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What you need to know: The California Air Resources Board (CARB) today announced that the updated Low Carbon Fuel Standard (LCFS) regulation will take effect beginning in July. The LCFS benefits public health, increases funding for electric vehicle (EV) charging, and saves Californians billions of dollars.
SACRAMENTO – CARB today announced that the implementation of California’s amended LCFS will begin on July 1, 2025, following approval by the Office of Administrative Law. The amended regulation focuses public and private sector investment towards increasing cleaner fuel and transportation options for Californians, accelerating the deployment of zero-emission infrastructure, and helping the state achieve legally mandated air quality and climate targets.
“Implementing the July 1 effective date for the LCFS provides critical certainty to industry, as well as the LCFS credit market,” said CARB Board Chair Liane Randolph. “But often lost in the noise around this program are our primary reasons for approving it: better health for Californians, our economy and the environment, as well as achieving required state and federal air quality standards.
“And despite predictions of sky-high increases in fuel prices, gasoline prices in May were about 40 cents cheaper than the same time last year and over a dollar per gallon cheaper than just a few years ago. Our efforts to deploy more zero-emission vehicles and reduce fossil fuel use is working to cut demand and create more competition in the fuels market, and the LCFS is a big part of that effort.”
The LCFS reduces air pollution and greenhouse gas emissions by setting a declining target for the carbon in transportation fuels used in California; producers that don’t meet established benchmarks buy credits from those that do. This system has generated $4 billion in annual private sector investment toward a cleaner transportation sector. These investments provide multiple economic and other benefits to California consumers, including:
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Significantly reducing emissions: The amendments will reduce greenhouse gas emissions by 558 million metric tons, NOx by more than 25,500 tons and PM 2.5 by more than 4,200 tons between 2025 and 2045.
The LCFS has been very effective to date, reducing the carbon in California’s fuel mix by almost 13% and displacing 75% of the diesel used in the state with cleaner alternatives. This has displaced 320 million metric tons of CO2 since 2011. The updates set targets to reduce the carbon in California’s transportation fuel pool by 30% by 2030 and by 90% by 2045.
The LCFS is designed to provide the most cost-effective path to support clean fuels and infrastructure. Affordability remains a key consideration for the Board, and it has directed staff to monitor any impacts and assess potential mitigation from today’s adopted amendments on retail gasoline prices every six months. CARB will also submit an annual report beginning one year from the effective date of these amendments, and collaborate with the California Energy Commission in that effort.
It’s important to note that independent experts projected LCFS pass-through costs could range from as low as 5 cents per gallon to as high as 8 cents per gallon, much lower than widely reported price spike projections that are as high as a dollar or more and promoted by the industry and industry aligned voices. According to a 2024 report, thanks to major improvements in fuel efficiency through programs like the LCFS, California drivers rank 45th in the nation for gasoline consumption and 21st in spending on gasoline per capita. A fact check of recent claims regarding gas prices is available here.
The LCFS updates adopted by the Board were developed after a rigorous, years-long public rulemaking process that incorporated feedback received from interested parties.
Real and Increasing Costs of Climate Change Impacts for Californians
The science behind climate change is irrefutable. With the increasing severity and frequency of drought, wildfire, extreme heat, and other impacts, Californians just have to look out their windows to know that climate change is real and rapidly getting worse. The impacts once thought decades away are happening now. Recent reports detail some of the impacts to the state:
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Home insurance is harder and more expensive to get. Seven of California’s largest property insurers, State Farm, Allstate, Farmers, USAA, Travelers, Nationwide and Chubb recently limited new homeowners policies in the Golden State — raising questions about the stability of the California home insurance market.
Setting the Record Straight on Gas Prices
There have been many disingenuous and false claims about the impact to gas prices from LCFS. Here are the facts:
CLAIM: California gas prices will go up by 65 cents or higher on July 1.
FALSE. There are two separate changes to fuel prices expected on or around July 1 – a legislatively mandated and voter-approved gas tax increase of 1.6 cents and updated fuel standards that could, according to experts, translate to 5 to 8 cents.
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Gas tax: California’s gasoline tax will increase by 1.6 cents per gallon, starting July 1, as required by law. This annual inflation increase was enacted by the Legislature in 2017 to help pay for road repairs – and overwhelmingly approved by voters in 2018 when they rejected a repeal attempt.
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Fuel standard: Additionally, changes to the state’s Low Carbon Fuel Standard (LCFS) – which is not a tax – will go into effect on July 1. Experts at UC Davis estimate this program, first established by Republican Governor Arnold Schwarzenegger, could add between 5 and 8 cents per gallon – well below one extreme projection that showed 65 cents. In the long term, LCFS is estimated to reduce fuel costs for Californians per mile by 42% – translating to savings of over $20 billion in gasoline costs every year by 2045. Studies also show that LCFS credit prices have no correlation with gasoline prices.
CLAIM: Gas prices could top $8 a gallon by next year.
FALSE. That number – widely reported in the media – comes from an unscientific analysis whose author has close ties with the oil industry and has been on the payroll of the Kingdom of Saudi Arabia. The author fails to provide evidence to support his main claim and only relies on vague references to models with no details on what those models are based on. Other experts, such as these Stanford economists, say gas price increases based on recent refinery announcements are likely to be negligible.
For more gas price facts see: Fact check: Claims swirling on California gas prices.
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