Pivotal Year for the Nation’s Largest Transportation Fuel Markets

By Lyndsey Nielsen, EcoEngineers

With the recent news of the state of New Mexico starting the process of developing its own Clean Transportation Fuels Standard, knowledge of the country’s low-carbon transportation fuel markets is more important than ever. These markets continue to drive the world toward decarbonization, and EcoEngineers has been the go-to consultant and auditor in these programs since 2009.

Eco is passionate about educating our clients on their journey to clean energy. The experts on our EcoUniversity team have been working in the regulatory landscape for decades, and they have analyzed data from two of the most influential low-carbon fuels programs in the United States transportation fuel markets in our two annual outlooks. Coming in March 2024, Eco is proud to publish our fourth edition of our California Low Carbon Fuel Standard (CA-LCFS) Fuel Supply and Credit Pricing Analysis and the third edition of our U.S. Environmental Protection Agency’s (USEPA) Renewable Fuel Standard (RFS) Credit Pricing Analysis.

The CA-LCFS remains the largest market in the country for low-carbon fuels despite the recent dip in credit prices. Over the next three years, there will be an increasing oversupply of credits in this market. The price reduction from the previous report is primarily the result of two factors: 1) the increased value of cap-at-the-rack, and 2) strategic choices by refiners to move toward a low-carbon future. Modeling performed by Eco’s experts also shows an increasing contribution to the gasoline credit pool from electric vehicle (EV) energy consumption that is likely to become more important over the second half of this decade. We are poised to follow the regulation’s progress throughout the year, in a volume and credit market capacity.

In June 2023, the USEPA published the first post-2022 RFS rulemaking schedule, called the Set Rule, which was the most comprehensive rulemaking in 10 years. The rule changed annual rulemakings that had previously adjusted biofuel volume mandates to accommodate trends in biofuel production. Instead, the USEPA issued three years of preset volumes across 2023-2025, attempting to create more market certainty for the Renewable Volume Obligations (RVO) compliance requirements within the RFS. The imperfections and difficulty of its estimates have created sectors of oversupply and undersupply in the Renewable Identification Number (RIN) market, which has caused significant RIN pricing variations within biofuel markets throughout 2023 and early 2024.

The analyses’ authors, Dr. Roxby Hartley and Paul Niznik, have been working in the low-carbon fuels field for decades, analyzing and modeling potential markets for low-carbon transportation fuel credits. Dr. Hartley is Eco’s Climate Risk Director. He focuses on both compliance and voluntary carbon methodologies, building carbon models, and researching how biodiesel and renewable diesel fuel types integrate into regulatory markets. He has more than a decade of experience in scientific research, development, and management of low-carbon diesel substitutes. Mr. Niznik is a Senior Carbon Consultant for Eco and is an expert on biofuel markets and mandates. His due diligence work has been used in the financing of some of the most capital-intensive low-carbon fuel projects in the nation.

This expertise, combined with Eco’s presence as engineers, regulatory experts, and renowned scientists is invaluable in the volatile election year market we are facing in the U.S. this year. These two outlooks — and their periodic updates provided throughout 2024 — will give your business an advantage regarding regulatory changes occurring in the transportation fuel markets in which you operate.

They can both be purchased today, so contact us to learn more. Fill out this form to receive pricing information.