How does the LCFS Market Work? Who buys the Credits?
The LCFS market is relatively complex and benefits from having a specialized partner, like PineSpire, to create, enhance, and monetize your credits in the marketplace. The value of an LCFS credit (in Dollars per Metric Ton of Carbon ($/Mt)) is determined in the marketplace based on supply from credit generators and demand from high-carbon fuel producers. The Low Carbon Fuel Standard (LCFS) program, administered by the California Air Resources Board (CARB), is a ‘cap and trade’ style program aimed at lowering the carbon intensity of fuel used in transportation. In a nutshell, the LCFS Regulation sets a carbon target for transportation fuel. Producers of traditional high-carbon fuel (diesel, gasoline, etc.) have a deficit because their fuel does not meet the carbon standard. Users of low-carbon fuel (electric forklifts, e-vehicles]) create credits. The companies with the Deficits buy Credits to bring them into compliance with the required carbon target.