How Are Low-carbon Fuel Standards Delivering?
California implemented its Low Carbon Fuel Standard (LCFS) in 2010 with the goal of reducing gasoline and diesel fuel GHG intensity 20% below 2010 levels by 2030. Since then, the Canadian province of British Columbia (2013), the state of Oregon (2016), and most recently Brazil (2020) have implemented similar programs. The Canadian federal government plans to implement a clean fuel standard in 2023 while several US states plan to enact legislation. In its “Fit for 55” package, the European Union also appears to be moving toward an LCFS of sorts, by changing targets to a GHG-reduction basis. These programs place a market-based price on lifecycle GHG emissions. The programs are designed to deliver real and measurable reductions through a variety of compliance options, but are they delivering results? Are GHG emissions declining because of these programs or are emissions simply being shifted from one sector to another? Do these regulations adequately address carbon leakage or indirect emissions? Are price signals driving the right behavior? What are the risks of unintended consequences?