BC’s Low-Carbon Fuel Credit Tripled to $472 While the Bank Stayed Long

At a Glance — The Decade in Three Numbers

British Columbia’s low-carbon fuel credit rose from about $171 per tonne in 2016 to $472 in 2023. The market held a positive credit bank in every one of those years, between 1.5 and 2.0 million tonnes. Over the same period the annual compliance obligation tripled, from 0.9 to 3.3 million tonnes. The bank measured in tonnes barely moved. Measured against what it had to cover, it fell from about two years of obligation to roughly seven months, and the price tracked that coverage, not the sign of the balance.

The credit bank sat near 1.8 million tonnes from 2016 through 2023. The obligation climbed from 0.91 to 3.30 million tonnes as the carbon-intensity target ratcheted down each year and the fuel pool grew. Coverage, the bank divided by the annual obligation, fell from 2.14× to about 0.6×. The price moved almost perfectly against it: $170 at 2.1× coverage, $269 at 0.69×, and $447 to $471 once coverage settled near 0.6×. A bank fixed in tonnes is a smaller and smaller share of an obligation that compounds beneath it.

Coverage falls as the obligation outgrows a flat bank; the price rises with the squeeze, then breaks when supply floods in 2024–25. Source: RLCF-007 Tables 9 and 11; BC Quarterly Market Assessment.

Every credit holder knew the next year’s target would be lower and credits scarcer. Holding the bank as a forward hedge beat selling it into a market that would be tighter in twelve months. The bank therefore never reached the market to relieve the current year, so a positive balance did not behave as excess supply. Storage against future scarcity carries its own return, and that return climbed as the standard bit harder.

The clearing price reflects the cost of the last credit a supplier needs to comply. That credit came almost entirely from renewable diesel. Ethanol was pinned near the ten-percent blend wall, and electricity was still small, so renewable diesel was the only supply that could scale to a widening gap. Its cost rose as the low-carbon-intensity feedstock — used cooking oil, tallow, distillers’ corn oil — grew scarce and California, the US and the EU bid for the same barrels. The marginal litre got more expensive, and the credit price rose with it.

Gasoline carried most of the compliance obligation, and its own credit source could not grow. Ethanol sits at a blend wall near ten percent, so each year the gasoline class fell further short and leaned on diesel-side credits to cover the gap. That draw on diesel-side credits was permanent, and the tightening standard enlarged it annually.

The federal Clean Fuel Regulations brought their first carbon-intensity reduction into force on July 1, 2023. The two programs stack. A litre of renewable diesel supplied in British Columbia earns a federal CFR credit and a BC credit at once, the same physical litre paying into two markets. That double credit pulled renewable diesel toward BC, the richest stacked market in the country. Supply into the province grew 64% in 2023 and another 42% in 2024, reaching about 1.17 billion litres, and the renewable share of the diesel pool jumped from roughly 5% a decade earlier to 31% in 2024.

The effect on the BC credit ran against the policy’s purpose. More renewable diesel arrived than the standard required, the diesel class swung from deficit to a large surplus, and that surplus overwhelmed the chronic gasoline deficit. Coverage rose toward 0.7×, and the BC credit price fell — $471 in 2023, $429 in 2024, about $259 by 2025 — while BC’s own standard kept tightening the whole way down. A federal program designed to cut carbon undercut the price signal of the provincial one, because the CFR credit now carried most of the revenue and the BC credit became a top-up rather than the driver.

For anyone pricing this market, the bank balance is the wrong gauge. Coverage of the obligation and the delivered cost of the marginal renewable-diesel litre move the credit, and both now turn on the North American renewable-diesel balance and the federal credit stacked on the provincial one. The climb from $171 to $471 was a decade of tightening against a capped fuel supply. The break to $259 was a flood of double-credited renewable diesel. Same mechanism, opposite sign.

Data: credit prices are the volume-weighted averages from BC’s Quarterly Market Assessment data (2015–2025). Obligation, credit bank and annual net position are from BC’s RLCF-007 compliance summary, Tables 9 and 11 (2010–2025). Coverage is the credit bank divided by the annual compliance obligation.

Climate Decode · Advisory · Clean Fuel Credit Markets

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