LCFS & RIN Pricing Report Through May 5, 2023

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• Figure 1. California & Oregon LCFS Pricing
• Figure 2. RIN Pricing

Figure 1. California & Oregon LCFS Pricing through 5/5/2023

The California Low Carbon Fuel Standard (LCFS) market rebounded following last week’s pause. Prompt credits rose $4.95/t, on average last week. LCFS strength has been driven by trader buying and strength in futures markets as the credits become more attractive options ahead of the California Air Resource Board’s more stringent scoping plan.

The forward structure remained in contango, yet some carry rolled out of the spot market late in the week (see below).

Figure 2. RIN Pricing through 5/5/2023

	D3	D4	D5	D6
Price May 5th, 2023	$ 2.02	$ 1.58	$ 1.57	$ 1.54
Avg. Weekly Price May 1st - May 5th, 2023	$ 1.98	$ 1.57	$ 1.56	$ 1.53
Average Monthly Price May 2023	$ 1.98	$ 1.57	$ 1.56	$ 1.53

RIN markets rebounded marginally as buying returned to the marketplace for the first time inover half a month.

EPA Administrator Michael Regan issued comments at a House Agriculture Committee hearing recently indicating the EPA is likely to cave to both industry and lawmaker pressure to increase the advanced biofuel mandate in the final ruling expected in June.

Debt ceiling negotiations saw non-farm state Republicans look to put advanced biofuel credits on the chopping block, while protecting SAF and carbon capture projects. President Joe Biden threatened to veto the bill, quashing the potential bullish headline impact.

EPA Administrator Michael Regan issued comments at a House Agriculture Committee hearing last wek indicating the EPA is likely to cave to both industry and lawmaker pressure to increase the advanced biofuel mandate in the final ruling expected in June.

News that United Refining was denied its SRE hardship waiver by the Third Circuit court added bullish undertones to the RIN complex as the move adds additional demand to the marketplace. Trade organization Growth Energy entered comments in support of enforcing SREs in its case against the EPA. A full denial of all SREs would represent more than 1.6 billion RINs

Prior to this month’s moves, the approval by a federal court of a SRE for Calumet Special Products 30,000 b/d refinery in Montana provided bearish undertones to RIN markets.

SREs were carved out in the Renewable Fuel Standard (RFS) for refiners producing 75,000 b/d or less which could prove compliance with the RFS—i.e., purchasing RINs—resulted “undue economic hardship.”

The chance of a pivot in the EPA's approach to SREs continued to provide underlying bearish sentiment. A reversal or dovish change in SRE policy would have an outsized impact on the D6 category. 

Market activity is likely to remain curtailed ahead of guidance from the EPA expected in June.

Questions? Contact our team for more information: environmental@aegis-hedging.com