This analyst note introduces an enhanced version of the cCarbon LCFS Model, which has been employed to assess the feasibility of various reduction targets and programme designs for the year 2030, considering different scenarios. We have updated the price forecasts till the year 2030. The fuel demand and credit demand/supply model has been updated to the year 2045. The forecast for fuel demand include the impact of the ZEV selling obligation, which includes Advanced Clean Cars II, Advanced Clean Trucks, and Advanced Clean Fleets. The note also presents a comprehensive collection of data from several scenarios related to topics that are relevant to the 2023 rulemaking process for the Low Carbon Fuel Standard (LCFS). The objectives for 2030 encompass a 35% reduction, the implementation of an automatic acceleration mechanism, and a goal of achieving a 45% decrease in carbon intensity (CI). In addition, there is a baseline scenario that aims to achieve a 30% decrease in CI. The model considers different scenarios which were discussed in the April 10, 2024 CARB LCFS workshop: 5%, 7%, 9% and double AAM. 

The key takeaways are: 

• CARB is aiming to lock in the updated rule in 2024 with a January 2025 effective date. They seem to be sticking to the proposed amendments as part of the 45-day package but considering short-term measures to create a stronger foundation for the long-term LCFS market.  
• Our model predicts the Value Giveback Index (VGI-$/gal) for CFS markets. Aside from Canada CFR, the VGI for renewable diesel in other markets will continue to rise. 
• With CA LCFS amendments effective from 2025, the bank will reach 45M credits by 2030 in the cCarbon baseline scenario. 
• 9% step down emerges as the most effective measure to address the low credit prices and prevent further buildup of the bank. Credit price could reach up to $156.82 in the 9% stepdown scenario. 

This analyst note is a series that cCarbon.info is publishing on CA LCFS as we are constantly increase our coverage of the market.