December 16, 2011

Air Resource Board Passes Resolution to Amend the Low Carbon Fuel Standard (LCFS) Regulations to Further Promote Credit Trading.

In 2009, the California Air Resources Board approved for adoption the LCFS regulation, which became fully effective in April 2010 (Title 17, California Code of Regulations, sections 95480-95490). The LCFS is intended to reduce greenhouse gas emissions by reducing the carbon intensity of transportation fuels used in California by at least 10 percent by 2020. Under the program, fuels that have carbon intensity levels below the standard generate credits. Fuels with carbon intensity above the standard create deficits. To comply with the LCFS for a given year, a regulated party must show that its banked total amount of credits equal or exceed the deficits incurred. Credits can be banked or sold to other regulated parties. Per the October 26, 2011 proposal that was adopted by the Board on December 16, 2011, a new section 95488 is being added to the LCFS regulation to provide more detail on how credits and deficits will be tracked, and to specify the process to be used to acquire, bank, transfer, and retire credits. CARB has stated that a healthy LCFS program depends on having a robust credit market and participants with confidence in a market that has clarity, certainty, transparency and accountability. For more information on the LCFS, click here.


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Our easy-to-use online trading platform makes it possible for automakers, engine manufacturers, fuels producers, and fleet operators to buy and sell regulatory compliance credits via forward auctions and reverse auctions.
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In a Forward Auction, a company with excess credits initiates an auction to sell credits and companies needing credits bid to buy them. As the auction proceeds, bidding drives up the price of the credits. When the auction ends, the company that has offered to pay the most for the credits is the winner.

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In a Reverse Auction, a company needing credits initiates an auction to purchase credits and companies with excess credits bid to sell their credits to that company. As the auction proceeds, bidding drives the price of the credits down. When the auction ends, the company that has offered to sell their credits for the least amount of money is the winner.

See An Example