Illinois CFS will take more time

Market: Biofuels, Emissions, Oil products
22/03/24

Illinois lawmakers will move slowly on a proposed state low-carbon fuel standard (LCFS) as opponents target fuel costs and placing authority over the program with a state agency.

The state Senate Energy and Public Utilities Committee discussed a proposed Illinois LCFS without voting during a Friday morning hearing for which registered opponents of the legislation outnumbered supporters by more than five-to-one. Both members of the public and legislators were wary of granting substantial rulemaking authority on the concept to Illinois environmental regulators.

Lawmakers had delayed a previous hearing and committee vice-chairman and bill sponsor David Koehler (D) switched the topic on the eve of today's hearing from a voting matter to a discussion item.

"This is important stuff and we have to do it right," Koehler said. "I'm committed to doing it right, rather than doing it fast."

LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. California, Oregon and Washington operate US LCFS markets. New Mexico lawmakers earlier this year directed its state environmental regulator to develop a program for that state.

The Koehler bill would direct the Illinois Environmental Protection Agency and Pollution Control Board to establish an LCFS requiring a 20pc reduction in gasoline and diesel carbon intensity by 2038. That direction, used in California, Oregon and, soon, New Mexico, has drawn immediate skepticism from opponents who believe those details should come from legislators who answer to constituents.

"I'm not prepared to cede that responsibility to non-elected boards," committee minority spokeswoman Terri Bryant (R) said today, summarizing concerns that have been raised from other opposed or neutral interest groups watching the bill.

The proposed law would also require consideration for low-carbon agricultural practices. Illinois hosts the largest soybean production of any state as well as an established corn and ethanol sector.

Corn grower and ethanol groups testified today supporting that idea, but not the overall bill.

"I sincerely believe that, if done right, Illinois policy could become a beacon in the Midwest of what a clean transportation standard should look like," said Dustin Marquis, president of the ethanol producers' organization Illinois Renewable Fuels Association.

Some environmental groups also registered as neutral on the language in the morning session, concerned that the proposal lacked protections against land-use changes and other environmental issues associated with agricultural-based lower-carbon fuels. Koehler said it was an issue that would be looked at in an upcoming amendment.

Trucking and fuel retail groups focused on costs based on interpretations of California's program. Truck associations chafed at exemptions for aviation and locomotive fuel, noting that the proposal could make their shipping rivals cheaper.

By Elliott Blackburn

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

04/04/25

Tariffs and their impact larger than expected: Powell

New York, 4 April (Argus) — Federal Reserve chairman Jerome Powell said today tariff increases unveiled by US president Donald Trump will be "significantly larger" than expected, as will the expected economic fallout. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth," Powell said today at the Society for Advancing Business Editing and Writing's annual conference in Arlington, Virginia. The central bank will continue to carefully monitor incoming data to assess the outlook and the balance of risks, he said. "We're well positioned to wait for greater clarity before considering any adjustments to our policy stance," Powell added. "It is too soon to say what will be the appropriate path for monetary policy." As of 1pm ET today, Fed funds futures markets are pricing in 29pc odds of a quarter point cut by the Federal Reserve at its next meeting in May and 99pc odds of at least a quarter point rate cut in June. Earlier in the day the June odds were at 100pc. The Fed chairman spoke after trillions of dollars in value were wiped off stock markets around the world and crude prices plummeted following Trump's rollout of across-the-board tariffs earlier in the week. Just before his appearance, Trump pressed Powell in a post on his social media platform to "STOP PLAYING POLITICS!" and cut interest rates without delay. A closely-watched government report showed the US added a greater-than-expected 228,000 jobs in March , showing hiring was picking up last month. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

UK considers import tariffs on US oil products

04/04/25

News

04/04/25

UK considers import tariffs on US oil products

London, 4 April (Argus) — The UK government has included refined oil products from the US in a list of goods that could be subject to retaliatory tariffs. The government said it was considering "potential tariff measures on US goods, should this be deemed necessary" in response to a 10pc US import tariff on UK goods and services — excluding energy — due to take effect on 5 April. The consultation will last until 1 May. Light oils, gasoils, jet fuel, fuel oils, lubricants and bitumen all feature in the list of products possibly subject to retaliatory tariffs. The UK could be particularly exposed to any tariff impact on US middle distillate imports in the event of retaliation. The UK sourced over a quarter of its 14.37mn t of 10ppm diesel and gasoil from the US last year, according to Vortexa, while 3pc of its 10.15mn t of jet and kerosine imports were sourced from the US. It is not clear what tariff rate the UK is targeting in its potential retaliation. For other oil products, any potential import tariff impact would become more muted as US refined product imports become less significant. The UK received just 6pc of its 1.92mn t total fuel oil imports from the US last year, while the UK was the fourth largest gasoline supplier to the US and received none of the product from its trade partner. European refined product values have collapsed as a result of the escalating trade war which saw China retaliate today against the US' latest tariff action. Eurobob non-oxy gasoline barge prices dropped by 4pc to $700.75/t on 3 April at a time when trading activity typically picks up ahead of the US summer driving season. Indicated non-oxy barge values were set to drop further in the trading session today. The EU is similarly preparing countermeasures against US import tariffs, which Washington set at 20pc from 9 April in addition to existing rates. Ice gasoil futures had dropped by 10pc since President Trump announced the new tariff regime on 2 April to $615.75/t by the close today. Ice gasoil futures are used as the pricing basis against which diesel, gasoil and jet fuel grades are assessed in the European middle distillates markets. European refined products market participants have pointed to a darker global economic outlook triggered by the US import tariffs as the driving force behind the drop-off in European product values. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

EU sees no credibility issue in 2040 GHG target delay

04/04/25

News

04/04/25

EU sees no credibility issue in 2040 GHG target delay

Brussels, 4 April (Argus) — The lack of a proposal for a 2040 greenhouse gas (GHG) reduction target is not a credibility issue for the European Commission, officials said. The commission will have an "ambitious" 2040 GHG proposal in time to derive a 2035 climate plan for the EU "well in time" for the UN Cop 30 climate talks in Belem, Brazil, over 10-21 November. The commission was expected to make a legislative proposal for a 2040 EU climate target no later than six months after the conclusion of the first global stocktake under the Paris climate agreement, which concluded at Cop 28 in December 2023, as per the bloc's European Climate Law. The process is "quite late nationally and also globally", the commission acknowledged. But officials insist that the update to the climate law, setting a 2040 GHG target, will come "well in time" for the Cop process. The EU will then derive its nationally determined contribution (NDC) to the Paris deal for 2035 from 2040. The official deadline for parties to submit their updated NDC was 10 February, but only 12 countries made timely submissions. "The credibility issue is much less to do with the agenda now," climate spokesperson Anna-Kaisa Itkonen said. EU climate commissioner Wopke Hoekstra has made "very, very clear" that the commission is preparing for an "ambitious climate law". "Ninety per cent is currently in the political guidelines," Itkonen said. "It is the starting point for these discussions," she added, underlining the extreme importance of presenting a 2040 proposal that has a "substantial majority". Another EU source noted that the commission is discussing various options and scenarios with EU member states and the European Parliament. "We want to keep the ambition as high as possible. So our starting point of discussion is 90pc," the source said. Discussion of 2040 flexibility — such as following a weaker trajectory toward climate neutrality, or using international credits — would have "severely negative" implications for the EU's standing in international climate action, NGO Bellona Europa's senior manager for carbon accounting, Mark Preston Aragones, said. "The commission should not come with an already watered-down proposal even before negotiations formally begin with the European Parliament and EU member states," he said. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

South Africa Natref to end bitumen production from Sep

04/04/25

News

04/04/25

South Africa Natref to end bitumen production from Sep

London, 4 April (Argus) — Bitumen production at Natref's 107,000 b/d Sasolburg refinery in South Africa will cease from September, ending all the country's output of the heavy oil product. Several South African bitumen market participants, including buyers from the refinery and suppliers of imported bitumen into the domestic and regional southern African markets, said officials from majority Natref shareholder Sasol had been informing customers of the planned move over the past week. Customers were told that final bitumen supply from stocks held at the refinery would be supplied to them into October, with all supplies ending thereafter. Market participants said the Natref plan is linked to a wider move of switching to sweeter crudes aimed at maximising output of light and middle distillates, which would also hit output of heavy products other than bitumen, notably high-sulphur fuel oil (HSFO). Officials at Sasol, which owns 63.3pc of Natref alongside UK energy firm Prax with 36.4pc, have so far not responded to Argus' requests for comment. South African market participant said the move had been under consideration for some time, even before Prax agreed to buy TotalEnergies' Natref stake in December 2023. South Africa turned from a major net exporter of bitumen, mainly to its southern African neighbours, to becoming increasingly dependent on imports after several of the country's refineries were either shut down or ended their bitumen production since 2020. South African cargo imports in bitumen tankers surged to nearly 200,000t in 2024, according to Vortexa data, mostly into Durban and some into Cape Town. Mediterranean supplies, mainly from Greece and Turkey, made up just over half of these, with Rubis and Continental supplying most. Mideast Gulf storage points, along with Bahraini state-owned Bapco's refinery and export terminal at Sitra, supplied around a third, while emerging exporter Pakistan shipped 8pc. According to a South African bitumen supplier, the Natref refinery's bitumen production fell last year to 45,000-50,000t — from an Argus estimate of 140,000t in 2023 — because of numerous plant halts and interruptions. The market effect of Natref ending its bitumen output will therefore be limited, with another leading South African participant saying truck flows from the inland refinery had become increasingly unreliable. The halt will nevertheless trigger more South African import requirements that are anyway likely to rise sharply in the coming years because of much-enhanced government infrastructure budgets. The Natref refinery was forced to stop all production for about two months following a fire in early January this year. French construction and bitumen supply firm Colas recently became the latest company to take a South African import asset position, agreeing a long-term deal with local firm FFS Refiners to operate four of five new bitumen tanks at an existing Durban facility once an FFS expansion there is completed, likely in the second half of this year. By Keyvan Hedvat and Fenella Rhodes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

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.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more