On December 19, 2023, the California Air Resources Board (“CARB”), which administers the California Low Carbon Fuel Standard (“LCFS”), released a rulemaking package (“Draft Rule”) describing proposed LCFS changes, including changes designed to make carbon intensity (“CI”) reduction obligations more stringent.

Specifically, the Draft Rule would mandate a 30% reduction in transportation fuel CI scores by 2030 and a 90% reduction by 2045 (in each case, versus a 2010 baseline). Current CARB rules, which the Draft Rule would modify, require only a 20% reduction by 2030.

The prevailing wisdom is that increased carbon reduction obligations will spur renewable fuel demand, leading to an increase in the value of LCFS credits (which are created when renewable energy is used in producing transportation fuel, and can be transferred to industry participants subject to emission reduction obligations for use in meeting their obligations).

The Inflation Reduction Act’s broad tax incentives for certain investments in renewable energy sparked a flood of capital investment, hastening the development of clean energy infrastructure nationwide.  According to an August 16, 2023 White House Press Release, private companies have announced over $110 billion in clean energy manufacturing investment since the enactment of the