Low Carbon Fuel Standard Update

JIM DUFFY
CHIEF, TRANSPORTATION FUELS BRANCH

OPIS LCFS & CARBON MARKETS WORKSHOP

DECEMBER 5, 2019
 Low Carbon Fuel Standard (LCFS)
California’s primary program to promote alternative fuel use in
the transportation sector
• Reduce carbon intensity of transportation fuels
• Transform and diversify fuel pool
• Reduce petroleum dependency
• Reduce emissions of criteria pollutants and
toxics

Transportation sector accounts for 50% of

State’s GHG inventory when industrial
emissions from refining and oil production are
included

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Overall Program Status

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 Aggressive Targets Through 2030 (And Beyond)

0
-2 Fuels with CI above the
-4 benchmark generate deficits
Percent Reduction in

-6.25
Carbon Intensity

-6 -7.5
-8.75
-8
-10
-10 Fuels with CI below the -11.25
-12.5
-12 benchmark generate credits -13.75
-14 -15
-16.25
-16 Historic Compliance Targets (black solid line) -17.5
-18.75
-18 Future Compliance Targets (black dotted line)
-20
-20

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Diverse and Growing Alternative Fuel Pool
Volume Credits
 Fuels supported by the LCFS
displaced over two billion
gallons of petroleum fuel in 2018
 About 11 million
metric tons of
GHG reductions
in 2018
 Rapid growth in
electricity and
renewable diesel
as transportation
fuels

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 Strong and Stable Credit Price
$250 2,500,000

Volume Transacted (metric tons CO2e)

Volume of Credits Transacted (MT)
Credit Price ($/Metric Ton)

$200 ARB Monthly Average Credit Price 2,000,000

$150 1,500,000

$100 1,000,000

$50 500,000

$0 0
J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASO
2013 2014 2015 2016 2017 2018 2019

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Credit Generation Responds to LCFS Value

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 Investment Activity Accelerating

HOLLYFRONTIER TO CONSTRUCT
RENEWABLE DIESEL PLANT AT NEW
MEXICO REFINERY

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2019 Rulemaking Updates

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Key Objectives of the 2019 Rulemaking
• Targeted amendments in response to Board Resolution 18-34
“The Board directs the Executive Officer to monitor the cost containment
provisions of the Low Carbon Fuel Standard, including the Credit Clearance
Market, and to propose technical updates through a future rulemaking if
needed to further strengthen the cost containment features of the program.”

“Work with stakeholders to establish an equity-based framework for the

possible uses of base credit value from residential charging, consistent with
Legislative priorities. Continue to evaluate the efficacy of such provisions and
propose adjustments to the electric utilities as needed.”

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Approved Change: Price Cap on All Transactions
Impose a maximum price on all credit
transactions occurring in the LCFS market
• Currently, only credit transactions
occurring in the CCM are subject to the
maximum price
• $200 per credit in 2016$, annually
adjusted for inflation

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Approved Change: Advanced Credits (1)
• If a CCM is held and pledged credits are insufficient, CARB will advance
credits from future years to ensure all deficits are cleared
• Credits will be advanced to large IOUs and POUs

Credits Advanced
From Future Years

Base credits issued to

EDUs grow over years
Years  with increase in EVs

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 Approved Change: Advanced Credits (2)
Credits

Credit
Credits Advanced Large IOU Deficit Holder
to EDU in CCM Large POU
Clearance in CCM
Market

$ Value
$ Investment

EDU Invests in Transportation Electrification Projects

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Approved Change: Equity Framework
Require a minimum share of revenue from utility credits to support
transportation electrification projects serving disadvantaged and
low-income communities and low-income individuals

Compliance Potential $ Value for

Year Equity Projects

2022 $75 million

2023 $120 million

2024+ $180 million+

CARB 14
Miscellaneous Updates

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 Pathway Activity in 2019
Deemed
Total as of 11/25/2019 Received Certified
Complete
Biodiesel and Renewable Diesel 86 33 35
Renewable Natural Gas (CNG, LNG, L-CNG) 116 61 44
Electricity 31 17 9
Hydrogen 32 17 11
Ethanol 186 142 27
Alternative Jet Fuel 1 1 0
Renewable Propane 1 1 0
Renewable Gasoline/Renewable Naphtha 5 0 5
Total 458 272 131

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Transition to Pathway Validation in 2020
• Tier 1 fuel pathway applications deemed complete by December 31,
2019 will not be required to obtain a third-party validation statement

• Tier 2 fuel pathway applications posted for public comment by

December 31, 2019 will not be required to obtain a third-party
validation statement

• Tier 1 or Tier 2 fuel pathway applications that were submitted in

2019 but do not meet the above criteria are required to obtain a
third-party validation statement in 2020 prior to certification

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Status Update on the Clean Fuel Reward Program
• EDUs working with automakers and dealerships
to develop the Clean Fuel Reward Program
• At point-of-purchase and statewide
• Additional to other State and Federal incentives,
including CVRP
• CPUC approved Southern California Edison’s
proposal to be the administrator for CFR
• Utility stakeholder group has finalized the
governance agreement
• Board to receive annual updates on the CFR
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Next Steps

Roll out of third party verification

Complete cost containment rulemaking and

initiate informal workshops for 2022 amendments

Assist with implementing similar low carbon fuel

standard policies in other jurisdictions:
• Pacific Coast Collaborative • Canada • Others

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 THANK YOU

LCFS Program Website

https://www.arb.ca.gov/fuels/lcfs/lcfs.htm

LCFS Contact List

https://ww3.arb.ca.gov/fuels/lcfs/contact.htm

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