On Friday April 4th, CARB issued a revised version of the 2024 LCFS amendments for a 15-day public comment period closing on April 21st. This 15-Day Notice had been anticipated since February 25th when California’s Office of Administrative Law (OAL) issued their disapproval of the rulemaking package which had been approved by CARB’s board on November 8th, 2024. For more information on how we got here, please see our previous Flash Report. 

The revisions issued by CARB on April 4th are intended to address the issues raised by OAL; these focus primarily on matters of clarity. Notably, the adopted amendments had a number of provisions in the format of “…the Executive Officer may…” (emphasis added). In OAL’s view, such provisions communicate a level of discretion which could leave regulated parties uncertain about the specifics of how the regulations would be implemented. In response, many of the proposed revisions change the format to “…the Executive Officer shall…” (emphasis added) with more explicit criteria for what triggers these, now mandatory, actions. 

Some of the more significant changes: 

1. More flexibility for supply of low-carbon hydrogen – the 15-Day modifications allow hydrogen produced with carbon capture and sequestration (CCS) to count towards the 80% renewable hydrogen content requirement by 2030 and to continue to be eligible post-phaseout of fossil hydrogen by 2035. Previously, only electrolytic hydrogen was deemed qualified. 
2. The provision to permit the Executive Officer to direct a portion of EV base credits to Original Equipment Manufacturers (OEMs) has been eliminated. 
3. The CA-GREET4.0 model and associated Tier 1 CI Calculators are to be used beginning with the 2025 Annual Fuel Pathway Reports with adjusted CIs becoming effective for fuel transactions beginning in 2027. 
4. It is now mandatory that, beginning January 1, 2031, no new pathways for biomass-based diesel will be approved if the number of unique Class 3-81 ZEVs or NZEVs reported or registered in California exceeds 132,000 on December 31, 2029. This had previously been discretionary. Given the size of the medium-duty portion of the truck fleet and the availability of existing ZEV and NZEV vehicles for those applications, Stillwater believes there is a good likelihood that this threshold will be met. 
5. Additional clarity on circumstances where the Executive Officer can require a more conservative Land Use Change (LUC) value be used in fuel pathways. With the revisions, this can only be done if a) the proposed pathway is not a match for existing biomass/region/fuel combinations with assigned LUC values and b) none of the existing values are appropriate. 
6. Feedstock certification systems – Several instances of “may” are changed to “shall” with respect to approval of certification systems; modification/suspension/revocations of previously approved certification systems; and how any such modification/suspension/revocation would be implemented. 
7. Measurement Accuracy and Data Provisions – more detail is provided on specific requirements. 

What happens next?
Parties potentially impacted by these changes should review the updated language and consider submitting comments by the April 21st deadline if these changes raise concerns. Note that comments on matters other than these revisions will not be considered. 

Once the public comment period closes, CARB staff will review all germane comments received and prepare responses for the record. If any issues requiring additional, substantive changes are identified, CARB could issue another 15-Day Notice with associated comment period. Once all public comments have been addressed, the revised package must be re-submitted to OAL for their approval. This re-submittal must happen within 120 days of OAL’s February 25th notice of disapproval (i.e., by June 25th). After re-submittal, OAL will have 30 days to review; if OAL is satisfied that their concerns have been addressed, the amendments can go into effect and CARB will need OAL approval on the actual effective date. Importantly, 1Q2025 fuel transaction reports are due on June 30th so there is considerable pressure on CARB to provide regulated parties with clarity on the effective date of the amendments prior to that deadline. 

If OAL is not satisfied with the revisions, CARB would have another 120-day period to address OAL’s continued concerns.  

Additional questions on this process? Reach out to us.

What does this mean for LCFS credit prices?

Stillwater’s proprietary LCFS credit price outlook quantifies the likely market impacts of these amendments including the potential for delayed implementation.
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