Correction issued 2026-09-02 LCFS: softer crude is bullish for credits, not bearish: this morning's note read softer crude as widening the renewable-diesel spread and so adding to credit supply, and carried it as the bearish offset against a drawing bank. (full statement below.) The reference contract is now the most liquid one, across the tape: this desk has been marking five compliance markets off the front-month futures contract. (full statement below.) · All corrections
AS OF 2 September 2026, MDT (Calgary, UTC-6). Futures marks do NOT share one settlement date - 2026-09-01 for EU ETS (EUA)/UK ETS (UKA), 2026-09-02 for California-Quebec (CCA)/RGGI (RGA); EU ETS (EUA)/UK ETS (UKA) are carried from a prior session and labelled as such in the line. Auction clearings and regulator prints carry their own dates, which are stated on each. Currency is named on every price.
Two corrections ride this note. First, LCFS: this morning we read softer crude as widening the renewable-diesel spread and adding to credit supply. That is the margin inverted. Diesel reprices with crude while feedstock does not follow it down, so the RD margin compresses, credit generation slows, and softer crude is supportive for credits, pointing the same way as a drawing bank rather than against it. Second, the reference contract: measured by open interest the front month is not the most liquid contract on any of these five markets, so from tonight every mark line names the December 2026 contract with its open-interest rank. Alberta is held out, its feed carries no open-interest field.
EU ETS (EUA). Mark: EUR 83.34 (2026-09-01, Most liquid futures settlement (Dec26, #1 by open interest, 54% of the curve as of 2026-09-01), EUA, settlement observation), a carried prior-session settle, not today's; the same-day file has not reached the tape. Primary: EUR 82.48 (2026-09-02, Latest EEX auction clearing price).
What moved: no same-basis prior on the new reference contract, so no delta is published tonight.
Why: nothing to attribute. One housekeeping flag: a secondary outlet carries the same 82.48 figure as an ICE Dec-26 weekly benchmark for the week ending 29 August, so the tape's EEX auction tag is queued for reconciliation.
Desk view: constructive but qualified. Our forward rows give +113.7 in 2027 flipping to -100.5 by 2030, and that is a PRE-MSR flow balance, not the tradeable surplus.
UK ETS (UKA). Mark: GBP 59.21 (2026-09-01, Most liquid futures settlement (Dec26, #1 by open interest, 82% of the curve as of 2026-09-01), UKA, settlement observation), carried prior session. Primary: GBP 58.68 (July 2026 official monthly average, Dec futures, CCM table).
What moved: no delta; the UKA leg is missing from the 2026-09-02 settlement file, so no UKA/EUA differential call tonight.
Why: demand rows were promoted to an observation on 1 September off the UK Emissions Trading Registry compliance report, resetting 2027-2030 demand to 75.0/72.8/70.6/68.5.
Desk view: deficit throughout (-2.7 deepening to -17.6), constructive; supply is SI 2020/1265 Table B as amended by SI 2026/392.
California-Quebec (CCA). Mark: USD 33.36 (2026-09-02, Most liquid futures settlement (Dec26, #1 by open interest, 78% of the curve as of 2026-09-01), CCA V26). Primary: USD 32.48 (August 2026 joint auction, current-vintage settlement).
What moved: no same-basis prior on the new reference.
Why: the amended 17 CCR 95841 Table 6-2 took effect 1 September, removing 118.3 Mt from 2027-2030 budgets. Separately, a Manufacturing Decarbonization Incentive account is created with its own 2028-2035 allocation window. Withdrawn from budget is not the same as retired, and the two mechanisms are not one.
Desk view: deficit in every forward year (-27.0 to -84.2), tightening; balances exclude private bank and reserve tranches.
Washington (WCA). Primary: USD 64.56 (2026-06, current-vintage settlement, Auction #14). The ICE mark is held for sequencing and publishes tomorrow with its announcing correction; that is a deliberate hold, not a coverage gap.
What moved: Auction #15 was held today. No clearing exists yet, and none is quoted here.
Why: Ecology sells allowances at quarterly auction; certification and the settlement price come on 9 September.
Desk view: deficit throughout on the current statutory slope, an assumption Ecology's WAC 173-446 rulemaking (adoption estimated 23 September) supersedes.
RGGI (RGA). Mark: USD 40.65 (2026-09-02, Most liquid futures settlement (Dec26, #1 by open interest, 57% of the curve as of 2026-09-01), RGGI V26). Primary: USD 35.00 (2026-06-03, Auction 72 clearing).
What moved: the demand base was promoted to an observation on 1 September, lifting 2027-2030 rows from 59.4/58.8/58.2/57.6 to 79.6/78.8/78.0/77.2.
Why: Potomac's monitor report anchors 82.0M short tons of covered 2024 emissions, corroborated by CAMPD within 1.1%.
Desk view: rows now deficit from 2027, so the roughly 67M private bank (July 2025, Potomac) is load-bearing and drawdown pace is the trade. Eleven states participate; the cap volumes above are ten-state, excluding Virginia until DEQ's rule takes effect 1 January 2027.
NZ ETS (NZU). Mark: NZD 54.77 (2026-08-13, NZU secondary spot, open-licensed scrape of broker marks, close observation), -2.2% versus prior close.
What moved: nothing today. That -2.2% spans 21 days between endpoints and is not a session move.
Why: unverified from here; the desk will not assign a cause to a three-week drift.
Desk view: rows assume auctions clear nothing below the NZD 71 floor; reporting has auctions failing repeatedly with secondary prices below that floor.
Australia (ACCU). Primary: AUD 37.50 (2026-05-15, Generic ACCU spot, CER QCMR March quarter 2026). That is a last print past its own cadence, not a current mark.
What moved: no fresh mark.
Why: no citable secondary; commercial marks are held and unpublishable.
Desk view: deficit deepening on the legislated 4.9% baseline decline, with the FY25-26 base still the desk's own figure and blocked pending CER totals.
Alberta TIER. Primary: CAD 95.00 (2026-05, headline TIER price for 2026, stated verbatim in s.1.2.1.1 of the Canada-Alberta Implementation Agreement, 15 May 2026). Administered price, not a market mark.
What moved: nothing; the schedule was re-verified against the primary today and the carried figures survive unchanged.
Why: the Agreement sets CAD 100 for 2027-2029 and CAD 115 in 2030, with a separate credit floor ladder and a separate CAD 130 effective-price target.
Desk view: the live variable is Alberta enacting the floor regulation by 31 December 2026, since pre-enactment credits are grandfathered.
BC LCFS. Primary: CAD 135.80 (2026-07, monthly average credit transfer price).
What moved: no fresh mark since the July average.
Why: monthly cadence, nothing pending today.
Desk view: neutral, watching cadence.
CA LCFS and RINs. CA LCFS credit: USD 79.02 (2026-08-24, CARB weekly volume-weighted average transfer price, week of 2026-08-24, range USD 67.00 to 84.00). RINs: D4 USD 2.0639, D6 USD 2.2615, D3 USD 2.5820, D5 USD 2.3402, all 2026-07-20 EPA EDAP weekly prints, 44 days old and historic, not current marks.
What moved: no new weekly CARB print since 24 August; the next report is due 8 September.
Why: on the corrected sign, softer crude compresses the RD margin and is supportive for credits.
Desk view: constructive. 2026Q1 ran credits 6.93M MT against deficits 9.77M MT, a bank draw of 2.84M MT on a cumulative 36.86M MT bank, published 31 July and 153 days behind today.
What to watch tomorrow, 3 September. The Washington ICE mark publishes with its announcing correction, our own held item and the first thing this desk owes. Nothing else on the calendar prints tomorrow; the CFTC Commitments of Traders lands 4 September, CARB's weekly LCFS report and the NZ quarterly auction under CBL as operator both fall 8 September, and RGGI Auction 73 is held 9 September, the same day Washington certifies today's sale. Virginia brings an 11.48 million allowance second-half budget to the September and December auctions plus 1.148 million CCR allowances, which is the supply event of the month in RGGI. Open IOUs: today's Washington clearing, the NZU cause, and the ten-state CAMPD total.
The desk published a bearish reading of softer crude for California LCFS credits this morning. The chain runs the other way, and the correction is worth stating in full because the error was in the reasoning rather than in any number.
What the note said. That crude softening into late August "widens the diesel-minus-feedstock spread, supporting renewable diesel volumes and credit generation", and that with the 2026Q1 bank drawing down, "deficit quarters are bullish, softer crude is the offset". Two forces, pointing opposite ways, netting to neutral.
Why that is backwards. Diesel reprices with crude. Feedstock - used cooking oil, tallow, soybean oil - does not follow it down on the same timescale: it is priced by its own supply and by competing demand from food and oleochemicals. So when crude falls, the renewable-diesel margin over feedstock COMPRESSES rather than widens. A producer facing a thinner margin needs MORE value from the environmental credits - LCFS and the D4 RIN - to clear the same volumes, which is demand for credits, not supply of them. Softer crude is therefore supportive for LCFS credits. It points the same way as a drawing bank, and there is no offset.
This desk's own model already said so. The renewable-diesel channel in the desk's flow-channel layer composes its legs by sign, and it carries ULSD with a POSITIVE sign to the margin: diesel down is adverse for the margin. Its stated conclusion is that a widening margin is price-bearish for credits, so a compressing one is price-bullish. The note contradicted the model it sits beside. That is the part that matters: this was not an unknowable call, it was an internal inconsistency that nothing in the pipeline was set up to catch, because every gate the desk runs tests whether a claim is TRUE and none of them tested whether two of the desk's own claims agree.
What changes. The California LCFS desk view moves from neutral to neutral-to-constructive into the 8 September weekly print. The deficit quarters and the compressing margin now point the same way. The leg the desk still cannot price is the RIN side, and that is stated rather than assumed away.
What does not change. No mark, no print and no forward row moves. The CA LCFS credit print, its date and its range are as published. This is a correction to a read, and the read was ours.
The rule, stated first because it is the change. The reference contract for every mark on this tape is the one carrying the most OPEN INTEREST. It is named on the mark line with its rank and the date the ranking was read, and it moves when liquidity moves. Not the nearest expiry, not the newest vintage, not the contract a compliance buyer is assumed to use.
What was wrong. Between 27 August and today this desk rebased its compliance markets onto the FRONT MONTH, and justified it as the contract a compliance buyer transacts against. That was an argument, not a measurement, and the measurement disagrees on every market we checked. Ranked by open interest on the 1 September activity file, the December 2026 contract leads all five: it holds 54% of the EU curve's open interest, 82% of the UK curve, 78% of California-Quebec, 57% of RGGI and 85% of Washington. The front month we had been quoting ranked third or fourth on four of them, and SIXTH on Washington, where it held two tenths of one percent of the curve. On UKA and RGGI the December contract carries roughly twenty times the open interest of the strip we were marking.
Why this happens, since it is not obvious. A contract weeks from expiry has had its open interest rolled OUT of it. Compliance markets concentrate in the December contract, which is why December is the benchmark everyone quotes. The front month is the nearest contract; it is rarely the traded one. A mark on an illiquid strip is a price nobody can trade, and that is the objection to it - not that it was inaccurate, but that it was not a price you could act on.
Why now rather than at the roll, which is the fair question. The September contract expires within weeks. Had the desk said nothing, these marks would have moved to December on their own at the roll, and the change would have arrived with no announcement and no reason given - a basis change by attrition. We would rather make the change deliberately, say why, and state the rule that governs the next one. That also means the next roll is an expected event rather than another correction.
This is the second correction on the EU mark in two days, and that deserves a plain word. This morning's correction moved EU ETS from an auction clearing to a futures settlement - a change of INSTRUMENT TYPE. This one keeps the futures settlement and changes WHICH CONTRACT is read. They are different questions, and the first correction did not address the second. It is also not an EU correction: one rule is being adopted across the whole tape and five marks move on the same morning.
Alberta is held out, and the reason is the rule working. The Alberta EPC rebase queued for 4 September does not happen. The feed that carries Alberta prices has no open-interest column at all - not missing for this contract, absent from the data. Under a rule that selects on liquidity, a market with no liquidity data gets no mark, so Alberta keeps the administered TIER headline price as its reference. That is the settled position rather than a pause: the data the desk receives for these contracts does not contain open interest, so there is no liquidity for us to read and no reference we could justify. We would rather say that plainly than pick a contract and imply we had a reason.
What does not change. No forward row, no supply or demand figure, no auction print. Every primary print keeps its own date and basis. The mark lines now carry their contract, their open-interest rank and the date that ranking was read, so a reader can see the reference is the traded one rather than take our word for it.