This report looks at carbon intensity based clean fuel standards operating in North America: California’s Low Carbon Fuel Standard, the Oregon Clean Fuel Program (CFP) and the British Columbia Low Carbon Fuel Standard (BC-LCFS), a term used interchangeably with the Renewable and Low Carbon Fuel Requirements Regulation (RL-CFRR). There are two other markets that are in the pipeline for development: the Transportation and Climate Initiative-Program (TCI-P) (a collaboration between North-eastern and Mid-Atlantic US) and the Canada Clean Fuel Standard (CFS), also known as the Clean Fuel Regulations (CFR). The report examines the current state and outlook for these markets, the credits that are/ will be required, and the economics behind them.

Carbon-intensity–based clean fuel standards have emerged across North America as key policy tools to reduce greenhouse-gas emissions from the transportation sector, which is among the most difficult to decarbonize. These programs create market incentives for fuel suppliers to lower the lifecycle emissions of the fuels they provide, measured through a “well-to-wheel” assessment that includes production, distribution, and use.

Each program sets a declining carbon-intensity benchmark over time. Fuels cleaner than the benchmark generate tradable credits, while higher-emission fuels create deficits that suppliers must offset. This system encourages investment in low-carbon alternatives such as electricity and renewable fuels while discouraging reliance on conventional petroleum fuels.

Several major markets operate such markets, including California, Oregon, and British Columbia, with additional regional and national programs under development. Although all focus on reducing fuel carbon intensity, program designs vary in scope, stringency, and market size, which can influence cross-border fuel flows and investment decisions. The expansion of new programs—particularly large national ones—has the potential to reshape the North American clean fuels landscape and alter existing market dynamics.

Under these standards, regulators establish a declining carbon-intensity benchmark for transportation fuels over time. Fuel suppliers that provide cleaner-than-required fuels generate credits, while those supplying higher-emission fuels incur deficits. Credits represent quantified emissions reductions and can be traded, banked for future use, or retired to meet compliance obligations. This flexible compliance structure encourages innovation, allows market participants to choose cost-effective strategies, and supports the gradual transition toward lower-carbon energy source The credit-deficit mechanism introduces flexibility and cost efficiency. Companies can choose among multiple compliance strategies: blending low-carbon biofuels, supplying renewable diesel or sustainable aviation fuels, investing in electricity or hydrogen infrastructure, improving production processes, or purchasing credits. Because credits can be banked, market participants can plan for future compliance, hedge against price volatility, and support long-term investments in clean energy projects.s.

Low-carbon fuels such as renewable fuels, electricity, hydrogen, and other alternative energy carriers typically generate credits, with fuels that have the lowest lifecycle emissions earning the most. Conventional petroleum fuels, by contrast, generally produce deficits because their emissions exceed program benchmarks. As targets tighten over time, the demand for low-carbon fuels increases, placing pressure on suppliers to diversify fuel portfolios, invest in cleaner technologies, or purchase credits from others.

Overall, carbon-intensity–based clean fuel standards function as powerful transition tools: they reduce emissions in the near term using available technologies while creating economic signals that encourage the development and adoption of next-generation low-carbon fuels and energy systems.