Low Carbon Fuel Programs Cost Less and Perform Better Than Expected

by Cory-Ann Wind (Clean Fuels Alliance America) Clean Fuels Alliance America’s state regulatory team promotes state and local-level biofuel policies to complement the important work of the association’s federal team. One of the team’s most important tools is a low carbon fuel (LCF) program. The potential for LCF programs occurring across the country—from Hawaii all the way to Illinois and Pennsylvania will have a profound impact.

Opponents of these policies have inaccurately asserted that an LCF program can add upwards of a dollar per gallon to the price of fuel which raises significant concern in these trying economic times.

With many states now considering an LCF program to help meet their transportation decarbonization goals, it’s more important than ever that costs are considered appropriately. Let’s take a step back and realize that every policy has its pros and cons; you simply cannot focus on the costs while ignoring the benefits.

In every other case, the costs will go down and the benefits will increase. These benefits include lower tailpipe emissions and improved public health, rural economic support, and increased energy security. Studies that only highlight the costs often forget to acknowledge the other side of the ledger.

To refute the claim that LCF programs significantly increase the price at the pump, Clean Fuels has partnered with Stillwater Associates to compare related predictions with real-life data to show that low carbon fuel programs in California, Oregon and Washington have consistently cost less than projected while outperforming carbon‑intensity reduction targets. View the entire analysis here.

Ultimately, the record shows that LCF programs are not the costly burden critics claim—they are a smart, market-based policy that deliver more value than predicted. Reducing carbon is not free and experience in these West Coast states demonstrates that LCF programs consistently drive down carbon thanks to innovation, expanding clean fuel supplies and responsive program design. For states exploring new pathways to decarbonize transportation, the takeaway is clear: low carbon fuel programs work.

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil, and animal fats, the clean fuels industry is a proven, integral part of America’s clean energy future. Clean Fuels Alliance America is the U.S. trade association representing the entire biodiesel, renewable diesel and sustainable aviation fuel supply chain, including producers, feedstock suppliers and fuel distributors. Clean Fuels receives funding from a broad mix of private companies and associations, including the United Soybean Board and state checkoff organizations. READ MORE

Excerpt from Stillwater Associates: Many forecasts anticipated much higher costs than have been observed. Like all forecasts, they were limited by factors which were known or predictable at the time they were made.

1. Forecasters were unable to predict where the market will innovate. For instance, early LCFS cost projections did not anticipate the rapid growth in renewable diesel (RD) and renewable natural gas (RNG). Future technology developments, which may be incentivized by an LCF program, can materially lower the cost of compliance.

2. Early forecasts did not consider complimentary carbon reduction policies. Forecasts for the Washington CFS did not consider that Washington’s Cap & Invest (C&I) program would offset CFS costs.

3. LCF programs can be adjusted. In fact, each of these programs has been amended regularly in response to evolving market conditions.

4. Forecasts did not highlight the program benefits alongside costs. Each program has succeeded in increasing clean fuel supply, lowering the carbon intensity of the transportation fuel pool, and supporting the electric vehicle market. READ MORE