Low-Carbon Fuel Standards (LCFS) are a way to establish a requirement for a reduction in the carbon intensity of fuels over a given time frame for a given sector of the market. For example, the state could require a 20% carbon reduction in transportation fuels by the year 2030. LCFS can be fuel- and technology-neutral and assess the lifecycle carbon emissions of fuels. In California, technical standards established include calculation of fuel greenhouse gas (GHG) intensity, compliance mechanisms, and a credit trading system. In addition, certain fuels are exempt, but have the option to opt in.
Adopting LCFS is somewhat similar to the renewable energy market in Nevada, where portfolio energy credits (PECs) can be used for compliance with the state’s renewable portfolio standard (NRS 704.7821). The LCFS market could be run via a state agency, like PECs in Nevada, which are run through the Nevada Public Utilities Commission (PUCN), or it could be managed by a third party. Regionally, it would need to be decided if the program was bound only to Nevada or if we would join another state’s program.
The details of a policy—including which fuels and markets are included, calculation of fees or credits, compliance strategy, and implementation strategy—would all need to be developed.