CARB and the Low Carbon Fuel Standard: Unaccountable, Ineffective, and Driving Up Costs Across California’s Economy

The California Air Resources Board has entrenched itself as one of the least accountable, least effective, and most costly bureaucracies in the history of California politics. The goal of CARB is simple: to lower the amount of greenhouse gas emissions in California. The way CARB aims to achieve this is primarily by adjusting the Low Carbon Fuel Standard (LCFS), over which it holds sole discretionary authority. The most recent vote on changes to the LCFS exposes what experts have known for years: CARB imposes tremendous costs on Californians without delivering meaningful benefits.

Unaccountable Bureaucracy

The root problem with CARB, which drives its inefficiency and costliness, is its complete unaccountability. The members of the board are appointed, not elected. Californians have no say in who presides over decision-making that affects us all — decisions that contribute to a higher cost of living and doing business across the state.

At a recent board hearing in November, more than a hundred Californians came to make their voices heard. Although “critics of the proposal outweighed those willing to voice their support,” CARB proceeded to pass amendments that made the annual required carbon intensity reductions even more stringent — requiring a 30 percent reduction by 2030 and a 90 percent reduction by 2045, compared to the previous target of 20 percent by 2030. Experts and everyday Californians alike warned that the higher carbon intensity reductions would increase prices and worsen the environment. CARB officials ignored these concerns entirely, pushing through the stricter mandate despite clear warnings about its devastating consequences that will be examined in later sections.

Countless calls for transparency, from both news agencies and legislators, were ignored by CARB. They responded to media interview requests with pre-drafted emails that did not respond to questions, and continued to avoid interviews even after Gov. Gavin Newsom called for “more transparency” from the board.

A letter sent to CARB by Republican legislators on May 14, 2024 raised accountability concerns. The letter stated in part, “We respectfully request that CARB remain transparent in its rulemaking by clearly stating the anticipated costs of each of these programs and what consumers can anticipate paying per gallon.” It was not until September, after CARB was reprimanded for their delay by both Republican and Democrat lawmakers, that the agency responded to the letter. But CARB’s painfully slow response did not address any of the questions that legislators had raised. Republican lawmakers sent another letter in October, echoing concerns from their earlier letter: “If CARB wants the public, through their elected representatives, to be supportive of new initiatives to protect the environment, CARB should be forthcoming with all information — so the public can consider costs and benefits.”

Instead of providing more information as the public, the legislature, and the Governor demanded, CARB passed the extreme standard.

Environmental Hypocrisy

This lack of accountability leads to staggering inefficiency. CARB’s mission is to protect the environment by reducing emissions, but, ironically, the agency’s rules increase the impact of emissions.

The LCFS creates a “carbon intensity benchmark,” which estimates the greenhouse gas emissions associated with fuel, from its production to its use. If a fuel produces less emissions than the benchmark, that generates a credit for the company. If a fuel produces more emissions than the benchmark, it generates a deficit. The goal of fuel companies is to ensure these credits and deficits are balanced at the end of the year. If they are not, the companies are able to buy credits from other companies on a price-controlled market to comply with regulations.

This system rewards biofuel use. Biofuels are fuels produced using crops, such as corn or soybeans, which marginally lower emissions. The problem is that turning crops into biofuels—especially to match the demand required in California—uses a massive amount of crops. Crops need land to grow, and California cannot produce enough crops to meet the artificial demand created by CARB’s regulations. To meet CARB’s requirements, companies must import biofuel from other, often tropical, countries. This leads to extreme deforestation as countries try to meet California’s demand by increasing cropland at the expense of their tropical forests.

But deforestation is only the beginning of CARB’s environmental hypocrisy. The deforestation caused by CARB’s policies leads to an increase in the amount of emissions released. Clearing land to make room for crops generates emissions due to dozens of factors. Studies have shown that the emissions associated with land clearing negate any benefit from increasing biofuels. One study found that, “Soybean biodiesel produced on converted Amazonian rainforest … would require ~320 years to repay.” Another study found that, if the land converted to cropland is peatland, “carbon balance would take more than 600 years.” To put that into perspective, 300 years ago, the vehicle of the wealthy was a horse-drawn carriage, while 600 years ago, the printing press was revolutionary technology. Imagine waiting that long for the environmental debt of today’s biofuel production to be repaid—it’s a stark reminder of how unsustainable CARB’s “solutions” truly are.

A Cost Californians Can’t Afford

For the average California consumer, however, the biggest problem with CARB’s rules is that the cost is simply too high. CARB increases prices across the economy in several ways.

First, by raising the amount of biofuel required to meet the LCFS, CARB drives up the price of food products made from those crops. As demand for biofuel increases, the supply of corn and soybeans—even accounting for imports from other countries—cannot keep up. Since demand for corn and soybeans remains steady while these crops are diverted to biofuel production, the price of these goods in other uses inevitably rises.

This affects the entire food sector. Corn and soybeans are used as feed for livestock, so as the cost of feed rises, the price of meat products also increases. Studies which examine the federal changes to biofuels found that they “increased corn prices by 30% and the prices of other crops by 20%,” and increase “the price of US beef, chicken, pork, eggs, breads, cereals, and milk more than 10% to 30%.” Though the percentages are likely different in California, the conclusion is undeniable: CARB excessively inflates the cost of food—further driving the affordability crisis for Californians.

The most significant cost increase caused by CARB policies is fuel. Even CARB’s own estimates suggest that the costs from carbon reduction inevitably hurts consumers. Last year, CARB published findings that showed estimated changes to the LCFS would “potentially increase the price of gasoline by an average of $0.37 per gallon” by 2030. CARB members have since argued this figure is inaccurately high, but independent research supports an even larger figure. Danny Cullenward, senior fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy, estimates that “maximum retail price impacts could reach $0.85 per gallon by 2030.” CARB has not published any new information to substantiate their claim that prices would not rise significantly.

Even more troubling is its outsized impact on the prices of nearly all other goods and services. As fuel becomes more expensive to produce, it also costs more for every other industry to use it. Farmers pay more to run tractors, and transportation companies face higher costs to distribute goods. As a result, increasing fuel costs have a ripple effect across the entire economy. For example, one study found that gas price increases also raise prices in seven out of twelve categories in the Consumer Price Index (CPI). Gas price increases have a particularly powerful effect on the three categories that account for “a combined 60 percent of household expenditure,” namely transportation, housing/utilities, and food. While some may dismiss these concerns, claiming the costs only affect wealthy corporations, the reality is that CARB’s policies disproportionately harm those who can least afford it.

CARB officials need to stop pretending they are crafting effective climate policies. As Cullenward writes: “I don’t think [the LCFS] is climate policy. I think this is regulatory capture. I think this is a handout to special interests.” If CARB board members dislike this label, they must start acting like responsible policymakers. They must listen to elected officials demanding accountability and acknowledge experts exposing the flaws in their approach.  And most importantly, they must stop dictating costly policies that wreak economic havoc on the Californians they are supposed to represent.

Tim Belev is a legislative assistant for the California State Assembly.