The Low Carbon Fuel Standard (LCFS) can play a major role in reducing greenhouse gas emissions and stimulating improvements in transportation fuel technologies so that California can meet its climate policy goals. In Part 1 of this study we evaluated the technical feasibility of achieving a 10 percent reduction in the carbon intensity (measured in gCO2e/MJ) of transportation fuels in California by 2020. We identified six scenarios based on a variety of different technologies that could meet or exceed this goal, and concluded that the goal was ambitious but attainable. In Part 2, we examine many of the specific policy issues needed to achieve this ambitious target. Our recommendations are based on the best information we were able to gather in the time available, including consultation with many different stakeholders. The recommendations are intended to assist the California Air Resources Board, Energy Commission, and Public Utility Commission, as well as private organizations and individuals, in addressing the many complex issues involved in designing a low carbon fuel standard. Choices about specific policies and calculation of numeric values for use in regulation must, of course, be made by these regulatory agencies. The analysis we present here is only illustrative.

Executive Order S-1-07, the Low Carbon Fuel Standard (LCFS) (January 18, 2007), calls for a reduction of at least 10 percent in the carbon intensity of California’s transportation fuels by 2020. It instructed the Secretary of the California Environmental Protection Agency to coordinate activities between the University of California, the California Energy Commission (CEC) and other state agencies to develop and propose a draft compliance schedule to meet the 2020 Target. This report is the first of two by the University of California in response. This first study assesses the low-carbon fuels options that might be used to meet the proposed standard, and presents a number of scenarios for mixes of fuels that might meet a 5, 10, and 15 percent standard. The second part of the study, to be released one month later, will examine key policy issues associated with the LCFS.