California Update to Low Carbon Fuel Standards Regulations

On December 7, 2021, the California Air Resources Board (CARB) began the process of updating the California Low Carbon Fuel Standard (LCFS) by hosting a virtual workshop where CARB staff discussed of its original amendment proposals. The goal of the LCFS update is to align the LCFS with the CARB AB 32 scoping plan update, which will be finalized in 2022. Any changes resulting from this effort may be implemented from here 2024.

AB 32, the California Global Warming Solutions Act of 2006, created a comprehensive, long-term approach to combating climate change by aiming to improve the environment and natural resources while maintaining economic prosperity. Specifically, AB 32 aims to mitigate the risks associated with climate change by reducing greenhouse gas (GHG) emissions, improving energy efficiency, expanding the use of renewable energy resources, improving clean transportation and reducing waste. The law also requires CARB to prepare and approve a framework plan to implement these emission reduction measures and to update this plan every five years. While the 2017 scoping plan update set out a plan to meet California’s 2030 goal of reducing GHG emissions to 40% below 1990 levels, the 2017 scoping plan update 2022 will chart a course to achieve carbon neutrality by 2045 at the latest.

The LCFS program is a market-based program that focuses specifically on reducing the carbon intensity (CI) of transportation fuels used in California. Created in 2009 and implemented in 2011, the program provides credit-generating opportunities to encourage the production and use of carbon-based fuels for transportation. Low-carbon fuels used for transportation in California can earn LCFS credits based on the difference between the alternative fuel’s IC and a declining IC benchmark adopted for the fossil transportation fuel it uses. replaces. Gasoline and diesel importers, refiners, and wholesalers can purchase the LCFS credits generated by alternative fuel producers to comply with the declining IC benchmark.

During its LCFS workshop, CARB outlined potential changes to the LCFS program that seek to:

  • Align the program with long-term statewide climate goals;

  • Encourage private investment in low-carbon fuels;

  • Accelerate the transition to zero-emission vehicles in accordance with Executive Order N-79-20;

  • Support exportability of the program to other jurisdictions;

  • Align the program with federal policies;

  • Update the LCFS program to reflect changes in technologies, data, and stakeholder feedback; and,

  • Streamline implementation of new LCFS standards.

The proposed changes to the LCFS program could have significant impacts on sellers, refiners and producers of transportation fuels used in California. Among other things, CARB is initially considering rule updates that:

  • Establish decreasing Cl targets after 2030;

  • Reinforce the pre-2030 Cl goals;

  • Extend allowance for accounting and claiming to low-carbon hydrogen injected into regional hydrogen pipelines; and

  • Establish better support for the electricity storage facility for excess renewable generation.

Businesses across all industries, especially transportation-related businesses, may wish to weigh in on updates to the LCFS program. CARB hosted the most recent workshop program February 15, 2022, to discuss the impact of the framework plan on public health. CARB is accepting comments on the workshop until March 7, 2022.

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 53

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