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LCFS flatlines as Midwest biodiesel producers intensify tax credit fight

Interest in the California LCFS market remained extremely slow on Tuesday, again with little sign of any fresh bids or offers to sway market direction away from its recent flatline. PRIMA’s LCFS Index finished Tuesday unchanged at $97.50, with best bids languishing at $95 against indicative offers hovering at a marginal level of $100, with further interests shown at $105.

While California’s carbon credit market slumbers, biodiesel producers are intensifying their fight for clarity over the shape of the federal $1/gal biodiesel credit after another year in which legislative re-instatement looks set to go to the wire. Iowa biodiesel board members were in Washington on Tuesday pressing Congress to limit the $1/gal federal tax credit to producers rather than for blenders for the year ahead as well as re-instating the 2015 blenders’ credit retroactively. Year-end interest in physical biodiesel against the uncertain federal tax credit backdrop has already perked up the midcontinent SME market in recent sessions. Producer margins have nudged back above 10 cents/gal assuming a 50/50 split on a re-instated 2015 credit, trimming blenders’ margins by more than 1 penny WoW to just under 52 cents/gal on the same 50/50 credit sharing scenario.

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