Governors of 11 Northeast and Mid-Atlantic States Agree to Work Together Toward Reducing Greenhouse Gas Emissions from Fuels; Timeline for Developing a Potential Low Carbon Fuel Standard for Region
Governors of 11 Northeast and Mid-Atlantic states signed a Memorandum of Understanding that commits their states to continued participation in a regional effort to reduce greenhouse gas emissions from fuels for vehicles and other uses. (Earlier post.)
A LCFS (Low Carbon Fuel Standard) program is a market-based, fuel-neutral program to address the carbon content of fuels. If adopted by states, it would apply to the transportation sector, and potentially to fuels used for heating buildings. A regional LCFS has the potential to reduce transportation-related greenhouse gas emissions, which represent approximately 30% of emissions in the region, reduce regional vulnerability to petroleum price volatility, and facilitate the long-term transition from petroleum-based fuels in the transportation sector.
The LCFS would require regional fuel suppliers to demonstrate that the average carbon content of the fuel they deliver is reduced over time. A credit trading system will provide opportunities to control costs by allowing a supplier to purchase credits from low carbon fuels and average them with higher carbon fuels delivered to customers. Rather than imposing restrictions on specific fuel types, this approach allows fuel providers to choose among different fuels, based on cost effectiveness and environmental impact, in order to meet the carbon intensity reduction targets set by the program. This policy will allow the fuel industry flexibility to determine when and where new infrastructure can be introduced most efficiently, such as use of electric vehicles or additional supplies of liquid low carbon fuels.
In June 2008, Massachusetts Governor Deval Patrick sent a letter to the governors of all 10 member states of the Regional Greenhouse Gas Initiative (RGGI) inviting them to work with Massachusetts on developing a Low Carbon Fuel Standard that would apply to the entire region, creating a larger market for cleaner fuels, reducing emissions associated with global climate change, and supporting the development of clean energy technologies.
The Commonwealth’s Clean Energy Biofuels Act, signed in July 2008, also required Massachusetts to seek an agreement with its fellow RGGI member states to implement a LCFS on a regional basis. Based on Letters of Intent signed in December 2008 by state environmental commissioners, the participating states—the 10 RGGI states plus Pennsylvania—have been doing preliminary work toward designing a regional LCFS program.
The Memorandum of Understanding establishes a process to develop a regional framework by 2011, and to examine the economic impacts of a LCFS program. The states have committed to including strong business, energy and environmental stakeholder involvement in the process by providing opportunities for input and review of any proposed LCFS program.
Signing the Memorandum of Understanding were the Governors from Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.
The Memorandum of Understanding notes that the states have already demonstrated the success of regional emissions reduction programs with RGGI, which covers greenhouse gas emissions from power plants. According to the MOU, a regional program to address transportation and other fuels is prudent and efficient given the interconnected nature of the fuel distribution system in the Northeast and Mid-Atlantic region.
In the Memorandum, the 11 states agree to work together to analyze low carbon fuel supply options, determine the feasibility of achieving a range of reduction goals, including a 10% reduction in carbon intensity of fuels, and develop a framework for a regional LCFS in order to ensure sustainable use of renewable fuels in the region. The states are collaborating with the Northeast States for Coordinated Air Use Management (NESCAUM).
The regional LCFS initiative is being coordinated by the Massachusetts Department of Environmental Protection (MassDEP).