California & Oregon LCFS Report - January 2023

To quickly access the page content, please click on the links below: 

• News Update
• Schedule
• LCFS Credit Pricing
• LCFS Credit Transfer Activity for California 
• LCFS Cost for Gasoline and Diesel 
• Figure 1. California LCFS USD/mt Jan. 2020 - Present
• Figure 2. California Monthly LCFS Credit Price and Transaction Volume as Reported by ARB
• Figure 3. Oregon LCFS USD/mt Jan. 2020 – Present

News Update

• California regulators warn against LCFS price floor and credit curbs. LCFS market participants have supported cuts to the LCFS program and urged CARB to accelerate their decarbonization goals. CARB will begin a year-long rulemaking process in early 2023 that will update the LCFS program. A November workshop came up with several potential scenarios such as 25%, 30%, or 35% targets by 2030. CARB has also continued to reject calls for an LCFS price floor, even as prices declined significantly in 2022.

• Governor Newsom cuts ZEV funding. According to Governor Gavin Newsom’s new budget proposal, a shortfall in revenue may reduce the amount of funding provided for zero-emission vehicles. The proposed budget would reduce spending on ZEV infrastructure, zero-emission buses, and drayage equipment. The total spending reduction is about $8.9 billion, or 11%. However, some of the spending reduction will be offset by funds from the state’s Greenhouse-Gas Reduction Fund.
• LCFS transfer volumes rose in December. Transfers were still down from year-ago levels, however. The total volume of transfers in December was about 3 million metric tons, which is 26% higher than in November, but 7% less than in December of 2021. Spot transfers were up 43% from November levels and 10% from year-ago levels.
• Sales of zero-emission vehicles in California climbed in 2022. While ZEV sales climbed, the total number of light-duty vehicles sold fell. ZEV sales rose 38% from 2021, representing 19% of all light-duty vehicles sold in the state. Tesla was the leading ZEV manufacturer in terms of sales. Electric vehicle charging has continued to generate an increasing number of LCFS credits, with residential electric vehicle charging representing 10% of LCFS credits generated in the second quarter of 2022.
• San Diego signs contract for RNG. The city of San Diego has signed a contract to acquire renewable natural gas to power its fleet of buses. The contract is for ten years and is expected to reduce carbon emissions by nearly 74,000 tons. An increasing number of LCFS credits have been generated by switching transportation fleets to RNG. Biomethane used for transportation is responsible for nearly 16% of all credits generated in the second quarter of 2022, which is a 71% increase from levels one year prior.

Schedule

• April 3, 2023: California LCFS 4Q 2022 reporting deadline
• April 28, 2023: California LCFS 4Q 2022 data release
• June 30, 2023: California LCFS 1Q 2023 reporting deadline
• July 31, 2023: California LCFS 1Q 2023 data release

LCFS Credit Pricing         

• Credits Price as of January 27^th, 2023: 
  • California - Spot Delivery $63.50
  • Oregon - Spot Delivery $121.00

LCFS Credit Transfer Activity for California

Source: https://ww2.arb.ca.gov/resources/documents/monthly-lcfs-credit-transfer-activity-reports

LCFS Cost for Gasoline and Diesel

• Cost as of January 27^th, 2023 for Vintage 2023:
  • California
    • Carbob (No Cl ethanol)- Vintage 2022 8.59 cents per USG
    • Carbob (79.9 Cl ethanol)- Vintage 2022 8.15cents per USG
  • Oregon
    • E10 gasoline- Vintage 2022 9.14 cents per USG
    • B5 diesel – Vintage 2022 10.14 cents per USG

Market Update

• On average, California LCFS traded at $66.86 in November, which was ~4.87% higher than the average of $63.75 in October.
• California LCFS credits have been mostly flat since September 2022, after reaching a low of $60.50 in October.
• CARB reported 292 transactions in December, a 61% increase from 181 reported in November. The traded volume was equal to 3,001,000 credits compared to 2,379,000 credits in October, or a 26% increase. December weighted-average price was $86, whereas the reported average spot price was 26% lower and equal to $63.50.
• Oregon LCFS credits have for the most part trended higher over the month of December, starting the month at $117.00, and ending the month at $121.00.
• California officials may begin a year-long process in early 2023 to overhaul LCFS rules, which the market is actively following to see the updated target by 2030.  
• Market is expected to become more oversupplied with the coming quarter's announcement by ARB of credits and deficits

Figure 1. California LCFS USD/mt Jan. 2020 - Present

2022 Average Daily Price: $98.35                                         2022 Average Daily Price: $64.31               2022 Highest Daily Price:  $153.50                                       2022 Highest Daily Price: $69.00

Figure 2. California Monthly LCFS Credit Price and Transaction Volume as Reported by ARB

Figure 3. Oregon LCFS USD/mt Jan. 2020 – Present

2022 Average Daily Price: $117.85	2022 Average Daily Price: $120.61
2022 Highest Daily Price: $126.50	2022 Highest Daily Price: $121.00

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