The California Air Resources Board (CARB) voted to extend the Low Carbon Fuel Standard (LCFS) by ten years to 2030 and to double the program’s carbon intensity reductions target from 10 to 20 percent. Under the LCFS, petroleum refineries and fuel importers must gradually reduce the average carbon intensity of the fuels they sell.
Since 2011, the LCFS has been a cornerstone policy of California’s effort to reduce greenhouse gas (GHGs) emissions and has spurred innovation in low-carbon transportation fuels such as hydrogen, electricity and biodiesel. Last year, the LCFS resulted in more than two billion gallons of petroleum and natural gas being replaced with cleaner, renewable transportation fuels.
The standard currently requires a 10 percent reduction in the carbon intensity of California’s transportation fuels by 2020. The new 20% reduction in carbon intensity by 2030 is the most stringent requirement in the US.
California has set a 2030 target of reducing greenhouse gas emissions 40% below 1990 levels by 2030.
Other approved amendments to the LCFS will incentivize development of additional zero emission vehicle infrastructure and the sale of electric and hydrogen vehicles by allowing utilities to collect LCFS credits through charging stations and hydrogen refueling facilities.
The LCFS program is implemented using a system of tradeable credits, each of which is equivalent to one metric ton of carbon. Credits are generated by producers of cleaner fuels and can be sold to producers whose product will not meet the program’s declining benchmark for carbon intensity.
In the case of utilities, credits are generated based on the expected capacity of fast charging and refueling stations for zero emission vehicles. Part of the proceeds from sale of those utility credits will be used to increase the rebates from utilities to drivers purchasing electric vehicles.
The amendments also restructure the various utility vehicle rebate programs into a single pool so application and payment processes are uniform regardless of which utility is involved, and so the rebates can be made available through small utilities as well as large ones.
The CARB vote also puts in place the most stringent regulatory protocol in the country to set requirements for carbon capture and storage (CCS). 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%.
The international aviation market is responsible for about two percent of the world’s GHG emissions. With the CARB vote, alternative, or renewable, aviation fuels may now also generate LCFS credits. Producers of those fuels will be permitted to voluntarily opt into the LCFS program.
The program will also begin using CARB-trained and accredited third-party verifiers to provide additional verification of reported reductions in carbon intensity. This process will be similar to the rigorous verification standards for emission reductions in the cap-and-trade program.
LCFS compliance began in January of 2011. The newly approved amendments follow a public process that lasted two years and included 22 workshops, multiple draft documents and numerous one-on-one stakeholder meetings.
The amendments take effect on 1 January 2019.