On Friday, California's Air Resources Board (CARB) announced that it would tighten restrictions on transportation fuels in the state in the hopes of spurring adoption of electric, hydrogen, and biofuel-based cars, trucks, buses, and even planes.

Since 2011, CARB has had a Low Carbon Fuel Standard (LCFS) on the books that requires a 10-percent reduction in "carbon intensity" for all fuels sold in California by 2020. Carbon intensity for fuels takes into account lifecycle carbon emissions, including any emissions created processing oil into gasoline, processing feedstock into ethanol, or transporting a fuel from a refinery to the point of sale.

With CARB's decision on Friday, the lifecycle emissions for transportation fuels needs to drop by 20 percent by 2030.

The LCFS also lets the state issue credits to utilities for installing electric vehicle charging stations. Utilities can then turn around and sell those credits to fuel producers who can't meet the 20 percent carbon intensity reduction. Part of the money that the utilities make from the credit program will go into a collective fund to help Californians buy electric vehicles. The more people who have electric vehicles, the more demand there will be for electricity, a good that utilities provide.

Not just a car thing

California's approach is an interesting one because transportation is a difficult sector of the economy to decarbonize. Unlike the electricity sector, where a relatively few companies are responsible for most of the carbon emissions, millions of Californians drive, and all of them have different reasons why they might or might not move to electric or hydrogen vehicles.

Personal preference, lack of a garage, concerns about resale value, and use patterns that don't allow for long recharging periods all play a part in the sluggishness of the transportation sector to decarbonize. But incentivizing fueling/charging infrastructure is one lever that state policy can pull to entice more people to move away from internal combustion vehicles. Reducing the price of electric vehicles through subsidies is also another lever that state policy can pull. The LCFS pulls both of those levers at the same time.

One area of transportation that doesn't quite fit into that model is aviation, but that sector is hard to decarbonize. One reason for that is that we don't yet have batteries that are energy dense enough to power a commercial plane. Additionally, attempts to blend jet fuel with biofuel-based alternatives have been stymied by exorbitant cost and few real-world tests, although Qantas United , and Alaska Airlines have done initial flights with biofuel. Still, CARB notes, "The international aviation market is responsible for about two percent of the world’s GHG emissions."

But as of Friday, the new low carbon standards in California also include a provision for credits to be issued to producers of alternative aviation fuels.

The amended LCFS also now accounts for Carbon Capture and Storage (CCS), which would allow fuel producers to capture carbon from the refining process and store it. "This process should be particularly useful to ethanol producers, as it has the potential to reduce their carbon intensity by up to an additional 40 percent," CARB states in its press release.

California policy makers have been extremely aggressive in proposing policy to tackle climate change, especially in recent years. Earlier this month, the state voted to move to 100-percent zero-emission electricity generation by 2045, one of the most aggressive decarbonization programs in the nation. The state has also promised a fight with the Trump administration, which is trying to roll back fuel economy standards in passenger vehicles. CARB benefits from a unique legacy exception under the Clean Air Act, which allows the state to set more aggressive fuel economy standards than the federal standard. The Trump Administration is attempting to remove CARB's power to do that.