What does the recent growth in the LCFS credit bank mean for credit prices in the longer term?

February 7, 2022 By , , ,

February 1, 2022

Volatility in the LCFS credit market and recently released 3Q2021 data showing nearly 433,000 metric tons in net credits for the quarter have left many investors scratching their heads. What does this mean for the trajectory of the program? How should we think about credit prices going forward? Stillwater Associates’ LCFS Team answers these questions and many more in our LCFS Credit Balance and Credit Price Outlook.

Stillwater’s LCFS Outlook includes historical LCFS credit balances and prices as a foundation for understanding forward-looking curves. Our team of experts also present three credit balance and credit price curves through 2031 (ten years from the data currently being released) – our “most likely” curves for both credit balances and credit prices in addition to high and low curves which serve to bound the outlook. Our price projections are based on our analysis of the supply of low-CI fuels in California, the demand for fossil gasoline and diesel, our outlook on carbon intensities of each fuel pool, the evolution of the vehicle fleet, and the ongoing development of the LCFS regulation.

Overlaying the numerical analysis is Stillwater’s deep understanding of regulatory actions and the evolution in California, the commercial fuels market, fuels logistics, market structure and players.

Contact us to learn more about Stillwater’s LCFS Outlook!

Stillwater’s Ten-Year LCFS Credit Balance and Credit Price Outlook includes:

  1. A table of our annual projected values for LCFS credits.
  2. Graphs of the supply, demand, and carbon intensity trends that inform our view of the LCFS credit price curve.
  3. Commentary around CARB’s historic and expected actions to regulate LCFS credit pricing.
  4. Qualitative descriptions of all key variables and how the data and factors mentioned above influence the forecast.
  5. All told: More than 40 pages of Stillwater’s deep knowledge and expertise, broken down for those looking to better understand the likely trajectory of the LCFS credit bank and credit prices.

This outlook is invaluable for any business impacted by LCFS credit values, such as:

  1. Investors in ESG projects
  2. Low carbon & renewable fuel producers
  3. Low carbon fuel technology suppliers
  4.  Any company that could be involved in project credits – CCS, solar, RNG, Renewable Hydrogen, Fuel Cell Vehicles
  5.  Refiners
  6.  Traders
  7.  Importers

Stillwater’s LCFS Outlook is updated on a quarterly basis, following each release of quarterly LCFS data. Our latest outlook incorporates 2Q2021 LCFS data (released October 31, 2021) and LCFS credit price data through December 31, 2021. We are currently in the process of refreshing the outlook to include recently released 3Q2021 LCFS data.The 3Q2021 update will be available March 14th, but you can sign up now to receive the latest report the moment it’s released. 

Our team of experts can also run additional scenario investigations utilizing the above-described proprietary model to test client-specific assumptions and produce unique credit balance and price curves based on these assumptions.

Contact us to learn more about Stillwater’s LCFS Outlook!



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