Low Carbon Fuel Standard Changes to Accelerate California Transportation Electrification

California’s recent changes to its Low Carbon Fuel Standard (LCFS) will help achieve greater emissions reductions from transportation and facilitate the widespread adoption of electric vehicles (EVs).

The LCFS is designed to reduce greenhouse gas emissions by increasing the use of alternative fuels, specifically electric mobility. Washington and Oregon have implemented similar clean fuel programs, and more than 25 states are actively considering one.

There are three key provisions in the 2024 LCFS amendments adopted by the California Air Resources Board (CARB) that will help electrify California’s transportation sector:

1. Incentivize Medium- and Heavy-Duty Vehicles

In 2020, CARB established the Clean Fuel Reward (CFR) program to provide point-of-sale incentives for light-duty EVs. The CFR program ran from November 2020 to September 2022, when it was paused due to limited funding.

As part of the 2024 amendments to the LCFS, CARB has modified the CFR program to incentivize buying or leasing new and used medium- and heavy-duty (MD/HD) EVs. This is significant because the high cost of MD/HD EVs is a barrier to their adoption. These incentives could be especially beneficial for small fleet operators, such as the 99% of fleets in California that operate fewer than 50 vehicles. These fleets operate on smaller margins and need greater incentive support to acquire MD/HD EVs.

2. Increase Funding for Utility Holdback Projects

Electric utilities generate LCFS base credits by supplying electricity used for residential EV charging. A portion of base credit revenues funds the CFR program. The rest is used for utility holdback projects, which are transportation electrification programs designed to benefit utility customers.

As part of the 2024 amendments to the LCFS, CARB increased funding for utility holdback projects and will require 75% of holdback funds to support equity projects. These equity projects may include incentive programs to help low-income households buy or lease pre-owned EVs, such as those already offered by Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric.

Other examples of equity projects include:

• Electrifying MD/HD vehicles (such as SCE’s Drayage Truck Rebate)
• Deploying EV infrastructure in multiunit dwellings (such as PG&E’s Multifamily Housing and Small Business EV Charger Program)
• Upgrading home electrical panels to support EV charging (such as SCE’s Charge Ready Home program)
• Providing financial guidance to low-income car buyers
• Developing EV car-sharing and ride-hailing programs in disadvantaged and low-income communities. 

These types of programs will provide targeted support to individuals and communities facing the greatest barriers to electrification.

3. Expand the Fast Charging Infrastructure Pathway

In 2018, CARB established the Fast Charging Infrastructure (FCI) credit pathway, which enables owners of EV charging infrastructure to generate LCFS credits based on the electrical capacity of the charger. This pathway helps incentivize the deployment of DC fast charging, which is necessary to support greater EV adoption.

As part of the 2024 amendments to the LCFS, CARB limited the application deadline for when EV infrastructure owners may apply for the FCI pathway. Specifically, CARB has changed the deadline from Dec. 31, 2025, to the effective date of the 2024 amendments, which will likely be in early 2025. 

However, CARB has also established two new credit pathways to direct funds toward underserved market segments:

• The FCI Pathway for Light- and Medium-Duty Charging Sites will provide credits to owners of light- and medium-duty EV infrastructure in disadvantaged, low-income or rural communities. This will support deployment of chargers in communities that have historically received less attention from the private sector. The presence of chargers can increase EV access to the communities’ residents.

   

• The ZEV Fueling Infrastructure Pathway for Heavy-Duty Vehicles will provide credits to owners of HD EV infrastructure within five miles of a designated alternative fuel corridor. This pathway will support replacing diesel-powered HD vehicles, including those used for freight transport, which are responsible for significant levels of greenhouse gas emissions and air quality pollutants. This pathway can also help generate revenue for fleet operators, especially smaller operators who are struggling to electrify their fleets.

LCFS fuels EV progress

These three CARB amendments will help electrify the transportation sector, especially in historically underserved areas. Coupled with the existing suite of EV incentive programs in California, they will accelerate progress toward the state’s clean transportation and decarbonization goals.