Suggested Citation:
Sperling, Daniel and Sonia Yeh (2011) "Toward a Universal Low-Carbon Fuel Standard" chapter 11 in Sustainable Transportation Energy Pathways: A Research Summary for Decision Makers. Institute of Transportation Studies, University of California, Davis, 251 - 262

Petroleum’s dominance as a transportation fuel has never been seriously threatened anywhere—except Brazil, with its sugarcane ethanol—since taking root nearly a century ago. Efforts to replace petroleum, usually for energy security reasons but also to reduce local air pollution, have continued episodically for years—and largely failed. Vehicles, planes, and ships are still almost entirely dependent on petroleum and account for nearly one-third of all greenhouse gas (GHG) emissions in the United States and almost one-fourth of all GHG emissions globally. In the face of this stubborn petroleum lock-in, what is the most effective type of policy to spur technological innovation and investment in alternative fuels?

In this chapter we argue that a new policy instrument known as a low-carbon fuel standard (LCFS) is the most promising approach to getting the carbon out of fuels. We have learned from past failures that to be successful, a policy approach must inspire industry to pursue innovation aggressively; it must be flexible, performance-based, and inclusive so that industry, not government, picks the winners. It should also take account of all greenhouse gas emissions associated with the production, distribution, and use of the fuel, from the source to the vehicle, so that petroleum and alternative fuels such as hydrogen and electricity are compared on a level playing field. (While upstream emissions account for about 20 percent of total GHG emissions from petroleum, they represent almost the total life-cycle emissions for fuels such as electricity and hydrogen; upstream emissions from extraction, production, and refi ning also comprise a large percentage of total emissions for the very heavy oils and tar sands that oil companies are increasingly embracing to supplement limited supplies of conventional crude oil.) LCFS policies already adopted in California and the European Union fi t these requirements and can lead the way toward a harmonized international effort.