SACRAMENTO, Calif., Dec. 07, 2017 (GLOBE NEWSWIRE) -- According to new research, low carbon liquid fuels must play a more significant role to meet California’s 2020 and 2030 carbon reduction goals under the Low Carbon Fuel Standard (LCFS). Data from Propel Fuels and ICF indicates consumers will make low carbon purchasing decisions if given the opportunity to do so; however the research shows the current policy model will need to change to allow more low carbon capable vehicles to enter the market.
“Our research shows that the LCFS is important, growing fast and needs to be implemented equitably to succeed. But if equity and fairness are goals of California’s carbon policies, they must be incenting what is working, and that is low carbon fuels and vehicles,” said Rob Elam, CEO of Propel Fuels. “California should mandate that every vehicle sold in state be low carbon fuel compatible such as Flex Fuel and high efficiency diesels, along with EV and hydrogen offerings.”
A recently published series of white papers reveals groundbreaking research into the progress and challenges under California’s LCFS. Co-authored by Propel and global consulting firm ICF, the Propel Workshop’s California’s LCFS: Unlocking Value in Low-Carbon Liquid Fuels illustrates key points on the LCFS’ size, scope and need for equity including:
- The LCFS is the most significant emissions reduction program for California’s transportation sector—it is expected to deliver more GHG reductions than all other transportation programs combined.
- Contrary to industry beliefs, LCFS customers are not obligated parties; the program’s real customers are fuel consumers, who bear the financial cost of carbon regulations.
- The pricing forecasts, and forecasted deficit generation—linked to gasoline and diesel fuel consumption—suggest that the annual market value of credits traded will approach $4 billion by 2022 (or ~$190/MT), with a cumulative market value exceeding $17 billion in 2022.
- Low-carbon fuels need to make up 25+% market share to achieve the 2020 goal and even more for 2030 (more than double to roughly 5 billion gallons). Every new vehicle sold in California needs to be low-CI compatible including Flex Fuel Vehicles (FFV) and high-efficiency diesel.
Philip Sheehy, Technical Director at ICF, led the development of a new LCFS Credit price path forecast and estimated the resulting LCFS market value at approximately $650 million in 2017; with the anticipation of 6x growth by 2022 to roughly $4 billion.
“Market observers have justifiably been focused on the federal Renewable Fuel Standard program—things like the RVO cliffhanger and the drama surrounding the point-of-obligation. Here in California though, the LCFS program is growing up fast and market observers should take note,” said Sheehy. “It is easy to get lost in the jargon of the LCFS program—deficits, credits, carbon intensity values, etc.—but what we’ve tried to do is cut through all that and talk about the opportunity at hand in terms of investment dollars. It is going to be fascinating to watch this market evolve over the next couple of years.”
California’s policy makers have promoted an Electric Vehicle (EV) focused “market transformation” approach to reducing transportation sector emissions and achieve LCFS goals. Sometimes referred to as “trickle down carbonomics,” this strategy focuses incentives towards California’s wealthiest for purchasing new vehicles with expensive technologies in the hope market acceptance will reduce costs over time. As studies show, this strategy may not be the most cost effective, or politically durable, way to reach California’s carbon reduction goals.
About Propel
Propel was founded in 2004 with a mission to connect people to better fuels. With retail locations across California, Propel provides new fuel choices that are higher in performance, deliver better value and create healthier communities. Propel ranked among 2015’s top 10 private companies in Silicon Valley and is recognized by Inc. Magazine’s “Inc. 500”. Propel was named winner of the 2016 Clean Energy Awards for Best Clean Energy Technology Innovator by Global Energy News. More information is available at propelfuels.com and by following Propel at facebook.com/propelfuels and on Twitter at @PropelFuels.
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The Low-Carbon Fuel Consumer - Motivators and Barriers to Adoption in California: https://propelworkshop.com/research/low-carbon-consumer
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Low Carbon Fuels Working for California: https://propelworkshop.com/research/lcfworkingforcalifornia
Media Contact
Jaime Quick, ChangeUp for Propel Fuels
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Editor's Note:
Video testimonials from Propel customers are included in a video “A day at Propel”. More information, screenshots, B-Roll video and photography for download and use is available at: propelfuels.com/media_kit.