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US senators introduce bill to remove ethanol mandate

  • Market: Biofuels
  • 20/07/21

US senators on both sides of the aisle today introduced a bill to remove the ethanol biofuel mandate from the Renewable Fuel Standard (RFS).

Senators Susan Collins (R), Dianne Feinstein (D), Bob Menendez (D) and Pat Toomey (R) submitted the Corn Ethanol Mandate Elimination Act. If passed, the bill would terminate the corn ethanol component of the RFS.

Senators sponsoring the bill said removing the corn ethanol mandate would incentivize development of more advanced biofuels.

"Corn ethanol achieves little to no reductions in greenhouse gas emissions. It's time to end the mandate and instead support more advanced biofuels and biodiesel," wrote senator Feinstein.

Under the RFS, obligated parties such as fuel refiners and importers must blend billions of gallons worth of biofuels with road fuels each year. In 2020, statutory volumes for total biofuels blended was 30mn USG. Actual volumes finalized by the US Environmental Protection Agency (EPA) were nearly a third lower at 20.09bn USG. Of those gallons, less than half of them were mandated as advanced biofuels.

Obligated parties often meet their minimum obligations for advanced biofuels and then cover the balance of their total renewable fuel obligation with cheaper RIN credits such as D6 ethanol RINs. The RFS volumetrically capped ethanol blending at 15bn USG in 2015. The ethanol blend rate into motor gasoline has averaged nearly 9.9pc so far this year. When ethanol RINs are tight because of low blending or aggressive blending targets, obligated parties will sometimes opt for covering that obligation with D4 biodiesel RINs.

Other senators said corn ethanol hurt obligated parties.

"The federal government forcing Americans to buy billions of gallons of corn ethanol is terrible policy on many levels. For starters, it imposes financial harm on consumers and refineries, risking thousands of good-paying jobs," wrote senator Toomy.

Trade groups last month expressed similar concerns.


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October a record month for AOM Ucome trading


01/11/24
News
01/11/24

October a record month for AOM Ucome trading

London, 1 November (Argus) — Used cooking oil methyl ester (Ucome) had its strongest month yet on the Argus Open Markets (AOM) deal initiation platform in October, with 107,000t changing hands. Ucome activity more than quadrupled on the month after only 26,000t traded in September. Ucome traded in October made up 19.6pc of total Ucome volumes traded in 2024 so far. For all three products combined — RME, Ucome, and Fame 0 — October 2024 was the most active month of trading since August 2023, and before that, July 2022. RME trade totalled 145,000t, a 150pc increase from September, and 104,000t of Fame 0 changed hands, a 108pc increase. In total, 356,000t of biodiesel was traded in October, up from 134,000t in September and 143,000t in August. The rise in activity aligned with the start of the new quarter and some major news for the market. At the end of September, Germany proposed a draft bill that would prevent excess greenhouse gas (GHG) quota tickets from being carried into 2025 and 2026. GHG quota tickets are the compliance mechanism for the GHG reduction mandate that governs biofuels usage, and the market is heavily oversupplied at the moment, pressuring down prices and encouraging companies to buy and use tickets rather than physical biofuels. By starting from scratch for 2025, participants except demand to pick up substantially, although until the end of 2024 tickets will remain the cheaper option. The immediate response to the announcement of the draft bill in Germany was a surge of activity in the related paper markets for the fourth quarter, a final piece encouraging physical trading. As of the last day of the October contract, open interest stood at 1,742 lots for Ucome, 1,167 lots for Fame 0, and 2,472 lots for RME. Total open interest for the fourth quarter was 4,655 lots for Ucome, 4,396 lots for Fame 0, and 7,529 lots for RME, according to Ice data. Many companies with strong paper positions will manage exposure by trading some portion of the total volume in the spot market. The Dutch government confirmed that the country's ticket carry-over levels will be reduced, which should also increase biofuels demand next year. Biofuels mandates throughout Europe go up at the start of the new year, along with the introduction of ReFuel mandates for aviation and shipping. This all combines for a much more positive outlook for 2025 demand than the market expected, as well as stronger competition for supply. The increase in trading started a quarter ahead, as companies look to take advantage of the changes, prepare for 2025, and still cover any shorts until the end of this year. European producers have been struggling with low production margins, which has slowed down production levels. European supply has tightened because of this and imports are down because of provisional anti-dumping duties on China, which may have also encouraged some companies into the window to find product. In the macroeconomic environment, volatility in energy markets following increased tensions in the Middle East also prompted some trading, as the Ice gasoil contract underpins European biodiesel prices and has closely followed military developments. Some participants reported an overall higher risk appetite for the fourth quarter after several months of very subdued market activity. By Simone Burgin Monthly AOM trade volumes t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US biofuel feedstock use dips in August


31/10/24
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31/10/24

US biofuel feedstock use dips in August

New York, 31 October (Argus) — Renewable feedstock usage in the US was down slightly in August but still near all-time highs, even as biomass-based diesel production capacity slipped. There were nearly 3.5bn lbs of renewable feedstocks sent to biodiesel, renewable diesel, and sustainable aviation fuel production in August this year, up from fewer than 3bn lbs a year prior, according to the US Energy Information Administration's (EIA) latest Monthly Biofuels Capacity and Feedstocks Update report. August consumption was 0.4pc below levels in July and 0.5pc below record-high levels in June. US soybean oil consumption for biofuels rose to 39.3mn lbs/d in August, up by 2.1pc from a year earlier on a per-pound basis and up 6.9pc from a month prior. The increase was entirely attributable to increased usage for renewable diesel production, with the feedstock's use for biodiesel slipping slightly from July. Canola oil consumption for biofuels hit 14.2mn lbs/d, up by 58.1pc from a year prior on a per-bound basis but still 19.4pc below record-high levels in July. Distillers corn oil usage, typically less volatile month-to-month than other feedstocks, bucked that trend to hit a high for the year of 13.6mn lbs/d in August. That monthly consumption is up 13.6pc from a year earlier and 20.9pc from a month earlier. Among waste feedstocks, usage of yellow grease, which includes used cooking oil, rose to 22.4mn lbs/d in August, up 13.8pc from levels a year prior and 5.8pc from levels in July. Tallow consumption for biofuels was at 18.6 mn lbs/d over the month, an increase of 27.8pc from August last year but a decrease of 13.4pc from July this year. Production capacity of renewable diesel and similar biofuels — including renewable heating oil, renewable jet fuel, renewable naphtha, and renewable gasoline — was at 4.6bn USG/yr in August, according to EIA. That total is 24.1pc higher than a year earlier and flat from July levels. US biodiesel production capacity meanwhile declined to fewer than 2bn USG/yr over the month, down by 4.3pc from a year earlier and 1.3pc from a month earlier. US biomass-based diesel production capacity has expanded considerably in recent years, but refiners have recently confronted challenging economics as ample supply of fuels used to comply with government programs has helped depress the prices of environmental credits and hurt margins. The industry is also bracing for changes to federal policy given this year's election and a new clean fuel tax credit set to kick off in January. That credit, known as "45Z", will offer a greater subsidy to fuels that produce fewer greenhouse gas emissions, likely encouraging refiners to source more waste feedstocks over vegetable oils. That dynamic is already shaping feedstock usage this year, with Phillips 66 executives saying this week that the company's renewable fuels refinery in California is currently running more higher carbon-intensity feedstocks ahead of a shift to using more waste early next year. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US court set to weigh biofuel blend mandates


31/10/24
News
31/10/24

US court set to weigh biofuel blend mandates

New York, 31 October (Argus) — A US court on Friday will weigh some novel issues that could affect enforcement of the Renewable Fuel Standard (RFS), the federal program that sets minimum biofuel blending levels for domestic motor fuel supplies. The Environmental Protection Agency (EPA) in last year's RFS regulation required refiners and importers to blend increasing volumes of renewable fuel from 2023-2025. But the rule differed from past obligations in a crucial way. While the RFS law set annual volume targets of cellulosic, advanced and conventional biofuels through 2022, it tasked EPA with setting volumes in subsequent years by balancing factors such as the environmental impacts of biofuels, energy security, expected production and consumer costs. 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In a separate case this year, the DC Circuit discarded EPA rejections of program waiver petitions, in part because judges disagreed that refiners can easily pass on the cost of Renewable Identification Number (RIN) credits used to show compliance with the RFS program. EPA used this pass-through theory in the 2023-2025 rule "like a magic wand, waving it around to dismiss any argument that the rule will cause harm", the American Fuel and Petrochemical Manufacturers and small refineries said in a case filing. Lafferty expects the judges at Friday's hearing to probe the extent to which EPA's volumes relied on this pass-through theory, "a policy that now this very court has gutted." Environmentalists have similarly targeted EPA's cost analysis, arguing that the agency downplayed the environmental drawbacks of growing crops for energy. 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RINcrease or decrease RIN market activity has thinned as participants await the results of the court case and November's presidential election. In its latest rule, EPA aimed to provide a clearer picture over a longer timeline by finalizing volumes over multiple years. But the agency underestimated the growth in renewable diesel production, partly because of unexpectedly high feedstock imports. The result has been persistent oversupply, which took D4 biomass-based diesel credit prices from around 150¢/RIN in spring last year to as low as 42¢/RIN a year later according to Argus assessments. Multiple refiners have consequently dialed back biofuel production. In the past, RIN prices have proven sensitive to legal developments as traders anticipate supply and demand shifts. Prices softened this summer after the DC Circuit vacated small refinery waivers, leaving it unclear whether many facilities would have to buy RIN credits at all. By Cole Martin and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cepsa rebrands to Moeve to reflect sustainability shift


30/10/24
News
30/10/24

Cepsa rebrands to Moeve to reflect sustainability shift

Madrid, 30 October (Argus) — Spain-based integrated energy company Cepsa has changed its name for the first time in its 95 years of existence, to Moeve (pronounced Moo-eh-vey). The change reflects Cepsa's transition "in which the majority of profits will come from sustainable activities by the end of this decade," said chief executive Maarten Wetselaar. Cepsa has sold nearly 70pc of its oil and gas production over the past two years, including its stakes in upstream assets in Abu Dhabi , in Peru and in Colombia . It has retained stakes in light crude and gas production in Algeria, which has a significantly lower carbon footprint. The company reported provisional working interest crude production of 36,000 b/d in July-September, down from 80,000 b/d in the same period of 2021. Since then it has announced an €8bn ($8.65bn) investment strategy to decarbonise much of its business through ventures such at the planned 2GW Andalusian Hydrogen Valley , announced at the end of 2022, together with second-generation biofuels, biomethane and renewables development. Cepsa, or Compañia Espanola de Petroleos SA, was founded in 1929. It has been been majority controlled by Abu Dhabi sovereign wealth investors IPIC and Mubadala Investment Company since 2011. US investment fund Carlyle acquired 37pc of the firm in 2019. By Jonathan Gleave Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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