OAL Approves CARB LCFS Amendments Effective July 1, 2025

/in /by

On June 27, 2025, the California Office of Administrative Law (OAL) announced that they have approved the long-awaited amendment to the California Air Resources Board Low Carbon Fuels Standard (CARB LCFS).  This amendment, which was effective July 1, was originally going to be implemented in February but was rejected by OAL and revised several times by CARB before final approval. 

The primary purpose of the amendment was to significantly tighten the emissions reduction schedule, both for 2025 and beyond.  The original goal of the legislation was to reduce the Carbon Intensity (CI) of the transportation fuel pool by 20% by 2030.  This amendment revises that goal to 30% by 2030 and adds the goal of achieving 90% reduction by 2045. 

The July 1 effective date means that LCFS credit and deficit generation for Q1 and Q2 will follow the original regulation effective July 2020.  Credit and deficit generation for Q3 2025 and beyond, and other aspects of the program, will follow the updated amendment and regulation additions.  This means, effective July 1, the benchmark CIs for gasoline immediately dropped from 85.77 to 76.60 gCO2e/MJ, and diesel benchmark CI dropped from 86.64 to 81.70 gCO2e/MJ.  This will result in a significant increase in deficit generation for the second half of 2025.

This amendment also has major impacts on fuel benchmarks, new and annual fuel pathway reports, soybean, canola and sunflower oil based renewable diesel (RD) restrictions and feedstock sustainability requirements.  Below is a list of some of the major changes with this amendment.

  1. Automatic Acceleration Mechanism (AAM) – The AAM is a rule by which, if certain criteria are met with regards to credit price and current credit bank balances, CARB can automatically accelerate the benchmark values used to determine credits and deficits for gasoline, diesel and their equivalents.  Starting May 15, 2027, CARB will announce quarterly whether the AAM criteria have been met.  If they have, starting four quarters after the announcement, the annual CI benchmarks will advance by 1 year.  This mechanism will increase the deficits incurred by fossil fuel sellers in California and decrease the number of credits generated by low carbon fuel producers, thereby pushing down supply of credits and credit prices upward.
  2. GREET 4.0 – New pathway applications submitted after July 1 and Annual Fuel Pathway Reports (AFPR) starting for compliance year 2025 must use the CA-GREET4.0 model or associated Tier1 calculators.  New certified CIs following the 2025 AFPR will be effective January 1, 2027.
  3. Soybean, sunflower and canola oil based RD restrictions – starting January 1, 2028, a maximum of 20% of total RD sold in California per company from soybean, sunflower or canola oil feedstocks can generate LCFS credits.  Any soybean, sunflower or canola oil based RD sold by a company in California in excess of 20% of the total will be assigned a CI equivalent to the current year’s benchmark and, therefore, receive 0 LCFS credits.
  4. Feedstock Sustainability Requirements – CARB has approved a stepwise approach to increasing the stringency of sustainability requirements for biomass-based feedstocks. 
    • For the 2026 AFPR or for new pathway applicants after July 1, 2025, fuel pathway holders who use biomass-based feedstocks must provide attestations certifying that these feedstocks were cultivated on land that has been continuously cultivated since January 1, 2008. 
    • Starting with the 2028 AFPR or for new pathway applicants after January 1, 2028, these producers must maintain the same third-party certifications as the EU RED program, such as ISCC-EU.
    • Starting with the 2031 AFPR or for new pathway applicants after January 1, 2031, additional biodiversity, land and water use requirements will go in to effect.

At TRICORD, we have helped many companies to navigate many states’ low carbon fuels programs, both for obligated parties, or fossil fuel producers, and credit generators, or low carbon fuels producers.  We have experts both in modeling using the CA-GREET models and regulatory requirements and compliance.  If your company needs support understanding the new CARB LCFS rules and any potential implications or opportunities, please reach out to our low carbon fuels team leader Hannah Losey, P.E. at Hannah.Losey@tricordconsulting.com.