Canada’s Renewable Diesel Market Impacted by Slumping Credits, U.S. Import Surge

Canadian renewable fuels producers are facing lower returns on new facilities due to a slump in British Columbia’s low carbon fuel standard (LCFS) credit market, a trend expected to persist amid a flood of imports from the United States.

renewable diesel
renewable diesel
(Farm Journal )

Canadian renewable fuels producers are facing lower returns on new facilities due to a slump in British Columbia’s low carbon fuel standard (LCFS) credit market, a trend expected to persist amid a flood of imports from the United States. British Columbia’s LCFS credits fell to C$207 in July and C$350 in August, after trading above C$400 for more than two years previously. Tidewater said in August the slump hurt its ability to generate revenues, and blamed weakening prices on a surge in renewable diesel imports from the United States. British Columbia LCFS credit values rose to C$456 in September.

The British Columbia provincial government told Reuters it is not currently considering changes to the program, as credit prices naturally fluctuate based on supply and demand dynamics.

U.S. producers shipped at least 530 million liters of renewable diesel to Canada in the first six months of 2024, a jump from 151 million liters during the same period last year, according to data compiled by Will Faulkner, founder of industry analysis firm Carbon Acumen.

Canada has lagged the U.S. in setting up domestic renewable diesel production. British Columbia is the only Canadian province with an LCFS credit market, which helped encourage Calgary-based Tidewater Renewables to open the country’s first standalone renewable diesel refinery last year. Others are also betting on the credits to support construction of more facilities in British Columbia and other provinces. At the same time, the LCFS has made Canada an attractive outlet for a glut of U.S. renewable diesel.

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