California's Low Carbon Fuel Standard (LCFS) is an ambitious, innovative, and controversial policy that controls greenhouse-gas emissions associated with transport fuels – a large emissions source mostly neglected by prior climate policies, with unique technical challenges of uncertainty, long time-horizons, and network effects, that hinder its response to economy-wide emissions-pricing policies. The LCFS was introduced in 2011 as one measure to pursue the goal of California's landmark 2006 climate law, returning emissions to 1990 levels by 2020. LCFS regulations were revised in 2015 and further changes are now proposed for 2019, under a new statutory target for state emissions 40 percent below 1990 by 2030.
Now in effect for seven years, the LCFS is a major element of California's climate policy. It has survived early legal challenges suffering only some implementation delays, and has generated large expansions of alternative fuel supply and significant reductions in overall carbon intensity in California's fuel markets. Yet the policy remains controversial and faces continuing legal challenges and policy critiques of its effectiveness, cost, and legality.
This paper provides a critical review of the LCFS, particularly regarding challenges likely to arise in pursuing deeper cuts after 2020. It is based in part on discussions at a 2015 workshop held at the Emmett Institute at UCLA School of Law, which sought to bring the LCFS to broader attention among environmental law scholars and identify key legal and policy design challenges moving forward. The paper draws on the workshop's background paper and discussions, but is substantially extended based on more recent developments and further research.