California Regulatory Vote on Low-Carbon Fuels

(Reuters) – California regulators will vote on Friday regarding stricter policies to boost low-carbon fuels aimed at reducing greenhouse gas emissions from the transportation sector and achieving the state's climate goals.

Proposed Changes to Low Carbon Fuel Standard (LCFS)

The adjustments to California's influential Low Carbon Fuel Standard (LCFS), established in 2011, seek a deeper reduction in the carbon intensity of transportation fuels by 2030 for fuel producers to earn tradable credits.

Transportation accounts for about 50% of California's greenhouse gas emissions.

While biofuel producers and some state climate advocates support the proposal, critics like oil companies and consumer advocates argue it could raise gasoline prices for Californians. Environmental groups warn that the policy might prolong oil and gas production and favor fuels from food crops rather than promoting a shift to electric vehicles.

Mechanism of the LCFS

The LCFS mandates that fuel makers buy tradable credits if their products exceed a carbon emissions baseline set by the California Air Resources Board (CARB). Developers producing low-carbon fuels can generate and sell these credits.

The policy has spurred a boom in renewable diesel and biogas production, reducing credit prices from above $200 in 2020 to around $70. The revisions aim to stabilize credit prices and promote more low-carbon fuel production.

New Reduction Goals

Under the proposed amendments, the LCFS would require a 30% reduction in transportation fuel carbon intensity by 2030, increased from 20%. A new target of 90% reduction would be set for 2045.

Supporters of renewable fuels from organic waste back these measures.

> Patrick Serfass, executive director of the American Biogas Council, stated, “This program represents real reductions in emissions. These are real tons of CO2 equating to a real credit.”

However, concerns about potential increases in gasoline prices persist.

Economic Impact

An analysis from CARB indicated that price changes could result in an average increase of 37 cents per gallon for gasoline from 2024 to 2030, although the board cautions that models may not accurately predict future prices.

The internal environmental justice advisory committee at CARB has recommended rejecting the revisions due to concerns about jet fuel exemptions and large subsidies for dairy methane projects, among others.

> “The latest proposal does not make the LCFS more equitable and continues to harm environmental justice communities,” the advisory committee advised CARB Chair Liane Randolph.

One board member, Dean Florez, has publicly expressed opposition to the measure over worries about higher consumer costs.