Obama Introduces National Low-Carbon Fuel Standard

The proposed National Low Carbon Fuel Standard Act of 2007 would require fuel refiners to reduce the lifecycle greenhouse gas emissions of the transportation fuels sold in the U.S. by 5 percent in 2015 and 10 percent in 2020.

Because most biofuels have lower lifecycle greenhouse gas emissions than gasoline, the NLCFS is expected to expand the market for renewable fuels while incentivizing lower carbon emissions in their production. By one estimate, the NLCFS will create a market for over 40 billion gallons of biofuels by 2020.

"Expanding the renewable fuels market in the United States will reduce our dependence on foreign oil, revitalize our agricultural sector, and provide a sustainable means to combat global warming. A homegrown solution to the international climate crisis lies in America's fields and farms," said Senator Obama.

The National Low Carbon Fuel Standard Act of 2007 introduced by Obama and Harkin on Monday is just one in a growing list of similar bipartisan legislation.

In January, California's Low Carbon Fuel Standard was signed into law by Governor Arnold Schwarzenegger. The following month, Schwarzenegger, joined by presidential candidate Senator John McCain (R-Arizona), called for the U.S. to implement a National Low Carbon Fuel Standard.

In March, Senators Dianne Feinstein (D-California), Susan Collins (R-Maine) and Olympia Snowe (R-Maine) introduced a measure to that would require fuel suppliers to increase the percentage of low-carbon fuels -- biodiesel, E-85 (made with cellulosic ethanol), hydrogen, electricity, and others -- in the transportation fuel supply by 2015.

"It's time to act on climate change," said Senator Harkin, Chairman of the Senate Agriculture Committee. "We've got to begin reducing greenhouse gas emissions, and emissions from our vehicles need to be a part of that. This bill sets a standard that establishes a steady downward trend for life cycle greenhouse gas emissions of our transportation fuels. Because biofuels generally have lower life cycle greenhouse gas emissions, this bill also promotes rural economic development and national energy security."

The National Low Carbon Fuel Standard Act of 2007 will:

-- Provide near-term demand certainty to renewable fuel producers. The Renewable Fuel Standard in the Energy Policy Act of 2005 will be expanded in the near-term to require 15 billion gallons of renewable fuel by 2012.

-- Drive the production of ultra-low carbon fuels. The bill requires fuel refiners to use minimum amounts of fuels with 50 and 75 percent lower lifecycle greenhouse gas emissions than gasoline.

-- Utilize a credit trading mechanism. Fuel refiners can trade allowances or bank them against future carbon reduction requirements.

-- Ensure an environmentally sustainable biofuels expansion. The bill ensures that the expansion of biofuels production does not impact national wildlife refuges, national parks, national forests, old-growth forests, or national grasslands. The bill calls for an assessment of the impacts of the expansion, including a comparison to the business-as-usual scenario of continued reliance on petroleum-based transportation fuels, and the development of standards by 2012 to protect air, land, and water quality.

-- If enacted in conjunction with a bill (S. 768) proposed by Senator Obama to raise fuel efficiency standards, the NLCFS would reduce emissions by about 530 million metric tons of greenhouse gases in 2020, the equivalent of taking over 50 million cars off the road.

According to the newest report from the Intergovernmental Panel on Climate Change (IPCC) however, global greenhouse gas emissions need to decline by as much as 50 percent by 2050. That means the United States must reduce its emissions by at least 80 percent by that date in order to meet the goal.

While the low carbon fuel standards proposed in Congress this year are a good start, many people believe that emissions from transportation need to be cut by much more than 10 percent by 2020. While most would agree that Obama's bill is well-intentioned, others believe it may not be effective because it competes with other state initiatives and the complicated rules for implementation would not be in place until at least 2010.