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Fractional Displacement Crediting Under the LCFS

The Low Carbon Fuel Standard (LCFS) has successfully reduced GHG emissions from transportation fuels in California. We propose a small but important change to improve the credibility and performance of the LCFS.

As currently designed, the LCFS assumes that each new zero emission vehicle will displace a fossil-fueled one. That was a reasonable assumption in the early years of the program but will become less accurate as the fleet shifts toward zero-emission vehicles. If this increasingly incorrect assumption is retained, it will lead to LCFS credit generation that does not accurately represent emissions impacts.

Fractional Displacement (FD) crediting is a minor, technology-neutral change to the LCFS to enhance its effectiveness by better aligning credit generation with actual emissions impacts. FD crediting strengthens the foundation of the LCFS, and could mitigate market imbalances expected to emerge over the coming decade.


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