LCFS Electricity and Hydrogen Provisions
Background
The LCFS incentivizes use of electricity and hydrogen as low carbon transportation fuels by providing several opportunities to generate LCFS credits. These credits can be traded in the California LCFS credit market.
Crediting Opportunities
Crediting opportunities for electricity and hydrogen can be broadly divided into the following broad categories:
1. Credit for Using Electricity and Hydrogen as Transportation Fuels
Who Is Eligible?
An eligible fuel reporting entity that provides electricity or hydrogen as a transportation fuel may generate LCFS credits, or designate a third-party entity on its behalf to generate credits, for the dispensed electricity or hydrogen. For details on eligibility, see LCFS regulation, section 95483(b)(E) for hydrogen and section 95483(c) for electricity used as a transportation fuel.
What are the Credit Generating Categories for Electricity used as a Transportation Fuel?
The following applications using electricity as a transportation fuel are eligible to generate LCFS credits.
What are the Credit Generating Categories for Hydrogen used as a Transportation Fuel?
Hydrogen used as a transportation fuel in the following categories, or used for producing other transportation fuel, is eligible to generate LCFS credits. For information on renewable hydrogen using book-and-claim accounting for biomethane, see LCFS Guidance 19-05 at LCFS Guidance Documents, User Guides, and FAQs.
2. Credit for Zero Emission Vehicle (ZEV) Refueling Infrastructure
For more information, visit LCFS ZEV Infrastructure Crediting and refer to LCFS regulation section 95486.2.
Fuel Pathway Classification
A variety of fuel pathway application methods for electricity and hydrogen are available in the LCFS. Below is an outline of these classifications; the application requirements and process vary for each application method.
Electricity Pathways
Electricity pathway applications fall into one of two methods: Lookup Table and Tier 2. Using a Lookup Table pathway determined by CARB is the simplest method to obtain a CI for use in reporting electricity used as a transportation fuel.
Entities can claim zero-CI or low-CI electricity used as a transportation fuel using indirectly supplied electricity, claimed using book-and-claim accounting. For more information on book-and-claim accounting for electricity, please refer to LCFS Guidance 19-01 at LCFS Guidance Documents, User Guides, and FAQs.
The following diagram outlines the possible pathway application methods for electricity and electrolytic hydrogen. Pathways under which low-CI electricity can be supplied through book-and-claim accounting are shown with blue fill:
1. Lookup Table Pathways for Electricity
There are three Lookup Table pathways available for electricity used in transportation:
- California Average Grid Electricity CI: This pathway is available by default to all entities eligible for reporting electricity in LCFS and does not require a fuel pathway application. The CI of California average grid electricity is calculated and updated annually by CARB and is based on the latest available California power mix data published by the California Energy Commission (see Annual Updates to Lookup Table Pathways).
- Zero-CI Electricity: This pathway is available for use of zero-emission electricity sources (solar, wind, and other eligible renewable energy resources as defined in California Public Utilities Code sections 399.11-399.36, excluding biomass, biomethane, geothermal, and municipal solid waste. An entity must submit a fuel pathway application to use this pathway to report electricity in the LCFS. For more information, please refer to LCFS Guidance 19-01 at LCFS Guidance Documents, User Guides, and FAQs and Apply for a Fuel Pathway.
- Smart Charging/Smart Electrolysis: This pathway is available for hourly metering of grid electricity supplied to EV charging and hydrogen produced via electrolysis in California. The 24 hourly CI values for each quarter, representing average marginal emissions for California's grid for each hour in that quarter, are calculated and updated annually by CARB based on the California Grid Average Electricity CI for that year and the marginal grid emission rates in the Avoided Cost Calculator available from CPUC (see Annual Updates to Lookup Table Pathways). An entity must submit a fuel pathway application to use this pathway. For more information, please refer to Applications instructions for Smart Charging Lookup Table Pathways at LCFS Guidance Documents, User Guides, and FAQs. (Entities wishing to use the Smart Electrolysis Pathway to report electrolytic hydrogen production outside of California must submit a Tier 2 application.)
2. Tier 2 Pathways for Electricity
Tier 2 pathway applications for electricity are required when the electricity to be reported in the LCFS does not meet the requirements of the Lookup Table pathways. The application process for Tier 2 pathway is more complex than the Lookup Table pathway applications, requiring CARB evaluation of a complete set of operational data (feedstock, energy, and material input consumption, energy production, direct facility emissions, and any indirect emission impacts), and third-party verification. For more information, please refer to LCFS Guidance 19-01 at LCFS Guidance Documents, User Guides, and FAQs and Apply for a Fuel Pathway.
Hydrogen Pathways
Hydrogen pathway applications fall into one of two types: Lookup Table and Tier 2. Using a Lookup Table pathway determined by CARB is the simplest method to obtain a CI for use in reporting hydrogen used as a transportation fuel.
1. Lookup Table Pathways for Hydrogen
A number of hydrogen Lookup Table pathways with predetermined CI values are available for reporting hydrogen produced in California and dispensed to vehicles under the LCFS. A fuel pathway application is required to use this pathway. Applicants must ensure that their physical process is consistent with the assumptions of the Lookup Table pathway (refer to CA-GREET3.0 Lookup Table Technical Support Documentation for details). These pathways include hydrogen transported in gaseous or liquid form, produced via steam methane reformation or electrolysis, and from renewable or fossil-derived feedstocks. For more information, please refer to the Hydrogen Lookup Table Checklist available at Apply for a Fuel Pathway.
2. Tier 2 Pathways for Hydrogen
Tier 2 pathways for hydrogen are required when the hydrogen to be reported in the LCFS does not meet the requirements of the Lookup Table pathways. The application process for a Tier 2 pathway is more complex than that of a Lookup Table pathway application. However, to the extent that the physical pathway is consistent with those of an applicable Lookup Table pathways, the Tier 2 application data requirements may be significantly reduced (for example, if the fuel transportation distance exceeds the Lookup Table pathway's distance, a simple adjustment can be made to determine the impact to the CI). For more information, refer to Apply for a Fuel Pathway.
Electricity Credit Proceeds Spending Requirements
All Electricity Credit-Generating Entities
Entities generating LCFS credits using electricity pathways are required to use the proceeds from those LCFS credits to benefit their customers and EV drivers, and to promote transportation electrification in California. Staff will be publishing a guidance to provide more information.
Clean Fuel Reward Program
The opt-in Electrical Distribution Utilities (EDU) receiving base credits for residential EV charging are required to contribute a minimum percentage of those credits toward establishing a statewide point-of-purchase EV incentive. As a result, the EDUs are working with a variety of stakeholders, including automakers and dealerships, to develop the Clean Fuel Reward (CFR) program. The CFR program will provide an upfront incentive for purchasing or leasing a new EV in California.
Holdback Credit Equity Projects
The Board has approved amendments to the LCFS regulation to establish an equity-based framework for the possible uses of the value from holdback credits (base credits remaining after contributing to the CFR program), consistent with legislative priorities. The amendments require opt-in EDUs, starting 2022, to spend up to 50 percent of the revenue from the holdback credits to support transportation electrification projects that benefit disadvantaged, low-income, and rural communities.