California aims to reduce carbon footprint of fuels

If a tree falls in the Amazon, does it have anything to do with California's alternative-fuels policy?

This week, the California Air Resources Board is set to adopt a plan that says it does.

The low-carbon fuel standard aims to cut the carbon footprint of the state's motor fuels 10 percent by 2020. It will influence what powers your car – from hydrogen to electricity to biofuels – for decades to come. It's likely to drive federal policies. And it will guide billions of dollars of investment in alternatives to petroleum.

But the plan doesn't encourage much of a long-term role for corn-based ethanol, currently the most widely used alternative fuel.

A key provision makes ethanol accountable for a ripple of potential impacts around the world, such as deforestation in the Amazon. That makes ethanol's carbon footprint larger, and its attractiveness to investors lower.

The nation's corn-ethanol leaders say it's a penalty that will hamstring their industry, which despite federal supports has lately struggled with debt, low prices and too much production capacity.

"Instituting a regulatory bias against biofuels will hurt every facet of the industry," said Tom Koehler, policy adviser at Sacramento's Pacific Ethanol Inc.

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