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August LCFS volume dip masks strong price gains as reconfirmation looms

California’s LCFS carbon capping scheme for road transport fuels saw liquidity dip in August, with credit transfers down 37.9% MoM to 200,000t traded. The slackening volume accompanied a surge in credit prices, up nearly 30% to average $57 for the month.

settlement volume

 

The highest August trade went through at $68, $10 above the July high. September’s looming reconfirmation of the carbon capping scheme has been the main driver of higher credit prices as state road transport fuel suppliers have focused on the increasingly onerous carbon cutting requirements which California hopes to achieve by 2020.

LCFS prices

 

Higher credit prices are in turn attracting the attention of clean fuel suppliers and investors. US renderer Darling Ingredients said last week it is considering siting a new conventional biofuels plant in California to benefit from the low carbon intensity values awarded to waste oil based biofuels under the California LCFS methodology, with Midwestern biodiesel also turning more of its gaze to the west coast market as falling RIN prices undermine biodiesel economics in the rest of the country.

lcfs prices 2

HZ/MS  – 09/09/2015

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