Growing Clean Fuels Credits Markets to Shape North America’s Low Carbon Future

In the next 5 years, nearly one-third of the transportation sector in North America will be covered by clean fuel standards, helping accelerate the uptake of cleaner fuels and electric vehicles. This is analyzed in the InSight report just published by CaliforniaCarbon.info (CCI): “North America’s Carbon Intensity Based Clean Fuel Standards: Outlook on Demand, Supply and Pricing of Credits.”
 
The first-of-a-kind InSight Report examines and compares California’s Low Carbon Fuel Standards (LCFS), Canada’s emergent Clean Fuel Standard (CFS), the standards in Oregon and British Columbia (CFP and BC-LCFS, respectively, and the emerging North-Eastern and Mid-Atlantic Transportation and Climate Initiative-Program (TCI-P).
 
The report contrasts each of these clean fuel programs to better understand the regulatory design and market opportunity of each one. Based on CCI’s proprietary CFS-CarbonOutlook Model, demand-supply scenarios are created and credit prices are forecasted for the two largest markets, LCFS and CFS. The exercise sheds light on how the highest emitting sector of the American economy could clean up its act.
 
Unlike local point source emissions, barrels of fuel can be exported to any state market. When these clean fuel markets are all operational, the relative price of California’s LCFS credit vs. the Canadian CFS credit will soon determine how much RNG or Biodiesel will be sold across these two markets. The fuel credit prices in BC, Oregon, or across the TCI-P will all feed into decision-making.
 
This is the necessity for a cross-continental approach to comprehending Clean Fuels Markets, you can’t understand one without understanding them all. Through its regulatory analysis and forecast analysis, this report provides that path to a comprehensive understanding.
 
The report is available on https://go.californiacarbon.info/NACFS2021
 
To learn more visit our website or contact insights@CaliforniaCarbon.info
 
 

 
Table of contents
 
Executive Summary
 
1.           Context and Role of Carbon Intensity based Clean Fuel Standards in North America
1.1         Role of Carbon Intensity-based Clean Fuel Standards in Various Transportation Markets
1.2         Comparison between the Clean Fuel Standards
 
2.           California Low Carbon Fuel Standard
2.1         Background and history of California Low Carbon Fuels Standard
2.2         Key components of California’s LCFS
2.3         Key market variables at play in LCFS (i.e., influencing supply and demand)
 
3. Canada Clean Fuel Standards
3.1         Background and History of the Market
3.2         Policy & Regulatory Overview: Pan Canadian Framework on Clean Growth and Climate Change
3.3         Key constructs of the Market
 
4.           Oregon Clean Fuels Program
4.1         Background and History of the Market
 
5            British Columbia Low Carbon Fuel Standard
5.1         Background and History of the Market
5.2         Key Constructs of the Market
5.3         Key Market Variables at Play
5.4         Regulatory Variables Influencing Market Outlook
5.5         Market Perspectives and Further Reading
 
6            Transportation and Climate Initiative of North East and Mid Atlantic States
6.1         Regional low-carbon transportation policy development process
6.2         Clean Vehicles and Fuels
6.3         Sustainable Communities
6.4         Development of a Market-Based Emission Reduction Policy
 
 
 
 
Figure 1: Description of credit and deficit creation
Figure 2: Map highlighting the different North American Clean Fuels Markets
Figure 3: CI schedule for the gasoline pool
Figure 4: CI schedule for the diesel fuel pool
Figure 5: California GHG Emissions by Sector, 2020      Source: California Air Resource Board
Figure 6. Overview of fuel wise GHG Emission distribution from the Transportation Sector gasoline fuel pool, 2020
Figure 7. Overview of fuel wise GHG Emission distribution from the Transportation Sector diesel fuel pool, 2020
Figure 8 LCFS Historical Credit and Deficit Volume Trend 2011 Q1 – 2020 Q3
Figure 9 LCFS credit generation trend by fuel type
Figure 10: LCFS deficit generation by fuel type
Figure 11 Average Carbon Intensity (CI) Distribution by Fuel Type
Figure 12: CI reductions schedule
Figure 13: Ethanol volumes and average CI
Figure 14: Biodiesel and renewable volume shares of the diesel pool and their corresponding average CI values
Figure 15: Bio- and fossil-LNG/CNG volumes and bio-CNG/LNG’s contribution to credit generation
Figure 16: Renewable content of natural gas transportation demand
Figure 17: Credit generation by RNG feedstock type
Figure 18: RNG feedstock volumes and bio-CNG CI
Figure 19: Electricity volume equivalents and credit generation
Figure 20: Electricity Mix in California
Figure 21 CI Value for various fuel-based pathways
Figure 22 Distribution of Light Vehicles by Fuel type
Figure 23 Distribution of Heavy Vehicles by Fuel type
Figure 24 Energy demand distribution in Million Gallon Gasoline Equivalent for transportation sector in 2019
Figure 25 No. of Vehicles (on road) and % share of electric vehicles 2020 – 2040. Output from the CFS.CarbonOutlook™ model
Figure 26 Energy demand – Likely Scenario (million GGE)
Figure 27 Energy demand: High ZEV Growth scenario (million GGE)
Figure 28 Energy demand – Cellulosic Breakthrough scenario (million GGE)
Figure 29 Energy demand – Enhanced Biofuel scenario (million GGE)
Figure 30 Energy demand – Slow progress scenario (million GGE)
Figure 31 Energy demand – Emerging Technology scenario (million GGE)
Figure 32 Credit distribution – Likely scenario (million Metric Ton CO2eq)
Figure 33 Credit distribution – High ZEV growth Scenario (million Metric Ton CO2eq)
Figure 34 Credit distribution – Cellulosic breakthrough scenario (million Metric Ton CO2eq)
Figure 35 Credit distribution – Enhanced Biofuel scenario (million Metric Ton CO2eq)
Figure 36 Credit distribution – Slow progress (million Metric Ton CO2eq)
Figure 37 Credit distribution – Emerging Technology (million Metric Ton CO2eq)
Figure 38 Net credit availability and credit bank depletion – Likely scenario (million Metric Ton CO2eq)
Figure 39 Net credit availability and credit bank depletion – High ZEV growth scenario (million Metric Ton CO2eq)
Figure 40 Net credit availability and credit bank depletion – Cellulosic Breakthrough (million Metric Ton CO2eq)
Figure 41 Net credit availability and credit bank depletion – Enhanced Biofuel scenario (million Metric Ton CO2eq)
Figure 42 Net credit availability and credit bank depletion –Slow progress scenario (million Metric Ton CO2eq)
Figure 43 Net credit availability and credit bank depletion –Emerging technology scenario (million Metric Ton CO2eq)
Figure 44 Price outlook for different credit surplus categories
 
 
 
 

Contact Information

Karsh Akhouri

Analyst

CaliforniaCarbon

Contact via E-mail