When electrifying their fleet, many operators run cost calculations for EV trucks and vans, only to be left with sticker shock on charging infrastructure. 

But there are plenty of funding options that are available for fleet operators to offset the costs of both electrified vehicles and the corresponding charging infrastructure. One example includes low carbon fuel standard (LCFS) credits. 

LCFS credits help offset upfront infrastructure costs, while promoting clean transportation.  

What Are Low Carbon Fuel Credits? 

Low carbon fuel credits are part of state-run programs designed to reduce the carbon intensity (CI) of transportation fuels. These programs encourage the use of cleaner alternatives like biofuels, hydrogen, and electricity by assigning a carbon score to different fuel types. 

LCFS programs require companies that produce high-carbon fuels (think: large oil companies) to offset their emissions by purchasing low-carbon credits. These credits are generated by entities using clean technologies like EVs or renewable fuels. The credits are then bought and sold on a private market, with transactions occurring directly between the credit generators (i.e. EV fleet operators) and the buyers (i.e. oil companies). 

Electricity has one of the lowest CIs, making EV charging infrastructure an advantageous option for generating credits. The revenue collected from the credits can be used at the company’s discretion, but many fleet operators reinvest it into the purchase of more electrified vehicles or to offset the costs of charging infrastructure. 

Which States Have Low Carbon Fuel Credits? 

Three states currently have fully implemented LCFS programs: 

California 

Oregon 

Washington 

Other states, including Minnesota, Michigan, and New York, are exploring similar programs but are not yet operational. 

Within each state, the cost of the LCFS credit will fluctuate, sometimes as frequently as daily. You can view historic and future credit price predictions from our partners at FuSE here.  

How LCFS Credit Programs Offer Fleet Operators a New Revenue Stream  

Fleet operators often face higher upfront costs when electrifying their fleet compared to Internal Combustion Engines (ICE) vehicles. ICE refers to a collection of vehicles that are powered by internal combustion engines, meaning they run on gasoline or diesel fuel. The EVs themselves are typically more expensive to purchase, and the additional need for charging infrastructure adds another layer of expense. 

However, LCFS credits offer a compelling way to justify these investments. By generating credits through charging infrastructure, fleet operators can unlock a recurring revenue stream that helps to offset these initial or ongoing costs —revenue that simply isn’t possible with all-ICE fleets. 

The process is as follows: 

Earn credits for charging the electrified fleet. 

Sell credits to high-carbon generators. 

Reinvest revenue generated from credits in upfront or ongoing infrastructure costs. 

While this process can seem straightforward, keep in mind that  buying and selling the credits on a private market isn’t quite as simple. High-carbon generators are required by the state to purchase credits, and they typically prefer to buy credits in bulk to meet compliance without ongoing management. The buying and selling process is often cumbersome and can result in a major administrative burden. Having a partner that facilitates these transactions helps to simplify the process and ensures you’re unlocking the full revenue potential of credits.  

Offsetting EV Infrastructure Costs with LCFS Credit Program: Real-World Example 

What Other Funding Options Exist to Offset EV Infrastructure Costs? 

In addition to LCFS credits, or if you operate a fleet in a state that does not have a LCFS program, there are other funding options that exist to offset upfront infrastructure costs. Federal tax incentives, state-level rebates and grants, and local utility programs offer reduced installation costs or charging rate subsidiaries. There are also plenty of financing options like leasing or loans, or lesser-known strategies including Charging-as-a-Service (CaaS). 

Check out this clip from our webinar about funding a fleet electrification strategy: 

Interested in listening to the full webinar? Click here to get access to an on-demand recording of the presentation. 

Your One-Stop Partner for the Full Electrification Process 

At SitelogIQ, we help you forecast and monetize LCFS credits with our vetted intermediary partners that support on both the buying and selling side.  

We’re also your one-stop partner for all phases of electrification infrastructure projects, including funding strategy and incentive management. Our team works hands-on with you from design through installation to warranty management and results tracking. We tailor a solution based on your current layout, charging capacity, number of charging ports needed, utility requirements, state and local mandates, accessibility requirements, financial needs, and more—both for right now and for future planning. 

Let us help you navigate the low carbon fuel credits and other funding options. Let’s chat about your fleet electrification needs. 

Most fleet operators have heard of the California Air Resource Board (CARB)’s Advanced Clean Fleet (ACF) regulation by now. It’s a regulation that coincides with the earlier adopted Advanced Clean Trucks (ACT) initiative and aims to accelerate the transition to zero-emission vehicles (ZEVs).

If your fleet is impacted by California ACF and you fail to comply, you could be faced with penalties, up to $10,000 per vehicle, per day. To help breakdown the ACF regulation and its corresponding milestones, continue reading.

Which Fleets are Impacted by California ACF?

Simply put, ACF will impact commercial and public fleets that operate in California. More specifically, ACF will impact the following fleet types:

Drayage fleets: Vehicles performing drayage operations at seaports and railyards.
Government fleets: Fleets owned by state, local, and federal government agencies. There is some flexibility in this category for government fleets with fewer than 10 vehicles or in a designated low population county.
High-priority fleets: Entities that own, operate, or direct at least one vehicle in California, and have either $50 million or more in gross annual revenue, or own, operate, or have common ownership or control of a total of 50 or more vehicles. *
Off-road vehicles: Including yard tractors.
Delivery operations: Light-duty mail and package delivery vehicles.

*High-priority fleets include any vehicles—even one—that drive on California roads, even if the vehicle is registered elsewhere. This will ensure out-of-state operators still comply with ACF.

When Does California ACF Go Into Effect?

While the ACF regulation went into effect in January 2024, important milestones that impact more fleet operators are coming quickly. Ensuring you comply with the following list will minimize future potential penalties.

High Priority Fleets: 2025 –  2042

High priority and federal fleets must remove internal combustion engine (ICE) vehicles at the end of their useful life starting in January 2025, known as the Model Year Schedule.

High priority fleets also have the ZEV Milestone Option, which states fleet owners may meet targets as a percentage of the total fleet following this breakdown shared by CARB:

Note that the above represents the total percentage of ZEVs each Group must operate by the corresponding year. For example, by 2025, 10% of Group 1’s operated vehicles must be emissions-free.

Government Fleets: 2027

100% of government fleet vehicle purchases must be zero-emissions.

Both state and local government fleet owners may also follow the same ZEV Milestone Option breakdown as high priority fleets above.

Small Government Fleets: 2027

Small government fleets (fewer than 10 vehicles or in a designated low population county) must begin purchasing ZEVs.

Drayage Fleets: 2035

Drayage trucks entering seaports or intermodal railyards must be transitioned to ZEVs.

Federal Fleets: 2035

100% of high-priority and federal fleet vehicle purchases must be ZEVs.

Vehicle Manufacturers: 2036

Vehicle manufacturers may only sell zero-emissions medium- and heavy-duty ZEVs.

While some of these dates may feel far away, it’s important for fleet operators to start planning right now to avoid mandate penalties.

Why Fleet Operators Need to Plan for ACF Right Now

While the immediate impact of ACF may seem limited for some fleet operators, the long-term consequences of failing to plan and prepare for the transition to ZEVs will be significant.

Fleet operators that drag their feet on getting started may face the following challenges.

Missed Incentives

There is “free money” on the table to help fleet operators subsidize the upfront costs to transition to ZEVs. Incentives are currently available across utility rebates, state and federal grants, tax credits, and low carbon fuel credits.

This clip from our webinar “Laying a Strategic Fleet Electrification Infrastructure Plan” talks about why it’s important to act immediately on incentives:

Infrastructure Delays

Anyone who has ever been part of a construction project knows they can take months to years to complete. And installing EV charging infrastructure is no different.

Charging installation projects can take anywhere from two months to two years (or more) from planning to installation, depending on existing infrastructure, vehicle operations, and space at physical locations. Projects are also often at the mercy of equipment lead time and availability and how quickly local utilities can bring power to a site.

If your fleet falls into one of the impacted categories mentioned above, and you know EVs will be required in the future, it’s best to take a “cart before the horse” approach. Otherwise, when those electrified vehicles arrive, you’ll have nowhere to charge them on-site, halting your fleet operations.

Installation Challenges

Even if a charging installation project is going exactly to plan, fleet operators still need to consider various factors for the actual installation, such as X or Y. These factors can often impact day-to-day operations. And if you’re rushing to meet a regulation deadline, this could have unnecssary impacts to your operations.

Here’s a clip from our webinar that dives further into these considerations:

Click here to watch an on-demand version of our infrastructure strategy webinar.

Operational Challenges

The transition to an electrified fleet can absolutely be met with operational challenges. And the sooner fleet operators begin electrifying, the more time they will have to work out operational kinks before they’re up against the clock to meet regulation milestones.

Consider just a few of the operational needs that are common with electrification:

Training for drivers, along with technical, maintenance, and operations teams.
Performance service level agreements (SLAs) with infrastructure hardware and software vendors. This will include the “who, how, and what” for managing infrastructure over the long-term.
Back-up plans if something goes wrong. We all know technology can fail from time-to-time, and the inability to charge an EV could mean your vehicles are inoperable.

Rushing any of the above can put your operations in a critically vulnerable position.

How Can Fleet Operators Start Meeting California ACF Requirements Early?

Crafting a fleet electrification strategy requires careful planning that begins with your business objectives. A haphazard strategy that is rushed simply to meet ACF’s looming deadlines can lead to high costs for expedited deployment, infrastructure permitting and utility hurdles, lost opportunities to reduce upfront costs, and much more.

Some fleet operators are also putting a lot of hope into regulation delays. While ACF has been met with opposition and lawsuits, those will likely only delay these milestones for a limited time. California ACF will be here to stay and the sooner you get started, the more time you have before penalties are imposed.

SitelogIQ is your one-stop partner for all phases of electrification infrastructure projects and helps fleet operators deploy centrally managed electrification infrastructure strategies. Our team works hands-on with you from design through installation to warranty management and results tracking. We tailor a solution based on your current layout, charging capacity, number of charging ports needed, utility requirements, state and local mandates, accessibility requirements, financial needs, and more—both for right now and for future planning.

Let us help you get ahead of ACF deadlines. Let’s chat about your fleet electrification needs.