Platts launches California ethanol, carbon intensity assessments; updates existing methodology April 1

• North California rail car ethanol 70 CI assessment launched
• Methodology updated for existing North California rail car ethanol assessment
• California Carbon Intensity price for ethanol launched
• Existing South California rail car ethanol assessment discontinued

S&P Global Platts has launched a North California rail car ethanol assessment that reflects a carbon intensity (CI) of 70 and discontinued its existing South California rail car ethanol assessments, effective April 1, 2020, to better reflect where the bulk of spot market activity occurs. Platts has also launched a Carbon Intensity price of ethanol to provide further transparency to the California market.

This follows a proposal first published December 18, 2019: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/121819-platts-proposes-to-launch-basis-70-ci-north-california-ethanol-assessments.

Platts had initially proposed to also discontinue its North California rail car ethanol assessment — which reflects ethanol with a CI equal to the annual gasoline standard as set by the California Air Resources Board — but later announced its decision to continue publishing this assessment with some changes in the methodology, following market feedback.

Both the existing North California rail car ethanol gasoline standard CI assessment and the new North California rail car ethanol 70 CI assessment reflect a minimum volume of 145,000 gallons, or five rail cars, of ethanol that is delivered into the Richmond, Stockton, McClellan Park and Sacramento terminals in northern California.

From Monday through Thursday, both assessments reflect this-week-shipment (TWS), while on Friday, both assessments reflect next-week-shipment (NWS).

The affected assessments are published in the Platts BiofuelScan and the Platts Weekly Global Ethanol Report; on Platts Biofuel Alert pages 10 and 210, and in the Platts database under the following codes:

Ethanol North California Rail AAMFT00

Ethanol NorCal Rail to Chi Mo01 AAVXD00

Ethanol North California Rail 70 CI cts/gal AENCA00

Ethanol NorCal Rail 70 CI to Chi Spread Mo01 cts/gal AENCB00

MOC PROCESS: Platts will publish bids, offers and trades for both the existing North California rail car ethanol gasoline standard CI assessment and the new North California rail car ethanol 70 CI assessment during the Platts Market on Close assessment process.

Platts understands that ethanol delivered into northern California by rail reflects material with a range of CI values. Therefore for any trades published during the MOC process for both these assessments, Platts would expect buyers and sellers to apply a value normalization based on the CI of the ethanol physically delivered. For example, if a seller delivers ethanol that has a CI value lower than stated CI basis of the traded reference, Platts would expect buyers to use a value per CI point calculation to compensate the seller for the difference in quality, and vice versa if the CI is higher.

Platts may publish pricing information for northern California rail car ethanol with different CI levels, but these would be normalized back to the stated reference level.

In the absence of pricing information for the North California rail car ethanol gasoline standard CI assessment, Platts would value it based on its North California rail car ethanol 70 CI assessment and the new daily Carbon Intensity value.

For trades published during the MOC, as per typical market practice, Platts would expect the buyer to nominate a destination to the seller by close of business on Thursday of the shipment week; and the seller to provide a bill of lading to the railroad by end of day Saturday of the shipment week.

NEW CARBON INTENSITY VALUE: In addition, Platts has launched a daily assessment that values each point of Carbon Intensity (CI) for ethanol under California's Low Carbon Fuel Standard.

The CI price is expressed in grams of carbon dioxide equivalent per megajoule (gCO2e/MJ) and reflects the measure of Greenhouse Gas emissions associated with the life cycle of the fuel.

The published CI price per point will be calculated using the daily Platts assessment of front-quarter California LCFS credits ($/mt) and the energy density of denatured ethanol as published by the California Air Resources Board, which currently stands at 81.51 MJ/gal, then divided by 10,000 to give a cents/CI per gallon value.

This assessment appears in Platts Biofuelscan and the Platts Weekly Global Ethanol Report; on Platts Biofuel Alert pages 10 and 214; and in the Platts database under the following code:

Ethanol CI Val­ue Per Point cts/gal ACIVA00

DISCONTINUATION OF SOUTH CALIFORNIA RAIL CAR ETHANOL PRICES: Platts has also discontinued its delivered South California rail car ethanol assessments, which reflect a CI equal to the annual gasoline standard, effective April 1, 2020, due to a significant drop in spot trading liquidity for ethanol rail cars delivered into South California terminals.

The affected assessments were previously published in the Platts price database under the following codes. The daily assessments also previously appeared in Platts Biofuelscan and on Platts Biofuels Alert pages 10 and 210; while the monthly averages previously appeared on Platts Biofuels Alert pages 11 and 212.

Ethanol SoCal Rail Prompt AAMNK00

Ethanol SoCal Rail Prompt MAvg AAMNM00

Ethanol SoCal Rail Premium to Ethanol Chicago IL Swap Mo01 AAVYD00

Ethanol SoCal Rail Premium to Ethanol Chicago IL Swap Mo01 MAvg AAVYD03

Please send any further feedback or questions to americas_ags@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available to the public upon request.