Come January 1, fuel suppliers across California will have to abide by the state’s Low-Carbon Fuel Standard (LCFS). The standard aims to reduce the “life-cycle carbon intensity” of fuels consumed by cars, trucks, and other vehicles by 10 percent over the coming decade and, in the process, even the playing field for low-carbon alternatives.

This coming year a carbon intensity baseline for gasoline and diesel sold in California will be established. Each year thereafter, the state will set a standard that is progressively lower. Fuel distributors will need to reduce the carbon intensity of their fuel by blending in low-carbon fuels such as cellulosic biofuels, or by purchasing low-carbon credits earned by other firms that beat the standard.

“Those fuels with lower overall emissions will be incentivized, and those with higher emissions will be discouraged,” says Daniel Sperling, director of the Institute for Transportation Studies at the University of California, Davis and an architect of the LCFS.

Policy analysts such as Sperling predict that the LCFS will be the harbinger of smarter national and international fuel policies, in contrast to the rush into food-based fuels such as corn ethanol that offer little overall environmental benefit. “Until we adopt an LCFS nationally and internationally, policy will be politicized and ad hoc,” he says.

However, controversy has dogged measures pending in Washington and Brussels as scientists and politicians struggle for consensus on ways to evaluate life-cycle emissions. A flashpoint is whether and how to measure greenhouse gas emissions from indirect land use changes. An example of this would be the clearing of a forest to grow food crops to make biofuels.

What is clear is that the LCFS will help make some alternative fuel technologies more viable than others. Dan Kammen, co-director of the University of California’s Berkeley Institute of the Environment and another architect of the LCFS, says battery-powered vehicles should win big, given California’s preference for natural gas-fired power generation and the high efficiency of electric drivetrains. “Because of the very low emissions per mile traveled for electric vehicles versus all liquid fuels, the LCFS could strongly advance electrified transport,” says Kammen.

Electric vehicle players are already scrambling to capture the benefits. The California Air Resources Board in Sacramento has determined that charging an electric vehicle will result in 43 percent as much carbon dioxide emissions, mile for mile, as burning gasoline. Charging electric vehicles should thus generate credits under the LCFS that fuel companies can buy to offset the carbon-intensity of higher-carbon fuels.

Companies extracting oil from Canadian tar sands could lose out under the LCFS unless they can improve the energy efficiency of the process by which they mine and refine asphalt-like bitumen into motor fuel. Some U.S. refiners argue that the LCFS will effectively ban the sale of tar-sands-based fuels in California. Sperling counters that it will drive the needed improvements. “I’ve talked to oil producers and they insist that tar sands can be produced competitively with a much smaller carbon footprint, if there were a stronger incentive to do so. LCFS provides that incentive,” he says.

Corn ethanol producers will be similarly challenged to improve because, under the LCFS regulations, the carbon footprint of this fuel looks to be about equal to or even worse than conventional gasoline’s. Corn ethanol looks about a third better than gasoline when you consider direct emissions attributable to growing corn and converting it to ethanol, but that advantage evaporates when you throw in the estimated greenhouse effect of indirect land use changes.

The Air Resources Board has yet to complete its analysis of cellulosic biofuels, which can be produced from agricultural wastes or woody crops grown on marginal lands, but the expectation is that such fuels will fare much better than corn ethanol. “If you use cellulosic and waste materials, then the land use effects are near zero, and the life-cycle greenhouse gas emissions are very low,” says Sperling.

These impacts would be much greater if the LCFS approach were extended beyond California. But the way the standard considers land use change has faced heavy opposition from the ethanol industry and farm-belt interests. Such resistance has stalled both federal and European initiatives of a similar nature.

The EPA is a year behind on a Congressional mandate to factor in life-cycle emissions, including indirect land use impacts, in updated rules for the federal Renewable Fuels Standard. The rules will define which fuels qualify as “advanced biofuels,” which account for about 7 percent of renewable fuels today and will account for 58 percent by 2022. These rules, originally due out last year, are expected to be finalized in 2010.

Sperling says he hopes that advanced biofuels developers, who have not played a large role in the debate so far, will recognize that their interests are in competition with those of the corn ethanol industry. “The food-based interests have been very clever and effective at muddying that distinction and bamboozling those advanced cellulosic interests that have a lot to gain from including land use effects in a full life-cycle analysis,” says Sperling.