This is the third in a series of articles examining California’s transportation fuels progress toward the greenhouse gas (GHG) reduction targets set by the 2022 Scoping Plan. The first article – Mind the Gap: Transportation Emissions vs. California’s 2022 Scoping Plan Pathway – provided background and an overview of how the transportation sector has performed in reducing GHG emissions relative to the 2022 Scoping Plan pathway.[1] The second article – The Gasoline Gap: How California’s Biggest Emissions Source Is Falling Behind – focused on how the trajectory of gasoline emissions is tracking versus the 2022 Scoping Plan. This article covers diesel fuel, the other major transportation fuel contributing to GHG emissions. We will examine how diesel fuel volumes and diesel fuel emissions have tracked the 2022 Scoping Plan.
Bottom Line Up Front: While the total volume of liquid diesel demand has tracked only slightly below the 2022 Scoping Plan’s expectations, GHG emissions from diesel have declined at a much faster pace than the Scoping Plan projected. This disparity is due to a significant displacement of petroleum diesel by biodiesel (BD) and renewable diesel (RD) whose carbon emissions are excluded from the GHG target inventories. The key driver of GHG reduction is the displacement of petroleum diesel by renewable fuels, which made up 71% of the total diesel pool by 2025.
Diesel Fuel Use Trend and Comparison to Scoping Plan through 2025
We begin with diesel demand trends, illustrated in Figure 1 below. From 1950 through the early 2000s California’s population growth drove rising diesel demand. We see a sharp downturn and market recalibration in the early 1990s when numerous military bases closed, suddenly eliminating their diesel demand and establishing a new baseline demand for the state. Then the Great Recession broke the pre-existing trend, producing a new, lower-growth trend line from 2008 through 2015 (illustrated in the green dotted line in Figure 1). In 2006, California’s AB32 laws were enacted, with the first impacts observed in the market in 2012. In more recent years, population and business growth in California have plateaued and, in some periods, declined, contributing to a leveling off in fuel use. In tandem, higher diesel prices – linked in part to Low Carbon Fuel Standard (LCFS) program compliance – contributed to declining diesel sales from the 2017 peak through 2025.
Figure 1. Long-Term Diesel Fuel Use Trend
Source: Stillwater analysis of Board of Equalization, EIA, and LCFS fuel volumes
The declining trend in diesel fuel consumption since 2017 can be partially attributed to higher fuel prices. A 20 cent-per-gallon increase in California excise diesel taxes occurred from 2018, through the first quarter of 2026. Additional price increases align with California’s growing concentration of more expensive renewable fuels and declines in fuel sales from 2018 to 2025, as depicted in Figure 1. Figure 2 shows the trend in California retail diesel prices since 2007 including the increasing retail diesel prices experienced since the greater introduction of renewable fuels.
Figure 2. California Month-Average Diesel Prices (dollars per gallon)
Source: Stillwater analysis of U.S. Energy Information Administration U.S. On-Highway Diesel Fuel Prices
So, how does real-world diesel demand track with the Scoping Plan’s expectations? As shown in Figure 3, the diesel fuel volumes reported in the LCFS Reporting Tool (LRT) have consistently clocked in below the Scoping Plan’s projected volumes since 2021.
Figure 3. Diesel Fuel Use Volumes Compared to 2022 Scoping Plan
Source: Stillwater Analysis Scoping Plan Data
Diesel GHG Emissions Compared to the 2022 Scoping Plan through 2025
The trend in GHG emissions from diesel fuel versus the 2022 Scoping Plan shows an even more stark contrast than the volume comparison above. Figure 4 shows diesel GHG emissions from 2018 to 2025 alongside the full 2022 Scoping Plan trajectory to 2045. As can be seen, actual GHG emissions from diesel have declined much faster than the Scoping Plan projected.
Figure 4. Historic Diesel GHG Emissions Compared to 2022 Scoping Plan
Source: Stillwater Analysis of LCFS and Scoping Plan Data
The reduction in actual GHG emissions from diesel fuel has occurred thanks to petroleum diesel being displaced by growing percentages of RD and BD in the diesel fuel pool over this period. Since the carbon emissions from renewable fuels are excluded as a covered emission in the Scoping Plan inventory, the GHG emissions per gallon from BD and RD are just 0.08% of that from petroleum diesel.[2] As such, petroleum diesel contributes almost all (99.92%) of the GHG emissions from diesel fuels.
In 2018, petroleum diesel made up 85% of the total diesel pool (with BD and RD making up the remaining 15%), but in the first 9 months of 2025 petroleum diesel demand – as reported in the LRT – was reduced to 29% of the total liquid diesel pool. Figure 5 shows the distribution of petroleum diesel, BD, and RD in the diesel pool from 2018 to 2025, alongside the petroleum diesel volume projected in the Scoping Plan.
Figure 5. Petroleum Diesel and Biomass-Based Diesel Volume Composition Over Time
Source: Stillwater Analysis Scoping Plan Data and LCFS LRT data
Conclusion
Diesel GHG emissions are currently lower than projected in the 2022 Scoping Plan, mainly due to renewable fuels displacing higher levels than projected of higher carbon petroleum diesel fuels, and reduced diesel sales from higher prices in California. This diesel GHG decline is helping offset the gap in gasoline-related GHG reduction targets and contributes to the state’s overall GHG reduction trajectory under AB 32. Going forward, continued reductions in petroleum diesel volume (mainly through increased renewable diesel and possibly electric vehicles) remain the primary options for reducing GHG emissions from the heavy-duty vehicle sector and contributing to the state’s AB 32 goals.
Stay tuned for the next installments of this series: Part 4 will assess electric vehicle (EV) trends and zero-emission vehicle (ZEV) adoption progress, and Part 5 will offer a comprehensive wrap-up of California’s transportation GHG trajectory relative to the 2022 Scoping Plan.
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