Targeting the carbon intensity of fuels to reduce emissions from the transportation sector has led to the consideration of low-carbon fuels. The California Low Carbon Fuel Standard (LCFS) is a mechanism that uses the life cycle carbon intensity of various fuel routes as a metric to cut emissions by 10%. Currently, the credit bank is at 11.70 MT. Tier 1 pathways are squeezing the other pathways, with a major credit increase from renewable diesel.

In this insight report, along with market trend analysis, we present the results of the three scenarios, which are based on the CFS.CarbonOutlook ^TM model. The model is a fuel demand-supply model that also calculates price based on the marginal abatement costs of the different fuels. Demand and supply of credits are linked to a number of variables impacting the transportation sector: projected stock of different types of vehicles in California, kinds of fuels used, Vehicles Miles Traveled (VMT) for different kinds of vehicles, seasonal behavioral changes on driving patterns, etc. Variations also take into account technological pathways and new emerging credit generation opportunities such as hydrogen (fuel cell electric vehicle), carbon capture & storage, refinery improvement.

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