North American Clean Fuels Standards Interplay and Pricing Outlook

Key Takeaways

• 45Z: The proposed Section 45Z has been extended through 2029 with stricter eligibility and lifecycle rules, SAF credit reduced to $1 per gallon after 2025 from $1.75, and clearer anti double counting and sales rules, improving clarity but tightening project economics
• Renewable diesel production and consumption fell after the US blenders tax credit expired, with a more pronounced drop in consumption. Monthly exports increased over the period, with volumes rising to Canada and transatlantic to Europe(particularly the Netherlands) and UK.
• ZEV Adoption: Near-term ZEV adoption has moderated across several West Coast and Canadian markets, placing pressure on 2030–2035 targets and increasing reliance on complementary low-carbon fuel pathways.
• Credit Markets: Stricter carbon-intensity targets across programs, combined with slower renewable diesel and ZEV growth, may tighten credit supply and support a firmer credit price environment.
• Model Outlook: cCarbon’s scenario-based outlook to 2030 covers credits, deficits, bank levels, and prices(in select markets) across California, Canada, Washington, Oregon, British Columbia, and the proposed New Mexico market. In California and Canada, bank levels are expected to decline, which could support higher credit prices.
• CFR Amendments: cCarbon’s modelling of the proposed CFR amendments assesses domestic fuel supply scenarios and expected low-carbon fuel production capacity through 2030.

The evolving landscape of North American clean fuel standards is entering a critical phase as tightening carbon intensity targets, shifting fuel economics, and evolving regulatory frameworks reshape compliance strategies across multiple jurisdictions. Against this backdrop, cCarbon conducted a webinar on 5th February 2026 to examine cross-market trends, modelling outlooks, and credit pricing trajectories, providing stakeholders with insights into how regulatory evolution and market fundamentals may shape the future of North America’s clean fuel markets through the coming decade.

Overview of the North American Clean Fuel Market

Clean fuel programs across California, Washington, Oregon, British Columbia, and Canada have evolved into structured compliance markets with tightening carbon intensity targets. Together, these programs now represent a $6.2 billion credit market in 2025 and are steadily reshaping fuel supply, technology investment, and pricing expectations.

Sources: CARB, BC LCFS, OR CFP, WA CFS, NM CTFP, Canada CFR

Two recent shifts stand out which were discussed in detail in the webinar

Renewable Diesel Trends:

The first one was that the renewable diesel growth has slowed after earlier rapid expansion, with softer production and blending volumes showing up in recent reporting periods particularly for California.  In fact, poll responses to one of the questions raised during the webinar pointed to a shared view that California is likely to face market saturation in the early 2030s. Most participants identified the 2030-2032 window, suggesting that renewable diesel and biodiesel blending limits will be reached 90% around that timeframe.

Poll Results from the webinar- North American Clean Fuels Standards Interplay and Pricing Outlook

EV sales momentum

EV sales have softened in the near term across several jurisdictions, as shown in the charts below, mainly due to the loss of federal credits and ongoing trade and tariff disputes. This has increased reliance on a broader mix of low carbon fuel pathways instead of a single dominant solution, and it is making it more challenging to meet the targets set by jurisdictions through 2035. However, continued buildout of EV infrastructure and targeted support from state governments, along with any new federal push (especially in Canada) can alter the adoption trajectory.

Source: cCarbon’s Market Outlook

Rulemaking and Policy Shifts Across Markets

Recent rulemaking updates are directly influencing credit supply outlook and project economics.

In the United States, the proposed Section 45Z clean fuel production credit rules extend the program timeline but tighten eligibility, lifecycle accounting, and anti-double counting provisions. The SAF credit value has been reduced compared to earlier levels (from 0.35/gal or $1.75/gal to 0.20/gal or $1.00/gal for fuel produced after December 31, 2025), which could affect higher cost aviation fuel pathways. The rules also clarify how sales through intermediaries are treated, reducing transaction risk for producers.

Washington’s HB 1409 strengthens its Clean Fuels Standard with clearer benchmark tightening and compliance structure. British Columbia and Oregon have also continued technical and benchmark updates, reinforcing the direction toward tighter standards.

The Canadian government has announced a $372 million Biofuels Production Incentive Program starting in 2026–27 for a period of two years. Regulators have already floated a proposal for domestic fuel credit multipliers, minimum blending or both approach to boost domestic low carbon intensity fuel production.

In a poll conducted during the webinar, majority of the respondents predicted that the ECCC would adopt a combined policy approach of credit multiplier mechanism and minimum domestic blend requirements to raise domestic low carbon fuel production in Canada.

Poll Results from the webinar- North American Clean Fuels Standards Interplay and Pricing Outlook

Credit Market Status for Key Markets

CA LCFS: CARB’s Q3 2025 reporting on fuel volumes and credit market marked an inflection point as tighter CI benchmarks reduced credit generation and pushed credits to be less than the deficits for the first time since early 2021. Renewable diesel volumes declined, while EV sales rose through federal incentives but softened in Q4 2025 following their September 30 expiration.

Canada CFR: Under Canada’s Clean Fuel Regulations, hundreds of entities are registered across supplier and credit creator categories, and total compliance credit creation has reached 30.7 million credits till 2025 Q2 since program launch. Category based credits such as CC2 and CC3 represent 87% and 8% of total supply. Primary suppliers can meet part of their obligation through registered emission reduction funding programs, with a set credit price of about CAD 380 for the 2025 compliance period, while the credit clearance mechanism caps prices around CAD 326 in 2025 if triggered.

cCarbon Scenario Views and Market Projections

Scenario modelling shows very different outcomes depending on how quickly new low carbon supply pathways grow.

If renewable diesel is not able to expand aggressively and ZEVs reach only a meaningful share of new light duty vehicle sales, then tighter CI targets could push credit banks toward tight or even negative bank levels by the end of the decade, supporting stronger credit prices. Canada and California are especially sensitive, where bank positions can shift from comfortable to tight based on how fast these changes occur and these sensitivities can be analyzed through our CFS analytical toolkits[1]

Conclusion

North American clean fuel markets are expanding, but they are becoming more sensitive to supply and delivery speed. Carbon intensity targets are getting tighter, while renewable diesel growth and EV sales have slowed in the near term. Recent policy updates such as 45Z, HB 1409, and proposed amendments in CFR, along with global feedstock deals, geopolitics and strong European demand for renewable diesel, are reshaping incentives and compliance design.

Going forward, market balance will depend on how quickly low carbon fuel and technology pathways scale in practice. Faster rollout will help keep credit banks more stable and prices more steady, while delays could tighten credit supply and push prices higher.

The full webinar recording and slides are available here for cCarbon Analytics Pro members with access to any Clean Fuel Markets.

If you’re not an Analytics Pro member and would like to access it or would like to discuss Clean Fuel Markets with Analysts, feel free to reach out to us at insights@ccarbon.info.

[1] Note: Analytics toolkits can be accessed only by cCarbon Analytics Pro members.