California eyes more oilseed limits as LCFS vote nears

Market: Agriculture, Biofuels, Emissions, Oil products
02/10/24

California regulators proposed late Tuesday expanding limits on the Low Carbon Fuel Standard (LCFS) credits certain oilseeds may generate while keeping the program's tougher targets and adoption schedule unchanged.

The latest proposed California Air Resources Board (CARB) revisions add sunflower oil — a feedstock with no current approved users or previous indicated use in the program — to restrictions first proposed in August on canola and soybean oil feedstocks for biomass-based diesel. The new language maintained a proposal to make the program's annual targets 9pc tougher in 2025 and to achieve by 2030 a 30pc reduction from 2010 transportation fuel carbon intensity levels.

CARB staff's latest proposals, published a little before midnight ET on 1 October, offer comparatively minor adjustments to the shock August revisions that spurred a nearly $20 after-hours rally in LCFS prompt prices. Prompt credits early in Wednesday's session traded higher by $3 than they closed the previous trading day.

LCFS programs require yearly reductions in transportation fuel carbon intensity. Higher-carbon fuels that exceed these annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives.

California's program has helped spur a rush of new US renewable diesel production capacity, swamping west coast fuel markets and inundating the state's LCFS program with compliance credits. CARB reported more than 26mn metric tonnes of credits on hand by April this year — more than double the number of new program deficits generated in all of 2023. Staff have sought through this year's rulemaking to restore incentives to more deeply decarbonize state transportation than thought possible during revisions last made in 2019.

California formally began this rulemaking process in early January after publishing draft proposals in late December. Regulators initially proposed adjusting 2025 targets lower by 5pc for 2025 — a one-time decrease called a stepdown — to work toward a 30pc reduction target for 2030.

CARB set its sights on 21 March for adoption. But staff pulled that proposal in February as hundreds of comments in response poured in.

Updated language released on 12 August proposed a steeper stepdown for 2025 of 9pc while keeping the 30pc target for 2030. The proposal also added a limit on credit generation from certain crop-based feedstocks, to 20pc of the associated volume delivered to California in certain cases.

Respondents generally supported the tougher targets, though fuel suppliers warned of higher prices and some credit generators argued that the state should be even more ambitious.

No one praised the proposed limits on credit generation. Environmental advocates said the proposal fell short of the protections they sought against crop conversion and other risks; agribusiness warned that the concept distorted the LCFS and could spark lawsuits.

By Elliott Blackburn

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02/10/24

US dockworkers, shippers strike positions entrenched

New York, 2 October (Argus) — The US dockworker strike gripping east coast and Gulf coast container terminals may not be short-lived given the wide gap between union demands and the offer from an alliance of containership owners, terminal operators and port associations. The United States Maritime Alliance (USMX) said its latest proposal for a 50pc wage increase, made on 30 September just before the strike started, "exceeds every other recent union settlement while addressing inflation". But the International Longshoremen's Association (ILA) rebuked USMX's characterization of the offer late Tuesday, saying it fails to address the many years it takes for the port workers it represents to realize the higher wages, and factors like workers being on unpaid on-call status. The last-minute timing of the 50pc wage increase offer itself undermines the USMX's position as good faith negotiators, ILA said. "[The] USMX's claim that they are ready to bargain rings hollow when they waited until the eve of the potential strike to present this offer," the ILA said. "The last offer from [the] USMX was back in February 2023." Dockworkers started to picket container terminals in New England, New York, New Jersey, Houston, Texas, New Orleans, Louisiana, and other locations on 1 October . Containership loading and unloading has come to a halt at those terminals, while no trucks where queued at unmanned loading checkpoints. The union has pointed to a perceived unfairness in record profits reported by shipping companies since the Covid-19 pandemic not being shared with ILA members who were "keeping ports open and the economy moving" during that time. The union is also sticking to demands for no new automation technology at US ports that would replace workers, describing this position as "non-negotiable", and the right to 100pc of the "container royalties" funds, a type of welfare paid out by employers to protect US longshoremen from the loss of work brought on by the containerization of cargo. No fed intervention expected US president Joe Biden continued to indicate the federal government would not intervene in the strike, saying collective bargaining between the ILA and the USMX is the best way for workers to achieve their goals. In a statement this week Biden also pointed out that the USMX "represents a group of foreign-owned [ocean] carriers" and insisted that they should "present a fair offer" to the ILA. "It is time for [the] USMX to negotiate a fair contract with the longshoremen that reflects the substantial contribution they've been making to our economic comeback," Biden said. Vice-president Kamala Harris, who is running to replace Biden, doubled-down on that position today. "This strike is about fairness," Harris said in a statement. "Foreign-owned shipping companies have made record profits and executive compensation has grown. The Longshoremen, who play a vital role transporting essential goods across America, deserve a fair share of these record profits." Few commodities curtailed for now Ports and the companies that rely on them have been anticipating the strike for many weeks . Movements of dry bulk cargo, such as coal and grains, are expected to be less affected by the work stoppage, though there could be side effects from the congestion of other products being rerouted to ports not affected by the strike. Movement of crude, refined products and many petrochemicals are not expected to be interrupted, but some polymers that are moved by container, including polyvinyl chloride (PVC), polyethylene (PE), and polypropylene (PP), could be disrupted. A segment of US steel imports could also be disrupted by the strike, as about 9pc of those imports come in via containers , according to data from Global Trade Tracker. A prolonged strike could begin to curtail some downstream manufacturing of equipment that requires parts that move by containers. By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU commission pushes for 12-month deforestation delay

02/10/24

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02/10/24

EU commission pushes for 12-month deforestation delay

Brussels, 2 October (Argus) — The European Commission has proposed an extra 12 months' "phasing-in time" to implement the bloc's EU deforestation regulation (EUDR). The commission also published the outlines of the EUDR methodology to classify countries as low, standard or high-risk. It said a large majority of countries worldwide will be classified as "low risk". The commission said that three months ahead of the intended implementation at the end of this year, "several global partners" have repeatedly expressed concerns about preparedness and that European stakeholder preparation is "also uneven". It added that the delay in "no way puts into question the objectives or the substance of the law". German agriculture minister Cem Ozdemir last month called for the commission to "urgently" postpone the EUDR's implementation by six months . The commission can "create all the necessary conditions on its own" for a delay, without renegotiating the EUDR, he said. Parliament's largest centre-right EPP group has also pushed to delay the regulation. Officials published "additional" guidance documents and a "stronger" international co-operation framework for global stakeholders, EU states and third countries. The change requires approval from EU states and European Parliament to make the EUDR applicable from 30 December 2025 for large companies. The date would be pushed back to 30 June 2026 for small firms. A group of major firms such as Ferrero, Mars Wrigley, Mondelez International and Nestle called for no reopening of the EUDR's "substance". The group, joined by several campaign organisations including Fairtrade International, said renegotiating aspects of the EUDR would only increase uncertainty and jeopardise the investments made for application. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Malaysia releases updated energy transition policy

02/10/24

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02/10/24

Malaysia releases updated energy transition policy

Singapore, 2 October (Argus) — Malaysia has released its updated national climate change policy, which sets out a new framework for the country's transition toward a low-carbon economy. Malaysia on 30 September launched its National Climate Change Policy 2.0, an update to its first national climate change policy that was implemented in 2009. It serves as an "umbrella policy" that ties together the country's various climate initiatives. It sets out a strategic framework to provide an overarching guide on achieving goals, including targets in its nationally determined contribution (NDC) to the Paris agreement — climate plans. The updated policy made no mention of 2035 goals, although countries, including Malaysia, are due to submit their NDCs for that period in November-February to the to the UN Framework Convention on Climate Change (UNFCCC). The country's NDC targets remain unchanged, with the country aiming to reduce emissions by 45pc by 2030 compared with 2005 levels, and achieve net zero by 2050. Its greenhouse gas emissions in 2019 totalled 330.4mn t of CO2 equivalent (CO2e), states the policy document, up from 250mn t of CO2e in 2005. The energy sector accounts for more than 79pc of the country's emissions. The policy acknowledges that as a trading nation and oil producing country, the shifts required for the energy transition pose risks to Malaysia. Policy changes such as carbon pricing may result in overall costs of doing business, and such changes need to be just to ensure there are no negative societal impacts, and no stranded assets. The policy, regulatory, technological and market shifts "are likely to significantly impact Malaysia's economy," states the policy document. Currently, 20-30pc of Malaysia's economy is reliant on sectors that face the aforementioned risks, such as the oil and gas, power generation, metals and mining sectors. Bank Negara Malaysia, the central bank, estimates that the country stands to lose $65.3bn/yr in export revenue "if it fails to comply to these transition risks." The updated policy attempts to address these risks and sets out five strategic thrusts that constitute its new climate change framework. One of these is to strengthen climate governance and institutional capacity. The initiatives under this include creating a comprehensive legal framework to regulate climate action and establishing an effective governance structure to manage climate action. Malaysia, much like many other developing economies, faces challenges in receiving adequate financing for its energy transition. It is estimated that the country needs 350bn ringgit ($84bn) in investments to achieve its net zero goals, according to the policy document. To address this, another key strategy in the policy is to scale up blended financing and stimulate a green economy by increasing the involvement of private sector. In line with this, Malaysia aims to explore the feasibility of carbon pricing instruments and to develop a national policy for the carbon market, to give guidance on carbon trading, including on international compliance and voluntary markets. Other strategies under the policy include supporting carbon capture, utilisation and storage development, as well as enhancing international collaboration on low carbon technology and innovations, although specifics on these initiatives were not provided. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Asian gasoline market in contango as supply surges

02/10/24

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02/10/24

Asian gasoline market in contango as supply surges

Singapore, 2 October (Argus) — The Asian gasoline market structure flipped into contango — where later deliveries are priced at a premium to prompt arrivals — on 1 October because of an influx of cargoes from Saudi Arabia and China. The balance October and November spread was assessed around $0.05-0.10/bl in contango. The last time the market structure was in contango was on 20 June when the spread fell to -$0.05/bl. The gasoline crack spread, or the Argus Singapore 92R gasoline spot assessments against Ice Brent, also reflected the weakness as it fell to $3.05/bl yesterday, the lowest since 20 October 2023 when the crack spread was at $3.01/bl. The reason for the drop could be because of an influx in gasoline cargoes from Saudi Arabia, market participants said. There are a number of gasoline cargoes loading from Jizan, Saudi Arabia in September and are making their way towards Singapore, gasoline traders said. This could be related to the fall in spreads, said a Dubai-based gasoline trader. About 113,000t (955,000 bl) of gasoline could be loading from the Jizan refinery around 9-13 September and is expected to arrive in end-September, according to global trade analytics platform, Kpler. This marks a significant increase from August's volumes of just 12,000t and is the highest since February, Kpler data show. This increase was also reflected in data from oil analytics firm Vortexa, which showed about 85,000t expected to ply the route in September as compared to below 10,000t in August. The Jizan refinery has been exporting gasoline cargoes but mainly to the US. The US accounted for 61pc and 28pc of total export volumes in July and August respectively, according to Kpler. An anticipated surge in Chinese gasoline exports in October also placed a cap on crack spreads. Exports are expected to increase in October because of improved export economics and the rapid development of new energy vehicles (NEVs) which reduces domestic demand and margins for gasoline. Chinese companies plan to export 190,000 b/d of gasoline in October, a rise of 60,000 b/d or 44pc from September, although the volume is 20,000 b/d or 11pc lower from a year earlier. The release of Chinese export quota also eased concerns of a tight market in the fourth quarter. China exported around 26.17mn t of clean products from January to August 2024, GTT customs data show. An Argus survey suggests that China could also be exporting an estimated 5.29mn t from September to October 2024, bringing the total export volume to around 31.46mn t, which means about 9.54mn t quota left will remain for November to December 2024. Based on the January-September clean product export split, there should be more than 1mn t/months of quota for gasoline exports during November to December. In comparison, China exported an average of 750,000t of gasoline each month from January to October 2024. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Calif. minimum gasoline reserve bill heads to Senate

01/10/24

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01/10/24

Calif. minimum gasoline reserve bill heads to Senate

Houston, 1 October (Argus) — The California State Assembly today passed a bill that would authorize the state's energy regulator to require refiners to maintain minimum gasoline inventories, the latest measure in governor Gavin Newsom's ongoing legislative efforts to mitigate price spikes at the pump. The assembly today passed AB X2-1 with a 44-17 vote, sending the bill to the California Senate for committee and then floor hearings. The bill, if passed by the Senate and signed into law by Newsom, would authorize the California Energy Commission (CEC) to regulate, develop and impose requirements for in-state refiners to maintain minimum stocks of gasoline and gasoline blending components. The CEC would have the authority to penalize refiners who fail to comply. The bill comes on the back of a transportation fuels analysis by the CEC's Division of Petroleum Market Oversight (DPMO) that concluded days of refined product supply in California is a key driver of price spikes. A minimum road fuels inventory requirement is unprecedented in the US but has been implemented in various forms in Australia, New Zealand, the Philippines and Mexico. Proponents of the bill say maintaining "normal" inventory levels of gasoline will mitigate against price spikes for consumers. Critics, such as the west coast refining industry, say the government has misdiagnosed what it a broader supply problem for California where limited refining capacity and import infrastructure have created a "fuel island". By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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