Posts Tagged ‘California’

Understanding the Watts and Volts of the CA LCFS Program

Posted September 11th, 2020 by SRECTrade.

As part of the California Global Warming Solutions Act (AB32), which aims to drastically reduce greenhouse gas emissions in the state, the California Air Resources Board (CARB) established the Low Carbon Fuel Standard (LCFS) program in 2009. The current goal of the program is to reduce the carbon intensity of transportation fuels in the state of California by 20% by 2030. Let’s take a closer look at the nuances of the program:

Regulator and Market Participants

  • Regulator: California Air Resources Board (CARB)
  • Credit Producers: Low carbon-intensive fuel producers & fleet operators (electricity, hydrogen, biofuel, etc.)
  • Deficit Producers: High carbon-intensive fuel producers & importers (diesel & gasoline)

With most low carbon liquid fuels, LCFS credits accrue to the fuel producer. However, for electricity and gaseous fuels, such as hydrogen, the LCFS credits accrue to the charging or fueling station owner. Fuel producers and fleet owners utilizing fuel that falls below the carbon intensity benchmark in that year generate LCFS credits. The volume of credits issued is based on the quantity of fuel produced or consumed and its carbon intensity. Conversely, participants that produce or import fuel above the carbon intensity standard are required to purchase LCFS credits to make up for their deficit. 

1 LCFS Credit = 1 MT (metric ton) of CO2 equivalent reduced

Eligible Vehicle Types

California vehicles that run on clean fuel (electricity, hydrogen, CNG) are eligible. This includes cars, buses, trucks, forklifts, rail, and more. For electricity as a fuel, in order to generate credits, fleet owners must own the charging infrastructure for their electric vehicles. 

Reporting Requirements – Electricity

For electricity as a fuel, fleet owners must have one of the following* to report energy consumption to CARB:

  1. Dedicated meters (separate utility bill)
  2. Submeters (with kWh readout)
  3. EV charger data monitoring

*Electric forklifts utilize a different methodology for reporting, and are able to utilize kWh calculations based on certain parameters.

Estimated Values per Vehicle Type

* Gross value before costs and fees. Assumes annual consumption of 50 MWh for Class 4-8 EVs and Buses and 10 MWh for Light Duty EVs and Forklifts. Also assumes Zero-CI electricity and a $200 LCFS credit price.

Generate Additional Value with RECs

The overall California energy mix has some carbon intensity associated with it, as the electricity is generated from a variety of resources. By virtually pairing your LCFS credits with Renewable Energy Credits (RECs), participants can demonstrate to CARB that the energy utilized to power their electric fleet is renewable. This mechanism can be utilized even if the owner of the charging equipment does not have renewable energy on-site.

This sounds too good to be true. What’s the catch?

The program is intended to act as an ongoing revenue stream that helps offset fueling costs and encourage further investment in clean fuel vehicles. For electricity, certain vehicle types have general spending requirements. 

How much are the credits worth?

The LCFS market is robust and growing, with plans to continue beyond 2030. Since the program is a market-based mechanism, LCFS credit prices fluctuate, but due to CARB’s compliance requirements and strong regulatory oversight, recent prices have remained relatively stable. Over the past year, LCFS credits have been valued between $190 – $200. There is a price cap set for LCFS credits and it is set at $200 (in 2016 dollars) and adjusted annually for inflation. The 2020 cap is $217.97 per credit.

How can SRECTrade help my business?

No matter your fleet size, we can help you generate additional value from your clean fleet. SRECTrade manages the entire administrative process on your behalf, from asset registration and reporting, to credit issuance and sales. We also provide an easy-to-use technology platform for you to easily view and keep track of your assets, credits, and transactions. Our strong understanding of the complexities of the market and ability to leverage our experience in the clean commodities space help you maximize your credit volume and price

Ready to start generating credits? Reach out to us at cleanfuels@srectrade.com or call us at (415) 763-7732 Ext 4.

California – State Senate Unable to Pass 33% Renewable Portfolio Standard Target

Posted September 2nd, 2010 by SRECTrade.

On August 31st, the California state senate was unable to vote on the country’s most aggressive renewable portfolio standard (RPS) program due to the session coming to at close at midnight. The bill, SB 722, which passed the state assembly, would have required California to produce 33% of its electricity from renewable sources by 2020.

Governor Schwarzenegger had made it clear he would not have signed the bill even if it passed the senate. The governor’s main concerns were that SB 722 did not allow for enough electricity to be imported from out of state. Additionally, the Governor wanted the bill to include a solution to streamline California’s siting and permitting process for renewable energy projects. Back in June, the Governor commented that he would not, “sign legislation mandating a higher requirement without ensuring that the necessary projects can be built.”

The two main arguments here have to do with developing a vibrant renewable energy market in the state of California while also maintaining competitive electricity pricing. Importing electricity from outside of California doesn’t help increase the number of in state jobs required to build the renewable energy projects needed to meet the 33% RPS target. On the other hand, allowing for greater amounts of electricity to come from out of state will increase competition and hopefully keep prices down, something to be mindful of considering the current economic environment in California.

While Governor Schwarzenegger signed an executive order to reach the 33% target, the order could be over turned by any future governor. Although SB 722 didn’t pass, the governor could call a special session of the legislature to pass the bill before the upcoming election. This could be the only chance for the ambitious 33% target as both California Governor candidate Meg Whitman and U.S. Senate candidate Carly Fiorina are opposed to it.

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