On March 10, 2023 B24-0950, which was codified as Law Number L24-0314, went into effect. The Solar Renewable Energy Portfolio Standard (RPS) target increased from 10% to 15% by 2041. The Alternative Compliance Payment (ACP) schedule was also adjusted.
The DC SREC market has experienced unstable conditions due to oversupply and lack of liquidity over the last two years. The RPS increase and the more gradual step-down of the ACP will address these issues and lead to a more stable market. These changes will provide more price stability within the SREC market and increase investor confidence. Current market prices and requirements can be found on our website.
SRECTrade was proud to work with solar companies and other stakeholders in support of this bill. Monitoring market conditions and supporting legislation that benefits our clients and partners is one of our highest priorities.
The California Air Resources Board (CARB) published quarterly program data for the Low Carbon Fuel Standard (LCFS) on January 31, 2023. In this piece, we will provide some analysis of the new data and highlight interesting trends.
But First: What is the Credit Bank and Why is it Growing?
Each quarter, CARB issues credits and deficits based on the carbon intensity (CI) and volume of fuel reporting under the program. The cumulative credit bank, a measure of net credit generation over the lifetime of the program, is often used as a proxy for credit supply and demand. This credit bank grew for the first few years of the program, reaching about 10M MT by the end of 2016. From 2017 through the first half of 2021, the credit bank remained largely stable as quarterly net gains were balanced by quarterly net reductions. However, the credit bank has increased significantly since then, reaching about 13.5M MT according to the latest data.
The immediate reasoning behind the growing bank is simple:
An increase in the production and use of low carbon fuel, which creates credits
A simultaneous decrease in the use of gasoline and diesel, which creates deficits
The forces behind these trends are much more complex, but the LCFS is itself one of those forces. For example, the production of renewable diesel (RD) is incentivized by LCFS and now makes up almost 40% of the diesel fuel reported in the program. RD displaces the use of conventional diesel which would otherwise create deficits. As more RD is produced, more credits and fewer deficits will be generated each quarter. And RD happens to be the single largest source of credits in the program, making up about ⅓ of all credits last quarter.
Of course, RD is not the only fuel generating credits and contributing to the growing credit bank…
Q3 2022 Credit Trends
The largest quarter-over-quarter increases came from renewable natural gas (10%), ethanol (6%), and electricity (6%).
RD declined slightly (-3%) for the first time since 2020
The primary driver of credit growth from renewable natural gas (RNG), the third largest credit source in the program, has been declining average CI. While RNG volume is only 7% up from the same quarter last year, the average CI is now -111 gCO2e/MJ compared to -60 last year. The lower the CI of a fuel, the greater number of credits it will generate.
Spotlight on EV Credits
Credits from electric vehicles continue to be a major source of growth in LCFS, reaching a record share of credits generated Q3 2022 (24%). Consistent with previous quarters, almost 90% of credits from EV charging came from just three categories: residential (49%), eForklifts (23%), and non-residential light/medium-duty (15%).
CARB is expected to release Q4 2022 data by April 28, 2023.
The Pasha Group Partners with SRECTrade to Decarbonize through California’s LCFS Program
SAN RAFAEL and SAN FRANCISCO, CA — Today The Pasha Group announced its partnership with SRECTrade to transition to low- and zero-emission equipment across its West Coast operations. The logistics and transportation services leader is partnering with SRECTrade to generate and monetize carbon credits from electric vehicles and equipment under the California Low Carbon Fuel Standard (LCFS).
The Pasha Group has led the transition to renewable energy in the marine ports sector through many projects and initiatives over the last five years, through initiatives to retrofit forklifts, drayage trucks, terminal tractors, and on-road EV trucks in California, the installation of dozens of charging stations, and a microgrid. The company has also conducted Terminal Equipment demonstration and prototyping projects in the Port of Los Angeles and serves on goods movement Technical Advisory Committees for the California Energy Commission. The Pasha Group and its partners have accomplished milestones in the marine port transition to clean energy such as approving and performing the first hydrogen refueling for a hydrogen powered vessel.
The Pasha Group continues to pave the way in electrifying ports with the support from incentives like LCFS, a market-based compliance program that provides ongoing funding to entities operating electric and hydrogen equipment. SRECTrade’s expert advisory and technology-enabled services make participation in complex compliance programs simple, rewarding, and transparent.
“SRECTrade is a valuable partner, providing our team with up-to-date information and opportunities to incorporate sustainability practices into our operations,” says George Pasha, IV, President and CEO. “Our partnership with SRECTrade contributes to our mission of moving forward as quickly as possible with our ESG goals.”
For companies still looking to benefit from clean fuels programs, The Pasha Group advises getting started now and working with a trusted partner like SRECTrade. To learn how much you can earn from clean fuel programs, contact SRECTrade at firstname.lastname@example.org.
About The Pasha Group
Established in 1947, The Pasha Group is a family-owned, third-generation diversified global logistics and transportation company that provides ocean transportation for containers and rolling stock between the U.S. West Coast and Hawaii; port processing services for finished and privately owned vehicles; stevedoring for vehicles, breakbulk and container cargos; auto hauling services with its truck fleet throughout the contiguous U.S.; domestic and international relocation services; and international logistics management for general commodity and project cargoes.
As the leader in environmental commodity management, SRECTrade provides full-service management and transaction solutions across a variety of renewable energy and clean fuel programs. The company is the largest third-party manager of EV charging assets under the California Low Carbon Fuel Standard. SRECTrade’s parent company, Xpansiv, provides market infrastructure to rapidly scale the world’s energy transition. Xpansiv operates CBL, the largest spot exchange for environmental commodities, including carbon credits and renewable energy certificates.