Generic Hero BannerGeneric Hero Banner
Latest market news

California adds oilseed limits as vote nears: Update

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

Updates throughout with more detail on revisions.

California regulators advanced stricter limits on crop-based biofuels as revisions to a key North American low-carbon incentive program drew closer to a vote.

The California Air Resources Board (CARB) late yesterday added 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.

Board decisions that could come as early as 8 November may reconfigure the flow of low-carbon fuels across North America. The state credits anchor a bouquet of incentives that have driven the rapid buildout of renewable diesel capacity and dairy biogas capture systems far beyond California's borders, and inspired similar, but separate, programs along the US west coast and in Canada.

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 before slipping back by midday.

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 enough to satisfy all new deficits generated in 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.

Participants have generally supported tougher targets, with some fuel suppliers warning about potential price increases and credit generators urging CARB to take a still more aggressive approach.

But proposals to limit credit generation to only 20pc of the volume of fuel a supplier made from canola, soybean and now sunflower has found little public support. Environmental opponents have argued that the CARB proposals fall short of what is necessary to add protections against cropland expansion and fuel competition with food supply. Agribusiness and some fuel producers have warned the concept, proposed in August, ran counter to the premise of a neutral, carbon-focused program and against staff's own view last spring. The proposal exceeded what CARB could do without beginning a new rulemaking, some argued.

CARB yesterday proposed a grace period for facilities already using the feedstocks to continue generating credits while seeking alternatives. Facilities certified to use those feedstocks before changes are formally adopted could continue using those sources until 2028, compared to a 2026 cut off proposed in August.

No facilities currently supplying California have certified sunflower feedstock, and it was not clear that any were planned.

"We're not aware of any proposed pathway or lifecycle analysis for sunflower oil, so that addition is just baffling," said Cory-Ann Wind, Clean Fuels Alliance America director of state regulatory affairs. "Clearly not based in science."

The latest revisions include a change to how staff communicate a new, proposed automatic adjustment mechanism (AAM). The mechanism would automatically advance to tougher, future targets when credits exceed deficits by a certain amount. Supporters consider this a more responsive approach to market conditions than the years of rulemaking effort already underway. Opponents argue such a mechanism cedes important authority and responsibility from the board.

Staff proposed quarterly, rather than annual, updates on whether conditions would trigger an adjustment, and to use conditions during the most recent four quarters, rather than by calendar year. Obligations and targets would continue to work on a calendar-year basis.

CARB staff clarified that verifying electric vehicle charging credits would not require site visits to the thousands of charging stations eligible to participate in the program. Staff also clarified how long dairy or swine biogas harvesting projects could continue to generate credits if built this decade, with a proposed reduction in credit periods only applying to projects certified after the new rules were adopted.

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.

Public comment on yesterday's publication will continue to 16 October.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

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
05/05/25

Mexico's manufacturing contraction deepens in April

Mexico's manufacturing contraction deepens in April

Mexico City, 5 May (Argus) — Activity in Mexico's manufacturing sector shrank for a 13th straight month in April, with declines accelerating in production and new orders, according to a survey of purchasing managers. The manufacturing purchasing managers' index (PMI) fell to 45.5 in April from 46.9 in March, finance executives' association IMEF said, moving further below the 50-point threshold that separates growth from contraction. US tariffs imposed since March are adding pressure to Mexico's manufacturing sector, which makes up about a fifth of the national economy. The auto industry, responsible for roughly 18pc of manufacturing GDP, may be the hardest hit by the new measures, including a 25pc tariff on auto parts that took effect 3 May. Mexico remains the top exporter of vehicles to the US, supplying 23pc of all US auto imports in 2024. But IMEF said tariffs compound broader, mostly domestic headwinds, including reduced public spending and investor uncertainty stemming from sweeping legal and regulatory reforms. New investment has stalled since late 2024. The PMI index for new orders fell by 2.5 points to 41.8, the lowest since June 2020. Production dropped by 2.5 points to 43.6, while employment fell by 0.6 point to 46.4. New orders and production have now been in contraction for 14 straight months, and employment for 15. Inventories saw the steepest drop in April, falling 4 points to 46.3 — sliding from expansion to contraction — as manufacturers accelerated shipments after tariff implementation dates were confirmed. IMEF's non-manufacturing PMI — which covers services and commerce — remained in contraction for a fifth consecutive month but edged up by 0.5 points to 49.0 in April. Within that index, new orders rose by 0.6 points to 48.1, employment increased 1.3 points to 48.6 and production held steady at 47.5. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

Alcmene withdraws ExxonMobil Miro shares offer


05/05/25
News
05/05/25

Alcmene withdraws ExxonMobil Miro shares offer

Hamburg, 5 May (Argus) — Austrian company Alcmene has withdrawn from its plans to buy ExxonMobil's share in German refining joint venture Miro. Alcmene told ExxonMobil of the withdrawal on 29 April, putting an end to a drawn-out sales process. ExxonMobil agreed in October 2023 to sell its 25pc stake in Miro, which operates the 310,000 b/d Karlsruhe refinery in Germany. The sale was initially put on hold by a court order following a petition by fellow shareholder Shell in April 2024. The court in Karlsruhe dismissed ExxonMobil's appeal in the final instance in July, prohibiting the company from selling its stakes without prior agreement by Shell. Shell holds 32.25pc in the venture, Russian state-controlled Rosneft has 24pc and US firm Phillips 66 has 18.75pc. Rosneft's German business has been under state trusteeship since September 2022. Rosneft plans to sell all of its German assets. By Natalie Müller and Fenella Rhodes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Sunoco to buy Canadian fuel distributor Parkland:Update


05/05/25
News
05/05/25

Sunoco to buy Canadian fuel distributor Parkland:Update

Adds details on proxy fight, other background. Houston, 5 May (Argus) — US infrastructure operator and fuel distributor Sunoco said it will buy Canadian refiner and fuel retailer Parkland in a $9.1bn cash and stock deal. The deal comes as Parkland faces a proxy fight from its largest shareholder Simpson Oil, which was calling for a vote to change the board of directors at a now-cancelled 6 May shareholder meeting. The agreement with Sunoco "creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas," said Michael Jennings, executive chairman of Parkland. The transaction will further diversify Sunoco's portfolio and geographic footprint and increase cash flow generation for reinvestment and distribution growth, Sunoco and Parkland said. Parkland owns about 4,000 retail and commercial locations in Canada, the US and the Caribbean region, as well as the 55,000 b/d refinery in Burnaby, British Columbia. The refinery produces conventional oil products and has 4,000 b/d of co-processing capacity, meaning both petroleum and biogenic feedstocks are used. Sunoco said it is committed to continue investment in the refinery which supplies fuel to southwestern BC, including the Vancouver area. Under the deal, Sunoco will keep a Canadian headquarters in Calgary and "significant employment levels" in Canada, the companies said. The transaction is expected to close in the second half of the year. Sunoco is part of the Dallas-based Energy Transfer family of companies but is publicly traded under its own ticker symbol. Parkland has planned a special meeting of its shareholders on 24 June, to approve the transaction. The annual general meeting of Parkland shareholders, which was originally scheduled for 6 May has been cancelled. Proxy fight building before deal Parkland in March said it was conducting a review of strategic alternatives including a possible sale of the company. The review was led by a special committee of the board of directors. Parkland long-time chief executive Bob Espey announced on 16 April that he would step down sometime this year with the timing depending on the completion of the strategic review or the appointment of a new chief executive. Simpson Oil, which holds about 20pc of Parkland shares, called for a strategic review of Parkland in 2024 and re-iterated its concerns in a letter to the Parkland board of directors in February. Parkland and Simpson Oil have been mired in a dispute related to a 2019 governance agreement. Simpson Oil said on 2 May that it had the support of more than 60pc of Parkland's shareholders which would enable it to take control of the Parkland board of directors. An official vote would have taken place at the now-cancelled shareholders meeting. Simpson Oil on Monday urged Parkland to "respect the democratic process" and allow the 6 May shareholders meeting to proceed as scheduled. "Delaying the meeting and pushing forward with any transaction ahead of board transition represents a clear breach of fiduciary duty—an obvious attempt to cling to power and sidestep shareholder will," Simpson Oil said in a press release. Simpson Oil also called for all 11 incumbent directors to resign immediately. In 2023, activist investor hedge fund Engine Capital said that Parkland should consider shedding assets "that create unnecessary complexity and detract from its underlying value." Engine Capital said at the time that the Burnaby refinery is a "volatile and more capital-intensive refinery" that should be sold or spun off. Parkland last year sold its Canadian commercial propane business to Avenir Energy for C$115mn. Sunoco, meanwhile, has been growing its footprint in North America. The company [last year acquired] (https://direct.argusmedia.com/newsandanalysis/article/2530270) pipeline and terminal operator NuStar Energy for $7.3bn. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Sunoco to buy Canadian fuel distributor Parkland


05/05/25
News
05/05/25

Sunoco to buy Canadian fuel distributor Parkland

Houston, 5 May (Argus) — US firm Sunoco agreed to buy Canadian fuel distributor and retailer Parkland in a deal valued at $9.1bn, the companies said Monday. Sunoco, an energy infrastructure and fuel distribution company, will acquire all outstanding shares of Parkland in a cash and equity transaction. This deal "creates significant financial benefits for shareholders and would position the combined company as the largest independent fuel distributor in the Americas," said Michael Jennings, executive chairman of Parkland. The transaction will further diversify Sunoco's portfolio and geographic footprint and increase cash flow generation for reinvestment and distribution growth, the companies said. Parkland owns a 55,000 b/d refinery in Burnaby, British Columbia, which produces conventional oil products and has 4,000 b/d of co-processing capacity, meaning both petroleum and biogenic feedstocks are used. Sunoco said it is committed to continue investment in the refinery which supplies fuel to southwestern BC, including the Vancouver area. Parkland owns about 4,000 retail and commercial locations in Canada, the US and the Caribbean region. Under the deal, Sunoco will keep a Canadian headquarters in Calgary and "significant employment levels" in Canada, the companies said. The transaction is expected to close in the second half of the year. Parkland has planned a special meeting of its shareholders on 24 June, to approve the transaction. The annual general meeting of Parkland shareholders, which was originally scheduled for 6 May has been cancelled. Parkland in March said it was conducting a review of strategic alternatives including a possible sale of the company. The review was led by a special committee of the board of directors. Parkland last year sold its Canadian commercial propane business to Avenir Energy for C$115mn. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

California refinery closures panic politicians


05/05/25
News
05/05/25

California refinery closures panic politicians

Houston, 5 May (Argus) — California could lose up to 17pc of its refining capacity within a year, triggering major concerns about its tightly supplied and frequently volatile products market. US independent Valero announced on 16 April that it will shut or repurpose its 145,000 b/d Benicia refinery near San Francisco by April 2026. The firm is also evaluating strategic alternatives for its 85,000 b/d Wilmington refinery in Los Angeles. And independent Phillips 66 said in October that it would shut its 139,000 b/d Los Angeles refinery in the fourth quarter of this year. Valero's Benicia announcement brought a quick reaction from state officials. Governor Gavin Newsom on 21 April urged regulators at the California Energy Commission (CEC) to work closely with refiners through "high-level, immediate engagement" to make sure Californians have access to transport fuels. He has ordered them to recommend by 1 July any changes to California's approach that are needed to ensure adequate fuel supply during its energy transition. The message appears to have hit home. The CEC delayed a vote on new refinery resupply rules to provide time for additional feedback and consultation with stakeholders after the Valero announcement. The CEC also plans to introduce a rule this year for minimum inventory requirements at refineries in the state as well as possible rules on setting a refiner margin cap. The new rules are part of an effort by Newsom to mitigate fuel price volatility in California, including the signing of two pieces of legislation known as AB X2-1 and SB X1-2. Refiners have been unhappy with the state's regulatory and enforcement environment for some time. It is "the most stringent and difficult" in North America owing to 20 years of policies pursuing a move away from fossil fuels, Valero chief executive Lane Riggs says. The long and short of it Refinery closures are fuelling long and short-term supply concerns in California. The most immediate is an anticipated supply crunch at the end of this summer. Phillips 66's plan to shut the Los Angeles refinery by October will deal a significant blow to the state's refining capacity and is likely to occur at a time when Californian gasoline prices are most prone to volatility. The US west coast is an isolated market, many weeks sailing time from alternative supply sources in east Asia or the US Gulf coast. California's strict product specifications further limit who can step in when refinery output falls. The state sometimes sees price spikes in late summer and early autumn because the switch from summer gasoline blends leaves local inventories low while in-state refineries adjust to producing winter grades. California gasoline prices spiked in September 2022 when stocks fell to a nine-year low on the west coast. Spot deliveries hit a record $2.45/USG premium to Nymex Rbob futures in the Los Angeles market at the time (see graph). Production problems at several refineries in southern California led to another spot price surge in September 2023. The California Air Resources Board (Carb) permitted an earlier switch to cheaper winter gasoline production in response to both events. Refinery closures will force California to rely on imports in the longer term, leaving the state exposed to stretched supply lines. State regulators' proposed solutions have raised eyebrows. The CEC's Transportation Fuels Assessment report in August last year included a policy option in which California would buy and own refineries, which the state is not pursuing. Another option involves state-owned products reserves to allow rapid deployment of fuel when needed. The CEC and Carb regulators will also release a draft transportation fuels transition plan later this year. By Eunice Bridges and Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

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