Fuel electricity and plug-in electric vehicles in a low carbon fuel standard

Electricity is unique among the alternative fuels in a low carbon fuel standard (LCFS) policy, in that demand from vehicles is the major barrier to its usage, not supply. This paper presents a policy discussion and policy recommendations on a number of topics related to the regulation and incentives for fuel electricity within the LCFS. In the near-term, the LCFS will have a limited role in incentivizing the use of electricity and lowering the carbon intensity of electricity, and electricity will play a small role in meeting LCFS targets. Calculating a carbon intensity value for electricity is a complex process, requiring many decisions and trade-offs to be made, including allocation methods, system boundaries, temporal resolution and how to treat electricity demand for vehicle charging. These choices along with other regulatory decisions about who can obtain LCFS credits will influence the incentives for providing electricity and charging infrastructure relative to other low-carbon fuels as well as across different electricity providers. The paper discusses how fuel electricity would fit into an LCFS, identifying those special characteristics that could reduce the effectiveness of the policy. It also provides specific recommendations to enable better policy design that appropriately incentivizes the use of low-carbon fuels.

► The challenge for fuel electricity usage is vehicle demand, not fuel supply.
► LCFS will have a limited role in reducing fuel electricity carbon intensity.
► Carbon intensity will depend on regional, temporal and methodological factors.
► Policy design influences incentives between fuels and among electricity providers.