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LCFS Credit Generation: Benefitting Vehicles & Forklifts

Published:

December 21, 2020

Category:

Alternative Fuel

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It’s hard to argue the positive impact alternative fuel has on transportation decarbonization and better air quality. Organizations across the globe are integrating electricity, hydrogen, renewable natural gas and renewable diesel into their fleets. Aside from the environmental benefits, fleets in many regions have financial incentives that strengthen the business case for change, especially those in California.

In this blog, we’ll focus on California’s Low Carbon Fuel Standard (LCFS) and specifically, LCFS credits that are available for vehicles using low carbon fuels as well as electric and hydrogen forklifts. Many fleets may be eligible for credits, but simply aren’t aware or perhaps might not have the resources to obtain them. Continue reading to learn more about how your fleet can generate and monetize LCFS credits, leveraging learnings and expertise developed by U.S. Gain.

LCFS Credit Generation

Credit generation is the process in which producers, users and distributors of alternative fuel receive financial credits from participating in state and federal incentive programs. To participate, an approved entity must submit their fuel consumption, fuel pathway and carbon intensity (CI) score to the California Air Resources Board (CARB). Data is then reviewed by CARB, verifying the actual number of credits generated. The lower the CI score, the more credits that can be generated.

Keep in mind – LCFS credits are often generated by on-road commercial vehicles, but hydrogen and electric forklifts also qualify, which is something many companies don’t realize.

Regardless of vehicle type, generating LCFS credits is just step one – now it’s time to convert your credits into cash.

LCFS Credit Monetization

After LCFS credits are generated, the next step is monetization, which entails selling them to a regulated party (petroleum and oil refiners and blenders within California). As part of California’s Cap & Trade program, regulated parties are required to purchase LCFS credits so long as the fuels they produce/distribute have CI scores higher than stated LCFS targets. 

Monetization sounds straightforward, but it’s often much more difficult for those not tenured in the LCFS. There is an entire market built around the LCFS program – with credit sellers, brokers and buyers continuously monitoring market conditions and leveraging established relationships to transact at the “right” times, maximizing credit values.  

Credit Generation Beyond California

State and federal governments recognize the positive impact alternative fuel has on transportation-related emission reductions. Therefore, several other opportunities to generate credits outside California exist and are listed below.

1.The Federal Renewable Fuel Standard (RFS)

The RFS, detailed in this blog, seeks to reduce petroleum-based fuels by replacing them with renewable fuels. While electric and hydrogen are not currently included in this standard, we recognize they role they have in a polyfuel future and are actively lobbying for their inclusion.

2. Oregon’s Clean Fuels Program (CFP)

The CFP, discussed in depth in this blog,  incentives clean fuel providers to Oregon markets – some of which include those developing natural gas, dispensing propane, manufacturing ethanol and biodiesel or supplying electricity for electric vehicles.

3. British Colombia’s Emission Offsets Regulation (BC EOR)

Further, moving beyond the U.S, British Colombia’s carbon offsets program is working across sectors – resulting in widespread benefit and comprehensive reductions of greenhouse gases.

As advocacy is growing and policies are being written, programs like the above are expanding into other regions – rewarding those that become part of the solution to air pollution.

 “While it may seem too good to be true, you really can get paid to use alternative fuel.”

Experience = LCFS Success

Whether you’re running alternative fuel vehicles or forklifts – finding the right partner is crucial to successfully generating and monetizing LCFS credits.

For over ten years, U.S. Gain has been helping customers obtain financial rewards thanks to LCFS – leveraging our deep knowledge of and experience working within the transportation sector. Our team of tenured compliance experts have been working with the LCFS (and other programs) since their inception, with a substantial volume of credits successfully transacted across fuel types.

Further, our proprietary risk management systems and industry-leading traders are continuously monitoring the market, finding the “right” scenarios to transact your LCFS credits, maximizing your returns.

Whether you’re developing, using or looking to start with alternative fuels, credit generation can put more money into your business. So… let’s see what kind of value your fleet of vehicles or forklifts can produce! Drop us a note in the form below or reach out directly to our Director of Product Management, Jon Summersett (jsummersett@usgain.com).

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