Environmental policies are often economic protectionism in green clothing. A case in point is California's low-carbon fuel standard, whose constitutionality is being challenged in federal court. It's also a case study of the incredible contortions of green policy-making today.
California's low-carbon fuel mandate requires the state, by 2020, to reduce the "carbon intensity" of its transportation fuels by 10%. Carbon intensity is a fuel's "life-cycle emissions," which include the energy needed to produce and transport it. You guessed it: California fuels tend to qualify as less carbon intense than imported out-of-state fuels because they're produced closer to market and use "cleaner" (i.e., renewable) sources of power.
But there's one big exception: Some California-based oil that is extracted using "thermally enhanced" techniques produces lots of emissions. But the state's oil industry is a key source of employment in inland areas. What to do? The California Air Resources Board came up with a formula that assigns older sources of crude oil, no matter its production technology, the same score.
What this means is that California's crude oil now rates the same as Alaskan light—even though California's actual carbon intensity is four times as high. Yet another convolution puts oil recovered from Canada's Alberta tar sands at a ratings disadvantage in California.
Now comes the kicker: By the California Air Resources Board's own admission, the state's fuel standard "does not result in reductions in greenhouse gas emissions on a global scale" because more carbon-intense fuels will be sold elsewhere anyway.
So what's the point of all this? The goal is to corner the market for "advanced" biofuels, such as soybean oil, landfill waste and even animal lard. This stuff will be in high demand when the U.S. EPA ratchets up the federal Renewable Fuel Standard. California subsidized the biofuels industry by $23 million this year.
The American Fuel & Petrochemical Manufacturers and other affected parties have sued the state for violating the U.S. Constitution's Commerce Clause by discriminating against out-of-state fuels. In 2011, federal Judge Lawrence O'Neill of the Eastern District of California ruled that the fuel mandate is unconstitutional and issued a preliminary injunction.
Then a three-judge panel of the hyper-liberal Ninth Circuit Court of Appeals weighed in. It vacated the district's court order, arguing that it should have considered whether the local benefits of controlling climate change exceeded the burden on interstate commerce. As argued by Justice Ronald Gould, California could see "its labor force imperiled by rising temperatures, and its farms devastated by severe droughts" due to rising emissions.
By this expansive logic, California could impose restrictions on virtually any out-of-state product on the pretext of reducing carbon emissions as the state defines them. France's wine producers take note.
Last week, the plaintiffs in the case requested en banc review by the Ninth Circuit. If the full appellate court rules that the climate trumps the Commerce Clause, the U.S. Supreme Court may have to bring California back to earth.

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