A California regulatory agency says it won’t release new information on a new carbon credit proposal that it said earlier could raise the cost of each gallon of gasoline by 35 cents next year, and significantly raise the costs of goods shipped through California, and airline tickets leaving or entering California.
The California Air Resources Board is voting on November 8 on whether or not to adopt more stringent requirements for its Low Carbon Fuel Standard program, by which the state uses a system of credits and deficits to reward or punish producers that make fuel better or worse than the rising “clean” standard.” While the current LCFS guidelines aim for a 20% reduction in carbon intensity by 2030 compared to 2010, the proposed amendments would aim for a 90% reduction by 2045, thereby necessitating much steeper cuts.
If this regulation is passed by CARB, all but two of whose 14 voting members are appointed by the governor, a 15 gallon fill-up of gas would cost an extra $5.25 next year, while a round-trip ticket between New York and Los Angeles could see prices go up by $35.20 (assuming a 250 person jetliner burns 10,000 gallons of fuel each way between the two cities).
Because diesel is used for delivering and transporting goods across the country, and 40% of the nation’s imports come in through Los Angeles, California’s proposed LCFS amendments raising the cost of diesel would likely impact every American.
“The proposed amendments would likely increase the costs to producers and importers of high-carbon intensity fuels, while producers of low-carbon intensity fuels would likely see revenue increases,” wrote CARB. “This could indirectly affect individuals in California that purchase transportation fuel, as staff assumes some portion of increased costs associated with production or import of high-carbon intensity fuels is likely to be passed on to consumers in the form of higher prices for these fuels.”
CARB’s own analysis estimated that under the current LCFS guidelines, for 2024 LCFS adds 12 cents to the cost of each gallon of gasoline, 14 cents to each gallon of diesel, and zero cents to each gallon of jet fuel, as jet fuel is not yet covered by LCFS. In 2025, the new standards would add 47 cents in pass through costs per gallon of gasoline, 59 cents for diesel, and 44 cents for jet fuel either purchased in or used on a flight to California.
An updated analysis from the Kleinman Center for Energy Policy at the University of Pennsylvania claims “Near-term price impacts could be as high as $0.60 or $0.70 per gallon.”
“Ultimately, California policymakers will need to determine what level of retail fuel price incidence is acceptable between the Low Carbon Fuel Standard and the state’s comprehensive cap-and-trade program for greenhouse gas emissions, as well as which funding recipients deserve to be the primary beneficiaries of many billions of dollars a year that that consumers ultimately pay,” wrote Danny Cullenward, Senior Fellow at the Kleinman Center, highlighting how the program creates costs born by all that benefit the small number of LCFS credit producers.
“You can’t discuss LCFS impacts on [the] economy completely without the impact on retail pricing,” wrote California Assemblyman Joe Patterson on X. “But they [CARB] have zero desire to be transparent about it.”
While some have proposed delaying the vote to allow for further analysis or revisions, CARB says it has no choice but to vote now, or start over with a new two-year process.
