Slide presentation from October 25, 2024 media briefing by CARB staff and management regarding the Low Carbon Fuel Standard. Presentation available for download below.

Slide 1/Introduction

Thank you so much for joining us today. We will hear from CARB’s Executive Officer, Dr. Steven Cliff, who will provide an overview on the Low Carbon Fuel Standard.

Slide 2

Thank you for joining us today. There has been significant interest in the program over the last few weeks and we’ll get to the topic of gas prices in a moment. But I also want to take the opportunity to address what LCFS does, why it’s an important part of California’s climate action and what the Board will consider during its Nov. 8 meeting.

To start, I’d like to point you to CARB’s mission statement. You can read this on our website later, but please note that embedded in our guiding vision is a commitment to the public health of Californians - including half of the state’s residents who breathe unhealthy air – while considering the economy consistent with CARB’s authorizing legislation. And the proposal before the Board is a result of rigorous analysis made to find the most cost-effective path forward.

Slide 3

LCFS is designed to tackle the fact that transportation accounts for half of the state’s greenhouse gas emissions and the vast majority of criteria and toxic diesel PM emissions. Simply put, we cannot make progress on climate and air quality targets without multiple solutions for this sector.

Slide 4

For those of you who have participated in any of the three public hearings, or more than a dozen workshops we have held over the last year, this slide will look familiar. We use this to make a key point: LCFS is part of the legislatively mandated roadmap to achieve the goals established under AB32, SB32, and AB1279, California’s landmark climate legislation, to cut fuel use by 94% by 2045. We have ambitious zero-emission goals for the transportation sector, and LCFS will help develop the clean fuels needed to power that future.

Slide 5

LCFS is one of California’s signature climate programs and it has been extremely effective. Here are some key stats you should know:

• Since 2011, it has reduced the carbon intensity of fuel pool in California by more than 15 percent.
• Over 31 billion gallons of fossil fuels have been displaced by lower-carbon, cleaner options
• Fully 70% of petroleum diesel has been replaced with biomass-based fuels. This means dramatically reduced climate impacts and improved public health.
• The LCFS has been a driving force for innovation and investment and has drawn more than $4 billion in investments in cleaner fuels and technology which means new business and jobs.
• Public transportation system has received more than $340 million in financial support

Slide 6

This slide is an LCFS 101. I won’t read the entire text to you, but I want to highlight two key points.

• LCFS makes polluters pay. Polluters that do not meet required carbon intensity benchmarks must buy credits from those that do.
• The market-based approach means that polluters are funding key zero-emissions infrastructure, supporting the development of alternative fuels and funding transit. That is a private investment, not from taxpayer funds.

Slide 7

We are updating LCFS because:

• CARB is tasked with finding achievable and actionable pathways to meet legislatively mandated climate and air quality goals.
• In order to comply with State law, we need to increase the programs stringency.
• The proposal was shaped by the public process to address key issues identified by interested parties.
• The proposal supports the infrastructure and other investments needed to achieve carbon neutrality.

Slide 8

I want to start on this topic by saying that affordability is a guiding consideration in all of our rulemaking, including for LCFS. We strive to balance affordability with other considerations such as protecting public health and meeting legislative mandates.  As noted earlier in our mission statement, we take those considerations very seriously.

For far too long, Californians have had no alternatives to fossil-powered transportation, with devastating impacts to climate and air quality. LCFS has already successfully created lower-cost, lower carbon alternatives, and the benefits of the proposal vastly outweigh the costs – which is good for consumers and good for the climate. 
 
I also want to dispel several myths on this topic.

• First, the so-called Standardized Regulatory Impact Assessment, or SRIA, that many of you have cited in your coverage is not a prediction of gas prices. The model used helps estimate fuel supply that could be delivered to California under various policy scenarios and ultimately helps inform the regulatory proposal.
• We are not aware of any economic model that can predict gas prices with certainty, for many complex reasons, including that how oil producers pass down compliance costs to consumers is a business decision they make.
• The SRIA analysis is required by law as an early requirement that is not repeated in the regulatory process. It should not be interpreted as an accurate cost prediction analysis, including because the model used only looks at compliance costs and does not account for economic benefits.
• I also want to address concerns about lack of transparency by noting that in the yearlong rulemaking process, we have addressed this multiple times in our public documents and through questions from the press. The SRIA includes a caveat about the limitations of the analysis, and multiple documents on the topic are available on the rulemaking website and has been proactively shared with members of the press.
• The frame around retail gas prices is incomplete without a discussion of the benefits it will provide to Californians. The overall cost of driving decreases under the proposal. Importantly, this program helps give Californians more fuel options that lessen our dependence on the volatility of fossil fuels.

Slide 9

You all have likely received this information from our Communications team. The SRIA model narrowly focuses on credit prices, yet third-party analysis reveals no relationship between credit prices and gas prices, as shown by this graph.

Slide 10

Another point we often highlight is that self-reported information from fuel producers points to a .08 to .10 cent a gallon cost attributed to LCFS. As you can see here, environmental programs and even other government related factors are not the main drivers behind retail gas price increases, as reported by oil producers themselves.

Slide 11

In summary, I hope you now have a fuller picture of what LCFS does, why it’s important, and what is at stake during the Board’s Nov. 8 vote for the future of clean transportation in California – including what it means for consumers in the long term.