What happened
California's low-carbon fuel standard is funding a program that offers rebates of up to $120,000 on electric trucks, with over $1 billion available through 2030. The program is funded by a regulatory cross-subsidy, where refiners must buy credits from producers of biomethane, renewable diesel, or electricity to meet the standard. These credit costs are then passed on to drivers, effectively creating a gas tax that subsidizes electric vehicles.
The standard requires a 30% carbon-intensity cut by 2030 and 90% by 2045, which is expected to add 47 cents per gallon of gasoline in 2025 and $1.15 per gallon after 2030. Independent analysts estimate the cost could be nearly $1.50 by 2035. The program has already extracted about $22 billion from gasoline and diesel sales, with this total expected to keep climbing as the intensity cuts ramp up.
Other states, including Oregon, Washington, and New Mexico, have copied California's program, and seven more states are considering similar measures. However, the impact of these programs on reducing pollution is minimal, with Oregon's Clean Fuels Program reducing greenhouse-gas emissions by only about 0.005% of global emissions in 2024.
