CRS: A Low Carbon Fuel Standard: In Brief July 7, 2021: “One policy option Congress may examine is a low carbon fuel standard (LCFS). An LCFS is a policy that requires transportation fuels to meet a certain energy-related GHG target (e.g., a specific carbon intensity) within a specified jurisdiction and time frame. Some states have established an LCFS (e.g., California), and some states and regions are considering adopting an LCFS (e.g., Colorado). Generally, an LCFS is intended to be both fuel-neutral and technology-neutral. Eligible fuels for an LCFS could be required to meet certain requirements, such as a lifecycle assessment (LCA), which typically quantifies the environmental impact of a fuel from its extraction or feedstock production to its end use. Challenges to LCFS implementation include the determination of an appropriate energy-related GHG target, development of a robust LCA, and construction of a transparent compliance system. Some in Congress are considering and have previously considered an LCFS. For instance, in the 117th Congress the Sustainable Aviation Fuel Act would establish a Low Carbon Aviation Fuel Standard that sets a carbon intensity benchmark for aviation fuel (S. 1608). Legislation that would have created an LCFS for motor vehicle fuel, non-road vehicle fuel, and aircraft fuel was introduced and at least one congressional hearing was held in the late 2000s. Some in Congress have opposed an LCFS, citing concerns about economic effects, including the potential for job losses, limited affordable lower carbon fuel options, and increasing fuel prices. Some in Congress recommend that the existing RFS transition to an LCFS. The RFS requires renewable fuel be blended into the nation’s transportation fuel supply. How a transition would happen is unclear given that the RFS is structured differently from existing state LCFS policies. For example, the RFS is a volume mandate that requires the use of renewable fuel volumes as specified in statute; the existing state and proposed LCFS programs are structured as a carbon intensity mandate that requires eligible transportation fuels to meet a certain carbon emission target. Further, the RFS only allows fuels made from renewable biomass; existing state LCFS programs have allowed a wide array of clean and renewable fuels. The statutory renewable fuel volume amounts for the RFS expire in 2022 with the U.S. Environmental Protection Agency (EPA) Administrator determining the volume amounts starting in 2023. Congress would have the option to design a national LCFS according to congressional priorities. Discussions that Congress may have about a potential LCFS may or may not be influenced by state actions. Additionally, Congress would have many items to consider if it chooses to authorize a national LCFS. These items include policy certainty, a mechanism for the LCFS program to adapt to unforeseen circumstances, regional needs and ability, land use change, consumer choice, distributional effects, and equity, among others.”
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