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Credit Prices Slump Amid Oversupply
The first Washington Clean Fuel Standard (CFS) credits were transacted around the $100 mark in August 2023. However, credit value has steadily declined since the program began. The latest market data made available by Ecology indicated a $40 average for credits transferred in June 2024, with only 4 recorded transfers. Credit pricing has continued to decline since, with trades in July reported as low as $20, similar to levels seen for the Oregon Clean Fuels Program.
Ecology To Make Changes to CFS Rules
Ecology continues to hold workshops to collect stakeholder feedback on potential changes to the program. Changes being proposed include:
- Integrating sustainable aviation fuel (SAF) into the program
- Requiring third-party verification for fuel pathway applications and fuel transaction reports
- Expanding the zero-emission infrastructure capacity crediting program to align with changes proposed for the CA-LCFS
- Adjusting book-and-claim accounting requirements for electricity and renewable natural gas
Notably, Ecology will not be modifying the carbon intensity targets in this rulemaking, despite the apparent oversupply of credits and declining credit prices.
Initiative 2117
In November, Washington voters will consider Initiative 2117 which, if approved, would repeal the Climate Commitment Act and the state’s Cap and Invest program. While Initiative 2117 leaves the Clean Fuel Standard intact, the balance of credits and deficits may be impacted: “Repealing the Climate Commitment Act will likely have an impact on the flow of renewable diesel to the state of Washington as the [Cap and Invest] program increases the cost of diesel made from crude oil, the exact thing renewable diesel is replacing. Without this policy in place, renewable diesel will likely go elsewhere where this type of carbon policy pricing arbitrage exists such as California and Canada” says Will Faulkner, founder of CarbonAcumen.
Recent polling indicated that 48% of respondents would vote to repeal the Climate Commitment Act, with an additional 18% undecided.
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