​​Washington’s 2025 Fuel Forecast Insights: Renewable Fuels, Credit Balances, and the Path to Clean Energy Compliance​

Key Takeaways  

• WA CFS (Washington Clean Fuel Standards) Q1 2024 data shows 208,041 ethanol credits. BRG forecasts that the ethanol credits generated would grow to 702,164 credits by the end of the year. This suggests that ethanol production may face hurdles in meeting expectations. Meanwhile, gasoline consumption is forecasted to rise slightly, with the ethanol blend rate holding steady at 11%  due to the slight decline in CI and BRG assumes that Washington is reaching its blend wall for Ethanol.
• Renewable diesel is showing stronger-than-expected growth, with a blend ratio of 13% in WA CFS Q1 2024 data, outperforming the BRG forecast of 8.5% for the year. RD consumption is projected to nearly double, reaching 87 million gallons by 2025.
• Biodiesel is off to a solid start, with 23,517 credits already generated in Q1 2024, a notable portion of the 84,382 credits forecasted by BRG for the entire year. Biodiesel Consumption is expected to grow from 11 million to 12 million gallons by 2025.
• Hydrogen credits are forecasted to increase from 225 in 2024 to 3,286 in 2025, though they will only make up 0.12% of total clean fuel credits. No significant SAF production is anticipated for 2025.
• WA CFS total credits for Q1 2024 were 462,215, the BRG projection of 2,292,500 credits for the year. While deficits are proceeding as forecasted, credit generation appears to be lagging behind. 

The Washington Department of Commerce recently presented its draft fuel supply forecast, a crucial component of the state’s Clean Fuel Standard (CFS) program. This forecast, prepared by BRG (Berkeley Research Group), offers insights into the projected fuel consumption and credit generation through 2025. Additionally, Projections from cCarbon offer an additional viewpoint on the anticipated developments within Washington’s fuel market. 

Gasoline and Ethanol: Supply Surplus and Slower Credit Generation 

According to BRG forecasts, gasoline consumption is expected to rise modestly from 2,441 million gallons in 2023 to 2,491 million gallons by 2025. The ethanol blend rate is projected to stay constant at 11%, due to the slight decline in CI and BRG assumes that Washington is reaching its blend wall for Ethanol.with ethanol consumption increasing from 302 million gallons to 308 million gallons during the same period. However, WA CFS published data for Q1 2024 shows a lower-than-expected ethanol volume of 66.2 million gallons, raising questions about whether ethanol will meet these forecasts for the year. 

The WA CFS Q1 2024 data shows 208,041 ethanol credits generated. BRG forecasts that the ethanol credits generated would grow to 702,164 credits by the end of the year. 

Renewable Diesel: Growing Faster than Forecasted 

Renewable diesel (RD) is experiencing strong growth in Washington, with the blend ratio reaching 13% in Q1 2024, according to WA CFS data. This is higher than BRG’s forecast of 8.5% for the year, signaling that RD is being adopted faster than anticipated. Both BRG and cCarbon forecasts project RD consumption to rise from 60 million gallons in 2023 to 112 million gallons by 2025. cCarbon’s forecast adopts a more optimistic stance on RD, predicting 111.89 million gallons by 2025. 

This increasing market share for renewable diesel aligns with the growing focus on lowering the carbon intensity of transportation fuels in Washington. 

Biodiesel: On Track for Higher-than-Expected Credit Generation 

Biodiesel is showing growth, with WA CFS data indicating that 23,517 biodiesel credits generated in Q1 2024, accounting for a significant portion of BRG’s forecast of 84,382 credits for the full year. This suggests that biodiesel is being blended and consumed at a faster rate than initially forecasted. 

Biodiesel consumption is projected to remain stable at 15 million gallons by 2025 by BRG. 

Diesel Consumption: Declining but Still Significant 

Total diesel consumption is forecasted by BRG to decline marginally, from 977 million gallons in 2023 to 966 million gallons by 2025. However, cCarbon’s forecast is more conservative, estimating a larger decrease to 792.55 million gallons by 2025. This decline in fossil diesel is offset by the rising use of renewable diesel, which is helping Washington meet its clean energy goals. 

Electricity and RNG: Key Contributors to Clean Fuel Credits 

Electricity consumption for transportation is forecasted to grow reaching 1,065 GWh annually by 2025, according to BRG. This reflects the increasing adoption of electric vehicles (EVs) in the state. Renewable Natural Gas (RNG) demand is also expected to rise significantly, from 3.71 million diesel gallon equivalents (DGE) in 2023 to 8.25 million DGE by 2025, marking a 122% increase. Both electricity and RNG are playing growing roles in Washington’s clean energy transition. 

Credits and Deficits: Forecasts Align with Published Data 

WA CFS published data along with forecasts from BRG and cCarbon suggest that clean fuel credits will outpace deficits in the coming years. BRG total credits are projected to increase from 2,292,500 in 2024 to 2,915,844 in 2025, a 26% rise, driven by electricity, renewable diesel, and ethanol. 

Meanwhile, deficits for gasoline and diesel are expected to grow as carbon intensity targets tighten. WA CFS data shows gasoline deficits in Q1 2024 at (154,296) while BRG forecasts project gasoline deficits to be (752,585) in 2024. 

Net positive credits are expected to reach 1,308,369in 2024 and 1,498,495 in 2025, ensuring that Washington’s clean fuel targets remain on track. The credit bank balance is forecasted to increase from 2,350,017credits at the end of 2024 to 2,350,017credits by the end of 2025. 

Emerging Trends: Hydrogen and SAF in Early Stages 

Hydrogen credits are projected to grow from 225 in 2024 to 3,286 in 2025, according to BRG forecasts, continuing to represent a small fraction (0.12%) of total clean fuel credits. Sustainable Aviation Fuel (SAF) production is not expected to have a material impact in 2025, but the WA CFS data indicates that the Washington Department of Commerce will continue to monitor SAF production as it develops.