LCFS programs eye tighter targets

Changes underway in all North American low-carbon fuel standard (LCFS) programs are poised to increase incentives for both renewable fuels and electric vehicles, with regulators keen to ramp up their targets in the coming years.

The California Air Resources Board (CARB) has said that it will explore tightening the 2030 carbon intensity (CI) reduction requirement for its program to 25-30pc, but this is "not a hard range," the agency's transportation fuels branch chief Cheryl Laskowski said today at the Argus North American biofuels, LCFS and carbon markets summit in Monterey, California.

"We will conduct more in-depth modeling to look at how aggressive we can be in the future," she said.

The agency will wait to see what its revised scoping plan modeling looks like to help determine the LCFS revised targets in the subsequent rulemaking. The program currently requires a 20pc carbon intensity reduction for on-road fuels by 2030.

The LCFS credit price has fallen significantly over the last year, weighed down by increased credit generation, which has led to calls for tougher targets.

"We have seen a lot of volume and credits coming into the market," Laskowski said. "This is a good problem to have from a climate perspective, with the innovation and investment. All of our programs are going to have to do a lot more [to get us to carbon neutrality], a lot sooner, a lot quicker. We can do more and we can do more now."

Although there are no immediate plans for linkage between the North American programs, they are trying to harmonize their designs as much as possible, the regulators said.

"We are hewing as closely to the California and Oregon programs as we can and some of what that means is we will accept, as Oregon did, the California certified fuel pathways that have been adjusted for WA transportation distances," Washington Department of Ecology Climate Policy Section manager Joel Creswell said. "We are adopting an IT platform modeled after California's. We are trying not to reinvent the wheel with policy."

Washington is close to finalizing the rules for its Clean Fuel Standard, which will launch next year, joining California, Oregon and British Columbia along the west coast of the continent in setting up LCFS credit trading programs. The Washington program will target a 10pc reduction in carbon intensity by 2031 and a 20pc reduction by 2034.

Oregon's program is the on the cusp of setting tighter requirements, with regulators proposing a 37pc by 2035 CI reduction target.

Oregon needs tighter targets to ensure sufficient incentives for low-carbon liquid fuels, said Cory-Ann Wind, Clean Fuels Program manager at the Oregon Department of Environmental Quality (DEQ). "If we did nothing else but electrify, that achieves 20pc reduction by 2035. We had to be more aggressive to get all the benefits to the other low-carbon fuels."

The lifespan of the vehicle fleet in Oregon is "very, very long," Wind said. "Even with the ZEV mandate, we see sizeable liquid fuel needs out to 2050 and we need those fuels to be lower carbon. That's the motivation behind us with our 2035 goals at the 37pc. That's what the market needs to continue to decarbonize those liquid fuels."

British Columbia is working to set a 30pc target by 2030, with the new regulation planned to come into force on 1 January 2024, the province's Low Carbon Fuels director Michael Rensing said today.

The zero-emission vehicle regulations in British Columbia will marry well with the more ambitious LCFS, Rensing said. "We have implemented a ZEV plan but we count on LCFS to make the economics work well."

By Jessica Dell