State Air Resources Board: Low Carbon Fuel Standard., the official text

An act to add Section 38567 to the Health and Safety Code, relating to greenhouse gases.

LEGISLATIVE COUNSEL'S DIGEST

Existing law imposes various limitations on emissions of air contaminants for the control of air pollution from vehicular and nonvehicular sources. Existing law generally designates the State Air Resources Board as the state agency with the primary responsibility for the control of vehicular air pollution. Existing law requires the state board to adopt standards, rules, and regulations necessary for the proper execution of the powers and duties granted to, and imposed upon, the state board.
The California Global Warming Solutions Act of 2006 establishes the state board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act requires the state board to adopt rules and regulations, as provided, to achieve the maximum technologically feasible and cost-effective greenhouse gas emissions reductions to ensure that the statewide greenhouse gas emissions are reduced to at least 40% below the statewide greenhouse gas emissions limit, as defined, no later than December 31, 2030. Pursuant to its authority, the state board has adopted the Low Carbon Fuel Standard regulations to reduce the carbon intensity of transportation fuels used in California, as specified.
This bill would require the state board, beginning no later than January 31, 2026, to reconsider and revise the Low Carbon Fuel Standard to reduce the program’s financial burden on drivers in the state, including by taking specified actions.

The people of the State of California do enact as follows:

SECTION 1.
The Legislature finds and declares the following:
(a) The State of California is a global leader in reducing greenhouse gas emissions and addressing climate change through innovative programs such as the Low Carbon Fuel Standard or LCFS.
(b) The LCFS is a critical tool to achieve the state’s goals of reducing carbon intensity in the transportation sector, encouraging innovation in low-carbon fuels, and improving public health.
(c) Transparency and accountability in the implementation of LCFS metrics are vital to ensuring equitable and effective progress toward the state’s climate goals.
(d) Technological advancements, market shifts, and emerging data necessitate periodic updates to the metrics and modeling assumptions underpinning the LCFS to ensure alignment with current science, economic realities, and equity principles.
(e) California consumers are overly burdened with the high cost of living, and the state should consider the financial impacts to consumers as future legislation, regulations, and policies are made to reach the state’s ambitious climate goals.

SEC. 2.
Section 38567 is added to the Health and Safety Code, to read:
38567.
(a) For purposes of this section, “Low Carbon Fuel Standard” means the Low Carbon Fuel Standard regulations (Subarticle 7 (commencing with Section 95480) of Article 4 of Subchapter 10 of Chapter 1 of Division 3 of Title 17 of the California Code of Regulations).
(b) Beginning no later than January 31, 2026, the state board shall reconsider and revise the Low Carbon Fuel Standard program to reduce the program’s financial burden on drivers in the state, including by doing all of the following:
(1) Providing a complete analysis and evaluation of the passed-through cost of carbon credits to drivers in the state, including a comparison to methodologies used in evaluating the cost impacts of previous amendments to the Low Carbon Fuel Standard and an explanation of why those methodologies were insufficient or inaccurate.
(2) Prioritizing policy changes that directly benefit individual drivers, including by revising carbon credit structures, such as through multiplying credit generation for certain classes of pathways that are aligned with state policy priorities.
(3) Evaluating the extent to which changes to the Low Carbon Fuel Standard can be made to prioritize in-state projects and benefits, and describing any limitations for doing so under existing state and federal law.
(4) Providing an analysis of the impacts that adjusting the credit price cap set for the Credit Clearance Market would have on program cost and investment capabilities.