Abstract

California’s low carbon fuel standard (LCFS) specifies that the state’s transportation fuel supply achieves a 20% reduction in carbon intensity (CI) below 2011 levels by 2030. Reaching the standard will require substantive changes in the fuel mix, but the specifics and the cost of these changes are uncertain. The research team assesses if and how California is likely to achieve the standard, and the likely impact of infrastructure credits on this compliance outlook. The team begins by projecting a distribution of fuel and vehicle miles demand under business-as-usual economic and policy variation and transforms those projections into a distribution of low carbon fuel standard net deficits for the entire period from 2019 through 2030. The researchers then construct a variety of scenarios characterizing low carbon fuel standard credit supply that consider different assumptions regarding input markets, technological adoption over the compliance period, and the efficacy of complementary policies. In the baseline scenario for credit generation, low carbon fuel standard compliance would require that between 60% and 80% of the diesel pool be produced from biomass. The research team’s baseline projections have the number of electric vehicles reaching 1.3 million by 2030, but if the number of electric vehicles reaches Governor Jerry Brown’s goal of 5 million by 2030, then low carbon fuel standard compliance would require substantially less biomass-based diesel. Outside of rapid zero-emission vehicle penetration, compliance in 2030 with the $200 credit price may be much more difficult. New mechanisms to allow firms to generate credits by building electric vehicle charging stations or hydrogen fueling stations have minor implications for overall compliance because the total quantity of infrastructure credits is restricted to be relatively small.