CARB Approves New Low-Carbon Fuel Regulations

The California Air Resources Board (CARB) approved changes to the state’s low carbon fuel standard (LCFS) that include accelerated targets to reduce the carbon intensity of transportation fuels used in the state.

The amendments, approved in a 12-2 vote on November 8, include accelerated targets to reduce the carbon intensity of California’s transportation fuel pool by 30% by 2030 and by 90% by 2045. They also increase support for zero-emissions infrastructure, including for medium- and heavy-duty vehicles.

LCFS and Carbon Neutrality

The LCFS is a key part of California’s policy to reduce greenhouse gas (GHG) emissions by providing producers with an incentive to decrease the carbon intensity of the state’s transportation fuels and provide low-carbon and renewable alternatives. CARB proposed the new regulations in December 2023 to “update and strengthen” the program. (see CARB Proposes Amendments to Strengthen LCFS Rules.)

The LCFS, first approved in 2009, is part of California’s plan to achieve carbon neutrality by 2045. The program assigns annual carbon intensity benchmarks to transportation fuels that fuel producers must comply with. Producers of products that are more carbon intensive than the targets pay a fee to purchase additional compliance credits, while producers of products that are below the target generate credits. To meet the targets, producers with a carbon deficit can reduce the carbon intensity of their overall production mix, purchase credits from other producers that have generated credits, or a combination of both.

CARB states that the LCFS has so far reduced the carbon intensity of California’s fuel mix by almost 13% and has displaced 320 million metric tons carbon dioxide of gasoline and diesel emissions since. Environmental groups have criticized the program for its incentives to produce biofuels rather than support for power for electric vehicles (EVs).

Impact on Fuel Prices

Critics argue that the amendments could increase fuel prices above the current 10-cents-per-gallon cost of the program that is passed through to consumers. A September 2023 report estimated that the amendments could potentially increase the price of gasoline by an average of $0.37 per gallon, diesel by an average of $0.47 per gallon, and fossil jet fuel by $0.35 per gallon beginning in 2025.

A March 2024 CARB report, however, stated that this assessment was “incomplete” because it included only fossil fuels and “did not capture all of the transportation fuels that will be available in response to these regulatory updates.”