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Calif. LCFS credit prices rebound to $119/tonne average in April

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Calif. LCFS credit prices rebound to $119/tonne average in April

Afternotching a record high average of $122/tonne in February, prices for CaliforniaLow-Carbon Fuel Standard, or LCFS, credits posted an average of $119/tonne inApril, up $3 on the month, even as volumes dropped steeply.

Accordingto data released May11 from the California Air Resources Board, in April California LCFS pricesranged from a low of $60/tonne to $128/tonne. The agency said 53 transfers tookplace during the month, for a total volume of 283,000 credits, down from atotal of 679,000 credits in March.

Theagency reported 63 entities were sellers in April, while 28 parties were buyersof California LCFS credits that month. A total of 39 entities were both sellersand buyers of credits during April.

Theaverage price for California LCFS credits was $114/tonne during the firstquarter of the year, up from $90/tonne during the fourth quarter of 2015 and$53/tonne during the third quarter of 2015.

CARB'smonthly statistical data includes transfers that were proposed and completed aswell as those that were proposed and still pending buyer's confirmation in theLCFS Reporting Tool and Credit Bank and Transfer System.

Inrecent months, California LCFS credit prices have been strong, particularlyafter the CARB voted in September 2015 to readopt the state's LCFS regulationwith some alterations.

TheLCFS requires California fuel providers to calculate the carbon intensity offuel sold for transportation, including imported fuel. The program requires thereduction of average carbon intensity of fuels by 10% by 2020, imposing agradual cap on carbon intensity levels in the years preceding. Thereadopted LCFS ratchets up the carbon intensity target reduction levels from2016-2019 since the level had been frozen at a 1% cut below 2010 levels in 2013after legal challenges. With the re-adoption, the reduction in carbon intensitylevels is pegged at 2% in 2016, 3.5% in 2017, 5% in 2018, 7.5% in 2019 and 10%in 2020 and beyond.

Market prices and includedindustry data are current as of the time of publication and are subject tochange. For more detailed market data, including powerand naturalgas index prices, as well as forwardsand futures,visit our Commodities Pages.