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Low Carbon Fuel Standard (LCFS): Programs, Credit Prices and Forecasts

A Low Carbon Fuel Standard (LCFS) is a state program that requires transportation fuels to meet a declining carbon intensity (CI) benchmark, measured in grams of CO2-equivalent per megajoule of fuel energy. Fuels that beat the benchmark earn credits; fuels that miss it generate deficits that must be covered with credits. California has run the original program since 2011, and it now anchors a family of five US state programs (California, Oregon, Washington, New Mexico and, from 2029, Hawaii) alongside British Columbia’s LCFS and Canada’s federal Clean Fuel Regulations.

Noreva tracks and forecasts LCFS credit prices program by program: historical credit prices, short-term forecasts (1 to 3 years) and long-term merchant curves out to 25 years, built on fundamentals-based modeling of credits, deficits and the credit bank, and calibrated against transactional data. This page covers how the programs work, which fuels earn credits, where prices stand in 2026, and how LCFS credits stack with RINs for producers of renewable natural gas, renewable diesel and other low-CI fuels.

Access LCFS Merchant Curves

$70.71

California weekly average per credit, March 2026

40.11 Mt

Credit bank, end Q4 2025

5

US state programs, California to Hawaii

$200

Credit Clearance Market price cap

How does a Low Carbon Fuel Standard work?

Each program sets an annual CI benchmark for gasoline and diesel (and their substitutes) that declines on a published schedule. Every fuel sold into the state’s transportation market is assigned a pathway-specific CI score that accounts for feedstock, processing, transport and end use. Fuel below the benchmark generates credits in proportion to the gap and the energy delivered; fuel above it generates deficits. One credit equals one metric ton of CO2-equivalent avoided relative to the benchmark.

Regulated parties (refiners, importers and producers of the deficit-generating fuels) must hold enough credits at each compliance deadline to retire against their deficits. They can generate credits themselves by selling low-CI fuel, or buy them bilaterally from credit generators such as electric vehicle charging providers, RNG producers and renewable diesel importers. Credits never expire, so the balance of unretired credits, the credit bank, is the program’s central price signal. In California, credits trade bilaterally and through ICE contracts.

The California numbers illustrate how quickly the balance can turn. In 2024 the program generated 37.16 million credits against 23.48 million deficits, a surplus of close to 14 million that pushed the bank above 40 million credits by the end of Q1 2025 (IETA business brief, September 2025). Then the 2024 amendments took effect on July 1, 2025 and the picture reversed: Q3 2025 posted a net deficit that ended a run of 17 consecutive quarters of bank growth (Argus, January 30, 2026), and in Q4 2025 the program generated roughly 8.20 million metric tons of credits against 9.64 million of deficits, leaving a cumulative bank of 40.11 million metric tons (CARB Quarterly Data Summary No. 4, April 30, 2026). A market that had added to its stock for more than four years is now drawing it down every quarter.

The amendments adopted by CARB in November 2024 and in force since July 1, 2025 are the reason the bank is shrinking. They raised the 2030 target from a 20% to a 30% CI reduction from the 2010 baseline and set a 90% reduction by 2045, with a one-time step-down on July 1, 2025 that added 9 percentage points to the required CI reduction. On that date the gasoline benchmark moved from 85.77 to 76.60 gCO2e/MJ and the diesel benchmark from 86.64 to 81.70 gCO2e/MJ (IETA, September 2025). Three further provisions shape forward pricing:

  • Automatic Acceleration Mechanism (AAM): if the credit bank exceeds three times the average quarterly deficit and credits have outpaced deficits over the trailing four quarters, the benchmark schedule advances by one year. The AAM is a floor against a renewed surplus.
  • Credit Clearance Market price cap: $200 per credit, inflation-adjusted. The cap bounds the upside for obligated parties and the revenue case for credit generators.
  • Feedstock limits: a 20% cap per producer on biomass-based diesel made from soybean, canola and sunflower oil, plus land-use-change certification from 2026. Both constrain the pathway that has supplied the largest share of California credits.

Which states have an LCFS, and how do the programs compare?

Five US states now have an operating or enacted clean fuel standard. The design is shared (CI benchmarks, credits and deficits, banking) but the baselines, targets and credit mixes differ enough that each program clears at its own price.

Outside the United States, British Columbia’s LCFS and Canada’s Clean Fuel Regulations apply the same CI logic with their own baselines and credit classes, and Noreva covers them within its clean fuels coverage. The practical point for a fuel producer is that a single pathway (a dairy digester in the Midwest, a renewable diesel plant on the Gulf Coast) can be certified in several programs and sell its fuel where the credit is worth most. That optionality is why program-by-program price forecasts matter more than a single LCFS price.

Low carbon fuel standards in North America: program parameters (compiled by Noreva, August 2026)

Program

Credits since

Baseline year

CI reduction targets

Largest credit sources (2025)

California LCFS (CARB)

2011

2010

30% by 2030, 90% by 2045 (2024 amendments)

Renewable diesel, electricity, biomethane (CARB quarterly data through Q4 2025)

Oregon Clean Fuels Program (DEQ)

2016

2015

20% by 2030, 37% by 2035; governor's directive of November 2025 targets at least 50% by 2040

Renewable diesel 35%, ethanol 23%, electricity 21%, biodiesel 15%, natural gas incl. RNG 6.1% (Stillwater)

Washington Clean Fuel Standard (Ecology)

2023

2017

HB 1409 (May 2025): 7% in 2026, 11% in 2027, 45% by 2038, 55% if conditions are met by 2032 (Stillwater)

Electricity 47.5%, ethanol 24.1%, renewable diesel 19.7%, RNG 3.2% (Stillwater)

New Mexico Clean Transportation Fuel Program

April 1, 2026

2018

20% by 2030, 30% by 2040

First compliance year in progress

Hawaii Clean Fuel Standard

January 1, 2029 (adopted May 6, 2026)

2019

At least 10% by 2035, 50% by 2045

Not yet operating

Which fuels generate LCFS credits?

Credits scale with the distance between a pathway’s CI score and the benchmark, multiplied by the energy delivered. A fuel with a negative CI score earns more than one credit per ton of displaced emissions; a fuel just under the benchmark earns almost nothing. The credit mix therefore shifts as benchmarks tighten and as pathways are re-scored.

Two mechanics matter for cash flow. First, credits are issued after quarterly reporting and third-party verification, so a producer’s credit revenue lags its fuel sales by a quarter or more. Second, a pathway’s CI score is not permanent: CARB and the other agencies re-certify pathways, and a higher score directly cuts the credits each gallon or MMBtu earns. Noreva models credit supply at the pathway level for exactly this reason.

Credit-generating fuel pathways under the LCFS programs

Pathway

CI profile

Role in credit supply

Stacks with

Electricity (EV charging, forklifts, electric transport refrigeration)

Low and falling as grid CI declines; utility and residential charging credits

Largest source in Washington; one of the three largest in California

No federal RIN; state program credits only

Biomethane / RNG (landfill, wastewater, dairy and swine digesters)

Landfill and wastewater well below the benchmark; dairy and swine pathways scored negative under avoided-methane accounting

Highest credits per megajoule of any pathway

D3 RINs under the federal RFS; Section 45Z tax credit

Renewable diesel (HEFA)

Feedstock-driven: used cooking oil and tallow score lowest, soybean oil higher; 20% crop-oil cap per producer in California

Largest source in California and Oregon

D4 RINs; 45Z

Biodiesel (FAME)

Same feedstock logic as renewable diesel; blend-limited

Mid-sized, declining share

D4 RINs; 45Z

Ethanol

Moderate; corn ethanol gains from carbon capture and low-CI process energy

Volume-driven; second-largest source in Oregon and Washington

D6 RINs (D5 for sugarcane); 45Z

Hydrogen

Electrolytic hydrogen scores low; California's 2024 amendments eliminate crediting for hydrogen produced from fossil gas (IETA, September 2025)

Small, infrastructure-limited

Section 45V in some configurations

Sustainable aviation fuel (SAF)

Feedstock-driven, opt-in crediting in California

Small but growing

D4 RINs; 45Z

Where do LCFS credit prices stand in 2026, and what moved them?

California credits spent most of 2025 near the bottom of their range, trading as low as about $40 per credit as the bank kept growing (Argus, January 30, 2026). The turn came with the Q3 2025 data: a net deficit of 1.7 million metric tons, gasoline deficits up 77% and diesel deficits more than doubled versus Q3 2024, while credit generation fell 16% over the same comparison, with renewable diesel consumption down 17% to 141,000 barrels per day and used-cooking-oil feedstock cut by more than half. Spot credits rose 13% in January 2026 and traded as high as $66.50 after the release, with December 2026 futures at $72 (Argus). By the week ending March 8, 2026, CARB’s weekly average for Type 1 transfers stood at $70.71 per credit, up $13.17 year on year, on 573,500 credits transferred (CARB weekly credit transfer report, as reported by OPIS, March 11, 2026).

Oregon and Washington have not moved in step with California. Oregon credit prices climbed from late 2024 through April 2026 before falling back in May 2026, and Washington’s credit bank grew through the program’s first three years even as quarterly net credit generation declined after Q4 2024, which kept its prices on a downward trend (Stillwater, 2026). The drivers below apply to all three programs, but with different weights.

LCFS credit price drivers: direction of impact

Driver

Supports higher credit prices

Weighs on credit prices

CI benchmark schedule

Step-downs and accelerated targets raise deficits per gallon of petroleum fuel

Delayed rulemaking or relaxed targets

Renewable diesel supply

Feedstock constraints, crop-oil caps, import frictions and 45Z rules that reduce volumes into the state

New HEFA capacity directed at the program; low-CI waste feedstocks in ample supply

Electricity credits

Slower EV adoption keeps gasoline deficits high

Fast EV uptake adds credits and removes deficits at the same time

RNG supply and verification

Verification backlogs and slower project completions hold credits back

New digester and landfill projects ramping into the program

Credit bank and AAM

Bank drawdown toward the AAM-safe zone; consecutive net-deficit quarters

Bank rebuilding; AAM left untriggered

Price cap

A higher inflation-adjusted cap leaves room above spot

The $200 Credit Clearance Market cap bounds the upside

Federal policy

Higher RFS biomass-based diesel volumes pull renewable diesel into the national pool

Federal incentives that lower the cost of low-CI supply

How do LCFS credits stack with RINs and the 45Z credit?

The same gallon or MMBtu of low-carbon fuel can earn three separate instruments: LCFS credits from the state program where it is sold, RINs under the federal Renewable Fuel Standard, and the Section 45Z clean fuel production credit, in effect since January 2025 and extended through 2029 by the July 2025 budget law. The three are not interchangeable. LCFS credits reward low carbon intensity; RINs reward volume by fuel category; 45Z rewards carbon intensity again, but as a tax credit paid to the producer rather than a traded certificate. A dairy RNG project dispensed as vehicle fuel in California is the clearest case: pipeline gas value, roughly 13 D3 RINs per MMBtu, LCFS credits scaled by a negative CI score, and 45Z on top.

Modeling one of these instruments in isolation gives the wrong number. Federal volumes set how much renewable diesel the country must absorb; LCFS benchmarks decide where that diesel is worth most; 45Z changes the feedstock that gets used. Noreva models the three together, which is why its renewable fuels coverage treats LCFS, RINs and RNG as one system. For the policy backdrop, see what the Renewable Fuel Standard is and how it works and Noreva’s market view on market reality versus policy ambition in renewable fuels.

Noreva’s LCFS coverage

Historical and current credit prices for California, Oregon and Washington, with New Mexico added as its market forms, and British Columbia and Canada’s CFR covered within Noreva’s clean fuels work. Each program is modeled on its own benchmark schedule, deficit base and credit mix rather than as a spread to California.

Short-term credit price forecasts over 1 to 3 years, calibrated to the current bank, the benchmark schedule and the reported credit mix, and long-term merchant curves out to 25 years for project finance and asset valuation. Every forecast carries low, base and high scenarios that stress the AAM, the price cap, EV adoption and renewable diesel supply.

Credit yield by pathway and feedstock: dairy versus landfill RNG, used-cooking-oil versus soybean renewable diesel, utility versus residential charging. This is the layer that turns a credit price into a revenue line for a specific asset.

Data is delivered through the Noreva Data Hub, API and CSV feeds, structured for integration into pricing models, risk systems and lender workflows, with an advisory layer for asset valuation, offtake structuring and due diligence. The LCFS work sits inside Noreva’s broader fuels coverage, alongside RINs and RNG.

Who uses LCFS forecasts?

LCFS forecasts: who uses what

Profile

Primary need

Noreva output

Obligated parties (refiners, importers)

Multi-year compliance cost budgeting and hedging across several state programs

Program-by-program credit price forecasts with scenario ranges

RNG, renewable diesel and SAF producers

Where to sell, which pathway to certify, what credit revenue to underwrite

Pathway-level credit yield and long-term merchant curves

Lenders and infrastructure investors

Defensible base and downside cases for debt sizing on credit-dependent projects

25-year curves with low, base and high scenarios

EV charging operators and utilities

Credit revenue forecasts for charging programs

Electricity pathway credit forecasts by program

Traders and originators

Forward price references for bilateral credit deals and futures

Short-term forecasts, bank tracking and policy event analysis

Frequently asked questions: Low Carbon Fuel Standard

Noreva provides historical LCFS credit prices and forward forecasts for California, Oregon and Washington, with short-term forecasts over 1 to 3 years and merchant curves out to 25 years. Public history is also available directly from the agencies: CARB publishes weekly and monthly credit transfer reports for California, and Oregon DEQ and Washington Ecology publish quarterly program data. Forward prices for California trade on ICE futures; for the other programs, and for any horizon beyond the listed contracts, the forward view comes from forecasts such as Noreva’s.

California’s Credit Clearance Market sets a maximum credit price of $200 per credit, adjusted for inflation, under the 2024 amendments in force since July 1, 2025. Obligated parties with unmet deficits can buy credits at that price through the clearance market, which effectively caps the spot market.

California (since 2011), Oregon (since 2016), Washington (since 2023) and New Mexico (since April 1, 2026) operate clean fuel standards, and Hawaii adopted one in May 2026 that starts on January 1, 2029. In Canada, British Columbia runs an LCFS and the federal Clean Fuel Regulations apply nationally.

The AAM is a provision of California’s 2024 LCFS amendments that advances the carbon-intensity benchmark schedule by one year when two conditions are met: the credit bank exceeds three times the average quarterly deficit, and credit generation has exceeded deficit generation over the trailing four quarters. It is designed to prevent a repeat of the surplus that built through 2024 and pushed credit prices to about $40 in 2025.

The LCFS is a state carbon-intensity standard: it scores every fuel pathway and rewards the gap to a declining benchmark, with credits measured in metric tons of CO2-equivalent. The Renewable Fuel Standard is a federal volume mandate: it requires set quantities of renewable fuel by category and tracks compliance with RINs. Many fuels earn both, and Noreva forecasts both markets together.

Because the program flipped from surplus to deficit. The July 1, 2025 step-down raised deficits per gallon of gasoline and diesel while renewable diesel volumes into California fell, producing net deficits in Q3 and Q4 2025 (8.20 million metric tons of credits against 9.64 million of deficits in Q4, per CARB). Prices moved from about $40 in 2025 to around $70 per credit by March 2026 as the market priced a shrinking bank.

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Access Noreva’s LCFS Forecasts

Noreva’s LCFS datasets, historical credit prices, program-by-program forecasts, 25-year merchant curves and pathway-level credit yields, are available through Noreva’s LCFS Merchant Curves and its environmental attribute pricing data feeds, alongside Noreva’s RIN and RNG coverage. To see how they fit your compliance plan, project model or investment case, book a demo with the Noreva team.