Stricter greenhouse-gas-emission-reduction targets are scheduled for North American low-carbon fuel programs in 2026, along with several major updates that will include more stringent requirements.
The California Low Carbon Fuel Standard's carbon intensity reduction target was set at 20% from a 2010 baseline by 2030, but the California Air Resources Board voted to amend the program in late 2024 by accelerating the targets from 2024 through 2045. The proposed rule-making intended to reduce the overall CI of California's transportation fuel pool 30% by 2030 and 90% by 2045.
Although the California Office of Administrative Law raised objections to the amendments in February, delaying the new targets from taking effect in 2025, the proposed amendments were approved and filed with the California Secretary of State and took effect in July.
The regulations required a 22.75% CI reduction in the state's transportation fuels, up from the previous target of 13.75%. Targets then increase by 1.45% each year to 24.2% in 2026, 25.65% in 2027, 27.1% in 2028 and 28.55% in 2029, before reaching 30% in 2030. After 2030, the carbon reduction target would be set at 34.5% in 2031, with a 4.5% addition each following year, until reaching a 90% reduction from the 2010 baseline by 2045.
The updated regulations also require a CI benchmark of 76.6 for gasoline and 81.7 for diesel, compared with the previous numbers of 85.77 for gasoline and 86.64 for diesel.
California LCFS credits averaged about $56/credit over the first 11 months of 2025, down slightly from about $60/credit in 2024 as the cumulative credit bank remains oversupplied.
The Washington Clean Fuel Standard was also modified in a legislative update to increase CI-reduction requirements for transportation fuels in May 2025 -- the 20% reduction from the 2017 baseline by 2038 was increased to 45%.
The target adjustments are set to begin in January and will come in addition to reduction targets previously adopted when the Washington state Department of
Ecology established the state's CFS program in 2023. In 2026, the reduction target will increase from 3% to 8%, followed by an additional 4% in 2027.
Oregon's Clean Fuels Program 2024 rule-making was adopted by the state's Department of Environmental Quality in January 2025, updating the Oregon GREET model for the first time since 2018. OR-GREET is used to calculate CI scores for the fuels in the CFP and the updated CI values from OR-GREET 4.0 will take effect in January.
Oregon's rule targets a 20% reduction by 2030 and 37% by 2035.
Further, the OR-GREET 4.0 requires a CI benchmark of 98.12 for gasoline and 104.92 for diesel, compared with the previous benchmarks of 100.14 for gasoline and 101.74 for diesel.
Canadian Prime Minister Mark Carney said his government intends to make targeted changes to the country's Clean Fuel Regulations in September 2025, which could include stricter standards for CI compliance, and Environment and Climate Change Canada responded by opening a review of the proposed amendments.
The review and public comment period is open until January and the proposed carbon reduction target of 15% below the 2016 baseline by 2030 will be maintained. Canada has set an 8.5% reduction for 2026.
British Columbia's Low Carbon Fuel Standard requires a 30% CI reduction by 2030 from a 2010 baseline, with an intermediate target of 20.6% reduction in 2026.
In addition, the New Mexico Environment Department is aiming to implement the state's Clean Transportation Fuel Program by July 1, introducing new carbon reduction targets and a market for low-carbon fuels credits. The program is designed to reduce the CI of transportation fuels in the state 20% by 2030 and 30% by 2040 from a 2018 baseline.
In May, the agency submitted a petition to the state's Environmental Improvement Board to adopt the proposed rule and the EIB held public hearings from September through November. While the agencyended the public comment period for the rule-making in November, the EIB has yet to announce a decision on the rule. If the EIB accepts the proposal, the state's CTFP will take effect 30 days after filing.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Reporting by Maura Hossler, mhossler@opisnet.com ; Editing by Jeffrey Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
U.S. Renewable Identification Number credit markets were marked by uncertainty in 2025 and that appears likely to continue into the new year.
The unpredictability in the market includes questions on the future of tax credit programs designed to spur biofuels production, the Trump administration's policies toward the Renewable Fuel Standard and how long trade wars will affect feedstock prices.
The U.S. biofuels industry, according to one longtime participant, is an inch deep and stretches for miles. And RIN credits impact all of it.
The largest uncertainty facing RIN markets in 2025 was the EPA's schedule for completing its next round of blending targets, known as the Renewable Volume Obligations--which will cover 2026 and 2027.
The agency is tasked with establishing targets for an upcoming compliance year by the end of the preceding November. EPA, however, often misses that deadline and that was again the case in 2025, in part because of an extended government shutdown this fall.
Without concrete figures to work with, market participants and biofuel producers have been forced to play something of a guessing game to determine what RIN demand could look like in 2026.
Another uncertainty facing the coming RVOs is the number of small refineries that were granted exemption from past compliance years, after having persuaded the government that RFS compliance would inflict "disproportionate economic harm" on their businesses.
EPA in August addressed its backlog of small refinery exemption requests by approving 63 and partially greenlighting another 77. Weeks after the dust settled, the agency said some of the gallons of biofuels associated with those exemptions would be reallocated to the coming set of targets and that it would consider divvying up the volumes in different ways.
Biofuel industry officials said anything less than a 100% reallocation would be unacceptable, because it would cut into their mandated volumes. And the oil industry has been pushing for no reallocation, saying such an approach would be the only legal way to proceed.
The agency could decide on a reallocation ratio of 50%, a compromise number that would leave both sides equally unhappy.
Further complicating the picture is the continuing effort to bring E15 to retail pumps, something that could be used as a bargaining chip in deciding the reallocation questions, some sources said.
The U.S. Court of Appeals for the District of Columbia Circuit in early December gave EPA one week to provide an update on the status of its work, and seven days later, the agency said it expected to wrap things up by the end of the first quarter.
Whatever targets are announced, an increase in RIN price volatility is almost guaranteed. In June 2023, the last time targets were announced for 2023, 2024 and 2025, prices for ethanol-related D6 and biomass-based diesel D4 RIN fell by more than 10cts in a single day. In that same session, cellulosic biofuel D3 RIN values jumped nearly 50cts.
At the start of December, the market began to value 2025 D6 and D4 RINs at parity. OPIS assessments for those two credit categories finished Dec. 15 at $1.04/RIN, flat to each other for a 12th-straight session. In 2024, current-year D4 and D6 RINs spent more than eight months locked into an unprecedented parity streak that stretched from April to New Year's Eve.
Many saw that coming, thanks to a shortfall of D6 RINs and an oversupply of D4 RINs, along with the fact that RFS obligated parties are allowed to use D4s toward the D6 portion of their compliance obligation. As early as 2023, some market participants predicted the two credit categories would remain at or near parity well into 2026.
That prediction remained intact as late as December. "We can't blend enough ethanol physically at 15 billion gal/year," one RINs trader told OPIS recently, referring to the D6 target for the 2025 compliance year. "So, the only way you reach that mandate is through D4 production."
D6 RIN generation has approached that 15-billion-RIN mark in recent years, with 14.83 billion D6 RINs generated in 2023 and 14.89 billion generated in 2024, according to government data. But the latest EPA numbers suggest a slowdown, with just 12.2 billion D6 RINs generated over the first 10 months of 2025.
In addition, EPA's data clearly shows an oversupply of D4 RINs. A total of 9.16 billion D4 RINs were generated in 2024, up nearly 15% from 2023's 7.97 billion RIN total. Those year-end totals dwarf the RVOs of 2.82 billion D4 RINs in 2023 and 3.04 billion RINs in 2024.
But D4 generation slowed considerably in 2025. The latest data show only 5.84 billion D4 RINs were created through October, well above the 2025 RVO of 3.35 billion RINs, but down 22% from the 2024 pace.
Despite an implied shortage of D4 RINs, some analysts don't expect prices to rise much in 2026 because of the amount of 2024 D4 RINs still available.
Over the last year, prices for 2024 D6 and D4 RINs--which expire on March 31 or June 1 of next year, depending on when EPA announces its next targets--have rarely been separated by more than 1ct.
In the first half of this year, the premium that 2025 D4 RINs held over their D6 counterparts averaged nearly 6cts. But that spread never rose above 3.5cts in the fourth quarter, eventually vanishing into the current parity streak.
On the forward RFS compliance curve, buying interest for 2026 D6 and D4 RINs picked up halfway through 2025. In the fourth quarter, 2026 D4 RIN prices traded at about a 5ct premium to D6 credits.
OPIS assessments from Dec. 15 put the 2026 D6 and D4 credits at $1.06 and $1.1125/RIN, respectively, a 5.25ct difference.
Relationships between 2026 and 2025 RINs have been hard to pin down as the new year approaches. In the first half of December, 2026 D6 credits have traded at a 2ct to 4ct premium over 2025 credits, while 2026 D4 RINs have been between 6.5cts and 8.5cts above 2025 D4 RINs.
RIN credit prices in 2026, one market source said recently "are a bit all over the place," adding yet another uncertainty to the 2025 list.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Reporting by Aaron Alford, aalford@opisnet.com; Editing by Jordan Godwin, jgodwin@opisnet.com and Jeffrey Barber, jbarber@opisnet.com
(END) Dow Jones Newswires
December 30, 2025 11:05 ET (16:05 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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