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News Update
- LCFS Q4 2022 data released, unused credit volume slows. On April 28th, 2023, the California Air Resources Board (CARB) published Q4 2022 data for the LCFS program. ~7.13 million credits were generated through Q4 compared to ~5.48 million deficits, resulting in a volume of 1.65 million unused credits in Q4- narrowly trailing behind the record high ~1.73 million unused credits generated in Q3 2022. Credit generation has steadily outpaced deficits for the past 7 quarters dating back to Q1 2021, causing many to put pressure on the agency to implement changes to the LCFS program and remedy the rising unused credit volume. Cumulatively, ~124.7 credits and ~109.6 million deficits have been generated since 2011, totaling an unused credit bank volume of ~15.1 million through 2022.
- California LCFS bill to limit dairy biogas crediting. California bill SB-709 was endorsed by the Senate Environmental Quality Committee by a 5-2 vote in April. SB-709 would impose limits on LCFS credit generation from dairy digester biogas projects by closing a loophole that incentivizes industrial dairy operations to increase herd sizes and emit more methane. The legislation would remove guarantees that existing projects would receive credits for at least 10 years and require regulators to consider reducing their credit-generating potency.
- CARB sets LCFS first auto-acceleration hearing for May 23rd. CARB will hold a workshop discussion over how LCFS fuel targets may tighten through an automatic mechanism in the future. While staff have taken careful considerations of the short-term and long-term implications of a self-correcting mechanism, many have called for CARB to adopt changes for more stringent targets to address the high volume of unused credits. CARB has set the auto-target discussion for May 23rd, 2023, and will take written comments until June 6th. Staff has yet to provide a date for formal rulemaking but still intends on implementing program changes in 2024.
- California speeds up heavy-duty ZEV transition. CARB voted in favor of a regulation that requires manufacturers of medium and heavy-duty vehicles to offer all zero-emissions models by 2036, up from the previous target year of 2040. The state's Advanced Clean Fleets rule extends current electrification ambitions to box trucks, government fleets, and other equipment/machinery used for commercial and mass transit.
- Oregon pauses EV rebates after $75 million awarded. Oregon has paused electric vehicle rebates after awarding over $75 million in funds since beginning the Oregon Clean Vehicle Rebate Program in 2018. One rebate option was for drivers who bought or leased an electric vehicle or plug-in hybrid under $50,000, offering up to $2,500 for any income level. The other offered $5,000 for low or moderate-income drivers. Oregon drivers could apply for both rebates for a total of $7,500 back. Purchases made before April 30th, 2023, qualified for benefit under the program, with the program funding now shifting focus towards equipping state parks with new chargers to support the resulting increase of EVs.
- US Navy expands LCFS participation to 3 more bases. The United States Navy has expanded their LCFS participation in an agreement to include three more bases in California. Naval Bases San Diego, Coronado, and Point Loma will generate credits using shore-based electricity to power vessels. Naval Base San Diego and the Port of San Diego have generated over $4 million in credits since the agreement began in September 2022.
Market Update
- On average, California LCFS traded at $74.00 in April, which is ~1.4% higher than the March average of $73.00.
- CARB reported 547 transactions in April, a 117% increase from the 252 transfers reported in March. The traded volume was equal to 5,596,000 credits, more than doubling March’s traded volume of 2,702,000 credits. April weighted-average price was $74, whereas the reported average spot price was 6.4% higher and equal to $78.75.
- California LCFS credits traded higher in April, starting the month at $71.50 before rapidly climbing to a new 7-month high of $84.50 on April 20th. Prices dipped down to $80.00 just a week later before settling for the month.
- Oregon LCFS credits traded higher over the month of April, starting at $127.50 and increasing to $132 in the first half of the month. Prices in the last half of April increased by another $2 to $134 before closing the month, marking the highest price seen in 3 years.
- Oregon DEQ reported a transfer volume of an estimated 338,000 metric tons of credits in April, nearly 3 times the volume moved in April 2022 and 2.5% lower than the previous transfer record of 345,000 set in March 2023.
- The California LCFS maximum credit price will be $253.53/t. as of 1 June 2023, based on the new CARB calculation, up from the 2022 maximum of $239.18/t. LCFS maximum credit prices are determined by a $200/t cap in 2016 dollars adjusted by a consumer price index.
- While the market remains oversupplied fundamental with the bank of LCFS at its highest levels in program history, prices did rebound off lows of $59 earlier this year to $80 in mid-April given the regulatory push to increase the pace of reductions in the program. Though likely not to be finalized until calendar year 2024, the market is factoring this in to a slight extent.
LCFS & CFP Schedule
California LCFS Q1 2023 Reporting Deadline
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June 30th, 2023
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Oregon CFP Verification Statements Due
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August 31st, 2023
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California LCFS Q1 2023 Data Release
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July 31st, 2023
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California LCFS Q2 2023 Reporting Deadline
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September 30th, 2023
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California LCFS Q2 2023 Data Release
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October 31st, 2023
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LCFS Credit & Futures Pricing
Credit Prices as of May 16th, 2023: |
California Futures Prices as of May 16th, 2023: |
- California - Spot Delivery: $ 84.00
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- Oregon - Spot Delivery: $ 140.00
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LCFS Cost for Gasoline and Diesel
California, as of May 16th, 2023:
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Oregon, as of May 16th, 2023:
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- Carbob (No Cl ethanol) - Vintage 2022: 11.36 cents per USG
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- E10 gasoline - Vintage 2022: 10.57 cents per USG
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- Carbob (79.9 Cl ethanol) - Vintage 2022: 10.79 cents per USG
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- B5 diesel – Vintage 2022: 12.09 cents per USG
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Monthly Credit Transfer Activity for California
Time
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Transfers
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Total Volume
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Avg $/credit
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23-Apr |
547 |
5,596,000 |
$74 |
23-Mar
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252
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2,702,000
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$73
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23-Feb
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161
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1,293,000
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$71
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23-Jan
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470
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4,564,000
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$81
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22-Dec
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292
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3,001,000
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$86
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22-Nov
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181
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2,379,000
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$81
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22-Oct
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555
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5,005,000
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$106
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22-Sep
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179
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1,759,000
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$102
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22-Aug
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153
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1,624,000
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$97
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22- Jul
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439
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3,680,000
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$117
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22-Jun
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133
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1,268,000
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$113
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22-May
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119
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861,000
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$125
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22-Apr
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468
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4,584,000
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$153
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CY 2022
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3,137
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30,641,000
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$125
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CY 2021
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2,664
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25,279,000
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$187
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CY 2020
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2,461
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21,728,000
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$199
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CY 2019
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1,656
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14,146,000
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$192
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CY 2018
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1725
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13,334,000
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$160
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CY 2017
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1226
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8,875,000
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$89
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CY 2016
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929
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5,343,000
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$101
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CY 2015
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578
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2,852,000
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$62
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CY 2014
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304
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1,667,000
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$31
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CY 2013
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202
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887,000
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$55
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Source: https://ww2.arb.ca.gov/resources/documents/monthly-lcfs-credit-transfer-activity-reports
Monthly Credit Transfer Activity for Oregon
Time
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Transfers
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Total Volume
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Avg $/credit
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23-Apr
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67
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337,461
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$122.24
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23-Mar
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50
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345,944
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$118.85
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23-Feb
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24
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130,929
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$119.73
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23-Jan
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41
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212,109
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$116.98
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22-Dec
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47
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329,116
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$118.02
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22-Nov
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24
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132,299
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$117.80
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22-Oct
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40
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176,986
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$115.55
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22-Sep
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35
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215,128
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$114.74
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22-Aug
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13
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43,724
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$110.83
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22- Jul
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23
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89,873
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$117.44
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22-Jun
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5
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37,135
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$115.95
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22-May
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24
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66,458
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$122.23
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22-Apr
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43
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124,607
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$122.84
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CY 2022
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319
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1,607,127
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$119.01
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CY 2021
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245
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1,035,306
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$125.30
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CY 2020
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151
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806,028
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$128.08
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Source: https://www.oregon.gov/deq/ghgp/cfp/Pages/Monthly-Data.aspx
Figure 1. California LCFS Prompt USD/mt May 2022 - Present
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2022 Average Daily Price: $ 98.35
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2023 Average Daily Price: $ 70.64
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2022 Highest Daily Price: $ 153.50
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2023 Highest Daily Price: $ 86.00
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(January 6th, 2022)
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(May 9th, 2023)
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Figure 2. Oregon LCFS Prompt USD/mt May 2022 – Present
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2022 Average Daily Price: $ 117.85
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2023 Average Daily Price: $ 125.50
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2022 Highest Daily Price: $ 126.50
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2023 Highest Daily Price: $ 140.00
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(February 17th, 2022)
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(May 15th, 2023)
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Figure 3. California LCFS Net Credits & Cumulative Bank Volume - Quarterly
Figure 4. California LCFS Net Credits & Cumulative Bank Volume - Yearly
Figure 5. Oregon CFP Net Credits and Cumulative Bank Volume - Quarterly
Figure 6. Oregon CFP Net Credits and Cumulative Bank Volume - Yearly
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