California’s Low Carbon Fuel Standard: Modeling financial least-cost pathways to compliance in Northwest California

The transition to low-carbon transportation fuels plays a key role in ongoing efforts to combat climate change. This analysis seeks to optimize potential alternative fuel portfolios that would lead to a 10% reduction in fuel carbon intensity by 2020 as required under California’s Low Carbon Fuel Standard (LCFS).

We present a novel, probabilistic modeling approach for evaluating alternative fuel portfolios based on their marginal greenhouse gas (GHG) abatement costs. Applied to a case study region in Northwest California, our model enables us to quantify the financial cost of GHG reduction via each fuel pathway, as well as for a portfolio deployed to meet the LCFS target. It also enables us to explore the sensitivity of the alternative fuel portfolio, evaluating the impact of fluctuating prices, fuel carbon intensities, and technology penetrations on the makeup of the portfolio and on the average cost of GHG abatement.

We find that battery electric vehicles play a critical role, as they offer the lowest-financial-cost significant abatement in almost all plausible scenarios. However, electric vehicles alone will not be sufficient to reach the target; low-carbon biofuels can be expected to play a role in the achievement of 2020 Low Carbon Fuel Standard targets.