The innovative concept that underlies California’s Low Carbon Fuel Standard is the use of a market-based crediting system to reduce the carbon intensity (CI) of transportation fuel. Between 2011 and 2017, California’s LCFS reduced the greenhouse gas (GHG) emissions that would have been emitted by conventional gasoline and diesel fuel by 35 million metric tons (MMT). In California’s diesel pool last year alone, 375 million gasoline gallon equivalent (MGGE) of renewable diesel provided 3 MMT of GHG reduction, 187 MGGE of biodiesel provided 1.4 MMT of reductions, and 124 MGGE of biomethane provided 0.7 MMT in reductions. At the Sept. 27 governing board hearing, California Air Resources Board extended California’s LCFS with a CI reduction schedule that ratchets down an additional 1.25 percent each year until 2030. Credits today are trading at $190/MT.

Other states and provinces in North America and jurisdictions around the world are increasingly seeing the value the LCFS delivers and are viewing the program as a flexible tool they can use to achieve their own policy objectives. Several attributes of the LCFS make it attractive from a policy-design perspective. Because the LCFS establishes a market-based crediting system with a decade-long compliance schedule, the program does not require an annual appropriation. The program uses a technology-neutral, performance-based, scientific metric. And the review and recognition of novel pathways developed by industry enables the science of GHG modeling to evolve over time rather than being fixed by statute.

The mission of the Low Carbon Fuels Coalition is the support and expansion of low carbon fuel policy structures worldwide. Along with cohosts Biotechnology Innovation Organization and below50, the LCFC recently hosted the “Driving Decarbonization” event at the Global Climate Action Summit. At the event, former California State Sen. Fran Pavley provided an overview of how LCFS programs fit within an overall climate policy structure. CARB Transportation Branch Chief Sam Wade explained the mechanics and GHG benefits of these policy structures. Oregon Clean Fuels Program lead Cory-Ann Wind described how Oregon developed its streamlined program. From a public health perspective, Will Barrett, clean air advocacy director for the American Lung Association, spoke about the benefits to individual and community health that these programs deliver. And State Rep. Joe Fitzgibbon discussed his work to establish a Clean Fuel Standard for the state of Washington. 

The earliest adopters of LCFS programs were California, Oregon and British Columbia, all members of the Pacific Coast Collaborative. The vision of the PCC is to dramatically reduce GHG emissions and to create a vibrant, low-carbon regional economy. Both the Oregon Clean Fuels Program and the BC Renewable and Low Carbon Fuel Requirements Regulation are generally consistent with the California LCFS. However, the Oregon program is considerably simpler and easier to administer than California’s program, and the BC program does not include an indirect land use change (ILUC) GHG modeling component.

Beyond the PCC, Canada has become a leader in the adoption of similar programs in other Canadian provinces and on a federal level. A national CFS is under development, with 2022 projected as an enforcement date for the liquid fuel component. Biofuels, particularly in the diesel pool, are widely expected to deliver a significant portion of the reductions. Development of the standard will continue into 2020; gaseous and solid fuels are also to be regulated under the CFS, coming into force in 2023. BC is also assessing new 2030 targets for its LCFS, and several provinces now have CI recognition in their renewable fuel standards. The LCFC is serving as a resource to its affiliate organization, Advanced Biofuels Canada, to support the growth of these programs.

Brazil is the second largest biofuel-producing country in the world and has long taken a leadership role in biofuels policy. Brazil is currently developing the RenovaBio program that is anticipated to utilize a CI standard and include a market-based trading program. The LCFC is looking forward to working cooperatively with the Brazilian Sugarcane Industry Association (UNICA) and other Brazilian stakeholders on low carbon fuel policy design issues.

In other international jurisdictions, the LCFC is working with BIO and the World Business Council for Sustainable Development’s below50 program to further expand comparable policies. below50 is active in Australia, Brazil, Europe and the U.S., and it is seeking to promote LCFS-type policies at both the federal and the state or provincial level. For example, below50 strongly endorsed Brazil’s Renovabio policy and is working to see it implemented in a way that generates a strong market signal for low-carbon fuels.
 
Author: Graham Noyes
Executive Director, Low Carbon Fuels Coalition
Managing Attorney, Noyes Law Corp.
530-264-7157
graham@noyeslawcorp.com