lower carbon fuels, such as next generation biofuels, and other measures to reduce global warming pollution from our transportation sector. Transportation accounts for about one third of U.S. global warming pollution and cleaning up fuels is seen as one of the critical components to meeting our climate protection goals and reforming our energy use.  

The beauty of the LCFS is that it is performance based.  It does not pick favorites. Instead it provides a more level playing field for lower carbon fuels to compete against dirtier fuels. It does this by relying on a straight forward concept - determining how much carbon is embedded in the fuel through lifecycle assessment, an accounting measure that evaluates emissions from the production through to the combustion of a fuel.

The Canadian federal government and government of Alberta, where the tar sands are produced, lobbied strenuously against the adoption of California's LCFS, arguing that the tar sands should not be subject to lifecycle assessment that would take into account its high production emissions (tar sands production requires huge amounts of energy to clear the Boreal forest and to strip mine and drill for oil that is embedded in its soils, releasing three times the global warming pollution per barrel compared to the production of conventional oil).  While Canada has argued that this is discriminatory, the opposite is true. Under California's LCFS, all fuels with a high carbon content (defined as fuels with carbon intensity of 15 grams of CO2 per megajoule of energy) will be subject to this lifecycle assessment whether they are produced in California, Venezuela, or Canada. Not to require this accounting would be giving an unfair disadvantage to lower carbon fuels and could easily wipe out the gains that California is seeking in reducing its global warming pollution.

To put this in context, NRDC analysis shows that just the incremental emissions from the tar sands production (above conventional oil) between now and 2020 could offset fully one third of the gains in national fuel economy requirements put in place in late 2007. While these fuel economy standards - mainly improving our fleet mileage for new vehicles to 35 miles per gallon - should hold our emissions on a flat line going forward, the LCFS is a critical tool in helping bring those transportation emissions down.

The main argument put forward by proponents of expanded tar sands production is that is necessary to meet our oil supply needs. But can we really afford to scrape the bottom of the barrel for the dirtiest oil on the planet?  President Obama has made reducing our oil use a key policy goal. Today we borrow over $700 billion a year to buy oil.  And oil saved is the best energy security policy.  Our analysis shows that instead of increasing our reliance on tar sands oil, we can hold our oil use steady with fuel economy measures already in law and that we can start bringing our oil use down through measures like the LCFS, putting more plug in hybrids on the road, moving more of our transportation to the electric grid and implementing policies like "smart growth" that will reduce the miles people have to travel.

Canada is our largest oil supplier and tar sands is rapidly increasing as a percentage of this oil, but our reliance on tar sands oil is still under 1 million barrels a day out of twenty million. Surely we can work to reduce our overall oil demand so that we don't have to rely on an oil source that will make cleaning up our transportation sector so much more difficult.  Instead of locking into an expansion of tar sands oil (there are several major pipelines in the permitting stage - Keystone, Keystone Xcel, and the Alberta Clipper - and a half dozen U.S. refineries expanding to take tar sands oil), we must make every effort to reduce our oil use.  Already California has proven that smart conservation measures can save energy. The per capita use of electricity in California is half that of the rest of the nation. Now California is posed to show us that this can be done with transportation.

Canada has also argued that if the US doesn't buy its tar sands oil, it will send it to Asia. The reality is that getting a pipeline built from the tar sands in Alberta to the West coast of British Columbia will be extremely difficult, if not impossible. There are over 20 native tribes that are opposed to the Enbridge Gateway pipeline and it would require lifting a 15 year moratorium on tankers on the BC coast. Instead, Canada should work to clean up the hige carbon footprint of its current level of tar sands production and start addressing the many other enormous environmental problems associated with its production.

Environment Canada reported last week that Canada will miss its Kyoto targets by over 30%.  The tar sands are the largest growing source of CO2 in Canada and make up more than half of the projected growth in Canada's emissions.  In contrast with the 80% reduction set out in the Waxman-Markey legislation, Alberta's climate plan seeks to reduce its emissions by only 14% from 2005 levels by 2050. Canada's federal plan also allow emissions to grow rapidly from this sector. In spite of the requirements proposed, the tar sands emissions are projected to increase from 29 MMtonnes per year (current) to 80 MM and then only drop to 49 MM after 2020 - if and only if actual emissions are accomplished through controversial measures such as carbon capture and sequestration (CCS).  Already the tar sands industry has shied away from committing to CCS in the tar sands, acknowledging that it is expensive and technically challenging.

California has sent an irrefutable message to all the major oil companies engaged in the high carbon fuels business. Do it at your peril. The billions of dollars slated to be spent to produce dirty fuels like the tar sands should instead be invested in clean energy and developing cleaner fuels. That is not only an environmental priority, but now a much smarter investment choice. Ask leaders in the global aviation sector. Led by Boeing Commercial Aircraft and Virgin Atlantic Airways, the Sustainable Aviation Fuels Users Group is already betting on low carbon fuels.  They can see the writing in the contrails.