Transportation fuels from fossil sources represent the single largest source of carbon emissions in California. Low-carbon biofuels, which are derived from a variety of agricultural sources (such as corn, sugarcane, and canola), algae, food waste, and forest residue, among other sources, reduces petroleum fuel consumption as a substitute fuel. Yet California is missing opportunities to produce more of this biofuel locally, with attendant environmental and economic benefits. To boost in-state production of low-carbon biofuel, this paper recommends greater state support (such as utilizing cap-and-trade auction revenue) for in-state production with accurate accounting for the total carbon emissions reductions, financial incentives for automakers and gas stations to sell greater amounts of low-carbon biofuels and higher blend rates, and improved access to in-state feedstock production, particularly on idled farmland and forest lands to reduce wildfire risk.

Planting Fuels is the sixteenth paper of the California Climate Change and Business Research Initiative, a joint project with UC Berkeley School of Law that is sponsored by Bank of America.