Trump EO weighs on already turbulent RGGI market

Market: Emissions
09/04/25

Regional Greenhouse Gas Initiative (RGGI) CO2 allowances tumbled starting late Tuesday evening after President Donald Trump issued an executive order taking aim at state climate policies, roiling a market that was already burdened from the effects of Trump's sweeping tariffs and the resulting global market sell-off.

Trump's executive order, which he issued Tuesday afternoon, directs the US Department of Justice to review state and local climate laws that hamper the "use of domestic energy resources", specifically singling out California's cap-and-trade program. It is unclear whether the administration intends to target RGGI, the 10-state regional cap-and-trade program that aims to lower power plant CO2 emissions.

US attorney general Pamela Bondi is required to report on actions her office has taken against state laws within 60 days, according to the order.

As a result, RGGI allowances for December delivery traded down to as low as $16/short ton (st) on the Intercontinental Exchange (ICE) early Wednesday morning, nearly 26pc below the prior day's Argus assessment of $21.52/st.

RGGI did not directly address Trump's executive order, saying that member states "will continue to implement their CO2 Budget Trading Programs, including appropriate consideration of any federal actions."

New York, the program's largest member, said it is reviewing the order.

"The governor is committed to ensuring a clean, affordable and reliable energy grid in New York statem," the office of Governor Kathy Hochul (D) said.

But the RGGI market had seen a steep fall even before Trump's directive. December 2025 allowances plunged by 8pc to $21.75/st on 4 April, erasing much of their gains following the latest auction, which bolster bullish sentiment in the market. Those declines likely were a response, albeit delayed, to the president's announcement of larger-than-expected tariffs on 2 April, spurring a major sell-off in global equities markets that continued into the beginning of this week.

At the time, RGGI was one of the only US environmental markets that significantly felt the impact of the global economic fallout resulting from Trump's tariffs. California Carbon Allowances (CCA) slipped slightly on 4 April while the state's Low Carbon Fuel Standard credits surged after regulators advanced changes to the program. The renewable energy certificate (REC) markets had been on a downward trend since the end of last month following proposed changes to New Jersey's solar incentive program.

Participants likely have become more risk-averse in light of broader economic uncertainty brought on by the tariffs, letting go of their RGGI positions first to possibly shore up their positions elsewhere.

The program is in the midst of a review, which has been ongoing for more than four years and subject to multiple delays. In addition, updates on its progress have been sparse, leaving the market uncertain about the types of changes to expect, including a potentially more ambitious emissions cap stretching beyond 2030. The participation of Pennsylvania and Virginia, two major CO2 emitters, has also been a major source of uncertainty for participants.

Projected surges in electricity demand fueled by the expansion of power-hungry data centers, as well as state electrification and clean energy policies, had resulted in a bullish outlook for the RGGI market because of an expected increase in demand for allowances and in turn, higher prices. The results of the last auction in March appeared to reflect such sentiment as it cleared high enough to sell all of the allowances in the program's 2025 cost-containment reserve, along with the original 15.4mn offered allowances.

But with December 2025 allowances trading this afternoon around $18.50/t on ICE, about $1.50 above the reserve trigger price, it is evident that Trump's policies are dampening any bullish expectations in the short-term. The long-term impacts remain to be seen as the effects of the president's global trade war play out across markets and the results of the attorney general's report on state climate laws are released in the next couple of months.

By Ida Balakrishna

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13/05/25

US clean energy groups decry House budget bill

Houston, 13 May (Argus) — Renewable sector advocates are warning that changes to federal incentives for clean energy proposed by Republicans will undercut the growth of new generation as demand on the power grid escalates. Industry groups representing wind and solar companies were quick to critique the House Ways and Means Committee's portion of Republicans' budget bill for its potential to undercut President Donald Trump's objective of "energy dominance" by reducing the viability of resources on which the US will depend in the coming years. The Ways and Means proposal "simply goes too far too fast", according to Jason Grumet, chief executive of the trade group American Clean Power Association. "With energy demand surging, this is not the time for disruption," Grumet said. "It is possible to phase out incentives for clean energy investment, production and manufacturing without harming American consumers or businesses." The Ways and Means bill would begin to sunset the 45Y production tax credit (PTC) and 48E investment tax credit (ITC) after 2028, with incentive values decreasing by 20 percentage points/yr from 2029 to 2031 before disappearing entirely in 2032. Moreover, the bill moves a key goalpost by pinning eligibility for both the PTC and ITC to a project's in-service date, rather than when it begins construction, which is currently the relevant deadline. At present, the PTC and ITC will remain at current levels until the end of 2032 or when regulators determine that annual US electricity sector emissions are equal to or less than 25pc of their 2022 level, whichever comes later. Democrats who passed the law in 2022 intended the minimum 10-year window to give developers certainty when investing in projects, shifting from past practice when Congress often waited until the last minute to extend earlier versions of the incentives. In addition, the Ways and Means bill would cancel the advanced manufacturing production credit, also known as the 45X credit, after 2031, rather than 2032, while completely disqualifying wind components after 2027. At present, wind turbine blades, nacelles and towers receive credits of 2¢, 5¢ and 3¢, respectively, multiplied by the total capacity, on a per watt basis, of the completed turbine in which those components are used. Offshore wind foundations receive similar incentives. The legislation would also remove the ITC for residential clean energy installations after this year, up from 2034. The bill also would repeal credit " transferability " two years after the law takes effect for the PTC and ITC, and at the end of 2027 for the 45X credits, and restrict projects' eligibility for all three credits if its construction includes "material assistance from a prohibited foreign entity". Republican lawmakers wrote their proposed changes with an eye on saving billions of dollars that they could use to partially offset over $5 trillion in expected tax cuts. But the updates would be particularly harmful for "local, red-state economies", according to Solar Energy Industries Association chief executive Abigail Ross Hopper. Over three-fourths of factories and investments threatened by the changes are located in regions represented by Republicans, and the changes will force "hundreds" of factories to close, raise electricity bills and damage grid reliability, she said. The loss of the manufacturing credits could be particularly harmful to the offshore wind industry's supply chain, "threatening billions of dollars of investments in the Midwest, Mid-Atlantic and American South", according to Stephanie Francoeur, senior vice president of marketing and communications at offshore wind business group the Oceantic Network. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US budget bill would prolong 45Z, boost crops

13/05/25

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13/05/25

US budget bill would prolong 45Z, boost crops

New York, 13 May (Argus) — A proposal from House Republican tax-writers would extend for four additional years a new tax credit for low-carbon fuels and adjust the incentive to be more lenient to crops used for biofuels. Republicans on the House Ways and Means Committee on Monday introduced their draft portion of a far-reaching budget bill, which included various changes to Inflation Reduction Act clean energy subsidies. But the "45Z" Clean Fuel Production Credit, which requires fuels to meet an initial carbon intensity threshold and then ups the subsidy as emissions fall, would be the only incentive from the 2022 climate law to last even longer than Democrats planned under the current draft. The proposal represents an early signal of Republicans' plans for major legislation through the Senate's reconciliation process, which allows budget-related bills to pass with a simple majority vote. The full Ways and Means Committee will consider amendments at a markup this afternoon, and House leaders want the full chamber to vote on the larger budget bill before the US Memorial Day holiday on 26 May. Afterwards, the proposal would head to the Republican-controlled Senate, where lawmakers could float further changes. But the early draft, in a chamber with multiple deficit hawks and climate change skeptics that have pushed for a full repeal of the Inflation Reduction Act, is remarkable for not just keeping but expanding 45Z. The basics of the incentive — offering benefits to producers instead of blenders, throttling benefits based on carbon intensity, and offering more credit to sustainable aviation fuel (SAF) — would remain intact. Various changes would help fuels derived from US crops. The most notable would prevent regulators measuring carbon intensity from considering "indirect land use change" emissions that attempt to quantify the risks of using agricultural land for fuel instead of food. Under current emissions modeling, the typical dry mill corn ethanol plant does not meet the 45Z credit's initial carbon intensity requirement — but substantially more gallons produced today would have a chance at qualifying without any new investments in carbon capture if this bill were to pass. The indirect land use change would also create the possibility for canola-based fuels, which are just slightly too carbon-intensive to qualify for 45Z today, to start claiming some subsidy. Fuels from soybean oil currently qualify but would similarly benefit from larger potential credits. Still, credit values would depend on final regulations and updated carbon accounting from President Donald Trump's administration. Since the House proposal does not address the current law's blunt system for rounding emissions values up and down, relatively higher-carbon corn and canola fuels still face the risk of falling just below 45Z's required carbon intensity threshold but then being rounded up to a level where they receive zero subsidy. The House bill would also restrict eligibility to fuels derived from feedstocks sourced in the US, Canada, and Mexico — an attempt at a middle ground between refiners that have increasingly looked abroad for biofuel inputs and domestic farm groups that have lobbied for 45Z to prioritize US crops. That language would make more durable current restrictions on foreign used cooking oil and significantly reduce the incentive to import tallow from South America and Australia, a loss for major renewable diesel producers Diamond Green Diesel, Phillips 66, and Marathon Petroleum. The provision would also hurt US biofuel producer LanzaJet, which has imported lower-carbon Brazilian sugarcane ethanol as a SAF feedstock to the chagrin of domestic corn ethanol producers. The bill would also require regulators to set more granular carbon intensity calculations for different types of animal manure biogas projects, all of which are treated the same under current rules. Other lifecycle emissions models treat some dairy projects at deeply negative carbon intensities. Those changes to carbon intensity calculations and feedstock eligibility would kick in starting next year, meaning current rules would remain intact for now. The proposal would however phase out the ability of clean energy companies without enough tax liability to claim the full value of Inflation Reduction Act subsidies to sell those tax credits to other businesses. That pathway, known as transferability, would end for clean fuel producers after 2027, hurting small biodiesel producers that operate under thin margins in the best of times as well as SAF startups that were planning to start producing fuel later this decade. Markets unresponsive, but prepare for new possibilities There was little immediate reaction across biofuel, feedstock, and renewable identification number (RIN) credit markets, since the bill could be modified and most of the changes would only take force in the future. But markets may shift down the road. Limiting eligibility to feedstocks originating in North America for instance could continue recent strength in US soybean oil futures markets. July CBOT Soybean oil futures closed 3pc higher on Monday at 49.92¢/lb on the news and have traded even higher today. The spread between soybean oil and heating oil futures is then highly influential for the cost of D4 biomass-based diesel RIN credits, which are crucial for biofuel margins and have recently surged in value to their highest prices in over a year. The more lenient carbon accounting will also help farmers eyeing a long-term future in renewable fuel markets and will support margins for ethanol and biodiesel producers reliant on crops. Corn and soy groups have pushed the government for less punitive emissions tracking, worried that crop demand could wane if refiners could only turn a profit by using lower-carbon waste feedstocks instead. The House bill, if passed, would still run up against contradictory incentives from other governments, including SAF mandates in Europe that restrict fuels from crops and California's efforts to soon limit state low-carbon fuel standard credits for fuels derived from vegetable oils. By Cole Martin and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Australia’s Macquarie unwinds coking coal funding ban

13/05/25

News

13/05/25

Australia’s Macquarie unwinds coking coal funding ban

Sydney, 13 May (Argus) — Australian investment bank Macquarie has changed its investment rules to fund coking coal mines, in a partial reversal of its 2021 coal financing ban. The bank made the change in November 2024, it said in its annual report for the year ended 31 March, released last week. It will now make short-term funding deals lasting less than 12 months for coking coal developments, to help producers buy, expand, or run coking coal mines. Macquarie's rule change still bans long-term investments in coking coal projects. There are few viable alternatives to coking coal for the steel and industrial sectors, Macquarie said. The company has maintained its ban on thermal coal financing, apart from specific emissions reduction projects. It is also working on supporting emissions reduction projects in the Australian oil and gas sectors, although it did not disclose which projects. Macquarie is not the only bank moving away from fossil fuel financing. Australian bank ANZ will stop lending capital to companies heavily involved in the thermal coal sector by 2030. It reduced its lending to thermal coal mining firms by 85pc between 2015 and July 2024,it said in July last year. It also stopped [funding new upstream oil and gas projects](https://direct.argusmedia.com/newsandanalysis/article/2566501), with limited exceptions, in May 2024. Macquarie has expanded its climate finance role over recent years. The bank set up a renewable energy business to fund utility-scale projects in Australia and New Zealand in November 2023. Macquarie is also involved in carbon markets. The company is continuing to help clients with compliance and voluntary carbon markets, including in newer locations like China, the company said, without disclosing further details. It has also purchased and retired 59,164t of CO2 equivalent of Australian Carbon Credit Units and other voluntary offsets to cover business travel in its 2024-25 financial year ended 31 March. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Australian PM reaffirms climate priority in new cabinet

12/05/25

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12/05/25

Australian PM reaffirms climate priority in new cabinet

Sydney, 12 May (Argus) — Australian prime minister Anthony Albanese has reaffirmed renewable energy commitments with cabinet picks after the Labor party's election victory on 3 May. Chris Bowen, who led key changes to the safeguard mechanism , the capacity investment scheme (CIS) and fuel efficiency standards for new passenger and light commercial vehicles, remains minister for climate change and energy. Madeleine King, the minister for resources and northern Australia, retains her cabinet position, while Tanya Plibersek, previously the minister for environment, is now the minister for social services and is replaced by Murray Watt, formerly the minister for workplace relations. In the previous term, Plibersek failed to establish an environment protection authority and reform the Environment Protection and Biodiversity Conservation Act, which was an election promise in 2022, after intervention from Western Australian state minister Roger Cook. Environmental lobby group the Australian Conservation Foundation (ACF) has welcomed Watt, who was also the minister for agriculture for two years to 2024, into his new role. "Having a former agriculture minister in environment increases the opportunities for co-operation on the shared challenges facing nature protection and sustainable agriculture," the ACF said. The ACF also welcomed Chris Bowen in returning to his role as environment minister for his "clear mandate" to continue the energy transition. Josh Wilson remains assistant minister for climate change and energy. Participants in the renewable energy carbon credit industry are urging the new Department of Climate Change, Energy, the Environment and Water to speed up the creation of new Australian Carbon Credit Unit (ACCU) methods in the new government term. They are also seeking greater transparency in ACCU data base , which requires legislative change. And renewable energy companies and lobby groups will be closely following a review of Australia's National Electricity Market wholesale market settings , which will need to be changed following the conclusion of the CIS tenders in 2027 and as Australia transitions to more renewables from its ageing coal-fired plants. By Grace Dudley Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Colombia's offset cap drops carbon market demand

09/05/25

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09/05/25

Colombia's offset cap drops carbon market demand

Bogota, 9 May (Argus) — Colombia's voluntary carbon credit market meant to offset greenhouse gas emissions continues see lower prices and demand, suppressed by a 2023 cap on domestic credits that limited any potential boost from this year's expansion of a green tax. The lack of development is making it harder for companies to use credits to meet emissions-reduction commitments, and on communities as social unrest has grown, affecting investments. Colombia's carbon tax, which aims to reduce greenhouse gas emissions, initially levied Ps15,000 ($5)/metric tonne of CO2 equivalent (CO2e) produced by most motor fuels and natural gas and LPG for industrial uses, among others. The producer or importer of the fuel pays the tax at the wholesale level. Starting in 2025, the "green tax" extended to coal-fired power generators and industries that burn coal. The tax rate now is Ps27,399.14/tCO2e. But the inclusion of coal came after President Gustavo Petro introduced a cap in 2023 on the amount of taxed emissions that can be offset with domestic credits, limiting the voluntary carbon credit market sharply, industry sources said. Otherwise, additional demand from coal users could have buoyed the carbon market. When Colombia created a voluntary carbon credit market, entities could offset their carbon tax liability by 100pc through credits. But Petro in 2023 reduced the limit for using credits to offset to 50pc, leading to a sharp rise in green tax revenue as the government has struggled with finances . The lower demand depressed voluntary carbon credit market prices, said Camilo Trujillo, policy adviser to the International Emissions Trading Association. The market price of Colombia's carbon credits has fluctuated from Ps12,000-16,000, equivalent to 46pc-58pc of the tax, sharply lower from a peak of Ps22,000, said Lina Gamboa, co-founder and chief operating officer at the carbon credit trader Neuttro. "Since this [cap] measure was neither foreseen nor planned, it generated changes in demand, and since demand was not the same as before, this generated an oversupply of credits," Trujillo said at the Colombia Carbon Forum. Still, the tax has curbed some CO2 emissions. The 236 projects certified to offer credits in Colombia's carbon market have cut 231.29mn tCO2e since 2002, according to carbon association Asocarbono. Yet the cap on tax emissions reduced the amount compensated. Companies compensated 14.3mn t of CO2 emissions through carbon credits in 2023, down from 20.8mn t of CO2 emissions in 2022, according to Asocarbono figures. As supply of carbon credits outstripped demand, the number of available carbon credits rose. As of September 2024, Colombia had some 63.7mn carbon credits pending to be sold, rising from 57.5mn as of June 2024, Asocarbon figures showed. "Now, the ones who hold the reins are the buyers, since they can set the prices," Trujillo noted. Community impacts Foundations such as Agro Impulso, which oversees 33 communities and 700,000 hectares in the departments of Valle del Cauca and Nariño, with a long presence of guerrilla and illicit groups, said the tax emissions cap has devastated their projects. Agro Impulso has more than 3.2mn credit certificates pending sale because of lower prices and fierce competition, Agro Impulso's general manager Francis Cornejo told Argus . In 2022, Agro Impulso sold 60pc of its 3.7mn credit certificates in one project to companies such as the Davivienda bank, state-controlled Ecopetrol, Ecopetrol's transportation unit Cenit and fuel supplier Primax. "If we don't sell the certificates we have left, many of our social and infrastructure projects will continue to be in limbo," she said. "Many farmers will return to planting coca or deforesting, because they will have to make a living somehow." Indigenous leader Levy Andoque, who represents the Aduche indigenous group in the department of Amazonas, said a project there sold 1.5mn credits since 2023, although they have 2mn credits pending sale. "Funds are not arriving," Andoque said. "Communities will return to illegal gold mining, deforestation and selling wild animals." By Diana Delgado Colombia's carbon credits mn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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