Setting a lipids fuel cap under the California Low Carbon Fuel Standard

Over the last decade, biomass-based diesel (BBD) fuels have grown from 0.4% of California’s diesel blend in 2011 to 32% in 2021 and this growth is poised to accelerate in coming years. Although BBD can be produced from cellulosic feedstocks, lipid-based feedstocks are the primary materials used to produce fuel for the state’s BBD market.

In order to mitigate sustainability risks and ensure California’s Low Carbon Fuel Standard (LCFS) remains an effective tool for decarbonization of transport in the state, this briefing recommends that California Air Resources Board (CARB) set a cap on the volume of lipid feedstocks used for fuel. This cap should be based on an analysis of feedstock availability and competing demands for vegetable oil, waste oil, and animal fats for food and other uses.

Setting a lipid cap would prevent California’s BBD market shifting from one that is primarily waste-oil based to one increasingly reliant on food-based fuels with the highest sustainability risks. A cap would avoid global displacement of vegetable oils that would contribute to negative impacts on global food and feed markets, deforestation, cropland expansion, rising greenhouse gas emissions, and biodiversity loss. It would also ensure that the LCFS supports a balanced portfolio of low carbon transportation fuels including alternatives such as battery and hydrogen fuel cell electric vehicles, as well as liquid fuels derived from cellulosic biomass.

With a reasonable cap on lipid fuels, California’s LCFS will remain a model that works for other states and the federal government, encouraging efficiency in the production and use of existing credit-generating fuels while supporting innovation in novel fuels.