Walz’s proposed “California Fuel Standard” would increase costs of gas and diesel by 20 cents per gallon
The Walz administration is seeking to enact another California regulation that will increase the cost of driving for Minnesotans by 20 cents per gallon for gasoline and diesel fuel.
The policy Governor Walz is seeking to enact is called a Low Carbon Fuel Standard (LCFS) in California, but the administration is calling it a Clean Fuels Standard. Regardless of what the program is called, it will impose a massive cost on gasoline and diesel fuel for Minnesota families who are already struggling to make ends meet.
What is a California Fuel Standard?
As I wrote last year, a California Fuel Standard is a government regulation that acts as a cap-and-trade system designed to reduce the carbon intensity (CI) for transportation fuels. Companies that sell fuel are required to reduce the carbon intensity of their fuels or buy credits to offset their emissions if their fuel isn’t meeting the government mandates.
Companies often try to reduce the CI of their fuels by adding ethanol to gasoline or using biodiesel or renewable diesel fuel. Over time, however, the rules become stricter, and companies will be forced to transition away from meeting the mandates with biofuels toward promoting electric vehicles, which is why ethanol makes up a smaller share of the credits sold over time and electricity increases, according to the California Air Resources Board website.
As the mandates get stricter, they also drive up costs.
The high cost of a California Fuels Standard
According to Stillwater Associates, the LCFS increased the cost of gasoline and diesel fuel by 22 cents per gallon in California in 2020 and reduced the carbon intensity of fuel by just 7.5 percent.
At this price, the average Minnesota family would pay an extra $230 per year at the pump as a result of this policy, and the cost to consumers could increase further as the regulations become stricter over time.
Rising inflation, which is hitting rural areas hardest, means Minnesota families are already struggling to put food on the table and pay for their rising energy costs. The Walz administration shouldn’t make driving even more expensive by importing another bad energy policy idea from Cailfornia.