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California’s Low Carbon Fuel Standard compliance rate is 98%

The California Air Resources Board’s report on the state of the Low Carbon Fuel Standard (LCFS) program for the compliance year 2015 indicates a compliance rate of 98%, with a total of 5.49 million credits generated in the year. These credits are roughly the same as removing 1 million cars from the roads for a year in terms of preventing greenhouse gases from entering the atmosphere.

The 2015 annual reports demonstrate exceedingly high levels of overall compliance. Of the 52 entities who sell high carbon fuels, and have an obligation under the program, only a single company—Astra Oil Company LLC—ended the compliance period with a small shortfall of 337 credits and will be required to purchase the necessary credits from the LCFS Credit Clearance Market (CCM) between 1 June and 31 July 2016.

The CCM is a cost-containment mechanism introduced into the regulation last year and allows a company to purchase credits offered for sale by producers who have generated a surplus. Sellers in the CCM voluntarily offer them into the pool of credits to be made available to other companies that may require them for compliance purposes.

Companies that have pledged credits to the CCM in 2016 include BP Products, North America Inc.; Calgren Renewable Fuels; and Titan El Toro LLC.

This program is succeeding: California has a thriving market for new, low-carbon fuels, there is an ample supply of low-carbon fuel credits, and the marketplace and the regulation provide businesses with the flexibility needed to comply. The Low Carbon Standard is fully delivering on its promise to drive innovation and create a thriving market that delivers clean, low-carbon fuels for the trucks, buses and cars in California.

—CARB Chair Mary D. Nichols

The Low Carbon Fuel Standard took effect in 2011, and is designed to lower carbon emissions generated at every stage of a fuel’s production. In California, transportation is the single largest sector for climate impact, responsible for 37% of the state’s total greenhouse gas emissions.

To date renewable and low-carbon fuels rewarded under the LCFS have displaced 5.3 billion gallons of gasoline, and 1.2 billion gallons of diesel fuel. Overall, the program has generated 16.55 million credits with a current balance (that is, over-compliance) of 7.41 million credits. Each credit is the equivalent of 1 metric ton of carbon dioxide.

The transportation sector is also responsible for the majority of the state’s air pollution which adversely impacts public health. Thus, by encouraging the production and use of clean fuels in California, the LCFS is reducing emissions of other pollutants of concern, ARB said.

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