US Senators Barack Obama (D-IL) and Tom Harkin (D-IA) earlier this week introduced legislation (S.1324) establishing a National Low-Carbon Fuel Standard (NLCFS). The bill requires a reduction of about 180 million metric tons in vehicle greenhouse gas emissions in 2020—about 10% of the current amount.
The Senators say their fuel standard encourages the growth of the renewable fuels market while providing incentives for lowering carbon emissions from biofuels production. One estimate cited by Senator Obama’s staff suggested that the NLCFS will create a market for more than 40 billion gallons of biofuels by 2020.
The National Low-Carbon Fuel Standard Act of 2007:
Requires fuel refiners that produce petroleum-based fuels to reduce the lifecycle greenhouse gas emissions of the transportation fuels sold in the US by 5% in 2015 and 10% in 2020.
Requires fuel refiners to use minimum amounts of fuels with 50%- and 75%-lower lifecycle greenhouse gas emissions than gasoline. This requirement signals to investors that there will be a market for advanced fuels, but still allows leeway for fuel refiners to choose the optimal mix of fuels to meet their overall greenhouse gas emissions targets.
Utilizes a credit trading mechanism. Fuel refiners can trade allowances or bank them against future carbon reduction requirements.
Calls for an assessment of the impacts of biofuel production 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.