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California Events LCFS

CME set to launch listed LCFS swap, as prices continue to surpass record highs

The Chicago Mercantile Exchange (CME) has announced a launch date for its listing of a California Low Carbon Fuel Standard (LCFS) futures contract. The announced futures settlement, which will be settled against PRIMA’s daily LCFS assessed Index, will become officially active on Monday July 16th. NYMEX will list the contract for trading on the CME’s Globex electronic trading platform.

For more information on the swap, please click here.

Since the start of the New Year, LCFS credit prices have surged to record heights, settling Wednesday at $184.50, a new LCFS assessed all-time high, and a near $108 rise YoY.

The record setting performance, which has seen LCFS prices rise over $70.00 during a 6 month stretch, has been accompanied by bolstered buy-side demand, which has seen transactions through May and June combine to total over 229,000 tons, a near 10% increase from the same period a year prior according to PRIMA data. The increase is transactional activity can largely be attributed to increased emissions reduction goals outlined by CARB during their initial drafted proposal on February 20th.

The regulatory reform project outlined eight key objectives to 2018 rule making reform, including incorporating a carbon capture and sequestration protocol, promoting zero emission vehicle (ZEV) infrastructure, allowing additional fuels and vehicle categories to participate in the states LCFS program, and, most notably, reduce the 2020 carbon intensity (CI) reduction to 7.5%, with the aim to gradually achieve 20% emissions reduction by 2030.

Following the first of two 15-day significant change packets for public comment on May 25th, CARB has released the second significant change packet for public comment Monday. Following the June 25th release, the next round of pertinent policy reveals will take place during the late summer and early fall, as CARB is expected to release a final rule packet in mid-August and hold a final approval board hearing in late September.

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