Adds context on recent OCFP trade, credit build.
Swiftly rising supplies of renewable diesel (RD) helped drive a surplus of new Oregon Clean Fuels Program credits during the second quarter, the state reported today.
A record quarter for new credit generation lifted supplies available for future compliance with the state's low-carbon fuel standard (LCFS) by 13pc to about 712,000 metric tonnes, according to the Oregon Department of Environmental Quality.
RD's growing displacement of petroleum diesel fuel on the west coast has helped reshape LCFS and federal renewable identification number (RIN) markets this year. Its swift rise in Oregon, a smaller and more logistically challenging market, shows that new US RD capacity will not be contained to the larger California market.
Oregon RD consumption rose to about 7,000 b/d during the quarter, combining with biodiesel to approach 25pc of the state's liquid diesel pool for the period. Net Oregon LCFS credits generated by RD increased by 46pc from the previous quarter and were four times higher than the number generated in the second quarter of 2022. The fuel made up more than a third of all new credits generated during the quarter.
Biodiesel demand also increased from the previous quarter but trailed second quarter 2022 consumption by about 20pc. The fuel generated about 17pc of all new credits during the quarter. Renewable natural gas consumption also rose slightly, generating about 5pc of all new credits for the period.
Gasoline consumption generating deficits averaged about 89,000 b/d, higher by 3pc from the previous quarter but 2pc lower than the same quarter of 2022. Consumption of the fuel generated about 62pc of all new deficits during the quarter. Shrinking deficits from diesel consumption were more than offset by new deficits from volumes of RD that exceeded the year's carbon intensity target.
LCFS programs require yearly reductions in transportation fuel carbon intensity. Conventional, higher-carbon fuels that exceed the annual limits incur deficits that suppliers must offset with credits generated from the distribution of approved, lower-carbon alternatives.
LCFS credits do not expire, and so excess credits remain available for future compliance years until they are used by a participant.
The latest quarterly data included updated residential electric vehicle charging credits from 2022 that roughly quadrupled the volume previously reported for the first quarter. The department had previously noted that residential electric vehicle charging credits, which are calculated based on a formula using utility and vehicle registration data, would be updated. The new volume left residential vehicle charging credits at about 6pc of all new credits generated for the period.
Oregon spot credits have tumbled from $162/t at the beginning of the fourth quarter to trade at $104/t ahead of the new quarterly data. October trade would have included new credits generated from these higher volumes of renewable diesel and other fuels delivered in the second quarter.
RD suppliers, including Diamond Green Diesel partner Valero, had previously acknowledged turning their attention to the smaller market this year as it maintained its premium to the much larger California program.
California renewable diesel consumption rose to more than 50pc of the state's liquid diesel pool during the second quarter.
It was Oregon's second-largest build in new credits exceeding new deficits in program history, trailing only the third quarter of 2019. The program had recently trended toward drawing down supplies of available credits, falling below 600,000 t by the end of the first quarter.
