Regulations

CARB Proposed Modifications to the Low Carbon Fuel Standard

Background

On August 12th, 2024, the California Air Resources Board (CARB) posted the latest proposed amendments to the Low Carbon Fuel Standard (LCFS). These confirm some of the previous amendments proposed earlier this year, while introducing new ones. Here is a recap of some of the important proposed changes. 

Revised Benchmark Carbon Intensity

The LCFS now targets a 30% reduction in carbon intensity by 2030 (vs. 20% previously), compared to a 2010 baseline.

The benchmark carbon intensities for gasoline and diesel (and their respective substitute fuels) have been revised and are shown in this plot. To align with the target, a reduction in carbon intensity of 9% is included in 2025.

Fuels

Various renewable and low carbon fuels are available to be blended with conventional gasoline or diesel (or used standalone) to lower the carbon footprint and meet the standards. The table here lists these and their respective energy densities. Note that the list not only includes liquid fuels but also gaseous (CNG, H2) and electricity.

However, not all fuels are treated equally and the proposal is peppered with provisions to encourage fuels made with low carbon feedstocks and/or to reserve the use of some fuels for the hard-to-decarbonize sectors.

Note also that the fuels carry a separate application specific “energy economy ratio (EER)” which is used in the carbon intensity calculations. For example, biodiesel and CNG has an EER of 1.0, while EVs have an EER of 5 for trucks and buses.

Carbon intensities for the fuels must be calculated on a lifecycle basis using the updated CA-GREET4.0 model. Land use changes are specified for the various biofuels and could be revised upwards if data is available.

 Hydrogen – Effective January 1, 2031, hydrogen produced using fossil gas as a feedstock is ineligible for LCFS credit generation unless biomethane attributes are matched to the hydrogen production. H2 produced using fossil gas as a feedstock must be assigned the ultra-low sulfur diesel (ULSD) carbon intensity.

 

Palm Oil – Transportation fuel derived from palm oil or palm derivatives is ineligible for LCFS credit generation and will be assigned the ULSD carbon intensity.

 

Natural Gas – For projects starting in 2030, pathways for bio-CNG, bio-LNG, and bio-L-CNG used in CNG vehicles are ineligible for LCFS credit generation beyond 2040 and will be assigned the ULSD carbon intensity.

 

 

Biomass-derived diesel – Diesel produced from soybean oil and canola oil is eligible for LCFS credits only up to 20% combined of total biomass-based diesel annual production reporting, by company. Beyond the 20%, the biomass-based diesel will be assigned a carbon intensity equivalent to the benchmark, or the certified carbon intensity for the associated fuel pathway, whichever is greater.

 

 

Base credits to OEMs for EVs – OEMs are eligible for up to 45% of base credits, if the share of new ZEV sales for model year 2024 is < 30%. The OEM must sell the base credits within 3 years and spend the proceeds on various projects which promote electrification (e.g. incentives for EVs, charging infrastructure, etc.)

What Next?

A public hearing on these amendments is scheduled by CARB for November 8, 2024. CARB will continue to analyze and incorporate modifications to the rulemaking proposal. If approved by the Board, the final rule will be implemented starting early 2025. Stay tuned.

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