Renewable diesel set to grow outside California
New state-level low-carbon fuel standard (LCFS) programs and Canada's proposed Clean Fuel Standard will grow the market for renewable diesel and create demand centers out of California, biofuel producers said during Argus Biofuels Live virtual conference yesterday.
California's LCFS, combined with federal incentives, has boosted the competitiveness of renewable diesel, a fuel that can blend seamlessly with petroleum diesel and move in existing pipelines, terminals and other infrastructure built for oil-based fuels. This has made the state a lucrative market for producers.
But with new clean fuels programs coming to fruition in the coming years, it will diversify sales and support California LCFS credit prices, producers said.
"If every RD gallon announced was built and came to California, that would put downward pressure [on LCFS prices], but I do not think that is a valid assumption," Crimson Renewable Energy chief executive Harry Simpson said.
The onset of Canada's Clean Fuel Standard — scheduled to begin in 2022 — will substantially grow the market for renewable fuels, producers said.
Draft regulations for the program are due out by next month, said Paola Mellow, executive director of the clean fuel standards team at Canada's environment ministry.
"We are working to design a technology-neutral program that will give an incentive for all fuels," Mellow said.
California's LCFS has received criticism in recent years for tilting too heavily toward electric vehicles, as the program allows charging stations to receive LCFS credits based on their capacity, not just fuel sold. The CFS will be a credit trading program similar to the LCFS programs in British Columbia, California and Oregon and will aim to cut Canada's greenhouse gas emissions by 30mn metric tonnes/yr by 2030.
"We will see an exponential growth curve [for renewable diesel] in Canada," World Energy chief executive Gene Gebolys said. "The emergence of Canada on the global stage is going to be very important."
Clean fuel programs that are proposed in Washington state and New York state also will grow the market for renewable fuels if they come to fruition, producers said.
Prospects for a clean-fuel standard in Washington state appear to have brightened following the 3 November election, said Washington state representative Joe Fitzgibbon (D), the sponsor of LCFS legislation.
"State level LCFS policies are driving demand. States will move regardless of what happens on the federal level," Neste US president Jeremy Baines said. "Refiners looking to convert on the US west coast will want to encourage different programs. This makes the picture different than it was a few months ago."
US refiners have turned to renewable diesel production to extend the life of crude refineries that are unlikely to remain competitive in petroleum-based transportation fuels markets. This summer, Marathon announced that its 166,000 b/d petroleum refinery in Martinez, California, may produce 48,000 b/d of renewable diesel beginning in 2022. Phillips 66 also announced plans to idle crude processing at its 120,000 b/d San Francisco, California, complex within three years and shift to renewable diesel, naphtha and jet fuel by 2024.
Producers may process renewable diesel from soybean oil, used cooking oil, animal fats and other feedstocks.
Renewable diesel was the top source of credits in the California LCFS program last quarter, generating about 1.14mn t, the most recent data from the state Air Resources Board (ARB) showed.
The California LCFS requires a 20pc cut in the carbon intensity of transportation fuels by 2030. Fuels with carbon intensity scores higher than the targets generate deficits, while fuels with lower scores generate credits.
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US services contract in June, signal broad weakening
US services contract in June, signal broad weakening
Houston, 3 July (Argus) — Economic activity in the US services sector contracted in June by the most since 2020 while a report earlier this week showed contraction in manufacturing, signaling a broad-based slowdown in the economy as the second quarter came to an end. The Institute for Supply Management's (ISM) services purchasing managers index (PMI) registered 48.8 in June, down from 53.8 in May. Readings above 50 signal expansion, while those below 50 signal contraction for the services economy. The June services PMI "indicates the overall economy is contracting for the first time in 17 months," ISM said. "The decrease in the composite index in June is a result of notably lower business activity, a contraction in new orders for the second time since May 2020 and continued contraction in employment." The business activity/production index fell to 49.6 from 61.2. New orders fell by 6.8 points to 47.3. Employment fell by 1 point to 46.1. Monthly PMI reports can be volatile, but a services PMI above 49 over time generally indicates an expansion of the overall economy. "Survey respondents report that in general, business is flat or lower, and although inflation is easing, some commodities have significantly higher costs," ISM said. The prices index fell by 1.8 points to 56.3, showing slowing but robust price gains. ISM's manufacturing PMI fell to 48.5 in June from 48.7 in May, ISM reported on 1 July. It was the third consecutive month of contraction and marked a 19th month of contraction in the past 20 months. Wednesday's weaker than expected ISM report, together with a Wednesday report showing initial jobless claims last week rose to their highest in two years, slightly increase the odds that the Federal Reserve may lower its target rate later this year after maintaining it at 23-year highs since last year in an effort to stem inflation. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexico economy showing 'timid growth': IMEF
Mexico economy showing 'timid growth': IMEF
Mexico City, 3 July (Argus) — Indicators of Mexico's non-manufacturing and manufacturing sectors suggested the economy recovered "some dynamism" in June, while maintaining the slow pace of growth of the second quarter, according to domestic financial association IMEF. "The trend suggested by the IMEF indicators suggest a moderate growth for the second quarter of the year," IMEF said. "The economy finds itself in an evident pause compared with the solid dynamism observed during 2022 and a large part of 2023." Manufacturing "stagnated" in the second quarter, it said. "It is very probable that economic activity will undergo additional slowdown in the second half of the year that will extend into 2025." IMEF's June manufacturing purchasing managers index (PMI) increased by 0.4 points to 49.5 points, still beneath the 50-point breakeven that shows contraction. This has been the third consecutive month of contraction. PMI adjusted to compensate for variations in company size was more positive, growing by 0.8 points to 51.2 in June, the group said. Manufacturing accounts for about a fifth of the Mexican economy. The non-manufacturing PMI, which covers the lion's share of the economy, rose by 0.6 points to 51 in June, marking a 29th month of expansion, IMEF said. Adjusted for company size, the headline services PMI rose by 0.9 to 5.18. Economic activity in Mexico continues to surprise downwards. After growth came in at an annual 1.6pc in the first quarter from a year earlier, the first data for April showed a monthly contraction of 0.6pc, IMEF said. Headwinds and tailwinds IMEF representatives highlighted growing market uncertainty following the Mexican election and ahead of the US presidential election in November. On the upside, said IMEF, Mexico should benefit from continued strength in the US economy, adding the incoming administration looks to bring down the current fiscal deficit, which is equal to 5.9pc of GDP. It will not reach the government's 3pc target for the budget coming out in November, but progress is expected with next year's budget and moving forward. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU’s centre-right EPP mulls Green Deal tweaks
EU’s centre-right EPP mulls Green Deal tweaks
Brussels, 3 July (Argus) — The European Parliament's largest group, the centre-right EPP, is working to complete the bulk of its strategy programme on 4 July at a meeting in Portugal. Key elements in the party's 2024-29 policy agenda include significant changes to the bloc's climate and energy policy for 2030. A draft of the five-point policy plan lists revising CO2 standards for new cars and vans to "allow for the use of alternative zero-emission fuels beyond 2035". The EPP also calls for a new e-fuel, biofuel and low-carbon fuel strategy "with targeted incentives and funding to accompany the EU hydrogen strategy". Additionally, the EPP wants the incoming European Commission to create a "single market for CO2" with a market-based framework for carbon capture and storage (CCS) and carbon capture and utilisation (CCU), through an accompanying legislative package similar to that adopted for the EU's gas and hydrogen markets. The strategy document discusses a "Green Growth Deal" aiming to achieve the EU's 55pc emission reduction target by 2030 — from 1990 levels — and climate neutrality by 2050, while boosting the EU's competitiveness and ensuring technological neutrality. The draft document emphasises the need to transition "away from fossil fuels towards clean energy", also by ramping up international hydrogen production. And the draft advocates for a "simple, technology-neutral, and pragmatic definition for low-carbon hydrogen" in upcoming technical legislation from the commission. More controversial points include postponing application of the EU's deforestation regulation and addressing problems related to its implementation. The EPP also wants to split the EU's industrial emissions directive into "industrial and agricultural parts", conduct a "full-scale" inquiry into why farmers are not receiving fair prices for their products, and require robust impact assessments for the economic viability of farms for any new animal welfare proposals. The group's members of parliament are meeting until 5 July. Commission president Ursula von der Leyen is also attending. She was [recently nominated](https://direct.argusmedia.com/newsandanalysis/article/25825320 by EU leaders for re-election. The EPP programme will significantly influence policy priorities that von der Leyen would support, if she is approved by an absolute majority of 361 votes at a session in Strasbourg on 15-18 July. But von der Leyen may need to drop more controversial points to secure a majority with liberal, centre-left and green support. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Oman's Duqm refinery on track to run above capacity
Oman's Duqm refinery on track to run above capacity
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