On July 1, the state’s gas tax will increase from 59.6 cents to 61.2 cents per gallon. This increase has been in effect since the gas tax was enacted into law by California voters in 2018.

The gas tax funds are used to support highway, road, bridge and active transportation infrastructure projects. In Sacramento, gas tax funds are being used for the Fix 50 project.

In addition to the scheduled tax hike the California Air Resources Board has announced that the implementation of California’s amended Low Carbon Fuel Standard will begin on July 1, following approval by the Office of Administrative Law.

Independent experts projected Low Carbon Fuel Standard pass-through costs could range from as low as 5 cents per gallon to as high as 8 cents per gallon.

The amended regulation focuses public and private sector investment towards increasing cleaner fuel and transportation options for Californians, accelerating the deployment of zero-emission infrastructure, and helping the state achieve legally mandated air quality and climate targets.

“Implementing the July 1 effective date for the Low Carbon Fuel Standard provides critical certainty to industry, as well as the Low Carbon Fuel Standard credit market,” said CARB Board Chair Liane Randolph. “But often lost in the noise around this program are our primary reasons for approving it: better health for Californians, our economy and the environment, as well as achieving required state and federal air quality standards.

“And despite predictions of sky-high increases in fuel prices, gasoline prices in May were about 40 cents cheaper than the same time last year and over a dollar per gallon cheaper than just a few years ago. Our efforts to deploy more zero-emission vehicles and reduce fossil fuel use is working to cut demand and create more competition in the fuels market, and the LCFS is a big part of that effort.”

The Low Carbon Fuel Standard reduces air pollution and greenhouse gas emissions by setting a declining target for the carbon in transportation fuels used in California; producers that don’t meet established benchmarks buy credits from those that do. This system has generated $4 billion in annual private sector investment toward a cleaner transportation sector. These investments provide multiple economic and other benefits to California consumers, including:

Increasing consumer choices, which drives transportation fuel price competition

Growing new industries and attracting investments that support jobs and strengthen communities.

California businesses will see $68 billion in revenue from Low Carbon Fuel Standard credit generation and sales.

Reducing dependence on petroleum and the oil industry, thereby protecting consumers from its associated supply and cost volatility: The Low Carbon Fuel Standard has displaced more than 30 billion gallons of petroleum fuel.

Making electric vehicles more affordable by providing hundreds of millions of dollars in beneficial credits and incentives for EV charging infrastructure and vehicle rebates.

Expanding access to electric vehicle charging and hydrogen refueling infrastructure: As of Oct. 10, 2024, there were a total of 71 hydrogen stations and 749 fast EV charger sites and there are now at least 178,000 public chargers, overall. 

Reducing health care costs associated with pollution from dirty fuels: CARB estimates $12 billion in savings from avoided health outcomes between 2024 and 2046 from reduced impacts of air pollution as a result of this program. CARB also anticipates over $60 billion in savings from reduced climate change impacts.

Strengthening communities: The amount of Low Carbon Fuel Standard proceeds invested in disadvantaged communities for clean fuel and transportation projects is estimated to be approximately $4.8 billion in the next decade.

Significantly reducing emissions: The amendments will reduce greenhouse gas emissions by 558 million metric tons, NOx by more than 25,500 tons and PM 2.5 by more than 4,200 tons between 2025 and 2045.

The Low Carbon Fuel Standardupdates adopted by the Board were developed after a rigorous, years-long public rulemaking process that incorporated feedback received from interested parties.