1. (a) Generation and Acquisition of Transferrable Credits.

   1. (1) Credit and Deficit Issuance. Upon submission and acceptance of timely reports as required by this subarticle, the total number of credits and deficits generated will be issued in the LRT-CBTS account of the applicable credit or deficit generator. Once issued, credits may be retained indefinitely, retired to meet a compliance obligation, or transferred to other entities through the LRT-CBTS. The Executive Officer will issue the credits and deficits in the LRT-CBTS if:

      1. (A) The credit or deficit generator met all the reporting requirements pursuant to this subarticle;
      2. (B) The credit or deficit generator successfully reconciled the fuel quantity reported per FPC using transaction types Sold with Obligation and Purchased with Obligation with business partners by the quarterly reporting deadline, if required;
      3. (C) The activity is not prohibited pursuant to section 95486(a)(2) or any other provision of this subarticle.
   2. (2) No Retroactive Credit Claim. Unless expressly provided elsewhere in this subarticle, no credit generator may generate or claim credits retroactively for a period for which the reporting deadline has passed. Similarly, no deficit generator may eliminate deficits retroactively for a period for which the reporting deadline has passed.

   3. (3) Buffer Account. The Executive Officer may create an LRT-CBTS account under the control of the Executive Officer. In this account, the Executive Officer may place:

      1. (A) An equivalent number of credits for any LCFS credits that could have been claimed (or deficits that could have been eliminated) if reported timely, if not for the prohibition on retroactive credit claims in section 95486(a)(2).

      2. (B) Unless otherwise specified in section 95488.10(b), an equivalent number of credits representing the difference between the reported CI and the verified operational CI from annual Fuel Pathway Reports for each fuel pathway code reported with the following liquid fuel transaction types “Production in California”, “Production for Import”, and “Import” and all non-liquid fuel transaction types during a compliance year will be placed in the buffer account after August 31 for the prior compliance year and will be calculated according to the following equation:

         

         where:

         

         is the number of credits representing the difference between the reported CI and verified operational CI for each fuel pathway code.

         

         is the number of credits calculated using

         

         instead of

         

         in the equation in section 95486.1(a)(1).

         

         is determined by the Executive Officer on the basis of the annual Fuel Pathway Reports pursuant to section 95488.10 for each fuel pathway code; and

         

         is the number of credits calculated using equation in section 95486.1(a)(1) for each fuel pathway code;

      3. (C) Contribution from CCS projects pursuant to the CCS Protocol.
      4. (D) All net credits remaining in any deactivated LRT-CBTS accounts.
      5. (E) The Executive Officer may retire credits in the Buffer Account to address the invalidation of credits, pursuant to section 95495, if the person responsible for the invalidated credits no longer exists or is otherwise unavailable to reimburse the program.
   4. (4) The Executive Officer may, at the time of credit generation or credit transfer, assign a unique identification number to each credit. Credits are subject to review and audit by the Executive Officer or his designee, and credits may be invalidated or adjusted as necessary pursuant to section 95495.

   5. (5) Acquisition of “Carryback” Credits to Meet Obligation.

      1. (A) Carryback Credit Acquisition Period. A fuel reporting entity may acquire, via purchase or transfer, additional credits between January 1 and April 30 (“carryback period”) to be used for meeting the compliance obligation of the year immediately prior to the carryback period. Credits acquired for this purpose are defined as “carryback” credits. All carryback credit transfers must be completed in the LRT-CBTS pursuant to section 95487(b) by April 30. In order to be valid for meeting the compliance obligation of the year immediately prior.

      2. (B) Use of Carryback Credits. A carryback credit may be used for the purpose of meeting the compliance of an immediate prior year if all of the conditions below are met:

         1. 1. The credit was acquired during the carryback period;
         2. 2. The credit was generated in a compliance year prior to the carryback period;
         3. 3. A fuel reporting entity electing to use carryback credits must identify the number of credits it desires to use as carryback credits in its annual compliance report submitted to the Executive Officer no later than April 30 of the year in which the carryback credits were obtained; and

         4. 4. A fuel reporting entity electing to use carryback credits must:

            1. a. Acquire and retire a sufficient amount of carryback and other credits to meet 100 percent of its compliance obligation in the prior compliance year, or
            2. b. Minimize its compliance shortfall by retiring all credits in its possession at the end of the previous compliance year, as well as all credits purchased during the carryback period that are eligible to be used as carryback credits.

2. (b) Calculation of Credits and Deficits Generated. The Executive Officer will calculate the number of credits and deficits generated within the LRT-CBTS using the methods specified in sections 95486.1, 95486.2, 95486.3, 95486.4, and 95489. The total credits and deficits generated are used in determining the overall credit balance for a compliance period, pursuant to section 95485. All credits and deficits are denominated in units of metric tons (MT) of carbon dioxide equivalent.

   1. (1) All LCFS fuel quantities used for credit calculation using fuel pathways are in energy units of megajoules (MJ).

      Fuel quantities denominated in other units, such as those shown in Table 4, are converted to MJ in the LRT-CBTS by multiplying by the corresponding energy density [FN1]:

      Table 4. Energy Densities and Conversion Factors for LCFS Fuels and Blendstocks.

      Fuel (units)

      Energy Density

      CARBOB (gal)

      119.53 (MJ/gal)

      CaRFG (gal)

      115.83 (MJ/gal)

      Diesel fuel (gal)

      134.47 (MJ/gal)

      LNG (gal)

      78.83 (MJ/gal)

      Fossil Jet Fuel (gal)

      129.82 (MJ/gal)

      CNG (Therms)

      105.5 (MJ/Therm)

      Electricity (KWh)

      3.60 (MJ/KWh)

      Hydrogen (kg)

      120.00 (MJ/kg)

      Dimethyl Ether (gal)

      72.72 (MJ/gal)

      Undenatured Anhydrous Ethanol

      80.53 (MJ/gal)

      Denatured Ethanol (gal)

      81.51 (MJ/gal)

      FAME Biodiesel (gal)

      126.13 (MJ/gal)

      Renewable Diesel (gal)

      129.65 (MJ/gal)

      Alternative Jet Fuel (gal)

      126.37 (MJ/gal)

      Renewable Naphtha (gal)

      123.36 (MJ/gal)

      Renewable Gasoline (gal)

      122.37 (MJ/gal)

      Propane (LPG) (gal)

      89.63 (MJ/gal)

   2. (2) The total credits and deficits generated by a credit or deficit generator in a compliance period will be calculated as follows:

      

      where:

      Credits^Gen represents the total credits (a zero or positive value), in units of metric tons (MT), for all fuels and blendstocks determined from the credits generated under the gasoline, diesel, and fossil jet fuel annual carbon intensity benchmarks, and from opt-in projects, if applicable;

      Deficits^Gen represents the total deficits (a negative value), in MT, for all fuels and blendstocks determined from the deficits generated under either or both of the gasoline and diesel fuel annual carbon intensity benchmarks;

      i is the finished fuel or blendstock index; and

      n is the total number of finished fuels and blendstocks provided by a credit or deficit generator in a compliance period.

Note: Authority cited: Sections 38510, 38530, 38560, 38560.5, 38562.2, 38571, 38580, 39600, 39601 and 43018, Health and Safety Code. Reference: Sections 38501, 38510, 39515, 39516, 38571, 38580, 39000, 39001, 39002, 39003, 39515, 39516 and 43000, Health and Safety Code; Section 25000.5, Public Resources Code; 42 U.S.C. Section 7545; and Western Oil and Gas Ass'n v. Orange County Air Pollution Control District, 14 Cal.3d 411, 121 Cal.Rptr. 249 (1975).

History

1. New section filed 1-12-2010; operative 1-12-2010 pursuant to Government Code section 11343.4 (Register 2010, No. 3).

2. Amendment of subsections (b)(1) and (b)(1)(O)-(P), new subsections (b)(1)(Q)-(R) and amendment of Table 7 filed 4-15-2010; operative 4-15-2010 pursuant to Government Code section 11343.4 (Register 2010, No. 16).

3. Amendment of subsections (b)(1)(A)-(R), new subsections (b)(1)(S)-(Z) and amendment of Table 6 and Table 7 filed 2-21-2012; operative 2-21-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 8).

4. Amendment filed 11-26-2012; operative 11-26-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 48).

5. Repealer and new section filed 11-16-2015; operative 1-1-2016 (Register 2015, No. 47).

6. Amendment of section, including redesignation of former subsections (b)(3)-(c) as new section 95486.1, filed 1-4-2019; operative 1-4-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 1).

7. Amendment of subsections (a)(3)(B), (a)(5)(A), (a)(5)(B)3. and (b)-(b)(2) and amendment of Note filed 6-27-2025; operative 7-1-2025 (Register 2025, No. 26).

[FN1]

Energy density factors are based on the lower heating values of fuels in CA-GREET4.0 using BTU to MJ conversion of 1055.06 J/Btu.