California Unveils Stricter Carbon Intensity Goals for Fuels

The California Air Resources Board (CARB) has voted to strengthen its Low Carbon Fuel Standard (LCFS), marking a significant step in the state’s push towards cleaner fuels. The updated LCFS aims to reduce the carbon intensity of fuels by 30% by 2030 and 90% by 2045.

This target will accelerate the adoption of zero-emission technologies, especially in the medium- and heavy-duty vehicle sectors.

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Incentivizing Sustainable Transportation and Cleaner Fuels

The updated LCFS program now supports more transit agencies in generating credits, further promoting sustainable transportation options across the state. One key change is the limitation on credit generation from virgin oil feedstocks.

This new approach prioritizes the use of waste-based fuels, which have a much lower carbon footprint. Additionally, the program will phase out avoided methane credits from dairies supplying fuel for combustion trucks and buses.

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Impact of the LCFS So Far

The LCFS has already achieved significant results. To date, it has reduced California’s fuel mix carbon intensity by nearly 13%. The program has also replaced 70% of diesel fuel with cleaner alternatives, leading to a reduction of 320 million metric tons of CO2 emissions from gasoline and diesel. These achievements highlight the program's role in helping the state meet its climate and air quality goals.

Addressing Potential Price Concerns

Some analysts have raised concerns about possible price increases at the gas pump due to the updated LCFS. However, CARB asserts that the policy model does not directly predict gas prices. The agency maintains that compliance costs for fuel producers are determined by market conditions and are not necessarily passed on to consumers. CARB has emphasized that the LCFS follows the “polluter pays” principle, meaning businesses are responsible for meeting compliance costs.

Ongoing Monitoring and Mitigation Strategies

CARB is committed to monitoring any potential impacts on gasoline prices. The Board will assess these effects every six months and publish an annual report on its findings. Furthermore, CARB will work with the California Energy Commission to explore potential mitigation strategies.

The LCFS currently caps the price of credits and allows companies to bank them, limiting pass-through costs to consumers.

Experts report that the current pass-through cost to California consumers is between $0.08 and $0.10 per gallon of gasoline. CARB continues to work towards balancing climate goals with economic impacts on consumers.