Suggested Citation:
Yeh, Sonia, Julie Witcover, James Bushnell (2015) Status Review of California's Low Carbon Fuel Standard - April 2015 Issue (Revised Version). Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-15-07

The Low Carbon Fuel Standard (LCFS) is an integral part of the overall strategy to reduce greenhouse gas (GHG) emissions in California. Administered by the California Air Resources Board (ARB), it sets an increasingly stringent carbon intensity standard (measured in gCO2e/MJ) that limits the total lifecycle GHG emissions intensity from the transportation sector. In addition to the LCFS, starting on January 1, 2015, GHG emissions from on-road transportation fuels including gasoline, diesel and natural gas became covered under the state’s Cap-and-Trade Program, which sets caps for emissions from a broad range of sectors throughout the state economy. More about the Cap-and-Trade Program appears in Section 5.

To meet the LCFS, regulated parties can supply low-carbon fuels to generate credits, purchase LCFS credits generated by other producers of low carbon fuels, or both. The standard requires a reduction of 1 percent in GHG emissions intensity (or carbon intensity, CI) for gasoline and diesel fuel pools in 2015 from 2010 levels, and of 10 percent in 2020. Credits can be banked for use later, allowing over compliance in early years to aid compliance as the standard grows more stringent. The standard has remained at 1 percent reduction since 2013 due to a court ruling (see Section 6), and is expected to be at 2 percent reduction in 2016 after a formal re-adoption of the rule by the ARB in July 2015.

This issue reviews LCFS compliance metrics from 2011 through 2014: credits and deficits generated and transport fuel energy (Section 1), fuel carbon intensity (Section 2), and credit trading and prices (Section 3). We take a special look at California in-state biofuel production and consumption (Section 4), and revisit fuel price impacts of the LCFS and the Cap-and-Trade Program, and interactive effects of the two (Section 5). We also briefly summarize the proposed changes in the LCFS re-adoption (Section 6).