Next Schwarzenegger target: fuel emissions

Escalating California’s battle against global warming, Gov. Arnold Schwarzenegger is expected to announce today that he will order a 10% cut in motor vehicle emissions of greenhouse gases, mainly carbon dioxide.

Under the proposal, petroleum refiners and gasoline sellers would be ordered to reduce the carbon content of their fuels over the next 13 years.

The order could also usher in a new generation of alternative fuels in California, experts say, as refiners consider adding ethanol or other biofuels into gasoline blends. It could also mean a shift of part of the state’s auto fleet to hydrogen or electric power.

Experts have said the changes could mean an increase in fuel prices over the years, but industry officials declined to comment Monday.

“Basically, California is signaling the beginning of a whole new era for fuels and for renewable energy,” said Fred Krupp, president of Environmental Defense, a New York-based activist group.

Schwarzenegger plans to include the environmental proposal as part of his annual State of the State address. Contents of the planned executive order were disclosed to The Times by industry sources and confirmed by administration officials familiar with the plan.

A white paper by Schwarzenegger advisors and obtained by The Times said, “To protect our jobs and wages, clean our air, cool our Earth and maintain our way of life, we must diversify our fuel sources and reduce our reliance on oil.”

Such an order would be the first major step in implementing the state’s landmark law approved last fall that requires California to reduce greenhouse gas emissions 25% by 2020. Greenhouse gases, which trap heat in the atmosphere, are considered a major cause of global warming.

The governor’s executive decree, which would be issued in the coming weeks and trigger a lengthy rule-making process, would increase the range of fuels powering the state’s cars and trucks. State law grants the governor authority to regulate fuel content.

Democratic lawmakers who provided the votes to pass the landmark law are expected to welcome the news. But Republicans, who opposed the law, probably will be more skeptical.

The governor’s initiative “is building on our earlier joint effort” in passing the law, AB 32, said the bill’s sponsor, Assembly Speaker Fabian Nunez (D-Los Angeles).

“We’re going to continue to move this thing forward,” he said.

California’s oil refiners, which would bear the brunt of the new carbon regulations, declined to comment on the governor’s expected proposal.

Spokesman Tupper Hull of the Western States Petroleum Assn. said his group had not seen the white paper or been briefed by the Schwarzenegger administration. Nevertheless, some oil companies could be receptive to the governor’s plan because they have invested heavily in developing ethanol-based fuel additives.

According to the white paper, a drop of 10% in carbon released by vehicles in California would translate to a 20% drop in gasoline consumption and more than triple the size of the state’s renewable-fuels market.

Transportation accounts for more than 40% of California’s annual greenhouse gas emissions, and the state relies on petroleum-based fuels for 96% of its transportation needs.

The governor’s order would put strict limits on the amount of greenhouse gases in vehicle exhausts and would lessen the U.S.’ dependency on high-priced foreign oil, added Roland Hwang, vehicle policy director at the Natural Resources Defense Council in San Francisco.

“A low-carbon fuel standard is a critical step in ensuring the state will meet its targets for reducing global warming pollution,” Hwang said.

The marketplace is the key to Schwarzenegger’s plan for combating global warming by burning less gasoline in cars. Fuel manufacturers would have a variety of ways to meet the mandates to reduce the amount of carbon dioxide while continuing to satisfy consumer demand.

The white paper suggests that a shift to lower-carbon fuels could be supplemented by creation of a market that would trade credits that could be used to satisfy state requirements to lower greenhouse gas emissions.

For example, high-carbon-fuel makers could meet their mandate by purchasing credits from electric utilities that supply low-carbon electrons to electric passenger vehicles.

The mandate also would provide a significant boost to the state’s fledgling alternative-fuels industry, said Bill Jones, chairman of Pacific Ethanol of Fresno, the state’s leading biofuel producer. Jones was a former California secretary of state and longtime state legislator.

“This is an excellent effort to connect the dots in the areas of environmental benefits, economic development and energy independence and do it in a way that lets the market determine the process to be developed,” Jones said.

Pacific Ethanol, with plants in Colorado and Madera in the Central Valley, is the largest independent marketer of ethanol in the West, producing 60 million gallons a year sold to refineries and oil companies, he said.

The governor’s planned executive order would give start-up companies and investors the regulatory certainty they need to expand.

“The opportunity is there, not just for us but for others to see a critical path to additional production of renewable fuels for the California market,” Jones said. “That’s very important for financing additional plants and the long-term viability of an emerging industry.”

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marc.lifsher@latimes.com