Tracking the Stacks: Comparative Values for RD and SAF in West Coast Markets

Stillwater tracks the total value stack for renewable fuels on the U.S. West Coast[1] to identify the most attractive markets as well as trends in supply and demand for these fuels. For this exercise, we break the West Coast into four markets:

1. Los Angeles, representing Southern California
2. The Bay Area, representing Northern California
3. Oregon
4. Washington

In this article, we’ll compare the value stacks for renewable diesel (RD) and sustainable aviation fuel (SAF) in each of the four markets to identify the cost added to fossil fuel, demonstrate the incentive value of the alternative renewable fuel, and highlight the higher incentive benefit RD receives over SAF. We’re using RD and SAF with a carbon intensity (CI)[2] of 40 gCO₂e/MJ (or simply g/MJ) as an example.[3] The prices shown in each chart are based on February 2025 averages.

The total value stack for each fuel includes two categories:

1. The cost to the fossil fuel supplier excluding logistics: This includes the average reported spot price for the fossil fuel, excluding the cost to store and transport the fuel from the refinery to the loading rack, along with any costs added to the fossil fuel from low carbon fuel (LCF) programs[4] or Cap at the Rack (CAR) fees due to Cap and Trade (C&T) programs.[5]
2. The environmental attribute (EA) credits: These include the value of state LCF credits, D4 RINs[6] prices under the federal Renewable Fuel Standard (RFS), and the federal Clean Fuel Production Tax Credit (45Z) provided for under the Inflation Reduction Act of 2022 (IRA).

The value for 40 CI RD in each of the four West Coast markets includes:

1. The average spot reported spot price for ultra-low sulfur diesel (ULSD),
2. The calculated LCF program cost added to ULSD, and
3. The added cost of CAR on ULSD.

Comparing RD Value Stacks
Bottom Line Up Front: Northern California offers the largest stacked value for RD

The figure below compares the RD value stacks in each of the four West Coast markets using February 2025 average prices.

Figure 1. West Coast Markets RD Value Stack Comparison – February 2025Source: OPIS, Stillwater Analysis

Let’s break it down…

1. Spot: Average spot price varies between the markets, with the California markets seeing the highest average spot prices at $2.44/gallon in LA and $2.52/gallon in the Bay Area. Cost for ULSD in California is generally higher because California specifications for diesel are more stringent than in Oregon and Washington, which follow U.S. Environmental Protection Agency (EPA) specifications for diesel.  
2. CAR: In February, Washington had the highest average CAR fee at $0.53/gallon. California’s average CAR fee averaged $0.30/gallon. Oregon’s Climate Protection Program (CPP) is similar to the California and Washington programs, but the value of carbon allowances is assessed differently.[7] Currently we don’t see a cost pass-through at the rack in Oregon due to the CPP, but we will be watching for added costs to fossil fuels in Oregon due to CPP compliance.
3. Fossil Cost (Excluding Logistics): The total cost for the fossil fuel supplier ex logistics is indicated by the black diamond in each of the bars. In February, costs for ULSD suppliers were highest in the Bay Area at $4.97/gallon, while Oregon saw the lowest average price of all four markets at $4.39/gallon due lower average ULSD spot prices and the absence of a cap at the rack fee.
4. State EA Value: The bars also show the value of the EAs for the renewable fuel. California offers the highest LCF credit value of all three states with an average of $68.14 per metric ton (MT) of carbon dioxide equivalent emissions in February, providing $0.42/gallon incentive for 40 CI RD in both LA and the Bay Area. Oregon’s credit price was the second highest, averaging $60.60/MT in February, providing $0.40/gallon incentive for RD. Washington’s CFS credit price is depressed, averaging $15/MT in February, providing $0.11/gallon incentive for RD.
5. Federal EA Value: The federal incentives, D4 RINs and 45Z tax incentive, offer the same value across state markets. D4 RINs provide the highest value incentive in the entire stack. The average D4 RIN price in February was $0.85/gallon. Because RD earns 1.7 D4 RINs per gallon, our sample 40 CI RD received $1.45/gallon in value. The estimated 45Z tax incentive value for 40 CI RD[8] is $0.17/gallon.

Comparing SAF Value Stacks
Bottom Line Up Front: Oregon offers the largest stacked value for SAF

The value stacks for SAF offer less value than RD. The figure below compares the SAF value stacks in each of the four West Coast markets using February 2025 average prices.

Figure 2. West Coast Markets SAF Value Stack Comparison – February 2025Source: OPIS, Stillwater Analysis

1. Fossil Cost (Excluding Logistics): Oregon and Washington both saw the highest average spot price for fossil jet fuel in February at $2.54/gallon. The cost to fuel suppliers for petroleum jet fuel only includes the average spot price. There is no added cost due to LCF deficits or cap at the rack fees as jet fuel is not obligated under these programs.
2. EA Value: The EAs for SAF are less valuable than those for RD due to the differences in energy density and production emissions between the two fuels.[9] The average California LCFS credit price in February provided $0.41/gallon incentive for SAF (compared to a $0.42/gallon incentive for RD). Oregon’s CFP value provides $0.37/gallon for SAF (compared to $0.40/gallon for RD). And Washington’s very low CFS credit price provides only $0.09/gallon (compared to $0.11/gallon for RD). To-date no SAF volumes have been reported in Oregon or Washington LCF program data. In contrast, California’s supply of SAF has grown from 1.9 million gallons starting in 2019 to 58.7 million gallons so far in 2024, based on 3Q2024 data (the latest available). Most SAF earns 1.6 D4 RINs/gal.

What’s missing from the SAF value stack?
Washington’s state SAF tax credit will kick in when the in-state SAF production reaches 20 million gallons per year. As yet, the up-to $2.00 per gallon incentive has not been triggered. Stillwater will add it to the value stack analysis once the state tax credit is active. This added incentive may make Washington’s SAF value stack the largest on the West Coast and should improve Washington’s ability to attract SAF gallons.

Why are value stacks important?
Identifying and comparing the stacked values for renewable fuels in different jurisdictions is one of the ways Stillwater provides strategic analysis for our clients. It’s a good tool for identifying advantaged markets and demonstrating the reasons one fuel captures more value over another (e.g., RD vs. SAF). In the case of SAF, it’s necessary to understand the value in other markets, like those in Europe, that are competing for the same volumes. In addition to market comparisons, we can offer a future view of the value stack by leveraging Stillwater’s Carbon Market Outlooks to demonstrate the potential total values in different jurisdictions through 2035.

What’s next?
Starting in April 2025, Stillwater will be adding RD, BD, and SAF Value Stacks to our Monthly LCFS Newsletter. Be sure to subscribe to track the stacks!