Low carbon fuel standards: what, why, and how?

On February 15, 2023, the U.S. Senate held a hearing considering a national clean fuels program, modeled after California’s state-wide Low-Carbon Fuel Standard (LCFS). The LCFS sets an annually decreasing standard of net carbon intensity (amount CO2 emissions per unit energy) for all the fuels being sold in the state. Companies that produce fuels or fuel equivalents below the carbon intensity threshold can sell low-carbon fuel credits. Companies that produce and sell fuels above the carbon intensity threshold must buy credits, thus creating a market force to encourage low-carbon fuel production and discourage carbon-intensive fuel production. 

Since the California LCFS standard was enacted more than a decade ago, transportation sector emissions in the state have declined by about 10% due to the program, outpacing the scheduled carbon intensity decreases. Other states and nations have taken note, with similar policies being adopted in the EU, Canada, Brazil, and Washington State and Oregon. Climate Now sat down with Colin Murphy, Deputy Director of the Policy Institute for Energy, Environment, and the Economy at University of California, Davis, to learn the details of how and why this emission reduction policy works, what impact it has had, and how energy companies are responding.

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