CEPP and Stanford Experts Provide Comments on Reforming the Low Carbon Fuel Standard

California’s “Low Carbon Fuel Standard,” a program implemented by the California Air Resources Board (CARB) to lower the carbon intensity of California’s transportation fuels, is currently undergoing a substantial revision. In early 2023, CARB initiated a process to evaluate potential changes to the program, including changes to carbon intensity targets, fuels pathway crediting, treatment of electric vehicle infrastructure, and other elements. That rulemaking process is ongoing, with an upcoming public workshop tomorrow (April 10).

In February of 2023, a variety of environmental justice groups—including Communities for a Better Environment, the Asian Pacific Environmental Network, Earthjustice, Leadership Council for Justice and Accountability, and others—requested that the Climate and Energy Policy Program (CEPP) conduct an analysis of a potential regulatory scenario that reflected their primary policy objectives, using CARB’s public California Transportation Supply (CATS) model to estimate the impacts of that scenario on the LCFS program. CARB staff had stated they did not have capacity to analyze such a scenario.

CEPP’s analysis used the version of the CATS model available at the time (the March 23 version) and was presented at public meetings held by CARB in May and June of 2023, as well as to the CARB Environmental Justice Advisory Committee on July 17, 2023. CEPP’s findings were subsequently released as a fact sheet. 

In the course of the analysis, researchers on the Climate and Energy Policy Program team also identified several opportunities for improving the CATS model and its input assumptions. That effort contributed to CARB releasing an updated version of the CATS model in August 2023, which is the most recent version of the model that is currently available.

CARB staff released the rulemaking’s Initial Statement of Reasons (ISOR) in December 2023, in which they evaluated regulatory alternatives to their proposed scenario, including an EJ alternative that was informed by the Environmental Justice Advisory Committee (EJAC) 2023 draft recommendations. CEPP was again asked to conduct updated modeling and evaluation of the proposed amendments and of the EJ scenario that CARB staff included in the ISOR, in part to more fully understand CARB’s rationale for rejecting that scenario. CARB staff made the CATS input and output files associated with the ISOR available earlier today (April 9).

CEPP team members and other Stanford experts submitted a comment to the California Air Resources Board asking it to consider the following key recommendations:

1. CARB should release the input and output files for CATS for all alternatives considered. While CATS modeling results are not the sole basis for the CARB staff proposal in the ISOR, CATS modeling is used both to justify the preferred alternative and to rule out other options.

2. CARB should consider its cap-and-trade program together with the LCFS, and consider whether interactions between the programs may affect the environmental and socioeconomic impacts of each program. This recommendation is particularly crucial because CARB has opened a parallel rulemaking to strengthen the cap-and-trade targets to 2030.

3. CARB should adopt a policy that sets incentives until 2035 and reconsider long-term incentives at that point. Innovation in this sector is fast-paced; the rule nonetheless establishes regulatory targets until 2045, which may become obsolete or inappropriate in light of CARB’s parallel work to incentivize use of zero emission vehicles and infrastructure.

4. CARB should reevaluate its assumptions concerning greenhouse gas reductions associated with the program and cap lipid biofuels. In particular, the authors urged CARB to conduct a detailed analysis of the interactions between the LCFS and the federal renewable fuels standard (RFS) and of the impacts of unprecedented renewable diesel supply growth on LCFS structure and performance (including associated indirect land use change assumptions).

5. CARB should reconsider its assumptions concerning particulate matter emissions. In its rulemaking documents, CARB relied on outdated assumptions concerning the relationship between in-state oil production and in-state fossil diesel consumption, as well as outdated assumptions about California vehicle fleets. The commenters urged reconsideration of these assumptions.

6. CARB should include a fulsome distributional analysis in its statement of reasons. The fairly comprehensive distributional analysis included in CARB’s initial standardized regulatory impact assessment (SRIA) was omitted from the ISOR. The commenters urged CARB to look thoroughly at the impacts of increasing its carbon intensity reductions and higher credit prices on marginalized populations in California.

Read the full comment here.