CARB Sends the LCFS Market a Lifeline
Revisions to the Low Carbon Fuel Standard were approved by CARB last Friday
๐๐๐๐ฉ ๐๐๐ช๐๐๐ฉ ๐ข๐ฎ ๐๐ฉ๐ฉ๐๐ฃ๐ฉ๐๐ค๐ฃ? Revisions to the Low Carbon Fuel Standard were approved by CARB last Friday.
๐๐๐ฎ ๐๐ฉ ๐ข๐๐ฉ๐ฉ๐๐ง๐จ? Revisions to the LCFS program were needed to help remedy an oversupply in the credit bank that has depressed LCFS prices since 2022. Spoiler: even with the changes it is going to take while.
Fun fact: O&G producers are some of the largest RNG and renewable diesel producers. Examples include: Archaea Energy (BP owned), Chevron, Shell and Marathon Petroleum Corporation.
๐ฟ๐๐ฉ๐๐๐ก๐จ:
โข LCFS prices have dropped to approximately $65, down significantly from around $150 in 2022, mainly due to an increase in renewable diesel supply. Many anticipated that regulatory revisions would be approved to help alleviate the supply surplus and bring balance back to the LCFS market.
โข Stricter Carbon Intensity (CI) Targets: The LCFS now mandates a 30% reduction in carbon intensity by 2030, an increase from the previous 20% target, relative to 2010 levels. This will help clear the overhang in the credit bank.
โข Limitations on Biomass-Based Diesel: Capping biomass-based diesel (especially from virgin feedstocks like soybean oil) to 20% of a companyโs production is impactful given that biomass-based diesel has been a cornerstone in meeting past LCFS targets.
๐๐๐ฃ๐ ๐จ: