x Statewide Greenhouse Gas Emissions Targets – Thirty-two states have set some form of executive or statutory target for greenhouse gas emissions. While the exact targets vary, they are generally aimed at attaining a level of emissions in the atmosphere that current science indicates is necessary to forestall the most devastating impacts of climate change. States that have emissions targets generally have accompanying climate action plans that are the result of a stakeholder process to identify strategies to reduce emissions throughout the economy. The transportation sector is considered in all of these climate action plans and, in some cases, more in-depth analysis of transportation emissions is included along with specific commitments in that sector. For example, Colorado’s law specifically requires development of a plan for reducing net greenhouse gas emissions from the state’s transportation sector.
x Statewide Alternative Fuel Targets and Plans – Some states are setting specific targets for statewide adoption of alternative fuel vehicles, including electric vehicles. For example, Hawaii set a statewide alternative fuel target of 10% of highway fuel use by 2010; 15% by 2015; 20% by 2020; and 30% by 2030. In Massachusetts, a 10-year plan is required to advance electric vehicles and other alternative fuel vehicles.
x Low Emissions Vehicle (LEV) CO2 Standards – In September 2009, USEPA and USDOT, along with the state of California, jointly issued federal greenhouse gas emissions standards for vehicles in model years 2012 through 2016. The federal standards currently serve as the national standard with regards to greenhouse gas emissions. However, under the federal program, California may proceed with setting more stringent limits beginning in 2016. At that time, other states may follow suit with more stringent standards should California choose to promulgate them (unless California and EPA/DOT continue their agreement beyond 2016).
x The Zero Emissions Vehicle (ZEV) Standards in the California Low Emissions Car Program (also adopted by the Northeast states) – has been setting increasingly stringent mobile-source emissions
requirements. In particular, the ZEV component of the California Car Program has required the automobile manufacturers to develop advanced technology vehicles to meet a zero emission standard. Carmakers can satisfy their ZEV requirement in a number of ways. The most direct route is through pure, battery-electric vehicles. For each 100-mile range EV an OEM sells in California, it can expect to receive three ZEV credits. For example, if Nissan were to sell 3,800 Leafs per year, the car would nearly meet the company's credit mandate completely on its own. As described throughout this report, carmakers are choosing different paths to meet the requirements, but the ZEV requirements are clearly bringing these innovative vehicles into the marketplace. In addition, carmakers that made early progress in auto technology innovation are now benefitting from their efforts in the form of banked ZEV credits.
Not surprisingly, Toyota is in a strong competitive position with regard to its compliance with ZEV regulations for at least a decade because of its strong hybrid sales and early alternative fuel vehicles like the electric RAV4-EV. The carmaker has accumulated a balance of more than 228,000 credits, and remains a leader in the field. Furthermore, advanced technology hybrids like the 2010 Prius will be receiving 0.6 credits each, while the Plug-in Prius will receive about 1.6 credits per vehicle when it's released for 2012.
Other carmakers also have more flexibility in their product lines due to accumulated credits; this program continues to spur innovation and serves as perhaps the most important driver for electric vehicles among many carmakers. Low Carbon Fuel Standards – A low carbon fuel standard is designed to reduce the carbon-intensity of transportation fuels through a performance- based standard that optimizes cost-effectiveness but that does not mandate any particular fuel or technology. Under a low carbon fuel standard, fuel providers are required to track the carbon intensity of their fuels and be required to meet a declining limit on greenhouse gas emissions as measured via carbon intensity. By implementing the standard, carbon emissions are attributed to various transportation fuels throughout its lifecycle, including the fuel’s production, storage, transport and use, and changes in land use
associated with the fuel are calculated. Suppliers must reduce emissions of the fuel on an average, per gallon basis.
Rather than promote a particular technology (i.e. E85), fuel suppliers have flexibility to determine the most cost effective means for achieving the continuing declining standard. Other aspects of a low carbon fuel standard involve the use of market-based low carbon fuel credits that a fuel supplier could use to help meet their obligations under the program. A low carbon fuel standard is inherently designed to put a declining cap on the relative intensity of fuels.
To comply with a low carbon fuel standard, a supplier needs to reduce the average intensity of their fuel products by blending in low-carbon fuels, such as cellulosic biofuels or by purchasing low-carbon credits earned by other
companies that exceed the standard. One method of purchasing credits is through the sale of low carbon electricity. A fuel provider could replace all of their current fuel supply with an alternative that has 10% lower greenhouse gas emissions or replace half the supply with a 20% alternative. Because of electric vehicles’ very low emissions per mile compared liquid fuels vehicles, a low carbon fuel standard could potentially become a strong incentive to advance electric vehicles.
California adopted its low carbon fuel standard in April 2009 and its implementation began in January 2011. It is designed to require California- based fuel suppliers to reduce the carbon intensity in the statewide mix of transportation fuels (both diesel and gasoline) by 10% between 2010 and 2020. The standard is designed to require more stringent reductions in the second five years of the program than in the first five. California’s expectation is that compliance with the standard will be achieved through a combination of lower carbon fuels and market penetration of advanced technology vehicles, including electric vehicles.
Eleven states in the Northeast are currently in the process of developing a framework for a low carbon fuel standard. The Northeast States for
Coordinated Air Use Management (NESCAUM) estimates that, if a low carbon fuel standard based on the California model was in place in the Northeast, it would result in reductions of 30 million tons of greenhouse gas emissions annually compared to a business-as-usual scenario. NESCAUM further estimates that, if a standard similar to California’s were to be established in the Northeast and were to be met via cars powered partially or completely by electricity, the result would be 3 million full or partial electric vehicles in the region by 2020, which NESCAUM estimates could be sustained by the current electricity grid. The development of the framework for the Northeast program is still underway and policy recommendations are expected early in 2011. It is likely that many or most of the states involved would require new statutory authority to impose a standard, so there is currently no schedule for implementation.
The impact of current low carbon fuel standard programs underway and under development could be significant. The markets represented by California and the 11 Northeastern states alone comprise 25% of the fuel market in the United States. In addition to California and the Northeastern states, the states of Oregon and Washington, as well as ten Mid-western states, have programs in place to consider or to develop low carbon fuel standards. In Oregon, state law requires the development of a low carbon fuel standard that mirrors the
California standard of 10% by 2020. In Washington, a Governor’s Executive Order directs the State to assess whether California’s Low Carbon Fuel standard, or a modification of it, would contribute significantly to meeting