The first quarter of the year saw a record build in unused California Low Carbon Fuel Standard (LCFS) credits, driven by a decline in petroleum diesel consumption. This surplus has put pressure on the California Air Resources Board (CARB) to balance the program effectively. says the report from argusmedia.
- Total credits available for program compliance reached a new record of 16.5 million t in the first quarter.
- Credit generation fell by 6.5% from the previous quarter, with renewable diesel, biogas, ethanol, and electric vehicle charging all retreating.
- Diesel deficits dropped by over 20% from the previous quarter and the first quarter of 2022, shrinking petroleum diesel’s share in the state’s overall diesel pool.
- Accumulation of unused credits outpaced deficits for an eighth consecutive quarter, now capable of satisfying 78% of all 2022 deficits without additional low-carbon fuel.
Sinking Demand
In the first quarter, California witnessed a record build in unused Low Carbon Fuel Standard (LCFS) credits, largely due to a significant drop in petroleum diesel consumption. The state data highlights the increasing pressure on the California Air Resources Board (CARB) to balance the program effectively.
Deficits and Credit Generation
While total credit generation decreased by 6.5% from the previous quarter, deficits in renewable diesel, dairy-derived biogas, ethanol, and electric vehicle charging retreated from end-of-2022 levels. However, the plunge in diesel deficits by over 20% contributed to deficits falling short of credit generation once again.
Massive Collection
The continuous outpacing of deficits by credits has resulted in an unprecedented Collection of unused credits, reaching a volume that could fulfill 78% of all deficits generated in 2022 before requiring additional low-carbon fuel. This surplus has significantly reduced petroleum diesel’s share in California’s overall diesel pool.
Regulatory Actions and Market Impact
Anticipated regulatory changes and discussions surrounding eligible fuels and credit generation have influenced the LCFS price curve, with forward selling decisions being affected. Uncertainty surrounding potential tougher targets and revisions to eligible fuels have led to cautious market behavior.
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Source-argusmedia
