Guest post: A driving force behind the Low Carbon Fuel Standard sees credit prices rising

The price of Low Carbon Fuel Standard credits is going to rise. It’s just a question of when. That’s the view of Professor Daniel Sperling, member of the California Air Resources Board, director of the Institute of Transportation Studies at the University of California, Davis, but more importantly, the intellectual father of the California Low Carbon Fuel Standard. Sperling noted that the required cut in the carbon intensity of California transportation fuels this year — and last year — was a mere 1% from a 2010 baseline. But that isn’t going to last, with CARB expected this summer to vote on a package of amendments that will tighten those requirements. “Next year it’s 2 percent, then 3.5%, then 5%, then 7.5% and then 10%,” he said. “It’s all backloaded. So looking at the market now doesn’t tell you much except that meeting 1 percent is easy.” He added: “As an academic, I will say it seems pretty likely the price is going to go up as we get to five and then 7.5 percent, and the market will get tighter. It’s just economics 101.”

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