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Forecasting Credit Supply Demand Balance for the Low-Carbon Fuel Standard Program

Forecasting Credit Supply Demand Balance for the Low-Carbon Fuel Standard Program

Full Title: Forecasting Credit Supply Demand Balance for the Low-Carbon Fuel Standard Program
Author(s): James Bushnell, Gabriel Lade, Aaron Smith, Julie Witcover, and Wuzheqian Xiao
Publisher(s): Energy Institute at Haas
Publication Date: August 6, 2023
Full Text: Download Resource
Description (excerpt):

This report presents projections for the expected supply of and demand for Low
Carbon Fuel Standard (LCFS credits) through 2030, as well as through 2035, based on potential changes to program stringency. This report’s main approach is to apply time-series forecasting methods to project the expected demand for transportation fuels and combine that with the expected evolution of fuel prices and carbon intensities as well as complementary policies’ impact on the fuel mix.

The results imply that the program can accommodate a relatively aggressive target of a 43%
reduction by 2035, but only if everything breaks right and many best-case outcomes arise
toward the middle of the next decade. By contrast, if ZEV penetration falls well below targets,
the program could reach cumulative deficits of 60 to 100 MMT by 2035. The median forecast
of our baseline scenario, targeting 30% carbon intensity reduction by 2030 and 43% by 2035,
forecasts a small but significant cumulative deficit by 2035.

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