About LCFS Consulting Services, Inc.

The LCFS

With the world’s fifth largest economy, the State of California is a world leader in the fight to reduce harmful tailpipe emissions and greenhouse gases/climate change from manmade sources. Transportation is the biggest source of GHG in California, accounting for about 40% of the total.

In response, California leaders created a market-based, fuel and technologically-neutral regulation, the Low Carbon Fuel Standard (LCFS) in 2010. The purpose of the regulation is to give transportation fuel producers and sellers a financial incentive to reduce the GHG derived from on-road transportation fuels they supply to or sell in the State. The agency responsible for implementing the regulation is the California Air Resources Board, commonly referred to as CARB.

Under the LCFS each transportation fuel used on California roads has a carbon intensity, or CI, determined by the amount of CO2 generated at each step of the pathway the fuel takes from “well-to-wheel”, i.e., from the creation of its feedstock to the production of the fuel to the transportation to its California port of entry to the tank of the car.

The regulation’s incentive comes from valuable LCFS credits that are generated based on the difference in CI between a biofuel and the annually declining CI of the fossil fuel it substitutes. The lower the CI of the biofuel, the more credits that are generated. If the biofuel producer, known as the fuel pathway holder (FPH), wants to continue to generate the same number of LCFS credits year after year from a pathway, it will have to continue to reduce the CI of the pathway each year.

To be able to get the credits, a biofuel producer must register a fuel pathway with CARB through the fuel pathway application (FPA) process.

There are two types of FPA’s a biofuels producer can submit to certify its pathway, either a Tier 1, for certain kinds of biofuels with which CARB has a great deal of experience (like ethanol or most biodiesel), and Tier 2, for certain innovative biofuels for which a Tier 1 pathway can be filed, but whose FPH believes it is entitled to a lower CI than that calculated under the Tier 1 LCA model. See the charts of the steps of each FPA, below.

The LCFS went into effect in 2011, and has been amended from time to time to incorporate refinements as CARB gains experience in regulating alternative fuels. In January, 2019, the latest amendment to the LCFS went into effect, imposing substantial new requirements on FPHs. Most of these requirements went into effect in 2020.

Among other changes, CARB included a requirement that each FPH submitting a FPA in 2020 must have it validated by an independent third party “verification body” (VB) having a minimum number of individually certified “LCFS verifiers”. Furthermore, after the year the pathway is certified, the FPH must submit certain quarterly and annual reports to maintain its ability to generate LCFS credits verified by a VB.

Note that in order to become a certified LCFS verifier, a consultant has to have a rigorous scientific background and undergo intense training in the LCFS and the new validation and verification processes. In February, 2020, CARB issued its first list ever of accredited verifiers. Three members of our team are on the list.

The LCFS is here to stay, at least through 2030. LCFS credits are quite valuable – even with the decrease in transportation fuel caused by the pandemic, they’re still worth about $200/credit. And, a regulated party generating credits under the LCFS will also generate RIN’s under the US’s Renewable Fuel Standard, the RFS.

    The following chart lays out the steps in a Tier 1 Fuel Pathway Application:

Note: The above diagram was created by CARB. However, it’s misleading in that “Verification” does not take place during the fuel pathway application process, but only for fuel pathway reports starting in the year after the pathway is certified, and every year thereafter.

The following chart lays out the steps in a Tier 2 Fuel Pathway Application (to be filed if the FPH cannot file a Tier 1 FPA or opts to go with a Tier 2 in an effort to lower its pathway’s CI):

Note: The above diagram was created by CARB. However, it’s misleading in that “Verification” does not take place during the fuel pathway application process, but only for fuel pathway reports starting in the year after the pathway is certified, and every year thereafter.

As you can see from the above charts, there are more steps involved in certifying your pathway under a Tier 2 FPA, so the process will take more time and it will be more expensive. However, if the FPH is successful in reducing its CI through a Tier 2 FPA, it can be well worth it for the FPH.

If you are entitled for file a Tier1 FPA, but are considering filing a Tier 2, we can analyze your opportunities for reducing your CI through the Tier 2 process, so you can decide whether to incur the additional expense.

What is LCFS Consulting Services, Inc.?

LCFS Consulting Services, Inc. is a California corporation based in Los Angeles, CA. We advise companies that are regulated parties under the LCFS regulation, or are considering becoming regulated parties, helping them with their fuel pathway applications, quarterly fuels transactions reports and annual fuel pathway reports. We also provide customized training and account registration and maintenance services.

We are longtime LCFS regulatory and fuel pathway application experts. Our expertise includes years as CA-GREET modelers. In our ranks, we have three certified LCFS verifiers (2 lead).

While other companies with certified LCFS verifiers provide validation and verification services, i.e., auditing services, our sole business is providing LCFS-related consulting services to producers of biofuels, including corn and sugarcane ethanol, renewable diesel, biodiesel, biomethane and sustainable aviation fuel (SAF).

For a biofuels producer, it’s always important to have a LCFS consultant who knows the regulation inside and out, and who has longtime relationships with and access to CARB decision makers and LCFS staff. However, with the major amendments to the LCFS that went into effect in 2020, it’s crucial now.

For Brazilian ethanol producer fuel pathway holders, we provide a unique added value. While we are native English speakers and writers, we include fluent Portuguese speakers. We also have great on-the- ground experience in sugarcane agriculture/ethanol production. One member of our team spent months learning Brazilian ethanol production in the heart of the industry in the interior of the state of Sao Paulo, and another is a process engineer based in Piracicaba, SP.

At LCFS Consulting Services our goal is to help you to (re)certify your fuel pathway in a seamless, stress-free and timely fashion.

RenovaBio

American corn ethanol producers now have a new way to diversify their sources of revenue via a Brazilian law that’s an analogue to the LCFS.

The law, RenovaBio, became operational in December, 2019. Like the LCFS, it’s market-driven and technology and fuel neutral. Its purpose is to incent the reduction of GHG from on-road transportation fuels in Brazil.

RenovaBio’s financial incentive comes from Cbios (Decarbonization Credits) generated by a producer of a biofuel based on the amount of the difference in its CI and the CI of the fossil fuel it replaces. Cbios are publicly traded securities.

US corn ethanol is specifically permitted to generate Cbios.

With our ability to speak Portuguese and our relationships in the Brazilian agency implementing RenovaBio, we will be assisting American producers to certify their pathways to generate Cbios.

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