Overview
Pursuant to the California Global Warming Solutions Act (AB32), Executive Order S-01-07 of 2007 called for a Low Carbon Fuel Standard (LCFS) to reduce the carbon intensity (CI) of California transportation fuels by 10% by 2020, from a 2010 baseline. The Order instructed the California EPA to develop a compliance schedule and directed the California Air Resources Board (CARB) to initiate regulatory proceedings to implement the program. CARB approved the LCFS regulation in 2009. Implementation and the first year of compliance began in 2011. Revisions to the program were made at the end of 2011 and took effect in 2013. Due to a court ruling that found procedural issues with the original adoption of the program, the program targets were effectively frozen from 2013 – 2015 until CARB re-adopted it in 2015. In January 2019, CARB amended the LCFS regulations and increased the carbon intensity reduction goal to 20% by 2030. An LCFS Credit is issued per 1 metric ton (MT) of CO2 equivalent reduced.
Other states and territories (i.e. Oregon and British Columbia) on the western seaboard of North America have followed in California’s footsteps and implemented LCFS programs of their own. As compliance standards continue to build, these programs hope to stimulate greater regional synergy in lowering greenhouse gas emissions.
Quick Facts
- 1 LCFS Credit = 1 MT of CO2 equivalent reduced
- Electric Vehicle Fleets and Charging Stations must be certified by CARB to sell LCFS credits
- Value is determined by market supply and demand mechanics
- SRECTrade manages the entire certification and credit monetization process
Compliance Obligations
The LCFS applies to the sale or supply of any fuel in California. Fuel producers and importers are the primary regulated parties. Regulated parties that exceed the maximum CI compliance limit may meet compliance by purchasing credits that are issued to regulated parties with an average CI that is below the maximum CI compliance limit. The LCFS enforces a declining CI curve every year to ensure the continuous reduction of the transportation fuel industry’s environmental impact. The chart below reflects the compliance schedule of average CI that needs to be meet for each respective baseline fuel type.
Pricing
SRECTrade’s Clean Fuels Management Services
SRECTrade provides EV charging networks, fleet operators, original equipment manufacturers, and independent EV charging station owners comprehensive fuel credit registration, management and monetization services. We make it easy to register, manage and navigate the regulatory and administrative complexities of the western clean fuels markets. Our company facilitates a return on the investment in your EV fleet or charging station portfolio through low-carbon fuel standard (LCFS) credit management and transaction services. If you are interested in our services or have any questions, please reach out to our Clean Fuels Team at cleanfuels@srectrade.com.
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