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California plans major carbon cut in its gasoline

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"Transportation accounts for 40 percent of California's annual greenhouse-gas emissions, and we rely on petroleum-based fuels for 96 percent of our transportation needs," he said. "This dependency contributes to climate change and leaves workers, businesses, and consumers vulnerable to price shocks from an unstable global energy market."

Higher prices for consumers?

As California moves to implement the new standard, its effect on consumers and the state economy will be closely watched. Several Republican lawmakers and business leaders have expressed early concern that the state crackdown on emissions will encourage businesses to locate outside California, or will increase their overall costs. Consumers worry that new fuels or fuel additives will raise prices at the corner gas station.

Advocates of the move, though, say California businesses and consumers stand to reap the windfall of technological investment. They say the new standard is expected to replace 20 percent of the state's on-road gasoline consumption with lower-carbon fuels, lead to a tripling of the size of the in-state renewable fuels market, and place more than 7 million alternative-fuel or hybrid vehicles on California roads – a 20-fold increase.

"The impact of this policy on consumers and the economy will likely be positive," says James Winebrake, chairman of the Public Policy Program at the Rochester Institute of Technology (RIT) in New York. "Although these low-carbon fuels may cost a bit more than conventional fuels, they may have a greater domestic content.... Therefore, money spent on low-carbon fuels is less likely to end up overseas and more likely to generate greater economic activity locally. This could have significant benefits to state and regional economies."

Schwarzenegger's announcement included appearances by environmental leaders, scholars, and energy and transportation consultants – all generally supportive of his plan.

Industry's view

Conspicuously absent were representatives of oil producers and carmakers. Conoco Phillips, in a written statement, said it "is supportive of and invests in technology development to produce and enable the use of low-carbon fuels and recognizes this [plan] is one component in a suite of actions necessary to reduce CO2 in the atmosphere."

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