Argus launches daily Californian renewable diesel prices

Completes global suite of renewable diesel/HVO prices

Houston, 14 November 2023

Global energy and commodity price reporting agency Argus has launched daily prices for renewable diesel in California, complementing its existing suite of renewable diesel prices, which spans Asia, Europe and the US west coast.

Renewable diesel, also known as hydrotreated vegetable oil (HVO), is chemically identical to conventional road diesel and can be used as a “drop-in” fuel to replace fossil fuel diesel, with no blending limits.

The four new Argus prices for California are assessed by collecting bids, offers and transactions at Kinder Morgan’s Los Angeles and San Francisco pipeline gathering systems from a range of market participants. The prices are for at least 5,000 barrel batches shipping any time during a named month, with differentials assessed against Nymex ultra low sulphur diesel (ULSD) futures and California Air Resources Board ULSD plus costs levied on the diesel fuel position holder at the terminal.

The renewable diesel market has grown exponentially in the past few years and was responsible for 54% of all Californian diesel consumption in the second quarter of 2023, crowding out biodiesel and conventional fossil fuel-based supplies.

Large financial incentives for renewable diesel have been provided by low-carbon fuel standards put in place by states along the US west coast, including the US Renewable Fuel Standard and the US Biodiesel Tax Credit, while the Inflation Reduction Act is expected to incentivize further uptake. In response to legislative developments, significant renewable diesel production capacity is now being built or is planned, including major new conversion projects in California.

Argus Media chairman and chief executive Adrian Binks said: “We have sought views from market participants from across the industry to bring much needed transparency to this rapidly growing market. We expect renewable diesel and HVO capacity and consumption to increase sharply over the next few years as companies seek to reduce greenhouse gas emissions. To operate efficiently, the market needs clear and accurate pricing, based on real transactions and other indications of buying and selling interest.”

The new California prices complement Argus' suite of existing US renewable diesel prices, joining calculated California and Oregon levels, which can be used as a reference in offtake arrangements. Argus also publishes European daily assessed prices for HVO, netback values for exports from Asia, and an assessed price for exports from China.