California Asks Court to Reinstate Carbon Fuel Standard

http://www.bloomberg.com/news/2012-10-16/california-asks-court-to-reinstate-carbon-fuel-standard.html

California’s low-carbon fuel standard, which complements the state’s first-in-the-nation economy-wide cap and trade program, appears to favor in-state fuel producers over Midwest ethanol makers, two U.S. appeals court judges said. 

Two members of a three-judge panel questioned state lawyers today about why the standard is tougher on ethanol produced in the Midwest and whether California’s method of assessing a higher “carbon-intensity” for Midwest ethanol because of the energy expended to make and then transport it to California was unfair to out of state producers. 

California’s low carbon fuel standard and other elements of its cap and trade program are facing court challenges as the state gets ready to hold its first auction of carbon allowances next month. The State Air Resources Board on Nov. 14 will auction at least 21.8 million allowances to be used during the first compliance phase of the cap-and-trade program. 

Attorneys for the board, which monitors air quality and administers the standard, asked the appeals court panel today to reverse a judge’s ruling that struck down portions of carbon fuel standards on grounds that they’re unfair to out-of-state ethanol producers and illegally regulate businesses outside of California.