Archive for the ‘Low Carbon Fuel Standard’ Category

CARB Schedules November Board Hearing Amid Market Volatility

Posted May 22nd, 2024 by SRECTrade.

Earlier this week, the California Air Resources Board (CARB) announced that LCFS changes would be considered at a November 8th public hearing. The hearing was originally scheduled for March but was canceled after significant stakeholder pushback on the reforms proposed in December 2023. Agency staff instead held a workshop last month to present updated modeling and hear additional feedback.

The agency will publish revised rulemaking language in the coming months. Notably, CARB indicated that the new proposal would include “a near term step-down in carbon intensity benchmarks of 7% or greater” in order to address the oversupply of credits. 

LCFS pricing had fallen to just $40 on May 16 but rallied slightly following the CARB announcement. Pricing was heard around $47 as of May 21. 

Source: CARB

LCFS Credit Surplus Grows, Prices Decline as CARB Mulls Changes

Posted May 2nd, 2024 by SRECTrade.

New data released by the California Air Resources Board (CARB) showed a net gain of nearly 3 million Low Carbon Fuel Standard (LCFS) credits. While the agency considers adjusting the near-term targets to address the growing oversupply of credits, continued regulatory uncertainty adds downward pressure to credit pricing

Note: Quarterly data is published about 5 months after the end of the quarter. Q1 2024 data will be available by July 31.

The latest quarterly report published by CARB this week indicated that 2.9 million more credits were generated than deficits in Q4 2023, pushing the cumulative credit bank to a record 23.5 million credits.

Source: CARB

Total deficit generation was down 4% from last quarter as sales of gasoline and conventional continue to shrink.

Overall credit generation, however, grew by nearly 6% driven by increases from the largest credit sources: renewable diesel (7% QoQ), electricity (6%) and renewable natural gas (6%). Bio-based diesel (includes both renewable and biodiesel) made up a record 66% of diesel reported in the state program. Credits from sustainable aviation fuel, while only making up less than 1% of all credits, rose by 66% last quarter. 

Source: CARB

CARB Considers Further Changes During April Workshop

The new data comes just weeks after a somewhat contentious workshop held by CARB, where various stakeholders called for more significant changes to the program than regulators appear to be willing to consider. In response to stakeholder comments on reforms proposed in December 2023, CARB canceled the March board hearing and held an all-day workshop on April 10 to present updated modeling and hear additional feedback.

Source: CARB

Notably, CARB suggested they would modify the near-term CI reduction schedule in response to the growth in the credit bank. However, staff appear to be maintaining the 30% reduction by 2023 target,  and continued to defend most of the original proposal.

CARB updated their modeling and presented alternatives to the near-term CI benchmark reductions, or “step-downs.” In addition to the originally proposed 5% step-down in 2025, staff modeled the impact of 7% and 9% step-down scenarios on the cumulative credit bank. Staff also modeled a scenario where the auto-adjustment mechanism was triggered twice before 2030 (the original reforms only allow for one triggering by 2030). 

Source: CARB

While CARB did not appear to favor one scenario over the other, staff indicated that “…given the growth in the credit bank, staff determined the market could likely support a larger step-down than presented in the [original proposal].”

Next Steps for LCFS

Revised amendments to the step-down would likely trigger another 15-day public comment period before the agency can formally approve changes to the program. It appears likely that revised amendments would not be published by CARB until after the 30-day comment deadline for the April 10 workshop. Staff indicated that implementation by 2025 is still possible, however administrative requirements may make this timeline challenging as the year progresses. 

LCFS Prices Continue Decline

CA LCFS credit prices continue to weaken against continued regulatory uncertainty, with a sharp drop following the April 10 workshop. Prices have continued a decline into May, with trades last heard around $57 on May 1. 

Source: CARB

Washington State Considers Changes to Clean Fuel Standard

Posted February 22nd, 2024 by SRECTrade.

The Washington Department of Ecology held a workshop on Thursday to discuss potential rule changes to the state’s Clean Fuel Standard (CFS) which was originally implemented on January 1, 2023. Ecology staff laid out the scope of this rulemaking which is expected to conclude with rule adoption by early 2025. The rulemaking will address the following topics:

  • Sustainable Aviation Fuel (SAF) – align program rules with state legislation passed in 2023 that aims to expand use of SAF.
  • Third-Party Verification – require fuel pathway applications and fuel transaction reports to be verified by accredited verification bodies. Ecology is looking to mirror similar programs in California and Oregon, where both programs are proposing to expand existing verification requirements to include EV charging. Ecology did not clarify whether verification would be required for EVs during the workshop.
  • Expand ZEV infrastructure applicability – current rules allow for certain public fast-charging and hydrogen refueling stations to generate CFS credits based in part on station fueling capacity and not solely on the quantity of fueling. Ecology is considering expanding the current rules to allow for medium and heavy-duty infrastructure to be eligible as well. The California Air Resources Board has proposed a similar expansion of ZEV infrastructure crediting for their Low Carbon Fuel Standard. Ecology also indicated that the current ZEV infrastructure program will soon be implemented.
  • Book-and-claim accounting – Ecology staff propose to update accounting methods for biomethane and electricity.

Ecology clarified that changes to carbon intensity targets and program participation fees would not be considered during this rulemaking.

Public comments from this initial workshop may be submitted by March 24. Ecology will schedule additional workshops in the spring and begin publishing draft rules this summer. Ecology aims to hold a public hearing to consider rule changes in the fall or winter.

Latest Data Shows Largest CA LCFS Credit Surplus

Posted February 16th, 2024 by SRECTrade.

Quarterly data from the California Air Resources Board (CARB) showed the largest ever credit surplus as prices fell to multi-year lows last month. Earlier this week, CARB postponed a March hearing to consider reforms to the LCFS program and may be evaluating stricter carbon intensity targets amidst stakeholder pressure.

In Q3 2023, 2.2 million more credits were generated than deficits, pushing the cumulative credit bank to over 20M credits and 3.6x greater than the average quarterly deficits generated in the prior year. This last metric is significant under the proposed amendments where an auto-acceleration mechanism (AAM) would be triggered under certain market conditions beginning in 2027.

Overall credit generation was up 9% from the previous quarter, driven by increases from the largest credit sources: renewable diesel (12% QoQ), electricity (10%), ethanol (20%), and renewable natural gas (4%). Nearly half of all credits came from bio-derived diesel which now makes up 60% of all diesel fuel consumed in the state.

Growth in credits from EV charging were driven by increases in residential credits awarded to utilities (11%), non-residential charging (17%), and heavy-duty fleet charging (19%). Credits from DC fast-chargers enrolled in the ZEV infrastructure crediting scheme fell by 4%. EVs continue to represent about one-quarter of all credits in the program. 

Oregon Clean Fuels Program Data and Rulemaking Workshop

Data for the Oregon Clean Fuels Program indicated a second straight quarter of net credit gains. In Q3, 686k credits were generated compared to just 624k deficits, a net gain of 62k credits. Last quarter saw a net gain of 81k credits, the largest quarterly increase since 2019. Following the trend in California, renewable diesel has quickly become the largest source of credits in the program, growing by 32% last quarter and 187% year-over-year.  Credits from electric forklifts were unchanged the previous two quarters after falling over 75% in Q1. 

On January 30, the Oregon Department of Environmental Quality (DEQ) held a rulemaking workshop to outline potential changes to the CFP including expanding third-party verification requirements to electricity reporting. The rulemaking will not consider changes to carbon intensity targets which were last updated in 2022. Future workshops are expected March through June. 

CARB Postpones LCFS Hearing to Reconsider Reforms

Posted February 15th, 2024 by SRECTrade.

The California Air Resources Board (CARB) announced yesterday that the March 21 public hearing to consider amendments to the Low Carbon Fuel Standard (LCFS) will be postponed to a later date. CARB plans to hold a workshop sometime in mid-April to “enable additional discussion and re-evaluation of the carbon intensity benchmarks, including the proposed step-down and auto-acceleration mechanism, as well as more consideration of the proposed sustainability guardrails, among other topics.” The 45-day public comment period will still close on February 20. 

CARB’s postponement comes two weeks after the release of quarterly data which indicated the largest ever net credit surplus and as LCFS credit pricing surpasses multi-year lows.

New Mexico Just Passed a Clean Fuel Standard. Which Other States Are Considering Legislation?

Posted February 14th, 2024 by SRECTrade.

The New Mexico Senate approved HB41 by a vote of 26-15 on Tuesday night. The bill now heads to Governor Grisham for signature. Once signed into law, New Mexico will become the fourth state with a clean fuel standard behind Washington, Oregon, and California.  

The bill would require the New Mexico Department of Environment to implement low carbon fuel standard regulations by July 2026. The program would mandate a 20% reduction in carbon intensity by 2030 and a 30% reduction by 2040, while creating mechanisms for generating and trading credits similar to those of existing programs.

Which Other States are Considering Clean Fuel Policy?


Minnesota approved a 100% clean energy standard in 2023 and may be poised to become the next state to pass a clean fuel standard this year. Last week, a working group convened by the legislature delivered a report recommending more moderate carbon intensity targets than those included in the current legislation. Minnesota’s 2024 legislative session concludes on May 20. 

New York

The New York Senate approved S. 1292 in June 2023 but the bill failed to pass in the State Assembly. Clean fuel policy has been considered by New York lawmakers for a number of years but has struggled to gain support with key stakeholders including environmental groups. 


In 2023, lawmakers introduced H.B 5083 and S.B 275 to establish a clean fuel standard for the state. The bill would require a 35% reduction in the carbon intensity of transportation fuels by 2035. The bill has yet to be heard by a legislative committee in the current session and was not included in sweeping climate policies approved last November. 

Several other states are considering clean fuel standard legislation including: Massachusetts, New Jersey, Pennsylvania, Vermont, Hawaii, and Illinois. 

CARB (Finally) Proposes LCFS Amendments

Posted December 19th, 2023 by SRECTrade.

On December 19, the California Air Resources Board (CARB) revealed their long-awaited proposal to update and extend the Low Carbon Fuel Standard (LCFS). Among the most significant changes: 

  • Increases 2030 carbon intensity (CI) targets from 20% to 30%, including a one-time 5% reduction of the CI benchmark in 2025
  • Extends CI reduction targets to 90% CI by 2045
  • Creates new auto-acceleration mechanism to help stabilize the credit market in the event of rapid decarbonization that outpaces deficits, beginning in 2028
  • Phases in some limitations to biomethane crediting
  • Reduces credits from eForklifts
  • Adds third-party verification requirement to electricity and other fuels
  • Expands ZEV infrastructure crediting for medium and heavy-duty charging

Staff published a Preliminary Draft Report, Regulatory Text, and nearly 12 total documents on its rulemaking page. These 500+ pages make for a good read over the holiday break.

What to Watch for Next

The agency indicated a formal regulatory notice will be issued in early January 2024, which kicks off a 45-day public comment period. The proposed regulations can then be adopted at a subsequent board meeting, potentially as early as March 21.

Check back here for more analysis on these proposed changes!

CA LCFS: 1.6M Net Credits in Q2

Posted October 31st, 2023 by SRECTrade.

The California Air Resources Board (CARB) published Q2 2023 data for the Low Carbon Fuel Standard (LCFS) today. Consistent with trends dating back to 2021, low carbon fuel producers generated 1.6M more credits than deficits, pushing the cumulative credit bank to over 18M credits. 

Source: California Air Resources Board

Record Credit Generation

More credits were generated in Q2 (5.5M) than in any previous quarter of the program, led by increases from the largest credit sources: renewable diesel (14%), renewable natural gas (28%), and electricity (7%). Two key trends underpin the consistent growth in net credits: 54% of diesel sold in CA last quarter came from renewable feedstocks while the average carbon intensity (CI) of renewable natural gas fell to its lowest mark of -131 g/MJ. 

There was also a 50% increase in credits from alternative jet fuel (also referred to as sustainable aviation fuel) which still represents less than 1% of all credits. Meanwhile, there were modest declines in credits from ethanol (-11%), propane (-11%), and biodiesel (-5%).

Source: California Air Resources Board

EV Credits Rebound

Credits from EV charging bounced back from a quarterly decline in Q1, driven by increases in both light-duty (12%) and heavy-duty (11%) on-road EV charging. Residential EV charging still made up about half of all EV credits, ahead of forklifts (23%) and on-road EVs (18%). Credits from DC fast-charging infrastructure rose by about 12%. Overall, EVs are the second largest source of credits, representing about one-quarter of all credits in the program. 

Source: California Air Resources Board

Credit Prices Hover Above Six-Month Low

LCFS credit prices closed October around $68/credit, up slightly from six-month lows in September following CARB’s publication of a regulatory document which hinted at major program changes including the strengthening of CI targets and limitations on biomethane crediting. CARB is expected to publish its final proposal by December, which triggers a 45-day public comment period before the governing board can approve rule changes. 

Source: California Air Resources Board

First Look at Washington CFS Data

Posted October 2nd, 2023 by SRECTrade.

The first batch of data for the new Washington Clean Fuels Standard (CFS) has been made available by the Washington State Department of Ecology. So far, Ecology has published:

Credit Transfer Reports for July and August 2023

No credits were transferred in July after technical issues with the Washington Fuel Reporting Systems triggered a one-month delay in the first issuance of credits. However, 27,055 credits were transferred in August. The average price from the four reported trades was $106.66. The price of Washington CFS credits was about midway between those reported in CA ($77) and OR ($137) during the same month. Credits from one program cannot be sold in another. 

Q1 2023 Credit and Deficits

Ecology reported 275k credits generated and 227k deficits generated, a net credit build of about 47k credits. Entities with compliance obligations do not have to retire credits until next year, and credits do not expire so they may be held indefinitely by market participants. 

The largest source of credits was ethanol (75%), followed by renewable diesel (12.1%), biodiesel (11.8%), and electricity (10.8%). Credits from residential EV charging, which are separately calculated and issued by Ecology, have not yet been issued for Q1 or Q2.

The deadline for reporting fuel consumption for the Q2 2023 reporting period is today. Ecology has not yet set a publication schedule for reporting quarterly credit and deficit data.

Source: Washington Department of Ecology

What’s Next for the Washington CFS?

Ecology will create a zero-emission vehicle infrastructure or “capacity credit” program for public DC fast-charging and hydrogen refueling stations. Stations approved under this program may generate CFS credits based on the fueling capacity of those stations. Guidance on this program is expected to be released before the end of the year. 

Ecology must also address the inclusion of alternative jet fuel pathways in the CFS after the passage of SB 5447. A rulemaking may be initiated as soon as this year or early next year.

LCFS Changes Likely By Spring 2024

Posted September 18th, 2023 by SRECTrade.

The timeline for implementing changes to the California Low Carbon Fuel Standard (LCFS) became clearer last week. At an industry conference, California Air Resources Board (CARB) Executive Director Dr. Steven Cliff indicated a final proposal would be made available in the “November timeframe” with hopes of approval by next spring. The announcement came after the September 8 publication of the Standardized Regulatory Impact Assessment (SRIA).

Under this timeline. CARB could implement a mid-year adjustment to the 2024 carbon intensity targets, increasing compliance obligations for fuel suppliers. An even more significant adjustment or “step down” is being considered for the 2025 targets, as indicated in the SRIA. The document evaluated other significant changes to the program, including a target acceleration mechanism, the inclusion of intrastate fossil jet fuel as a regulated fuel, and the phasing out of biomethane and forklift crediting. However, Dr. Cliff reiterated that the SRIA, which precedes any formal rule-changes to be considered by the regulatory body which oversees the LCFS, “is not the final proposal. It’s not even the proposal.” 

Source: CARB Standardized Regulatory Impact Assessment for LCFS 2023 Amendments

What To Watch For Next

Regulatory staff will present on changes to the LCFS at the September 28 CARB non-voting meeting. The next formal milestone will be the publication of a Rulemaking Package which starts the 45-day public comment period, after which CARB may adopt new provisions to the LCFS rules. 

Source: CARB Staff Presentation at 9/14 EJAC Committee