Comment Log Display

The New LCFS Regulation was supposed to inspire the achievement of
stronger target reductions; it has done the opposite. Prices are
currently 55 USD/MT; many technologies at these prices cannot be
funded. The market has reacted poorly to the AAM and step-down. 

The approach ARB seems to have taken is allowing the legislation to
tighten if prices are too weak. However, the problem with this is
the time it takes for the results of tightening to manifest and
market dynamics in between (many models predict we are going to
have very low prices for the next few years, and most models lose
their accuracy the farther out they try to predict because of
changing market dynamics; one example is the underestimation of
renewable diesel adoption).

An alternative approach is to start with very tight policies and
give ARB the option of loosening the legislation. this would look
like "We are triggering AAM twice today, but reserve the right to
use an Auto-Decelaration mechanism starting in 2028" for example. 

Lastly, another recommended mechanism that can be employed is an
"ARB LCFS containment fund", this fund will have the power to buy
credits in the market when prices are low, and sell them when
prices are high. There would be a few other hurdles to work
through, but a fund like that would surely allow market prices to
converge faster, and would also help California reach its goals.