California Low Carbon Fuel Standard Amendments

On September 8, 2023, California Air Resources Board (CARB) released the Standardized Regulatory Impact Assessment (SRIA) document, which outlined proposed amendments to the Low Carbon Fuel Standard (LCFS). The major regulatory updates that CARB is considering are summarized below:

CARB is proposing more stringent CI standards through 2046, with a 30% statewide CI reduction by 2030 and a 90% reduction by 2046 from 2010 levels. In addition, the proposed amendments include an automatic acceleration mechanism (AAM) to increase the stringency of CI benchmarks if specific regulatory criteria are met, where the AAM would advance the upcoming year’s CI benchmark after being activated. For example, if the AAM is activated in 2029, the 2030 CI reduction target will be increased to the 2031 reduction target.

CARB is considering removing the LCFS exemption for fossil jet fuel given the availability of lower carbon alternative jet fuels which is also bolstered through federal incentives. This means that conventional jet used intrastate would be subject to mandatory reporting and deficit generation.

The proposed amendments would phase out avoided methane crediting for dairy and swine manure pathways and for landfill-diversion pathways by 2040 and would allow a one 10-year crediting period inclusive of avoided methane for applications certified through December 31, 2029 or a 5-year crediting period between January 1, 2030 and December 31, 2034.

In addition, CARB is proposing to align deliverability requirements for biomethane with requirements applicable to other fuels mandating demonstration that the fuel was physically delivered to California.

The proposed amendments would expand crediting provisions for hydrogen refueling infrastructure (HRI) and fast charging infrastructure (FCI) to the medium- and heavy-duty sectors.

CARB intends to expand existing book-and-claim provisions to include low-CI hydrogen injected into the pipeline network and to align these with the hydrogen production incentive eligibility under the Inflation Reduction Act (IRA). Hydrogen derived from fossil fuels would be excluded from book-and-claim eligibility under the CARB proposal unless low-CI hydrogen is produced using book-and-claim of biomethane.

CARB is proposing to phase out project-based crediting provisions applicable to refinery and crude oil production facilities by 2040 and limit eligibility of direct air capture projects to those located in the US.

Proposed amendments would decrease the number of credits generated by forklifts with lift capacities less than 12,000 lb given that many smaller classes of forklifts already transitioned to zero-emission technology. Crediting change is limited to smaller forklifts because those with larger lift capacities still largely use fossil fuels.

CARB intends to release a draft rulemaking package for a formal 45-day comment period by the end of the year with Board action expected in the first quarter of 2024

If you would like to learn more or have questions on how the proposed LCFS updates may impact your business, please email Erin Baker from Trinity’s Mobile Source and Fuels Business Line or call 540.621.6194.