California’s Office of Administrative Law has sent the state’s new low-carbon fuel standard back to the Air Resources Board (CARB) for revisions after determining that it violates a state code provision requiring clarity in rulemaking. The new rules are expected to increase California’s fuel prices, which are already some of the highest fuel prices in the country. The Low Carbon Fuel Standard (LCFS) has existed since 2011 and is a $2 billion credit trading system that requires fuels sold in California to have progressively less carbon dioxide-producing content and provides companies financial incentives to produce lower-carbon fuels.
Following the November 2024 elections, CARB, a regulatory body almost entirely appointed by the governor, updated the state’s LCFS. The revised LCFS is expected to generate an estimated $105 billion in EV charging credits and $8 billion in hydrogen credits, primarily funded through fees on gasoline and diesel — costs that will ultimately be passed on to consumers.
According to CARB, the new carbon standards are expected to add an additional 47 cents per gallon to gasoline prices and 59 cents per gallon to diesel prices in 2025, which the agency later disavowed. A report by the University of Pennsylvania’s Kleinman Center for Energy Policy predicted that the fuel standard changes could increase the cost of gas by 85 cents a gallon through 2030. The LCFS changes will also impact California-grown food and goods, as higher diesel costs — driven by the new regulations — will raise transportation costs for trucks and trains moving goods within the state and across the country. Governors of Arizona and Nevada have warned that their residents could face fuel shortages and price hikes as they rely on California for fuel.
The Office of Administrative Law is a state agency whose mandate is to ensure “regulations are clear, necessary, legally valid, and available to the public.” In response to the Law Office’s ruling, CARB plans to review the order and resubmit the rules, which will be required within 120 days. Any substantial changes would require a delay, including a public comment period.
Trump Administration Foiled California’s Rule to Electrify Trucks
CARB was forced to abandon other climate and air pollution rules pertaining to truck and train emissions because the Trump administration would have rejected granting them special treatment via waivers under the Clean Air Act. California requires truck manufacturers to sell an increasing number of zero-emissions heavy trucks in the state. Its plan to replace thousands of diesel-fueled trucks with battery-powered semis requires that some of the more than 30,000 trucks that move cargo in and out of ports start using semis that do not emit carbon dioxide.
Port trucks travel distances that battery-powered semis can handle on one charge, roughly 200 miles, and California thought that they could serve as a springboard for a broader effort to remove diesel rigs from the state by 2045. However, port truckers are mostly small operators that earn only slim profits. They own diesel rigs that sell for only about $40,000 and are reluctant to take on the financial risk of acquiring electric tractor-trailers, which can cost around $150,000 after hefty government incentives. Without government aid, the trucks would cost $500,000.
California’s plan to force trucks to electrify also had other problems, including the huge expense of the batteries that power electric trucks, the long time they take to charge, and the lack of charging stations to handle large trucks’ robust electric demand needs. Electric rigs can take up to two hours to charge.
After President Trump was elected, California regulators had to withdraw their plan because it required a federal waiver that the Trump administration would have rejected. Even the waiver that the Biden administration’s EPA granted California regarding its mandate to force the sale of electric vehicles has been sent to Congress by EPA Administrator Lee Zeldin to be rescinded via the Congressional Review Act.
Conclusion
The California state legal office rejected California’s Low Carbon Fuel Standard update because it lacked the clarity required under the law, so the public can understand it. CARB plans to make changes and reissue it. The updated rule is expected to increase gasoline and diesel prices substantially. The LCFS update is part of California’s goal to phase out petroleum-based internal combustion engines and gas-powered vehicles by 2035. The state’s strategy appears to be to drive up oil and gas prices to the point where consumers have no choice but to switch to electric vehicles. However, California’s push for electrification faces significant challenges. Due to its progressive energy policies, California imports more electricity from other states than other nations. The state’s power grid is already overstretched, suffering from brownouts and blackouts, and the electricity demand is expected to grow as more people are forced to switch to electric vehicles as gasoline and diesel prices skyrocket.
