A legal storm in the energy industry that has been rumbling in the distance for three years is likely to come to a head this summer as petroleum refiners, ethanol producers and Washington lobbyists pursue their battle with state agencies in Sacramento.
The latest flare in this clash between a powerful pantheon of US energy titans and federally influential regulators in California occurred last week, after a temporary injunction was lifted by a US court of appeals in San Francisco.
The California Air Resources Board now has the green light to continue implementation of its “transformative” standard, which aims to reduce the carbon intensity of transportation fuels by 10% by 2020.
The Low Carbon Fuel Standard, first proposed in 2007 under former Governor Arnold Schwarzenegger, was designed to stimulate innovation and investment in transport fuels with lower carbon intensity such as advanced biofuels, natural gas, electricity and hydrogen.
Opponents of the LCFS say it’s too expensive because the supply of advanced biofuels is insufficient and the costs of compliance are too [high].
Last week’s court decision marked a key development in the ongoing legal challenge first brought in December 2009 by ethanol lobbying groups, the Renewable Fuels Association (RFA) and Growth Energy. The groups argue that the Low Carbon Fuel Standard is “unconstitutional” because it violates the commerce clause, which was intended to stop states from introducing laws that would discriminate against businesses located in other states.