Freeman Spogli Institute for International Studies Program on Energy and Sustainable Development Stanford University

October 19, 2012 - In the News

Wolak comments on California’s gasoline prices and the low carbon fuel standard

Frank Wolak was interviewed by reporter Anne Makovec of CBS5 of San Francisco about California’s high gasoline prices and how the state’s Low Carbon Fuel Standard (LCFS) is likely to impact the price of transportation fuels in California.  The LCFS requires all sellers of transportation fuels in California to have full-fuel-cycle average carbon content of the fuels they sell be less than a carbon intensity standard that falls by 0.5 percent each year up to 2020.   This means that sellers must blend more and more lower carbon sources of transportation fuels such as corn-based ethanol or sugarcane-based ethanol from Brazil with the higher carbon-content conventional fuels they sell in California to meet the standard each year.   Wolak noted that blending in these higher cost energy sources will increase gasoline prices in California, but because California is already blending substantial amounts of ethanol in California gasoline and the additional increases in low carbon fuels mandates by the LCFS were modest, the price impact is likely to be modest.   However, Wolak also noted recent research demonstrating that the LCFS is an expensive way to reduce greenhouse gas (GHG) emissions from the transportation sector because it rewards GHG emissions from sources lower than the carbon intensity standard and punishes GHG emissions from sources higher than the standard, in spite of the fact that policymakers are attempting to reduce all GHG emissions through these sorts of policies.