EIA says renewable diesel making a major contribution to California’s transportation decarbonization

November 13, 2018 |

In Washington, the Energy Information Administration says renewable diesel net supply to California’s fuel market has increased since the state’s Low Carbon Fuel Standard (LCFS) program went into effect in 2011, reaching 100 million gallons during the second quarter of 2018, or 10.1% of the total diesel supplied to California that quarter. The LCFS program, which is administered by the California Air Resources Board, sets standards to incrementally decrease the carbon intensity of motor gasoline and diesel fuel by at least 10% by 2020 relative to a 2010 baseline.

As carbon intensity requirements have become progressively more stringent, prices for LCFS credits have increased. Throughout most of the program’s history, LCFS credits averaged lower than $100/metric ton (mt). During 2017, LCFS credits averaged $89/mt, growing to $164/mt through the first 10 months of 2018, suggesting an increasing difficulty for refiners, importers, and wholesalers in meeting annual carbon intensity targets.

Under the LCFS program, renewable diesel generates a large number of credits relative to other fuels because it has some of the largest lifecycle greenhouse gas reductions compared with other fuels. The total volume of LCFS credits associated with renewable diesel exceeded that of fuel ethanol for the first time in 2018, reaching about 870,000 mt of carbon dioxide equivalent during the second quarter of 2018.

While renewable diesel imports from Singapore remain significant, planned renewable diesel production capacity additions during the next several years have the potential to increase the share of domestic renewable diesel in the California market. A number of LCFS amendments are slated to go into effect in 2019, including an extension of the program to increase the total reduction in carbon intensity to at least 20% by 2030.

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