Weekly LCFS Credit Volume Volatile Since April Regulator Meeting

California’s Low Carbon Fuel Standard (LCFS) credit volume stalled after hitting its third highest weekly tally last week but the average price paid per credit was able to climb back over $180. Second quarter volume is 50 percent higher than the first quarter over the first five weeks of the period.  Second quarter volume is also seven percent over second quarter 2018 volume for the same time frame.  Weekly credit volume fell 91 percent from the previous week and is 63 percent below the same weekly period last year.  Average weekly credit volume decreased from 223,620 to 214,193.

Trading activity was heaviest on Wednesday May 1, with 40 percent of the trades taking place.  The highest average daily price was $190, which occurred on Tuesday. The price range credits traded in narrowed from $131 – $199 the week prior to $144 – $192. The weighted-average credit price was $183.22, up from $172.92 the week prior. At the top of the range 2,500 credits traded and 2,500 traded at the bottom of the range. 68 percent of the credits traded at a price of $185 or above, 32 percent traded between $144 and $182.

The Jacobsen expects credit volume to continue to rise relative to last year. An additional 284 million gallons of biodiesel and renewable diesel are forecast to be produced during 2019 and are expected to produce and additional 1.9 million credits. This is slightly offset by an expected 20-million-gallon decline in ethanol output.

CARB only includes transfers that are completed in the given week. Transfers for future dates, proposed and still pending confirmation, are excluded.  CARB’s weekly report excluded 9 transfers of 213,418 credits. CARB will exclude transfers that trade at, or near, zero in price.

Biodiesel Market

Closing Comments

WTI crude edged higher while soybean oil continued to slide lower. This improved blending economics, pushing the bean oil/heating oil down to a seven cents per gallon credit. RINs remain stagnate, waiting on something directional to emerge either from the EPA or the White House.  California’s LCFS credit continues to attempt to stabilize in the mid $180’s. Oregon’s LCFS credit is quietly pushing higher.  The Oregon credit had an end of the day quote of $157 bid versus a $160 offer.

INDUSTRY-RELATED NEWS

May 02 (Ethanol Producer Magazine)  Letter asks EPA to use RFS reset rule to lower ethanol RVOs – A group of 15 senators, led by Sen. Jim Inhofe, R-Okla., sent a letter to U.S. EPA Administrator Andrew Wheeler April 30 asking him to use the agency’s upcoming Renewable Fuel Standard reset rule to limit future renewable volume obligations (RVOs) for conventional biofuel to less than 10 percent of projected gasoline demand. In response to Inhofe’s letter, the Renewable Fuels Association is calling on the EPA to use the RFS reset rule to reallocate lost volumes associated with small refinery exemptions (SREs) and increase conventional biofuels beyond 15 billion gallons annually. READ MORE

Apr 22 (NationalObserver) Shell aims to lead Big Oil in pivot to clean energy – Shell admitted in 2016 that peak oil demand might be just around the corner. The company set a goal of cutting the carbon footprint of its energy products in half by 2050, with an interim goal of 20 per cent by 2035. Shell has set these targets in partnership with Global Action 100+, representing $32 trillion in assets, and The Institutional Investors Group on Climate Change. READ MORE

Apr 15 (Jakarta Post)  RI to accelerate B30 program in anticipation of EU restrictions   – The government has said Indonesia will accelerate the mandatory use of 30 percent blended biodiesel ( B30 ) in anticipation of the European Union’s move to ban palm oil-based biofuel in its member countries. With the mandatory use of both B20 and B30, the domestic market is expected to absorb 9 million tons of crude palm oil (CPO). READ MORE

I always look forward to hearing from our customers.  Please feel free to contact me with any questions, comments, or suggestions you may have.  If you buy, sell, or trade any of our products, I would like to hear from you.  Bob Lane at [email protected]  847-549-3640.