Quota row puts Brazil ethanol sector on alert

Market: Biofuels
08/09/20

Ethanol producers are considering whether to appeal to Brazil's congress should president Jair Bolsonaro's decide to reinstate a tariff exemption for US ethanol imports without providing better access to the US sugar market.

Bolsonaro has still not communicated the executive branch's position on the preferential no-tariff regime for up to 750mn litre/year of ethanol imports, which officially expired on 31 August, leaving US ethanol shipments subject to a 20pc common import tariff. A senior government official confirmed to Argus that there has been no final decision on whether to reinstate the lapsed quota.

If the duty-free quota is reestablished without reciprocation for Brazilian sugar exports to the US, producers could petition the president of Brazil's congress for a legislative decree reversing the decision of the executive, Brazilian producers told Argus.

The 746.9mn l of ethanol imported in the first seven months of this year was just shy of the quota limit, but down 19pc compared with the same period of 2019, according to data from Brazil's trade ministry MDIC. US ethanol exports accounted for 89pc of the total imported so far in 2020.

Brazilians want access to US sugar market

Brazilian ethanol producers celebrated their last agreement in 2019, but soured on the plan after the expected opening of the US market for Brazil's sugar exports failed to materialize.

Brazilian ethanol producers, mainly in the northeast region, have pushed for an end to the regime in recent months and remain opposed to a reinstatement of the tax benefits.

"Brazil is self-sufficient in ethanol and we are against the introduction of a new term for the quotas to be in force," Alexandre Lima, president of the Brazilian federation of cane planters Feplana, told Argus.

Absent a new decision on the future of the tariff regime, all ethanol imported after 1 September from countries outside the Mercosur trade bloc are subject to import duties of 20pc. Mercosur includes Argentina, Brazil, Paraguay, and Uruguay.

The asymmetry between the sugar sectors in Brazil and the US has made it difficult for Brazilian producers to successfully target counterparts in the US and negotiate lower import duties for Brazil's sugar, which can reach 140pc. Unlike Brazil, where ethanol producers are also responsible for the country's sugar output, US production involves multiple segments of the agriculture sector besides corn ethanol producers, such as sugar beet and sugarcane producers.

"Quota regimes generate distortions in the functioning of the market," Adriano Pires, founding director of the Brazilian center for infrastructure (CBIE), told Argus.

For Pires, maintaining the regime does not make sense, especially absent reciprocity from the US. "There are other possibilities, such as increasing corn ethanol production" in Brazil, he said.

Brazil/US relations supersede trade dispute

Yet the Brazilian government sees the quotas as part of a broader strategy in improving bilateral relations with the US administration, as both presidents are aligned politically and ideologically.

The import exemption regime also constitutes a bargaining chip for the Brazilian government pursuing a broad political agenda — OECD membership among others — that benefit from US backing.

By Carolina Guerra

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08/01/25

Tidewater seeks Canadian import duties on US RD

Seattle, 8 January (Argus) — Canadian biofuels producer Tidewater Renewables is asking the federal government to impose countervailing and anti-dumping duties on renewable diesel (RD) imported from the US. Tidewater's complaint to the Canada Border Services Agency (CBSA) alleges the nation's renewable diesel market is being pressured by US producers who export volumes to Canada at artificially low prices because of US tax incentives — the now-retired blender's tax credit and pending Clean Fuel Production Credit. The complaint is also intended to alleviate pressure on emissions credits issued by British Columbia's low-carbon fuel standard (LCFS) and Canada's Clean Fuel Regulation, Tidewater said Monday in a statement. Tidewater said duties of C$0.50-0.80/liter (35-56¢/liter) could be imposed at the border on US renewable diesel if the complain it upheld, reflecting an estimated subsidy and dumping benefit to US producers of 40-60pc. CBSA is charged with investigating and verifying the complaints, while the Canadian International Trade Tribunal (CITT) is responsible for determining if those activities have harmed the Canadian industry. For a CBSA investigation to proceed, the complaint must have support from producers representing at least 25pc of Canadian output. Evidence of injury could then include lower prices and lost sales, reduced market share or decreased profits, among other factors. An affirmative finding by the CITT would grant the CBSA authority to impose import duties, in this case intended to offset the alleged unfair price advantage held by US exporters. Preliminary duties could be imposed as early as May, following a preliminary injury finding by the CITT. Final duties — dependent on the ruling by the CITT — could be imposed by September, Tidewater said. The company in December cited challenging economic conditions in its decision to re-evaluate its renewable diesel production from March-onward at its 3,000 b/d renewable diesel plant in British Columbia. Tidewater's profitability is dependent on sales of British Columbia LCFS credits, and its credit purchase and sales agreement with parent company Tidewater Midstream is due to end in March. By Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Indonesia necessitates UCO, Pome oil export approvals

08/01/25

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08/01/25

Indonesia necessitates UCO, Pome oil export approvals

Singapore, 8 January (Argus) — Indonesian exporters of palm oil derivative products must now obtain approvals to ship them out of the country, according to a regulation released by the Indonesian ministry of trade today. The palm oil derivative products include used cooking oil (UCO) and palm oil residue palm oil mill effluent (Pome) oil. The regulation is to ensure adequate availability of feedstocks to support the rollout of Indonesia's B40 mandate, under which companies will have to supply 40pc biodiesel blends from the end of February . Export approvals will be valid for six months from the date of issuance, according to the regulation. Further export policies will be discussed and agreed upon in an upcoming co-ordination meeting between relevant ministries and non-ministerial government institutions which market participants said is likely to be held on 13 or 14 January. The service for applying for export approvals will be temporarily suspended until the meeting is held. During the meeting, a quota system for exports might also be discussed, said Indonesia-based market participants. An integrated team could also be formed to supervise exports, including bodies such as the Co-ordinating Ministry of Economic Affairs, Ministry of Trade, Industry, Agriculture, Finance and others. Indonesia-origin UCO prices in flexibag have been on an uptrend since the end of October 2024, rising to over 1½-year highs of $960/t on 20 December, according to Argus' assessments. They were slightly higher at $965/t on 7 January and remained at that level on 8 January. Argus assessed Pome oil fob Indonesia at a 29-month high of $1,010/t on 9 December, although prices have since softened slightly to $960/t on 8 January. Prices were driven up by escalating palm oil prices, and the country raising export levies on UCO and Pome oil to 6pc and 7.5pc of the monthly crude palm oil (CPO) reference price respectively in September last year. More recently, UCO sellers were short on stocks, and rushed to aggregate volumes to fulfill export obligations. Another round of export levy increases is looming, although market participants feel this might not be enough to fund B40 across all transport sectors as well. The country's ministry of energy and mineral resources said on 3 January that biodiesel producers and fuel retailers must supply 15.6mn kilolitres of biodiesel to fulfill the B40 mandate. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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S Korea’s SK Energy supplies first SAF cargo to Europe

06/01/25

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06/01/25

S Korea’s SK Energy supplies first SAF cargo to Europe

Singapore, 6 January (Argus) — South Korean refiner SK Energy has exported its first sustainable aviation fuel (SAF) cargo to Europe, describing itself as the first refinery in the country to do so. The cargo was exported four months after the refiner started commercial co-processing of SAF, SK Energy said today. SK Energy completed a dedicated SAF production line at its 840,000 b/d Ulsan refinery in September 2024. The refiner has established a production capacity of around 80,000 t/yr of SAF and around 20,000 t/yr of other low-carbon products such as bio-naphtha, using bio-feedstocks such as used cooking oil (UCO) and animal fats with traditional oil production processes. SK Energy works with its affiliate SK On Trading International to secure waste-based raw material as feedstock. It is one of three South Korean refineries which are producing SAF through co-processing, with the other two being S-Oil and Hyundai Oilbank. A fourth refiner GS Caltex has not announced plans to produce SAF, but is likely studying options including co-processing. It previously supplied around 5,000 kilolitres of SAF to Japan's Narita airport via Japanese trading firm Itochu on 13 September 2024. South Korea plans to require all international flights departing from its airports to use a mix of 1pc SAF from 2027 , with a target for the country to capture 30pc of the global blended SAF export market, it announced in August 2024. It remains unclear if co-processed SAF will be allowed to meet the country's mandate, but some South Korean refineries are optimistic. The country also said in August it planned to establish a national standard, certification and testing method for SAF beginning in December 2024, but no updates have surfaced as of 6 January 2025. By Deborah Sun Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Q&A: EU biomethane internal market challenged

02/01/25

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02/01/25

Q&A: EU biomethane internal market challenged

London, 2 January (Argus) — The European Commission needs to provide clearer guidance on implementing existing rules for the cross-border trade of biomethane to foster a cohesive internal market as some EU member states are diverging from these standards, Vitol's Davide Rubini and Arthur Romano told Argus. Edited excerpts follow. What are the big changes happening in the regulation space of the European biomethane market that people need to watch out for? While no major new EU legislation is anticipated, the focus remains on the consistent implementation of existing rules, as some countries diverge from these standards. Key challenges include ensuring mass-balanced transport of biomethane within the grid, accurately accounting for cross-border emissions and integrating subsidised biomethane into compliance markets. The European Commission is urged to provide clearer guidance on these issues to foster a cohesive internal market, which is essential for advancing the EU's energy transition and sustainability objectives. Biomethane is a fairly mature energy carrier, yet it faces significant hurdles when it comes to cross-border trade within the EU. Currently, only a small fraction — 2-5pc — of biomethane is consumed outside of its country of production, highlighting the need for better regulatory alignment across member states. Would you be interested in seeing a longer-term target from the EU? The longer the visibility on targets and ambitions, the better it is for planning and investment. As the EU legislative cycle restarts with the new commission, the initial focus might be on the climate law and setting a new target for 2040. However, a review of the Renewable Energy Directive (RED) is unlikely for the next 3-4 years. 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When it comes to mass-balancing, the challenges arise in trying to apply mass balance rules for liquids, which often have a physically traceable flow, to gas molecules in the interconnected European grid. Once biomethane is injected, physical verification becomes impossible, necessitating different rules than those for liquids moving around in segregated batches. The EU mandates that sustainability verification of biomethane occurs at the production point and requires mechanisms to prevent double counting and verification of biomethane transactions. However, some member states resist adapting these rules for gases, insisting on physical traceability similar to that of liquids. This resistance may stem from protectionist motives or political agendas, but ultimately it results in non-adherence to EU rules and breaches of European legislation. 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We've sought clarity from the European Commission, as this issue intersects multiple regulatory and legal frameworks. Initially, we interpreted EU law principles, which discourage double support, to mean that FuelEU, being a quota system, would qualify as a support scheme under Article 2's definition, equating quota systems with subsidies. However, a commission representative has publicly stated that FuelEU does not constitute a support scheme and thus is not subject to this interpretation. On this basis, FuelEU would not differentiate between subsidised and unsubsidised bio-LNG. A similar rationale applies to the Emissions Trading System, which, while not a quota obligation, has been deemed to not be a support scheme. Despite these clarifications, the use of subsidised biomethane across Europe remains an area requiring further elucidation from European institutions. It is not without risks, and stakeholders require more definitive guidance to navigate the regulatory landscape effectively. By Emma Tribe and Madeleine Jenkins Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: Changing incentives shift RD and SAF in 2025

31/12/24

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31/12/24

Viewpoint: Changing incentives shift RD and SAF in 2025

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