California’s Low Carbon Fuel Standard provides the wide majority of credits and regulations for alternative fuels and related transportation. The available credits and pathways for credits are outlined below, along with a sustainable aircraft fuel credit that was recently included. There are several relevant regulations that the state has adopted with regard to alternative fuel, including increasing its own purchase of it. Funding is available from several resources in California, several of which are included below.
1. Low Carbon Fuel Standard Overview
- California’s Low Carbon Fuel Standard (LCFS) program includes multiple opportunities for credits related to electricity and hydrogen fuel usage, as described by the California Air Resources Board.
- For electricity, the credits are divided into residential electric vehicle charging and non-residential electric transportation.
- For hydrogen, the credits pertain to uses involving fuel cell electric vehicles and renewable hydrogen used for fuel production.
- The LCFS offers a credit for Zero Emission Vehicle refueling infrastructure.
- Guidance on claiming credits and additional guidelines (such as biomethane accounting guidelines) for the LCFS can be found here.
- When an entity receives a credit for electricity usage, the credits must be applied “to benefit their customers and EV drivers, and to promote electrification in California.”
2. Low Carbon Fuel Standard Fuel Pathway Credits
- Fuel pathways are another potential for generating credits via the LCFS (involving storing and/or using fuel).
- Regarding electricity pathways, vehicles or infrastructure using the default California Average Grid Electricity CI as an energy source are eligible; Zero-CI sources (using biomass, biomethane, wind, solar, or other zero-emission fuels) are eligible; and smart charging or smart electrolysis pathways are open to entities wishing to use an hourly metered charge of grid electricity or hydrogen produced using electrolysis.
- Additional energy pathways using electricity are open to receiving credits through the Tier 2 Pathways for Electricity option.
- Hydrogen used in gaseous or liquid form, produced through steam methane reformation or electrolysis, and other sources (such as renewable or fossil-derived feedstocks) is eligible for energy credits through the hydrogen Lookup Table Pathways.
- Any form of hydrogen usage or storage that doesn’t fit the standard Lookup Table Pathways should fit into the Tier 2 Pathways for Hydrogen credit.
3. Alternative Jet Fuel Approved for LCFS program
- Alternative jet fuel made from petroleum or non-petroleum sources has been approved as a temporary fuel pathway under the LCFS.
- To qualify, the fuel must be produced using a hydrotreating process.
- Feedstocks could include fats, oils, or grease residues, or feedstock-derived plant oils (other than palm oil) to qualify for this temporary pathway.
- Per the California Department of Food and Agriculture, Division of Measurement Standards, hydrogen fuel used in engines via internal combustion must meet the quality standards outlined in SAE International J2719.
- If the private sector is not developing enough hydrogen fueling stations in accordance with the California Energy Commission’s judgment, it will allocate up to $20 million per year to help fund fueling stations.
- The state has ruled that at least 3 percent of the fuel it purchases must come from a “very low carbon transportation fuel service”. To achieve this goal, the state will be increasing the amount it purchased by 1 percent until January 1, 2024.
- There are several regulations and requirements involving Zero Emission Vehicles; however, these are primarily road-based vehicles and these regulations are thus not included in this summary but are noted here for reference.
- A sales and use tax incentive for manufactures of advanced transportation-related products is available through December 31, 2020.
- Incentives are available for programs or businesses that train mechanics in Alternative Fuel Vehicle maintenance.
- Infrastructure projects that reduce emissions from on- and off-road vehicles are eligible for grants through the Motor Vehicle Registration Fee Program.
- The Clean Transportation Program offers financial incentives to alternative fuel and vehicle businesses, manufacturers, workforce training partners, fleet owners, consumers, and academic institutions.
- Additional funding is available through the South Coast Air Quality Management District’s (SCAQMD) Clean Fuels Program for projects at any stage of development or research that accelerate the commercial availability of lower emission transportation technologies.
- The Atlantic Council published a document that discusses sustainable aviation fuel policy in the United States (and California in particular) by Fred Ghatala on April 28, 2020. It includes touching on limitations to California’s LCFS program in terms of sustainable aviation fuel (due to diesel being state regulated and fossil jet fuel not falling in that category).