Increasingly we are being asked to model the LCFS policy but are having issues because the model cannot drive electrification and is mostly considered to be a catchall for remaining fuel use.
However, given the new logit function simplicity I believe we can modify (and simplify to some extent) the existing LCFS policy to allow for electrification as part of the solution set.
My idea is to calculate carbon credit values for each of the potential fuel options: biofuel gasoline, biofuel diesel, hydrogen, natural gas, and electrification and then use a calibrated logit choice model to assign the carbon reductions to the different choices, depending on what is available for different vehicle models.
For engine type shifting, we would calculate the required incentive needed to shift a fixed percent of sales to a new vehicle engine type, then compute the emissions savings from switching those sold vehicles, to derive a $/ton estimate for the credits for those technologies (this would be for hydrogen, natural gas, and electric). The mechanism would then allocate reductions based on the credit prices. For the fuel blending, this would work like the current mechanism, with calculated fuel replacement (and share-weights would be calculated to prevent over-blending of fuels). For the engine type switching, we would add an LCFS incentive to the NPV calculation to shift sales to the specified mix.
Done carefully, I believe this approach would handle the LCFS elegantly. I will try to create a working version for testing some time soon.
Increasingly we are being asked to model the LCFS policy but are having issues because the model cannot drive electrification and is mostly considered to be a catchall for remaining fuel use.
However, given the new logit function simplicity I believe we can modify (and simplify to some extent) the existing LCFS policy to allow for electrification as part of the solution set.
My idea is to calculate carbon credit values for each of the potential fuel options: biofuel gasoline, biofuel diesel, hydrogen, natural gas, and electrification and then use a calibrated logit choice model to assign the carbon reductions to the different choices, depending on what is available for different vehicle models.
For engine type shifting, we would calculate the required incentive needed to shift a fixed percent of sales to a new vehicle engine type, then compute the emissions savings from switching those sold vehicles, to derive a $/ton estimate for the credits for those technologies (this would be for hydrogen, natural gas, and electric). The mechanism would then allocate reductions based on the credit prices. For the fuel blending, this would work like the current mechanism, with calculated fuel replacement (and share-weights would be calculated to prevent over-blending of fuels). For the engine type switching, we would add an LCFS incentive to the NPV calculation to shift sales to the specified mix.
Done carefully, I believe this approach would handle the LCFS elegantly. I will try to create a working version for testing some time soon.