Low Carbon Fuel Standard

The Low Carbon Fuel Standard (LCFS) is California’s market-based rule that caps the average carbon intensity of transportation fuels, administered by the California Air Resources Board. Fuels with a carbon intensity below the annual benchmark generate credits; fuels above it, such as conventional diesel, generate deficits, and the benchmark tightens each year. Regulated parties buy credits to cover their deficits, creating a tradable price on lifecycle carbon intensity measured in grams CO2-equivalent per megajoule. The maritime sector in California and Oregon may opt in, and CARB has considered amendments to let low-carbon-intensity methanol in marine operations earn credits.