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Viewpoint: Biofuels producers bullish on LCFS plans

  • Market: Biofuels
  • 27/12/19

Future clean fuels programs in the US and Canada and more stringent carbon intensity targets in existing programs will provide additional demand for renewable fuels over the next few years, giving biofuels producers reason to be bullish.

Producers have already benefited from a trio of low-carbon fuel standard (LCFS) mandates on the Pacific coast — California, Oregon and British Columbia. Soon they could find new markets across the continent.

In Washington state, the Puget Sound Clean Air Agency's draft LCFS rule would require a 25pc reduction in the carbon intensity of transportation fuels by 2030. If implemented, it would be the most stringent clean fuels program along the US west coast. The agency's board will consider action on a final rule as early as 27 February.

At the same time, Washington state lawmakers remain keen to get an LCFS out the door. State representative Joe Fitzgibbon (D) plans to re-introduce LCFS legislation that nearly made it through the legislature this year. His new bill would mirror the previous one (HB 1110), which would have required a 10pc cut in the carbon intensity of transportation fuels by 2028, and a 20pc cut by 2035. HB 1110 passed the House of Representatives but ran into opposition in the state Senate.

With a large refining complex in Washington state, biofuels producers are eyeing a large source of demand if that clean fuels program becomes law.

Biofuels producers in the midcontinent that have been sending product to California to take advantage of record-high credit prices in that state's LCFS may get a new market to their east. Members of the New York State Assembly are asking governor Andrew Cuomo (D) to include an LCFS as part of his proposed budget next year.

New York Assembly member Carrie Woerner (D) earlier this year sponsored a bill to create an LCFS that would require a 20pc reduction in the carbon intensity of transportation fuels by 2030. The bill has yet to receive a vote in committee. But the sweeping climate legislation Cuomo signed into law in July could provide a new vehicle for enacting a fuels mandate.

And Colorado is also considering an LCFS to help meet its new emissions reduction goals. The state is undertaking a scoping study, which will be completed by June.

Canada early in 2020 will propose a Clean Fuel Standard that could provide a significant opportunity to grow the alternative fuel's market. It would be similar to the existing LCFS programs in British Columbia, California and Oregon, and would require an 11pc reduction in the carbon intensity of transportation fuels by 2030. Canada aims to launch the liquid fuels portion program in 2022.

The British Columbia government early in the new year will propose legislation to extend its LCFS to require a 20pc reduction in the carbon intensity of transportation fuels by 2030, which would match California's stringency. The current LCFS requires a 10pc cut in carbon intensity by 2020.

But even if none of the proposed clean fuel standards came to fruition, the fact that the California and Oregon programs will be more stringent in 2020 will provide additional demand for biofuels.

California's LCFS in 2020 will mandate a 7.5pc carbon intensity reduction, up from 6.25pc in 2019. Oregon's target for the new year will be 2.5pc, the next step on the way to a 10pc cut by 2025.

Electric vehicles a threat to biofuels

While clean fuels programs provide ample reason for biofuels producers to be bullish, states also are moving to support zero-emission vehicle (ZEV) growth. And California is unsurprisingly leading the charge on this front.

The state Air Resources Board (ARB) has been increasing its mandates on zero-emission vehicle use, in line with the state's goals set under former governor Jerry Brown to hit a target of 5mn ZEVs by 2030.

California is requiring all of its transit agencies to switch completely to zero-emission buses by 2040. And in June, California regulators unanimously voted to require that all airport shuttles operating in the state be powered by electricity by 2035.

Other programs administered by the ARB, including the clean vehicle rebate program, also encourage growth in the ZEV market. The state's LCFS awards compliance credits to the use of electric vehicles and the deployment of fast charging stations. It also requires utilities to use LCFS credit revenue to fund EV rebates.

None of this has been lost on biofuels producers. They argue that the state is directing a disproportionate amount of funding to EVs, to the detriment of fuels like biodiesel, renewable diesel, and renewable natural gas that are ready alternatives to gasoline and petroleum diesel, particularly in the medium- and heavy-duty sectors.

"We are carrying the load with LCFS credit generation. But ZEVs are getting all the attention and the lion's share of the funding," California Advanced Biofuels Alliance Tyson Keever said earlier this year. "Biofuels are not getting the credit that is due."

For many biofuels producers, EV is the dark spot on an otherwise bright future for increased growth.

By Jessica Dell


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10/04/25

New tariffs could upend US tallow imports: Correction

New tariffs could upend US tallow imports: Correction

Corrects description of options for avoiding feedstock tariffs in 12th paragraph. Story originally published 3 April. New York, 10 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 far-greater collection of charges 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. Some tariffs are eligible for drawbacks, meaning that producers could potentially recover tariffs they paid on feedstocks for fuel that is ultimately exported. And multiple biofuel producers are located in foreign-trade zones, a US program that works similarly to the duty drawbacks, and have applied for permission to avoid some tariffs on imported feedstocks for fuel eventually shipped 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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US absence unlikely to derail IMO talks


10/04/25
News
10/04/25

US absence unlikely to derail IMO talks

London, 10 April (Argus) — The US delegation's absence from the 83rd International Maritime Organisation's (IMO) Marine Environment Protection Committee (MEPC) meeting is unlikely to derail the outcome of discussions on a greenhouse gas (GHG) economic pricing mechanism, market participants told Argus . This comes after the US sent a statement to foreign embassies of countries partaking in the IMO GHG economic pricing mechanism talks, confirming the US' absence from the negotiations. The statement says: "President Trump has made it clear that the US will not accept any international environmental agreement that unduly or unfairly burdens the US or the interests of the American people," according to a document seen by Argus . It adds: "Should such a blatantly unfair measure go forward, our government will consider reciprocal measures so as to offset any fees charged to US ships and compensate the American people for any other economic harm from any adopted GHG emissions measures". The statement ends: "The US will engage with partners on energy and investment issues of common interest. We stand ready to work with you to advance our shared commitment to energy security and economic growth". "The US will not be engaging in negotiations at the IMO's 83rd Marine Environment Protection Committee. Consistent with President Trump's executive orders on international environmental agreements and on energy dominance, it is the administration's policy to put the interests of the US and the American people first in the development and negotiation of any international agreements", the US State Department told Argus . IMO member countries are voting this week on the economic pricing mechanism for marine GHG emissions, for which the structure is expected to be agreed by 11 April, according to IMO secretary-general Arsenio Dominguez. Even if the US does not engage in the GHG talks, it cannot unilaterally block decisions at the IMO, a spokesperson told Argus . Many of the GHG measures remain under discussion, with final approvals from the working group expected by 11 April. "The US doesn't have a huge share of the global ocean-going fleet, so their absence or opposition probably won't change the broader [IMO members] consensus", a Chile-based ship owner told Argus . US imposing "reciprocal" costs on foreign ships calling at US ports will almost certainly get passed on to [US] consumers, which could lead to higher prices for goods in the US, the owner said. If the measures are ratified by IMO member nations, US-flagged ships will probably not adhere to IMO's regulations when they call into ports of member countries, a Singapore-based shipbroker said. "We are not expecting any impacting on Asia-Pacific region yet, and it's subject to what is agreed at the MEPC and how levies are calculated," the shipbroker added. Despite not having veto power, the US remains the largest financial contributor to the UN, a Greece-based shipowner told Argus . If international shipbuilding credit lines begin to tighten under US influence, other countries may align with Washington's stance, it added. The IMO has 176 member countries. Greece, China and Japan account for the largest shares of the global ocean-going fleet. During the ongoing session, member states have approved interim guidance on the carriage of biofuel blends. 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 blends being shipped. By Hussein Al-Khalisy, Madeleine Jenkins, Stefka Wechsler, Mahua Mitra, Natália Coelho, and Gabriel Tassi Lara Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Bunker Industry seeks universal alternative fuels rules


08/04/25
News
08/04/25

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

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