What does a low-carbon fuel standard contribute to a policy mix? An interdisciplinary review of evidence and research gaps

A low-carbon fuel standard (LCFS) requires fuel suppliers to decrease the carbon intensity of their fuels on a life-cycle basis. California pioneered the LCFS in 2007, and versions have since been developed in other parts of North America, with LCFS-like policies emerging in Europe and Brazil. There is still relatively little research on the contribution that an LCFS can make to a climate policy mix. In this review, we summarize evidence and research gaps using a four-category interdisciplinary framework: effectiveness, cost-effectiveness, political acceptability, and transformative signal. First, regarding greenhouse gas (GHG) mitigation, several studies demonstrate that existing LCFS policies have helped to cut emission to date, while modeling studies indicate that a stronger LCFS can play an additive mitigation role in a well-designed policy mix over the long-term. Second, policy cost-effectiveness is more uncertain; some studies suggests that although an LCFS is not likely to be as efficient as a carbon price, a well-designed LCFS could be an efficient complement to a mix that includes carbon pricing. Third is political and social acceptability, where numerous studies show that the LCFS receives substantial citizen support—more so than any pricing mechanism. Fourth is transformative signal, where the LCFS is associated with increased investment in low-carbon fuels and supportive infrastructure, and a stronger version could induce even more innovation in the long-term. We conclude by identifying research gaps, including the need to better understand the impacts of biofuels on indirect land-use and other sustainability measures, as well as improved simulation of longer-term technological change under a more stringent LCFS, including policy mix interactions.