Opinion: The Low Carbon Fuel Standard is Good for California

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By George Slover | May 2, 2014

The oil industry continues to try to beat back California’s pioneering clean energy policies.  But we at Consumers Union believe their efforts will ultimately fail. That’s because California’s families and businesses are better served by having more energy choices, a level playing field for alternative energy producers, and a focus on efficiency and clean energy innovation.Take the Low Carbon Fuel Standard (LCFS), which is part of California’s groundbreaking AB 32 clean energy and climate law. The LCFS—which requires carbon pollution from transportation fuels to be cut by 10 percent by 2020—is a frequent target of oil industry criticism. That’s not surprising, since the LCFS is designed to open up fuel markets to cleaner alternatives to petroleum, which means competition for oil companies.But oil interests go too far when they claim this will wreak havoc on the state’s economy, and insist that the gasoline-centric status quo must be preserved if the economy is to continue to grow. A new study by ICF International, commissioned by a coalition of business groups, looks at the clean fuel standard’s impacts on the economy, including employment rates, personal income, and gross state product, and finds any potential adverse impact will be negligible and far outweighed by all the positive impacts in most cases. California’s economy should continue to grow just fine.Exaggerations abound about how the Low Carbon Fuel Standard will result in big price hikes at the pump, with some claiming gas prices will rise over $1 a gallon. But the new ICF study—based on transparent modeling methods that are widely accepted—puts the cost to the petroleum industry at pennies. Given their profits over the last few years, it’s up to the oil companies whether they will absorb the costs of cleaning up their act and polluting less, or will pass these costs on to their customers.Here’s some perspective:  Since 2010, California gas prices have fluctuated by an average range of 75​cents per gallon, mostly because of swings in global oil prices, refinery shutdowns and accidents, and shifts in seasonal demand. But thanks to California’s clean energy policies, demand for petroleum is already being driven down, and is expected to cut fuel bills by up to 30 percent by 2020.

And here’s how California consumers will benefit from policies like the LCFS. They will get more clean fuel options and less reliance on oil. In the long run, these trends will ease upward pressure on gas prices. And they will hasten the day when there is real competition and genuine consumer choice in fuels and transportation options—the day when petroleum is no longer the only game in town. Californians also will get cleaner air and water, and improved public health.

That’s a better future we should all get behind.

George Slover is senior policy counsel at Consumers Union, the public policy and advocacy division of Consumer Reports.