The Air Resources Board (Board or ARB) will conduct a public hearing at the time and place noted below to consider the approval of proposed goals contained in the Reducing California's Petroleum Dependence, July 2003, staff report. Assembly Bill 2076 (AB 2076), Shelly, Chapter 936, Statutes of 2000, directs the ARB and the California Energy Commission (CEC) to develop and adopt recommendations for the Governor and the Legislature on a strategy to reduce California's dependence on petroleum. The statute requires the strategy to include goals for reducing the rate of growth in the demand for petroleum fuels, and increasing the use of non-petroleum fuels.

The item will be considered at a two-day meeting of the Board, which will commence at 9:00 a.m., July 24, 2003, and may continue at 8:30 a.m., July 25, 2003. Please note that this item may not be considered until July 25, 2003. Please consult the agenda for the meeting, which will be available at least 10 days before July 24, 2003, to determine the day on which this item will be considered.

If you have special accommodation or language needs, please contact ARB's Clerk of the Board at (916) 322-4011 or amalik@arb.ca.gov as soon as possible. TTY / TDD / Speech-to-Speech users may dial 7-1-1 for the California Relay Service.

If you are a person with a disability and desire to obtain this document in an alternative format, please contact the Americans with Disabilities Act Coordinator at (916) 323-4916, or TDD (916) 324-9531, or (800) 700-8326 for TDD calls from outside the Sacramento area.

This notice relates to the ARB's consideration of the goals and recommendations included in the Reducing California's Petroleum Dependence, July 2003, staff report. The CEC will consider the report at a separate hearing on July 23, 2003. Information regarding the CEC proceeding can be obtained at:

http://www.energy.ca.gov/fuels/petroleum_dependence - Link Expired

STAFF ANALYSIS

AB 2076 directs the ARB and the CEC to develop and adopt recommendations for the Governor and the Legislature on a strategy to reduce California's dependence on petroleum. This directive is the outgrowth of increasing concern regarding the effects of petroleum dependence on California's environment and economy. Such effects include the impact of higher fuel prices on the cost of transportation and the cost of production throughout the economy, the vulnerability associated with heavy reliance on foreign imports that are subject to external disruptions and geopolitical instability, and the environmental consequences of petroleum related emissions of greenhouse gases and smog-forming pollutants.

The staff evaluated a number of measures to reduce petroleum use in California, focusing most directly on fuel efficiency and fuel substitution options. For each measure staff estimated the reduction in petroleum demand, and the associated costs and benefits.

The most dramatic reduction in petroleum usage over the next 20 years is achieved by improving vehicle fuel efficiency. According to national experts, it is technically possible to more than double the efficiency of new cars and light-duty trucks, using existing and emerging automotive technologies. These technologies include improvements in engines and transmissions, aerodynamic styling, and increased use of hybrid electric and diesel propulsion systems. Many of the technologies evaluated in this report are being used in one or more vehicles in production today.

Doubling the vehicle fuel efficiency has a positive direct net benefit, because the capital cost of improving fuel efficiency (e.g. the increased purchase price of a new car) is more than offset by the lifetime fuel savings.

Significant reduction in petroleum demand can also be achieved by substituting non-petroleum fuels for gasoline and diesel. Staff's evaluation points out that natural-gas derived Fischer-Tropsch diesel can be blended with conventional diesel to produce a fuel for heavy duty trucks that has a positive direct net benefit at today's fuel price. Other non-petroleum fuels, such as natural gas and hydrogen, may have positive benefits depending on assumptions regarding their costs and the comparable price of petroleum fuels. For example, if the price of gasoline and diesel fuel should rise to the $2.00 to $2.50 per gallon range on a sustained basis, most of the non-petroleum fuel options result in positive direct net benefits to society, provided that the price of the non-petroleum fuel did not rise concurrently.

In the post-2020 timeframe, continuing growth in population and vehicle use begins to overtake the benefits of improved vehicle fuel efficiency and use of non-petroleum fuel blends such as Fischer-Tropsch diesel, and petroleum fuel consumption begins to rise again. Staff's evaluation suggests the increased use of a sustainable, non-petroleum fuel such as hydrogen will be needed to assure the long-term effectiveness of a petroleum reduction strategy.

STAFF RECOMMENDATIONS

As directed by statute, and based on the analysis in the technical appendices to the staff report, staff recommends specific goals for reducing petroleum dependence in the transportation sector, and increasing the use of non-petroleum fuels. The recommended goals can be met with a strategy that our analysis indicates is technically and economically feasible using existing and emerging technologies, and provides direct net societal benefits. It reflects ambitious but achievable levels of demand reduction through the combined effects of improved vehicle fuel efficiency and the increased use of non-petroleum fuels.

The report contains the following recommendations to the Governor and the Legislature:

Recommendation # 1. The Governor and Legislature should adopt the recommended statewide goal of reducing demand for on-road gasoline and diesel to 15 percent below the 2003 demand level by 2020, and maintaining that level for the foreseeable future.

Recommendation #2. The Governor and Legislature should work with the California delegation and other states to establish national fuel economy standards that double the fuel efficiency of new cars, light trucks and SUVs.

Recommendation #3. The Governor and Legislature should establish a goal to increase the use of non-petroleum fuels to 20 percent of on-road fuel consumption by 2020 and 30 percent by 2030.

Please note that the goal in Recommendation #1 (15 percent below 2003 demand) assumes that the federal government doubles the current CAFE standard. Should the federal government fail to implement a CAFE standard that doubles the fuel efficiency of new cars, it would be necessary to reassess the goal in Recommendation #1.

Please also note that although the percentage goal for 2020 in Recommendation #3 differs from the one used in the May 2003 version of the Staff Report (i.e. 15 percent by 2020), it actually reflects exactly the same underlying goal. The 2020 percentage was adjusted for two reasons. First, under the previous approach the current ethanol content of gasoline was not included in the non-petroleum fuel total. Staff believes it is important to recognize the non-petroleum fuel contribution of the ethanol currently blended into gasoline. Second, the previous estimate was based on the percent reduction from the "business as usual" forecasted demand (i.e. the demand that would exist if current trends continued). The revised percentages used here, 20 and 30 percent in years 2020 and 2030, respectively, (the goal for 2030 was added in response to public comment) more appropriately represent the non-petroleum fuel options as a percentage of total fuel consumption assuming that the petroleum reduction goal is achieved. The volume of non-petroleum fuel essential to meet the goal has not changed; it is merely more accurately represented.

AVAILABILITY OF DOCUMENTS AND CONTACT PERSON

The staff report containing the petroleum reduction goal and recommendations will be presented by ARB staff at the July 24, 2003 meeting. Copies of the staff report and supporting technical appendices may be obtained from the Board's Public Information Office, Air Resources Board, Visitors and Environmental Services Center, 1001 I Street, 1st Floor, Sacramento, California 95814, (916) 322-2990, prior to the scheduled meeting. The staff report and supporting technical documents are also available electronically on CEC's website at:

http://www.energy.ca.gov/fuels/petroleum_dependence - Link Expired

Further inquiries regarding this matter should be directed to Eileen Tutt, at (916) 445-8897, P.O. Box 2815, Sacramento, California, 95812.

SUBMITTAL OF COMMENTS

The public may present comments relating to this matter orally or in writing at the meeting, and in writing or by e-mail before the meeting. To be considered by the Board, written submissions must be received no later than 12:00 noon, July 23, 2003, and addressed to the following:

Clerk of the Board
Air Resources Board
1001 I Street, 23rd Floor
Sacramento, CA  95814

To be considered by the ARB, e-mail submissions must be addressed to petdeprpt@listserv.arb.ca.gov - (Link Expired) and received at the ARB no later than 12:00 noon, July 23, 2003.

To be considered by the ARB, facsimile submissions must be sent to Clerk of the Board at (916) 322-3928 and received at the ARB no later than 12:00 noon, July 23, 2003.

The Board requests but does not require 30 copies of any written submission. Also, the ARB requests that written and e-mail statements be filed at least 10 days prior to the meeting so that ARB staff and Board Members have time to fully consider each comment. The ARB encourages members of the public to bring any suggestions or comments to the attention of staff in advance of the meeting.

CALIFORNIA AIR RESOURCES BOARD




Catherine Witherspoon
Executive Officer

Date:  July 14, 2003

The energy challenge facing California is real. Every Californian needs to take immediate action to reduce energy consumption. For a list of simple ways you can reduce demand and cut your energy costs, see our Website at www.arb.ca.gov