Bullish on Biogas: Why $400 CFR Credits are Just the Beginning

By Nel-i

In 2025, compliance credits under Canada’s Clean Fuel Regulations (CFR) surged from $90, where they had languished amid political uncertainty, to $380. After a brief holiday cooling to $360, early March 2026 sees prices again pushing $400. For the Biogas Community, these stable, high prices provide the “green light” to fund projects and drive demand for feedstocks like manure and food waste. To understand where prices are headed from here, we must look at the “marginal” source of credit supply: Renewable Diesel (RD).

While credit supply comes from many sources – ethanol blending, EV charging, carbon capture, and more – RD is the market’s swing producer. Because it is a “drop-in” substitute for fossil diesel without blending limits, the price of a CFR credit must stay high enough to incentivize the production or import of the marginal barrel of RD.

Breakevens and Fair Value

We calculate the “Breakeven” as the credit price required to bridge the gap between expensive feedstocks (canola or soy) and cheaper fossil diesel. However, since the marginal barrel is generally imported, we also define a “Fair Value” that competes with the U.S. incentive stack. This stack includes D4 RINs and the California LCFS, but disregards the 45z production credit, which the producer retains upon export. Unless the CFR price exceeds this total value, the marginal barrel never reaches Canada.

The Gaseous Distinction

A distinction exists for “gaseous class” credits (created from non-transportation gaseous fuel supply). Because their utility is limited compared to the broader “liquid class”, we expect them to eventually trade at a discount. While they currently trade at par, this gaseous discount will likely open up – albeit from a higher base – as high prices draw more supply into the market.

Where are we today?

In late 2025, CFR prices converged with Breakevens and the Fair Value around $370. Since mid-December, Fair Value has skyrocketed – largely due to higher RIN values needed to restart idled American production – and as of March 5, sits above $450. If U.S. markets hold these levels, the CFR credit price faces significant upward pressure to ensure domestic supply.

Volatility is guaranteed. Less important than any potential increase in CFR prices from here is stability near current levels. Every day with the CFR above $350 is a good day for biogas producers, and the outlook remains bullish.

You can get more insights like this in the 2026 Canada Edition of the Biogas Community Magazine.