Earlier this year in Oregon, as they did in California several years ago, the American Fuel and Petrochemical Manufacturers (AFPM), together with American Trucking Alliance (ATA) and Consumer Energy Alliance (CEA), filed a federal lawsuit to try and derail a cutting-edge, scientifically-based, and legally sound clean fuel standard. Not discouraged by their recent losses challenging California’s clean fuels program (the Low Carbon Fuel Standard, or LCFS) in the Ninth Circuit Court of Appeals and U.S. Supreme Court, the plaintiffs have proceeded with nearly identical constitutional law arguments – simply recycling issues and claims that were rejected many months ago.
Like the California LCFS, the Oregon Clean Fuels Program reduces the carbon intensity of transportation fuels by requiring fuel sold in state to have reduced lifecycle greenhouse gas (GHG) emissions. Compliance is based on the schedule developed by the Oregon Department of Environmental Protection and designed to spur innovation in the fuel sector, as the California Low Carbon Fuel Standard has already done. The fuels program itself does not choose a formula for carbon reduction, but allows the market to find the best path forward.
A significant portion of Oregon’s climate pollution comes from the use of gasoline and diesel in transportation, as it does in many other U.S. states, and it’s high time for Oregonians to have access to cleaner burning, lower carbon alternative fuels. Once in use, these alternatives not only cut climate pollution, they also deliver reduced emissions of multiple air contaminants that damage the health of the public while also improving energy security. In light of these substantial benefits to the people and economy of Oregon, on March 12, 2015, Governor Kate Brown signed a bill passed by the state legislature that removes the sunset date established in the 2009 law, allowing the Oregon Clean Fuels Program to move forward unimpeded. Read More
By: Erica Morehouse, Senior Attorney, and Katie Hsia-Kiung, High Meadows Research Fellow
What do we call regularly occurring activities? A routine. Which, let’s face it, can sometimes feel tired and uninteresting. But other times, getting into a routine can mean good things. When you get an all-clear at a check-up with the doctor or dentist, you’re not disappointed, right? Well, here’s another example of a smooth routine: as of May 28, we’ve now chalked up 11 auctions that have taken place as part of California’s cap-and-trade program. And the latest results tell us yet again that a good routine is just what the doctor ordered.
The auction results released today reflect a stable and healthy carbon market, in line with results we’ve seen consistently over several of the past quarterly auctions. (Click here for background on how the auctions work under cap-and-trade). One hundred percent of the allowances offered – which can be used for compliance as early as this year – were sold in the current auction, at a price of $12.29, 19 cents above the minimum floor price set by the California Air Resources Board (CARB). This is only eight cents above the price per allowance seen at the last auction, and the lack of any significant price movement from auction to auction is indicative of the stability and maturity of the market. It also shows that companies are becoming more comfortable with the requirements of the cap-and-trade regulation. To date, none of the current vintage allowances offered in the California auctions have gone unsold.
Over many decades, the United States and Canada have developed what is now the largest trade relationship in the world. This achievement is measured by the goods and money that cross their shared border, and does not even account for the trade of ideas and exchange of information currently underway between the two countries. The linkage of the California and Quebec carbon markets is yet another demonstration of the mutually beneficial relationship that these neighboring countries have cultivated. The two jurisdictions are taking the final steps in what started off as a virtual marketplace of ideas and best practices and has since grown into a real market for tradable carbon credits.
Last Thursday, the California Air Resources Board (CARB) and Ministry of Sustainable Development, Environment and the Fight against Climate Change (MDDELCC) of Quebec held a practice joint auction for the linked California and Quebec cap-and-trade programs. This trial was run as though it were a real quarterly auction, requiring participants to establish a Compliance Instrument TrackingSystem Service (CITSS) account if they did not already have one, submit an application to participate, and await approval from the auction administrator. CARB and MDDLECC published an auction notice and ran webinars for auction participants in the days leading up to the practice auction. The auction administrator and independent market monitor for both jurisdictions also monitored the auction while the bidding window was open and the appropriate help desks were available to take questions, just as they would have for a real auction. As such, interested parties were able to become familiar with the actual processes and materials required to participate, as well as test out and provide feedback on the updated features of the auction platform, which was refined to support bidding from both jurisdictions. The careful completion of this important exercise demonstrates CARB and MDDELCC’s dedication to thoroughness in their implementation of the cap-and-trade regulation. Read More
By Erica Morehouse and Larissa Koehler
On this 4th of July week, a time of celebratory fireworks and barbeques, Americans commemorate our country’s hard-fought independence from colonial oppression. Americans are again working for greater independence, this time from fossil fuels that threaten our health, economic prosperity, and future. This week California won a pivotal legal challenge on this front.
Just three days ago, the U.S. Supreme Court refused to review a 9th Circuit Court of Appeals decision upholding California’s Low Carbon Fuel Standard (LCFS). The Rocky Mountain Farmer’s Union and the American Fuel and Petrochemical Manufacturers were seeking to overturn the sound and well-reasoned decision from the 9th Circuit. The High Court’s refusal affirms the legality of a vital policy that decreases our reliance on foreign oil by promoting alternative sources of energy while reducing climate and air pollution from our vehicles.
Yesterday, the Environmental Defense Fund, the Natural Resources Defense Council, the Sierra Club and the Conservation Law Foundation filed a brief in opposition to March 2014 petitions for Supreme Court review in American Fuel & Petrochemical Manufacturers Association v. Corey and Rocky Mountain Farmers Union v. Corey, cases in which oil and ethanol companies attack the constitutionality of California’s Low Carbon Fuel Standard (LCFS).
The LCFS, adopted under California’s trail blazing Global Warming Solutions Act, is a central contributor in the effort to move the transportation system away from the current paradigm of unsustainable global warming pollution, foreign energy dependence, and community-choking air pollution. The LCFS works by putting market incentives in place that encourage the production and use of low carbon fuels that were not prevalent when the program went into effect. It is projected to reduce greenhouse gas emissions from California’s use of transportation fuels by 16 million metric tons per year by 2020.
As we have explained in prior posts here and here about this important case, the challengers in the litigation have argued that the LCFS discriminates against ethanol and oil coming from outside of California and that it attempts to regulate actions occurring outside the state in violation of the U.S. Constitution's Dormant Commerce Clause. A panel of the United States Court of Appeals for the Ninth Circuit rejected these arguments in September 2013. In their March 2014 petitions, the industry challengers seek Supreme Court review of the appeals court’s decision. The Supreme Court’s decision on whether to take the case could come as early as late June. Read More
By Tim O'Connor and Larissa Koehler
Last week, we saw a big win for California's Low Carbon Fuel Standard (LCFS) – a regulation to diversify the state’s fuel mix with lower carbon sources of energy. After almost a year of deliberation, the United States 9th Circuit Court of Appeals filed a decision in the case Rocky Mountain Farmers Union, et al. v. Corey, in favor of California.
In its 79-page decision, the Court addressed two major constitutional issues: 1) whether the LCFS was invalid because it directly regulated wholly out-of-state ethanol producers (extraterritoriality); and 2) whether the LCFS was invalid because it impermissibly discriminated against out-of-state producers based solely on origin, thereby violating the Commerce Clause. The court overturned a District Court ruling on both grounds, finding that the state can move forward with the LCFS unimpeded. Of course, the ruling is only a temporary win for California, as additional legal process at the District court — and possibly U.S. Supreme Court — is forthcoming.
Although not required to do so, the Court of Appeals went to great lengths to recognize the importance of California’s leadership in developing and implementing environmental policy. The Court said it did not wish to “block California from developing this innovative, nondiscriminatory regulation to impede global warming… [as] it will help ease California’s climate risks and inform other states as they attempt to confront similar challenges.”
These words of support for the LCFS and California’s leadership are supported by tremendous growth in alternative fuels industries like California biodiesel, and also by analysis that shows fuel diversification can yield long-term price reductions at the pump. The 9th Circuit's decision which allows these trends to continue is not just a win for the state in a long legal battle, but also a win for California’s consumers and environment.