A California green diesel fuel program is proving too popular for its own good, reports The Wall Street Journal. The state’s efforts have helped create a boom in the production of green trucking fuel, with bio-fuels now making up nearly 50% of the diesel used in California and overall greenhouse-gas emissions down about 13% since the program began in 2011.
That has created a twist that few in the industry anticipated by tanking the market for California’s low-carbon fuel credits, which are now trading for about $84 per metric ton, down from over $200 at the beginning of 2021.
The credit-price collapse threatens the economics of some renewable-energy projects and highlights the way unanticipated market dynamics can compromise government objectives.
Carbon-credit markets have emerged among the main tools used to fight global warming. The experience in California suggests the details need adjusting for the impact of supply and demand.
