The Low Carbon Fuel Standard (LCFS) is a regulatory program designed to reduce greenhouse gas (GHG) emissions from the transportation sector. It aims to promote the use of cleaner, low-carbon transportation fuels in California. This initiative encourages the production of these fuels to reduce greenhouse gas (GHG) emissions and lessen reliance on petroleum in transportation. The LCFS sets standards based on the "carbon intensity" (CI) of gasoline, diesel, and their alternatives.For every metric tonne of avoided greenhouse gas (GHG) emissions, one credit is earned. At the end of the year, entities that fall below the benchmark line set by the California Air Resources Board (CARB) are required to purchase credits from other entities. This system introduces monetary incentives in the trading of carbon credits.
