California’s Low Carbon Fuel Standard (LCFS) credit volume eased this week and the average price paid per credit pushed higher

The first week of the second quarter was subdued compared to the last week of the first quarter. Credit volume declined from 771,919 to 159,633, a 79 percent drop from the previous week and 40 percent below the same weekly period last year. Average weekly credit transaction volume decreased from 220,028 to 215.

Trading activity was heaviest on Monday with 59 percent of the trades occurring. Credit volume tapered off as the week moved on. No credits traded on Friday.  The highest average daily price was $196, which occurred on Wednesday. The price range credits traded in narrowed from $141 – $199 the week prior to $185 – $197 in the latest report. The weighted-average price was $192.64. At the top of the range 7,000 credits traded and 4,000 traded at the bottom of the range. Eighty-five percent of the credits traded at a price of $190 or above and 15 percent traded between $180 and $189.  Second quarter 2019 transfers are down 26 percent from the first quarter and are 40 percent less than what was recorded during the second quarter of 2018.

Despite the slower start for the second quarter, The Jacobsen expects credit volume to continue to rise relative to last year, as an additional 250 million gallons of biodiesel and renewable diesel are forecast to be produced during 2019.  California’s Air Resources Board (CARB) is scheduled to release full year 2018 production data at the end of April. The expected 2019 increase in biodiesel and renewable production is only slightly offset by an expected 20 million gallon decrease in ethanol output. 2018 production rates for biodiesel and renewable diesel to fall short of 2018 projections. Moving into 2019 The Jacobsen see’s biodiesel covering Q1 production forecast while renewable diesel should exceed Q1 projections.

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 12 transfers for 163,800 credits. CARB will exclude transfers that trade at, or near, zero in price.

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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.