The standards expected to be adopted by the California Air Resources Board could serve as a template for a national policy that has been advocated by President Barack Obama and Democrats in Congress.

The proposal calls for reducing the carbon content of fuels sold in the state by 10 percent by 2020, a plan that includes counting all the emissions required to deliver gasoline and diesel to California consumers - from drilling a new oil well or planting corn to transporting it to gas stations.

Transportation accounts for 40 per cent of greenhouse gas emissions in the state.

Representatives of the ethanol industry have criticized the rules, saying state regulators overstated the environmental effects of corn-based ethanol. They also have criticized the board's intention to tie global deforestation and other land conversions to biofuel production in the United States.

The board has said Brazil converted rainforest into soybean plantations as a result of the growth in corn-based ethanol in the USA formula being considered by the board would take into account the destruction of forests and grasslands elsewhere to grow fuel crops for US demand.

Representatives of the ethanol industry said it was unfair to penalize them for agricultural land changes abroad.

If the air board adopts a low-carbon fuel standard, petroleum refiners, companies that blend fuel and distributors must increase the cleanliness of the fuels they sell in California beginning in 2011.

The petroleum industry warned that the state was moving too quickly without assurances that the alternative fuels they will be required to sell would be available for the market. Representatives asked the board to delay a decision until next year.

The statewide efforts come two years after Governor Arnold Schwarzenegger directed air regulators to develop a rule that would boost the amount of renewable fuels sold in the state. -- AP