Calif. to rank greenhouse gas content of fuels; Plan could also include trade system between firms with low, high content

Kim D. Johnson , May 15, 2007, Reuters -- California on Friday will unveil a ranking of greenhouse gas emissions from motor fuels with the goal of encouraging people to use low-carbon alternatives.

Scientists will reveal the formula for calculating the amount of greenhouse gases emitted from the full cycle of fuels — from extraction and harvesting to combustion — said David Crane, an advisor to California Gov. Arnold Schwarzenegger.

The rankings will calculate emissions of inputs used to make the fuels, such as the fertilizer and diesel used to grow and harvest corn-based ethanol from the U.S. Midwest, or the diesel and natural gas burned to dig and melt crude from Canada's tarry oil sands.

The move comes on top of a plan Schwarzenegger rolled out in January to cut carbon from vehicle fuel 10 percent by 2020.

California, where electricity demand has been flat for decades despite a rising population, has long led the nation in environmental laws. The U.S. Congress is watching the state amid growing pressure to craft laws reducing emissions of the gases linked to global warming. President Bush opposes mandatory caps on greenhouse emissions.

Schwarzenegger's plan is still being hashed out, but beginning in 2010 businesses that sell low carbon fuels could earn credits they would sell to oil companies that can't meet the new rules, Crane said.

Crane said it would be "wonderful" if it turned out that locally made ethanol and biodiesel were lower in carbon than corn-based ethanol sent by locomotive from the U.S. Midwest or gasoline made from foreign oil.

He said it could be just as likely that future fuels, such as a new one that can be made from sources like switchgrass and poplar trees, called cellulosic ethanol, would have the lowest carbon emissions — even if it was produced in other states and needed to be transported to California.

And low-carbon natural gas, used to fuel some buses and trucks, could be the lowest of all and earn producers a lot of credits.

"We want the consumers and markets to choose the winners and losers," Crane said.

The rankings would combine with the lower emissions standard to encourage tough competition between companies for making the lowest carbon fuel comparable to putting them "in a boxing ring competing to provide the product to win consumer favor while meeting the standard," he said.

Given how influential the state is, the California Environmental Protection Agency said the ranking formula has the potential to become an international standard for calculating greenhouse gas emissions from various fuels.

Europe has also called for a low-carbon fuel standard, and representatives from the European Union will be at a symposium revealing the formula on Friday, Crane said.