Low-Carbon Fuel Standard

Electric vehicle (EV) drivers generate Low Carbon Fuel Standard (LCFS) credits by using low carbon fuel (electricity), and the IOUs receive credits on behalf of their customers. When the IOUs sell the credits, they must return the value of the revenue to benefit current or future EV drivers. While historically, the IOUs had to either provide EV rebates or on-bill credits with this revenue, effectively lowering a driver’s cost to purchase or operate the EV, the types of programs the IOUs now fund with LCFS credit revenues is now more varied. Rebates amounts and program budgets have varied across each IOU program, and year to year based on the number of LCFS credits generated in each utility service territory and the price the utilities can charge for the LCFS credits they are selling.

In February 2021, California’s utilities—IOUs and publicly-owned utilities (POUs)—and the California Air Resources Board (CARB) launched a new point-of-purchase EV rebate program funded with utility LCFS credit revenue. The program, known as the California Clean Fuel Reward, offers all purchasers of new battery electric vehicles (BEVs) or plug-in hybrid electric vehicles (PHEVs) a rebate off the initial purchase price of a vehicle.

Since 2018, the CPUC has worked with CARB to establish the California Clean Fuel Reward program.  In August 2019, the CPUC authorized SCE to serve as the administrator for the statewide utility-run program.  All of the state's utilities contribute LCFS credit revenue to fund the program, with the IOUs contributing 67 percent of their LCFS credit revenue.

The California Clean Fuel Reward program takes the place of PG&E’s, SCE’s, and SDG&E’s other on-bill credit and rebate programs, which they began offering in 2016.

In December 2020, the CPUC issued a decision developed in consultation with CARB that outlines how the IOUs can spend LCFS credit revenues that exceed their contributions to the California Clean Fuel Reward program.  The decision on these remaining funds--also called the "holdback" funds--focuses funding towards TE programs addressing equity and resiliency.  The decision requires the IOUs to spend 35 percent of their holdback funds on equity projects in 2021, 45 percent in 2022, 55 percent in 2023, and 75 percent in 2024 and thereafter.  The decision includes certain requirements depending on the program area the IOUs choose to pursue to ensure the projects are not duplicative of other TE efforts, address barriers to TE, and demonstrate collaboration with environmental justice groups and community-based organizations.  For the holdback funds not spent on these equity programs areas, the IOUs are directed to spend up to 20 percent of annual holdback revenue to implement programs to address EV resiliency (e.g., EV charging facilities at evacuation/emergency response centers, pilots for technologies that allow EVs to power electric equipment at home or businesses).

In December 2021, the CPUC approved PG&E’s LCFS Holdback programs, which will mostly run from 2022 through 2024:

  • Pre-Owned EV Rebate—Provides a post-purchase rebate for used EVs, with a base rebate of $1,000 for all customers, and an additional rebate of $3,000 for income-qualified customers.
  • Multi-Unit Dwelling and Small Business Direct Install Pilot—Installs low-power chargers (Level 1 and Level 2) at small multi-unit dwellings and small businesses. The pilot will cover all EVSE installation costs and two years of networking and software fees for the site host. The implementer will be responsible for procuring EVSE and coordinating the installation at the site so that the site host has no upfront cost.
  • Residential Charging Solutions Pilot—Allows PG&E to develop educational resources and provide financial support to help customers install EV charging at single-family residences or multi-unit dwellings while avoiding or lowering the cost of electric panel upgrades. Implementation will occur in phases—1) customer assessment tool that improves on existing online tools, including the buildout of a “home charging wizard” tool; 2) technology solutions rebate focused on avoiding panel upgrades to help renters and customers for whom an upgrade would present challenges; and 3) additional support solutions.1
  • Research and Innovation Fund Pilot (funded with non-holdback LCFS funds)2--Funds small proo-of-concept pilots and research studies to support research and development in TE technology to generate lesson learned to inform other PG&E TE investments.

In November 2022, the CPUC approved Resolution 5236-E authorizing SCE to spend approximately $224 million in LCFS Holdback funds for programs supporting light-duty and MDHD sectors.3  Approximately 86 percent of the funds between 2021-2024 are allocated to underserved and disadvantaged communities. The following programs were authorized in this Resolution including data collection and reporting requirements:

  • Pre-Owned EV Rebate--A total of $56 million in rebates to offset some of the cost for the purchase or lease of a pre-owned EV. The program offers a $1,000 rebate per EV to any SCE customers, with an enhanced rebate amount of $4,000 to customers if they live in a lower income household, or are enrolled in California Alternate Rates for Energy (CARE)4 or Family Electric Rate Assistance (FERA).

In November 2022, the CPUC approved Resolution 5236-E authorizing SCE to spend approximately $224 million in LCFS Holdback funds for programs supporting light-duty and MDHD sectors.[1] Approximately 86 percent of the funds between 2021-2024 are allocated to underserved and disadvantaged communities. The following programs were authorized in this Resolution including data collection and reporting requirements:

  • Pre-Owned EV Rebate--A total of $56 million in rebates to offset some of the cost for the purchase or lease of a pre-owned EV. The program offers a $1,000 rebate per EV to any SCE customers, with an enhanced rebate amount of $4,000 to customers if they live in a lower income household, or are enrolled in California Alternate Rates for Energy (CARE)[2] or Family Electric Rate Assistance (FERA).
  • Home Electrification Readiness Program—Recognizing the importance of home electric panel upgrades towards supporting EV charging, $55.49 million is authorized for rebates to upgrade home electric panels contingent upon the purchase of an EV charger. SCE estimates that this program could benefit 13,000-26,000 households.
  • Drayage Truck Rebate--$87.90 million is authorized to support the purchase of new EV drayage trucks, with $150,000 and $115,000 rebate towards the purchase of Class 8 and Class 7 drayage trucks respectively.
  • Zero-Emission Truck, Bus, and Infrastructure Financing (ZETBIF) Program—To support access to financing for small- and medium-sized businesses a loan-loss reserve mechanism is dedicated to fund commercial EVs and supporting equipment. The California Pollution Control Financing Authority will administer this program, utilizing $20.93 million holdback funds from SCE to unlock approximately $100 million in private capital loans. 
  • TE Research and Studies--$4 million is authorized for research projects that would enhance the data and understanding for TE infrastructure planning and grid reliability optimization.

In this same month, the CPUC authorized SDG&E’s Pre-Owned EV Rebate Program, which mirrors those of PG&E and SCE to provide a similar rebate amount and experience across the three IOU territories. The rebate program will provide a rebate of $1,000 to all customers and $4,000 for income-qualified customers. A third-party implementer will be responsible for equity-focused marketing, education and outreach, application processing, and rebate issuance. This program is expected to continue for three years.

For more information on the LCFS regulation, please visit CARB’s website: https://ww2.arb.ca.gov/our-work/programs/low-carbon-fuel-standard

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1 The potential phase 3 would be proposed in a future update to the implementation Plan, and is dependent on lessons learned from Empower EV and the outcomes of the Clean Energy Financing OIR--R.20-08-022.

2 Funded with non-residential credit revenues from PG&E-owned EVSE at its offices and EVCN sites.  These funds do not have the same equity and resiliency requirements as the holdback revenues.

3 Resolution 5236-E

4 California Alternate Rates for Energy (CARE)