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Brazilian governors back renewable H2 support bill
Brazilian governors back renewable H2 support bill
Rotterdam, 15 May (Argus) — A group comprising the governments of nine states in northeast Brazil has endorsed the latest amendments filed in the country's hydrogen bill, which envisage generous tax credits and financial incentives for renewable hydrogen production and demand. Governors from the nine states have joined calls by the Brazilian green hydrogen industry association ABHIV to push the national government to embrace the suggestions, recently filed by senator Otto Alencar. The consortium, which is an instrument for "political, judicial and economic" integration of the states that make up the northeast region, is urging more support from federal government at the World Hydrogen Summit in Rotterdam. The current pipeline of planned projects in the northeast would amount to approximately 12mn t/yr of renewable hydrogen production, and "if only 10pc of these projects materialise, it would already place us in a global leadership position," Piaui's governor and consortium representative Rafael Fonteles said. The proposals in the bill resemble incentives that were given to other energy sectors such as ethanol and biodiesel to make alternative sources more competitive, ABHIV director Fernanda Delgado said. "Brazil knows how to do these policies, this is not new". The amendments are currently being discussed by the senate. ABHIV expects some pushback from the finance ministry regarding the tax credits, mainly regarding the 20-year offer, Delgado told Argus , but the initial proposal has left some room for negotiation and even a more modest version will already help the industry, she said. The current proposal envisions tax credits to up to 15GW of electrolyser capacity in the country, with up to 6.58 Brazilian reais ($1.27) per kg for production and 8.55 reais/kg for domestic consumers. While the northeast of Brazil offers competitive renewables generation and available land, these factors alone are "not enough" because "competition is worldwide," according to the head of Latin America at French renewables firm Voltalia, Robert Klein. The first molecules will be the most expensive ones and the tax cashback will help make them more competitive and projects reach gigawatt scale, Klein said. Momentum has accelerated for Brazilian renewable hydrogen projects, although almost all are at a very early stage. During the event, Brazilian utility Eletrobras signed an agreement to support European group Green Energy Park's planned renewable hydrogen and ammonia production in Piaui with electricity transmission infrastructure. By Pamela Machado Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia to explore biofuels mandate, incentives
Australia to explore biofuels mandate, incentives
Sydney, 15 May (Argus) — Australia's federal budget is funding mandate studies and pursuing certification schemes, given the increasing likelihood biofuels will play a significant role in the nation's energy transition. The federal government has pledged A$18.5mn ($12.3mn) in the four years from 2024-25 to develop a certification scheme for low-carbon liquid fuels, including SAF and renewable diesel, by expanding its guarantee of origin programme for long-term demand by the industry . An extra A$1.5mn over two years from 2024-25 will go to analysis of the regulatory impact of the costs and benefits of introducing mandates for low-carbon liquid fuels, while the government has promised consultation on possible production incentives for domestic project developers. Money from the A$1.7bn Future Made in Australia innovation fund will also be made available for liquid fuels research, to be administered by the Australian Renewable Energy Agency to commercialise net zero technology. "The package of announcements is dealing with crucial areas essential for deployment, including certification to ensure Australia develops a sustainable liquid fuels industry, resourcing to support key demand side interventions such as a low carbon fuels standard and consultation on additional supply-side measures such as production credits," Bioenergy Australia chief executive Shahana McKenzie said on 15 May. The funding pales in comparison to the $9bn hydrogen investment promised by the government, although much of that is deferred to the decade from the 2027-28 fiscal year. About 45pc of Australia's energy use is supplied by liquid fuels but the nations lags behind many countries on decarbonising its transport sector. Australia's Commonwealth Scientific and Industrial Research Organisation forecasts demand for jet fuel will grow 75pc by 2050. But no domestic production facility has yet reached a financial close, despite major airlines committing to increasing their SAF use. Domestic feedstocks including agricultural residues could meet 60pc of Australian jet fuel demand initially, growing to 90pc by 2050, Bioenergy Australia has said, while pursuing renewable fuels could cut the country's dependence on oil product imports from 90pc to 61pc by 2040. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Falling D4 RIN values alter RD strategy
Falling D4 RIN values alter RD strategy
Houston, 14 May (Argus) — Soaring US renewable diesel production is cutting renewable fuel credit prices and pressuring biofuel production margins, potentially curbing industry growth. Renewable diesel (RD) production in North America last year jumped by 36pc to a record 3.45bn USG, and output this year is expected to climb by another 28pc to 4.43bn USG, according to Argus estimates. Rising production has cut the value of biomass-based diesel D4 credits, or renewable identification numbers (RINs), by 75pc over the past year, as credit generation from renewable diesel production has outpaced the the US Environmental Protection Agency's (EPA) biofuel blending targets. D4 RINs credits reflect compliance costs of biofuel that has been blended with diesel, used by fuel suppliers in accordance with the EPA's annual Renewable Fuel Standard (RFS) mandates. They also act as an incentive for renewable fuel production, as producers can sell RINs once their biofuels are blended with conventional road fuels. Lower prices on D4 RINs generate less revenue for the biofuels industry and also reduce compliance costs for obligated parties. Some refiners have shifted their strategic focus to compensate for lower RIN values, with some cutting back on renewable fuels production. Vertex Energy plans to idle renewable diesel production at its Mobile, Alabama, facility as the company anticipates generating wider margins by returning a converted hydrocracker back to fossil fuel production. Vertex remains open to restarting its renewable diesel production if market conditions improve. CVR Energy is considering changing feedstocks to improve its renewable diesel margins, possibly substituting corn oil for soybean oil. Chevron has shared similar sentiments, saying feedstock flexibility can be a major advantage across its operations. The company recently closed two biodiesel facilities in the US midcontinent as attention shifts to more profitable renewable diesel in the long term. Valero is nearly finished converting its renewable diesel unit to sustainable aviation fuel (SAF) at its Diamond Green Diesel joint venture facility in Port Arthur, Texas. The venture with Darling Ingredients is the largest producer of renewable diesel in North America and a major contributor to the increase in supply over the past two years. Valero views the D4 RIN market as in persistent oversupply due to the growth of renewable diesel, but the company remains optimistic due to other clean fuels incentives, including state-level low carbon fuel standard (LCFS) programs that provide incentives for reducing the carbon intensity of transportation fuels. "The long-term outlook of RD is still positive, because you look at the number of LCFS programs that are still being contemplated by legislation this year," Valero executive vice president Gary Simmons said. More renewable diesel capacity is expected to come online by the end of this year. Marathon Petroleum's Martinez, California, refinery is undergoing a full conversion from conventional petroleum refining to renewable fuels and is currently running at 50pc of capacity. Phillips 66 has taken a similar approach with the conversion of their Rodeo, California, plant, with 30,000 b/d of renewable diesel online. With EPA biofuel blending targets fixed through 2025, an aggregate decrease in renewable diesel production and subsequent lower generation of D4 RINs could counter the weakened RIN prices that are contributing to the industry's depressed production margins. By Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US court upholds RFS blending targets for 2020-22
US court upholds RFS blending targets for 2020-22
Washington, 14 May (Argus) — A federal appeals court has affirmed biofuel blending requirements for 2020-22 under the Renewable Fuel Standard (RFS), rejecting lawsuits from refineries and renewable fuel producers challenging the standards. The US Environmental Protection Agency (EPA) acted within its authority in the rule when it revised the biofuel blending targets to account for small refinery exemptions it expected it would award in the future, the US Court of Appeals for the DC Circuit said today in a 2-1 ruling. The court rejected a complaint by refineries that argued EPA could only revise the annual biofuel blending targets based on exemptions it had already approved in the past. "The statute does not confine EPA to the Refiner Petitioners' preferred method of accounting for small refinery exemptions," DC Circuit judge Cornelia Pillard wrote on behalf of the majority. "EPA's choice to account for them both retrospectively and prospectively is not arbitrary or capricious." The ruling leaves intact a 2022 rule that required renewable fuel blending to increase to 20.63bn USG by 2022, up from 17.13bn USG in 2020. For the first time under the RFS, the rule used a new formula that tried to avoid a recurrent issue under which EPA failed to account for upcoming requests from small refineries for exemptions from the RFS. EPA has subsequently decided to start denying all small refinery exemptions, under a new argument that small refiners do not face a disproportionate hardship from complying with the RFS. But if the courts throw out that finding in a pending lawsuit , the formula at issue in today's court ruling could take on a greater relevance for how EPA accounts for small refinery exemptions when setting biofuel blending targets. The DC Circuit rejected a separate lawsuit by cellulosic ethanol producers that said EPA should have required increased blending of cellulosic ethanol, based in part on the availability of carryover compliance credits. The court found EPA had adequate authority to waive volumetric targets set by the US Congress in 2007 based on its finding there were inadequate domestic supplies of the fuel, which is produced from plant fibers. Judge Gregory Katsas, who dissented from the ruling, said he believed the biofuel blending requirements for 2022 were set "arbitrarily high." Katsas cited EPA's finding that those standards would impose an estimated $5.7bn in additional costs for fuel but only deliver $160mn in energy security benefits. Katsas also faulted EPA for increasing the biofuel blending targets by 250mn USG in 2022 to "cancel out a legal error" from biofuel blending targets in 2016. Katsas said there was no authority to transfer volume requirements from one year to another. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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