10 YEARS OF THE CALIFORNIA LCFS
The California Global Warming Solutions Act of 2006 (Assembly Bill 32) established the first-ever Low Carbon Fuel Standard (or “LCFS”). The objective of the program was to reduce greenhouse gas emissions from the state’s transportation sector, while also lessening dependence on petroleum.
The LCFS achieves GHG reductions by requiring individual fuel producers and distributors to annually reduce the average lifecycle carbon intensity (“CI”) of the fuels they supply to the market. Fuels with CI values below the annual standard set by the California Air Resources Board (CARB) generate compliance credits, while fuels with CI values above the standard generate compliance deficits. Regulated parties are in compliance with the annual standards when their credits offset or exceed their deficits.