D E P E N

Many Canadian provinces are considering a low-carbon fuel standard (LCFS). An LCFS would require transportation fuel providers to distribute a mix of fuel that, on average, emitted a declining amount of greenhouse gas emissions per unit of energy produced, measured on a lifecycle basis. An LCFS has numerous problems: administrative complexity, scientific uncertainty – owing to the difficulty of measuring all emissions from fuel consumption and production, and the possibility that there will be little net reduction in total emissions. An economy-wide cap-and-trade system would be more economically efficient and more certain to reduce greenhouse gas emissions. The author would like to thank Frank Wolak of Stanford University for his considerable contribution to the original draft and for comments received throughout the drafting of this paper, and to Colin Busby and Finn Poschmann for their helpful suggestions. The author assumes sole responsibility for the paper. 1 Transportation’s contribution ranges from a high of 41 percent in Quebec to a low of 15 percent in Alberta (Canada 2008). In 2007, gasoline and diesel powered 87.3 percent and 12.3 percent, respectively, of kilometres travelled by fuelled vehicle