New Progress Report Shows Low Carbon Fuel Standard Working

California released an encouraging batch of new numbers today that confirm continued success in the state’s effort to expand the use of cleaner fuels. Under the state’s Low Carbon Fuel Program (LCFS), which requires the oil industry to reduce the carbon-intensity of gasoline and diesel, fuel suppliers reported 100 percent compliance in 2016. More than that, clean fuel producers helped to exceed the overall targets by about 60 percent since the program began. That’s according to agency staff with the Air Resources Board (ARB) who are presenting their progress report at today’s public hearing, where I will be also testifying. 

ARB staff also compared their earlier assessment of low-carbon fuel supplies against reports sponsored by the Western States Petroleum Association (performed by Boston Consulting Group) and Chevron. As shown below, the comparison revealed that the oil industry was wrong in its dire, doomsday predictions of  "fuels cliff" among other claims. I’ve previously blogged on this issue and the oil industry’s other claims of fuel price spikes and refinery closures that never materialized

In contrast, a varied cohort of business owners recognizes the value of LCFS, not only in terms of cleaning the air but creating jobs and jumpstarting technology advancements. Last month, 155 companies and industry groups signed a letter by Calstart in support of the standard, calling it a necessary incentive for investment in a clean energy economy. The signers include vehicle fleet operators, manufacturers, fuel producers, utilities, and business groups.

By expanding the market for cleaner fuels, the LCFS is also helping California diversify its fuel supply, because it encourages investment in alternatives such as biodiesel and renewable diesel, low-carbon ethanol, biogas, transportation electrification, as well as low-carbon technologies in the petroleum supply chain. The LCFS has spurred $1.6 billion in clean fuels investment since its inception and helped increase alternative fuel use by 57 percent in the state.  By diversifying the transportation fuel supply beyond petroleum, the LCFS will also help protect California’s economy from the frequent refinery outages and price swings in the global oil market.

The LCFS has also become one of the state’s most important programs for reducing carbon pollution – together with the state’s Renewable Portfolio Standards, Clean Car Standards, and Cap-and-trade program. Already, the standard has helped California avoid 26 million tons of planet-warming carbon pollution since 2011 and $2 billion in public health impacts.

The state has more work to do though to meet state climate and air quality requirements. California will needs to continue the LCFS program beyond 2020 as well as other complementary climate and air quality programs. In fact, a recent report from the consulting firm ICF found that strengthening the LCFS target to 20 percent for 2030 would reduce costs for the state’s cap-and-trade program by lessening the burden on other sectors. Put another way, the LCFS works together with cap-and-trade while also helping ensure the fuels industry contributes its fair share of emission reductions.

In a world where the federal government has relinquished its climate leadership, the state has been, and will continue to be, a beacon of clean energy policy for the rest of the U.S. and the world. California is already one step ahead with the success of the LCFS and increasingly well-positioned for a global market that will need to be increasingly lower-carbon and less polluting.

About the Authors

Simon Mui

Director, California Vehicles and Fuels, Energy & Transportation program

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