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Viewpoint: Regulations to weigh on Asia UCO, boost Pome

  • Market: Biofuels
  • 19/12/23

European policy changes will continue to drive Asia-Pacific biofuel feedstock markets in 2024, even though a set of new regulations to boost renewable fuel use across sectors are unlikely to take effect until the following year.

The European Council and Parliament formally adopted the third iteration of the Renewable Energy Directive (RED III), ReFuelEU Aviation and FuelEU Maritime in September 2023, will all three expected to apply from 2025. But more imminent European regulatory changes including revisions to individual member states' blending mandates and updated certification guidance for mills supplying palm oil residues should affect prices ahead of this.

Biofuels policy discussions also accelerated in Asia-Pacific during 2023, including in Malaysia, China and Indonesia. But timelines for implementing policies on second-generation biofuels and feedstocks within the region remain shaky, with European demand still playing a large part in driving prices for Asian waste and advanced feedstocks in 2024.

The biofuels complex in Europe and Asia-Pacific was under pressure for much of 2023. An influx of advanced biodiesel from China to Europe caused oversupplies of double-counted physical biodiesel and tradeable tickets, which have pressured renewable fuel prices in the EU and consequently Asia-Pacific (see charts 1 and 2).

The change in trade flows spurred several investigations across Europe. The EU's formal inquiry into China's potential involvement in circumventing import duties on Indonesian biodiesel is expected to conclude in early 2024, with the bloc likely to impose countermeasures that will hamper flows of Chinese used cooking oil (UCO) methyl ester to its main buyer if evidence of any malpractice is found. China's commitment to promote domestic biodiesel blending may appear a ray of hope, although market participants expect local government funding for the programme will be unlikely to support UCO prices at current levels.

Feedstock demand from renewable diesel and hydrotreated vegetable oil (HVO) producers in the US, Singapore and Europe has supported Asian UCO prices to some extent in 2023, as margins for hydrotreated biofuels have remained significantly higher than for their first-generation counterparts.

Changing flows

But a decision by one of Europe's biggest HVO consumers Sweden to drastically cut its greenhouse gas reduction mandate for 2024-26 will curtail short-term EU HVO demand. HVO demand across the bloc will now total roughly 3.9mn t in 2024, Argus Consulting forecasts, down from 4.5mn t before mandates were adjusted lower.

A weaker demand outlook, combined with higher interest rates, mean some standalone HVO and SAF refineries due to come on stream in the Asia-Pacific are considering reducing planned capacity or delaying start-ups. They may not begin buying significant UCO volumes in 2024 as many feedstock suppliers had hoped.

The flow of Asian UCO to the US established in 2023 will almost certainly continue, although it will unlikely provide the same price support. US, Asian and European UCO markets are now poised to move in parallel, having integrated after substantial imports of cheaper Chinese UCO drove sharp losses in US UCO prices (see chart 3).

But tighter supplies may support firmer prices for RED-certified palm oil mill effluent (Pome) oil in 2024.

Availability of the palm oil residue will likely fall as a new ISCC requirement for full upstream traceability applies market-wide. Collectors must ensure all mills they buy from are certified by their next annual audit after 1 August 2023. But some aggregators expect a sizeable portion of mills on their books will choose not to pay for certification, leaving them unable to supply the EU market.

Ucome fob China, strait of Malacca ($/t)

ARA Ucome, advanced Fame ($/t)

US vs China, ARA UCO ($/t)

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08/04/25

Bunker Industry seeks universal alternative fuels rules

Bunker Industry seeks universal alternative fuels rules

Fujairah, 8 April (Argus) — Bunker market participants urged the adoption of universal standards for alternative bunker fuels, warning that fragmented regulations are hampering the maritime sector's shift to lower-carbon options. Speaking at the S&P Global Commodity Insights FUJCON 2025, held in Fujairah, UAE, stakeholders highlighted inconsistencies and divergent regional policies, governing biofuels, methanol, ammonia and hydrogen as a key obstacle to scaling up adoption. The lack of harmonised standards on fuel certification, safety protocols and emissions accounting is creating uncertainty for operators and suppliers navigating a complex global market. "Shipping companies like us face an unfair situation, falling behind the policies, that are changing every day," Jens Maul Jorgensen, director of bunkering at Oldendorff Carriers said. The EU's emissions trading system (ETS) was extended to cover the maritime sector last year, and this year FuelEU Maritime came into effect, while the International Maritime Organisation (IMO) is lagging with global regulations, Jorgensen said. FuelEU Maritime, which came into effect this year, sets greenhouse gas (GHG) emissions reduction targets for vessels travelling in or out of Europe. Panel participants at FUJCON called for the replacement of "too many regulations" with universal, clear and policed rules. "If we do not ensure the proper policing of these rules, people will keep finding loopholes, and we do not need loopholes," according to chair of the International Bunker Industry Association Constantinos Capetanakis. The bunker market is under pressure to decarbonise as the IMO targets a 50pc cut in shipping emissions by 2050 from 2008 levels. Alternative fuels are central to this goal, but regulatory disparities complicate investment decisions, industry players said. Market participants warned that prolonged regulatory fragmentation could delay infrastructure investments and inflate costs for end-users. By Elshan Aliyev Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Flooding on US rivers mires barge transit


07/04/25
News
07/04/25

Flooding on US rivers mires barge transit

Houston, 7 April (Argus) — Barge transit slowed across the Arkansas, Ohio and lower Mississippi rivers over the weekend because of flooding, which prompted the US Army Corps of Engineers (Corps) to close locks and issue transit restrictions along the waterways. The Corps advised all small craft to limit or halt transit on the McClellan-Kerr Arkansas River Navigation System (MCKARNS) in Arkansas because flows reached above 200,000 cubic feet per second (cfs), nearly three times the high-water flow. The heavy flow is expected to persist throughout the week, posing risks to those transiting the river system, said the Corps. Some barges have halted movement on the river, temporarily miring fertilizer resupply efforts in Arkansas and Oklahoma in the middle of the urea application season. The Corps forecasts high flows to continue into Friday, and the National Weather Service predicts several locations along the MCKARNS will maintain a moderate to minor flood stage into Friday as well. Both the Arthur V Ormond Lock and the Toad Suck Ferry Lock, upriver from Little Rock, Arkansas, shut on 6 April because of the high flows. Flows along the Little Rock Corps district reached 271,600cfs on 7 April. The Corps forecasts high flows to continue into Friday. Ohio and lower Mississippi rivers The Corps restricted barge transit between Cincinnati, Ohio, and Cairo, Illinois, on the Ohio River to mitigate barge transportation risks, with the Corps closing two locks on the Ohio River on 6 April and potentially four more in the coming days. Major barge carrier American Commercial Barge Line (ACBL) anticipates dock and fleeting operations will be suspended at certain locations along the Mississippi and Ohio rivers as a result of the flooding. NWS forecasters anticipate major flooding levels to persist through the following week. Barge carriers also expect a backlog of up to two weeks in the region. To alleviate flooding at Cairo, Illinois, where the Ohio and Mississippi Rivers meet, the Corps increased water releases at the Barkley Dam on the Cumberland River and the Kentucky Dam on the Tennessee River. The Markland Lock, downriver from Cincinnati, Ohio, and the Newburgh lock near Owensboro, Kentucky, closed on 6 April. The Corps expects the full closure to remain until each location reaches its crest of nearly 57ft, which could occur on 8 or 9 April, according to the National Weather Service (NWS). Around 50 vessels or more are waiting to transit each lock, according to the Lock Status Report published by the Corps on 7 April. The Corps also shut a chamber at both Cannelton and McAlpine locks. The John T Myers and Smithland locks may close on 7 April as well, the Corps said. The Olmsted Lock, the final lock before the Ohio and Mississippi rivers, will require a 3mph limit for any traffic passing through. The NWS expects roughly 10-15 inches of precipitation fell along the Ohio and Mississippi River valleys earlier this month, inducing severe flooding across the Ohio and Mississippi River valleys. A preliminary estimate from AccuWeather stated an estimated loss of $80-90bn in damages from the extreme flooding. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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GHG pricing mechanism to be finalised this week: IMO


07/04/25
News
07/04/25

GHG pricing mechanism to be finalised this week: IMO

London, 7 April (Argus) — The structure of the International Maritime Organisation's (IMO) economic pricing mechanism — aiming to reduce the cost gap between conventional marine fuels and zero/near-zero emission alternatives — will be agreed on by the end of the week, including details on the cost of carbon emissions and whether remedial units will be included, IMO secretary general Arsenio Dominguez said today. Dominguez said the focus of the economic pricing mechanism is not just to raise revenue, but also to support fuel transition. By the end of this week, Dominguez said he is confident that we will see the architecture of what the proposal looks like, including if a remedial unit will be included in the pricing mechanism and what the numbers will look like. Dominguez also said that non-compliant penalties, once agreed on as part of the proposal, will be implemented via a guideline which will be developed after this week. This will be in place by the "entry into force" in 2027, and will cover vessels above 5,000 gross tonnage (GT). Dominguez confirmed that the latest discussions between member states have favoured a "crediting" system for alternative marine fuels as opposed to a "flat carbon levy", although these details are set to be finalised by 11 April. He highlighted three main points being discussed — the definition of "znz" (zero and near-zero emission fuels and technologies), the pricing mechanism itself, and the approach of governance when it comes to implementing the mid-term measures. One of the main concerns raised by market participants on IMO's efforts has been potential regulatory conflicts, such as in the EU where the emissions trading system (ETS) was extended into maritime in 2024 and FuelEU Maritime came into effect in 2025. The concern could be that clashes between IMO global regulations and EU regulations could lead to uncertainty and confusion in the market, potentially weighing on fundamentals for alternative marine fuels. Dominguez said this topic has not yet been explored, but he expects EU member states to look into the respective legal clauses and there could be potential for a unified regulatory approach in line with the global regulation. IMO had also been looking at raising the limit on biofuel content onboard a Type I barge to 30pc from the current limit of 25pc. The proposal for this was submitted to MEPC 83, with a view to approval. "The guidance allows conventional bunker ships certified for carriage of oil fuels under Marpol Annex I to transport blends of not more than 30pc by volume of biofuel, as long as all residues or tank washings are discharged ashore, unless the oil discharge monitoring equipment is approved for the biofuel blend(s) being shipped.", IMO said. The MEPC circular on interim guidance on the carriage of blends of biofuels and Marpol Annex I cargoes by conventional ships was approved today, subject to final editorial review and then to be released as a circular. Dominguez addressed questions regarding the IMO carbon intensity indicator (CII) system, for which a review is expected. IMO's CII regulation, which came into force in January 2023, requires vessels over 5,000GT to report their carbon intensity, which is then scored from A to E. A and B vessel scores are regarded as superior energy efficiency, while C, D and E are considered moderate to inferior scores. Dominguez said the review is likely to take place in 2027, in which IMO will assess the positive aspects of CII so far and identify any further improvements needed. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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USDA to release paused funds for higher biofuel blends


04/04/25
News
04/04/25

USDA to release paused funds for higher biofuel blends

New York, 4 April (Argus) — The US Department of Agriculture (USDA) said this week that the agency would release $537mn for 543 projects meant to expand infrastructure for higher biofuel blends, reviving many projects that were funded by former US president Joe Biden and then paused by the new administration. The grants will help support the installation of biofuel storage tanks and dispensers of higher ethanol blends, including E15 and E85, and higher biodiesel blends, including B20 and B99. They come from the Higher Blends Infrastructure Incentive Program, which started during US president Donald Trump's first term to help reduce the cost of installing biofuel infrastructure but was more recently expanded in scope with new funds from the Inflation Reduction Act. Project funding had been stalled after Trump pressed federal agencies to pause the disbursement of funds appropriated by that 2022 climate law. That directive affected projects due for funding under the higher blends program, including some approved in the final days of the Biden administration. Trump's efforts to freeze legislatively-approved funding is the subject of multiple court cases. USDA said that of the 543 projects approved for support, 188 projects — amounting to nearly $260mn of spending — were new commitments under the Trump administration. The largest of the new projects is a $14.3mn grant for QuikTrip to install E15 and B20 dispensers at 75 fueling stations across 13 states. More projects received funds in California than in any other state. USDA said releasing the funds — at the same time as various other government programs remain on hold — is part of its commitment to "aggressively exploring ways to unleash American energy and incentivize the production and use of homegrown US biofuels." Biofuel groups see potential for supportive policy under the Trump administration and lobbied US officials at a meeting this week for a steep increase in biomass-based diesel blend mandates. Ethanol lobbyists are privately optimistic too that the administration will soon start issuing emergency waivers to bypass typical summertime limits on nationwide E15 access. Support for biofuels is one way the Trump administration could reduce the toll on US farmers from an increasingly volatile trade war that threatens to cut off export markets for US corn and soy. USDA noted that the higher blends program, by allowing for more ethanol and biodiesel consumption, "protects American farmers from retaliatory trade practices." By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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New tariffs could upend US tallow imports


03/04/25
News
03/04/25

New tariffs could upend US tallow imports

New York, 3 April (Argus) — New US tariffs on nearly all foreign products could deter further imports of beef tallow, a fast-rising biofuel feedstock and food ingredient that had until now largely evaded President Donald Trump's efforts to reshape global trade. Tallow was the most used feedstock for US biomass-based diesel production in January for the first month ever, with consumption by pound rising month to month despite sharp declines in actual biorefining and in use of competing feedstocks. The beef byproduct benefits from US policies, including a new federal tax credit known as "45Z", that offer greater subsidies to fuel derived from waste than fuel derived from first-generation crops. Much of that tallow is sourced domestically, but the US also imported more than 880,000t of tallow last year, up 29pc from just two years earlier. The majority of those imports last year came from Brazil, which until now has faced a small 0.43¢/kg (19.5¢/lb) tariff, and from Australia, which was exempt from any tallow-specific tariffs under a free trade agreement with US. But starting on 5 April, both countries will be subject to at least the new 10pc charge on foreign imports. There are some carveouts from tariffs for certain energy products, but animal fats are not included. Some other major suppliers — like Argentina, Uruguay, and New Zealand — will soon have new tariffs in place too, although tallow from Canada is for now unaffected because it is covered by the US-Mexico-Canada free trade agreement. Brazil tallow shipments to the US totaled around 300,000t in 2024, marking an all-time high, but tallow shipments during the fourth quarter of 2024 fell under the 2023 levels as uncertainty about future tax policy slowed buying interest. Feedstock demand in general in the US has remained muted to start this year because of poor biofuel production margins, and that has extended to global tallow flows. Tallow suppliers in Brazil for instance were already experiencing decreased interest from US producers before tariffs. Brazil tallow prices for export last closed at $1,080/t on 28 March, rising about 4pc year-to-date amid support from the 45Z guidance and aid from Brazil's growing biodiesel industry, which is paying a hefty premium for tallow compared to exports. While the large majority of Brazilian tallow exports end up in the US, Australian suppliers have more flexibility and could send more volume to Singapore instead if tariffs deter US buyers. Export prices out of Australia peaked this year at $1,185/t on 4 March but have since trended lower to last close at $1,050/t on 1 April. In general, market participants say international tallow suppliers would have to drop offers to keep trade flows intact. Other policy shifts affect flows Even as US farm groups clamored for more muscular foreign feedstock limits over much of the last year, tallow had until now largely dodged any significant restrictions. Recent US guidance around 45Z treats all tallow, whether produced in the US or shipped long distances to reach the US, the same. Other foreign feedstocks were treated more harshly, with the same guidance providing no pathway at all for road fuels from foreign used cooking oil and also pinning the carbon intensity of canola oil — largely from Canada — as generally too high to claim any subsidy. But tariffs on major suppliers of tallow to the US, and the threat of additional charges if countries retaliate, could give refiners pause. Demand could rise for domestic animal fats or alternatively for domestic vegetable oils that can also be refined into fuel, especially if retaliatory tariffs cut off global markets for US farm products like soybean oil. There is also risk if Republicans in the Trump administration or Congress reshape rules around 45Z to penalize foreign feedstocks. At the same time, a minimum 10pc charge for tallow outside North America is a more manageable price to pay compared to other feedstocks — including a collection of charges amounting to a possible 69.5pc tax on Chinese used cooking oil. And if the US sets biofuel blend mandates as high as some oil and farm groups are pushing , strong demand could leave producers with little choice but to continue importing at least some feedstock from abroad to continue making fuel. Not all US renewable diesel producers will be equally impacted by tariffs either. Diamond Green Diesel operates Gulf Coast biorefineries in foreign-trade zones, which allow companies to avoid tariffs on foreign inputs for products that are ultimately exported. Biofuel producers in these zones could theoretically refine foreign tallow, claim a 45Z subsidy, and avoid feedstock tariffs as long as they ship the fuel abroad. Jurisdictions like the EU and UK, where sustainable aviation fuel mandates took effect this year, are attractive destinations. And there is still strong demand from the US food sector, with edible tallow prices in Chicago up 18pc so far this year. Trump allies, including his top health official, have pushed tallow as an alternative to seed oils. By Cole Martin and Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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