Understanding California's Low Carbon Fuel Standards Regulation

This guide explains California's Low Carbon Fuel Standard (LCFS), a market-based regulation designed to reduce greenhouse gas emissions and air pollution in the transportation sector by capping the carbon intensity of fuels.

• The LCFS program, established under the AB32 Global Warming Solutions Act, aims to reduce the carbon intensity (CI) of transportation fuels by 80 percent from a 2010 baseline by the year 2030.
• The program utilizes a credit and deficit system where fuels with a CI higher than the benchmark generate deficits, while those with a lower CI generate credits. Regulated parties with deficits must purchase credits from those with a surplus, such as electric distribution utilities (EDUs), EV service providers (EVSPs), or biofuel producers.
• LCFS credits are generated through three primary pathways: fuel-based crediting for low-carbon fuels, project-based crediting via carbon capture and storage (CCS) at refineries and production facilities, and capacity-based crediting for unused hydrogen fueling and EV charging infrastructure.
• Credit prices are market-determined and volatile; to protect end users, CARB implemented a price cap in 2016 of $200 (adjusted for inflation), which reached $253.53 in 2023.
• Biomass-based fuels account for nearly three quarters of generated LCFS credits, leading to concerns from stakeholders like the National Resources Defense Council (NRDC) that the program may over-incentivize livestock biomethane and crop-based biofuels over the zero-emissions vehicle transition.

APA

RMI (2023). Understanding California's Low Carbon Fuel Standards Regulation. https://rmi.org/resources/understanding-californias-low-carbon-fuel-standards-regulation/

Chicago

RMI. Understanding California's Low Carbon Fuel Standards Regulation. 2023. https://rmi.org/resources/understanding-californias-low-carbon-fuel-standards-regulation/.

Wikipedia

{{cite report |author=RMI |title=Understanding California's Low Carbon Fuel Standards Regulation |date=4 October 2023 |url=https://rmi.org/resources/understanding-californias-low-carbon-fuel-standards-regulation/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023understanding, author = {{RMI}}, title = {{Understanding California's Low Carbon Fuel Standards Regulation}}, institution = {RMI}, year = {2023}, month = oct, url = {https://rmi.org/resources/understanding-californias-low-carbon-fuel-standards-regulation/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }