ICCT says CARB should refocus LCFS after delay

In California, earlier this year, the California Air Resources Board (CARB) postponed a hearing and vote to finalize revisions to its Low Carbon Fuel Standard (LCFS) until the Friday after the 2024 U.S. elections in November. The vote had been expected in March and the International Council on Clean Transportation says it’s a good sign that CARB is taking more time. This delay is another opportunity to adjust the regulation so it can do more to achieve California’s climate goals.

The LCFS revisions were riven from the outset by temporally competing priorities. A quick, simple update that raises ambitions and greenhouse gas (GHG) reduction targets would be relatively straightforward. It would also lift the LCFS’s sagging credit market, which has fallen from pre-pandemic heights of $200 per ton of carbon dioxide (CO2) to less than $75 per ton in early 2024. Addressing several other issues that have cropped up over the last 5 years, including the program’s growing reliance on virgin vegetable oils and credits from avoided methane emissions at large dairy farms, would take much more time. The risk with spending that time is that it could prolong the slump in credit prices and thus erode the program’s near-term value to credit-generators such as electric vehicle charging stations and alternative fuel producers.

Under any circumstances, balancing these priorities would be a challenging. But now that there’s more time, ICCT urges focusing on what it says are the two largest issues—the risk that the LCFS is shuffling around or diverting resources and that it’s crediting GHG reductions from unrelated agriculture-sector projects. There are available policy levers to tackle both.