Bioenergy: ARGUS Low Carbon Fuel Standards (LCFS) price assessments

Bioenergy: ARGUS Low Carbon Fuel Standards (LCFS) price assessments

The ARGUS LCFS price assessments

The LCFS program is designed to decrease the carbon intensity of transportation fuels (gasoline and diesel) pool and provide an increasing range of low-carbon and renewable fuel alternatives. Jet fuel was added in 2019 as an eligible credit generator, although it is not an obligated fuel. This program covers refiners and fuel importers and compliance is achieved through blending or buying credits. These credits can be banked, which helps with future years when targets get more stringent. 

Fuels are issued CI scores based on lifecycle GHG emissions:

  • Fuels above targets (gasoline, diesel) generate deficits
  • Low-carbon alternatives (including renewable diesel, RNG, biodiesel and ethanol) generate credits
  • California LCFS requires 20pc cut from 2010 baseline by 2030
  • Oregon’s Clean Fuels Program requires 10pc cut by 2025 but the state is looking at extending the program

LCFS assessments – four forward calendar quarters

In March of 2020, Argus expanded the California LCFS assessments to now include assessments for spot delivery and for delivery during the first four forward calendar quarters. In addition to the California LCFS program, Argus also assess the Oregon LCFS market daily. Market coverage includes ¢/USG premiums for ethanol, biodiesel and alternative jet fuel and compliance costs for gasoline and diesel. Market assessments encompass trades and bids/offers between 8:00am-5:00pm eastern. 


Argus LCFS assessments include: 

  • California LCFS credits
  • Oregon LCFS credits
  • California LCFS cost for gasoline, diesel 
  • LCFS premium per carbon intensity point
  • California LCFS market biogas value

California LCFS credit generation

california-lcfs-credit-generation


Argus California LCFS assessments

argus-california-lcfs-assessments


Advantages of the ARGUS LCFS price assessments - forward quarterly prices

No other price reporting agency (PRA) has LCFS assessments as far along the curve as Argus does. Argus is the only PRA that publishes four forward quarters of LCFS assessments. With expanded coverage, we are seeing more liquidity further along the curve which provides greater transparency to the market. 


Clean fuels programs on the horizon

While California’s targets get more stringent, more clean fuels programs will emerge. California could be competing in the future with other regions for renewable fuels and feedstocks. Oregon is working to extend and tighten its LCFS out to 2035, but Oregon isn’t the only state looking to tighten or add a LCFS program. From the mid-west to the east coast, states are looking at LCFS programs to cut GHG emissions.

 

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