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UK increases RTFO target

  • Spanish Market: Biofuels
  • 19/07/22

The UK government will amend and increase the main target in its Renewable Transport Fuel Obligation (RTFO) scheme, with the aim to increase carbon savings from land, air and sea transport.

Following a consultation launched in March last year, the UK will increase the RTFO main target by 5 percentage points by 2032, to 14.6pc, which it said will lead to greenhouse gas (GHG) emissions savings of 23.6mn t of CO2 equivalent between 2022 and 2032. The government will increase the target by 1.5 percentage points in 2022 with an additional 3.5 percentage points spread over the 2023-32 period.

The consultation proposed to support uptake of recycled carbon fuels (RCFs), which are produced from fossil wastes that cannot be avoided, reused or recycled and that have the potential to reduce GHG emissions relative to gasoline or diesel. But supporting RCFs in the RTFO requires an amendment to primary legislation, and the government said it will look to make this as soon as possible.

The government also proposed to expand the scope of the RTFO to make the use of renewable fuels of non-biological origin (RFNBO) in maritime, rail and non-road vehicles eligible for support. It will expand support for RFNBOs, but said primary legislation changes may be needed to expand support to loading and construction vehicles.

Regarding proposals to promote improvements in sustainability criteria of fuels supported under the RTFO, the government will establish criteria to address the specific impacts of biofuels made from forest biomass and introduce criteria to manage the soil carbon impacts associated with the use of agricultural residues. It will improve the accuracy of reported GHG emissions and secure and increase the minimum GHG savings delivered by eligible fuels.

The government said it intends to make the legislative changes, so the new policies and increased targets apply from the start of the next RTFO obligation period, which began on 1 January 2022.


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06/11/24

US RFS, RIN markets face uncertainty under Trump

US RFS, RIN markets face uncertainty under Trump

Houston, 6 November (Argus) — Renewable identification number (RIN) credit prices ticked up slightly today following the re-election of Donald Trump and a likely Republicans control of the US Senate, but uncertainty remains for other biofuel-related markets and policies. An increase in tariffs under Trump or other policy changes to deter biofuel feedstock imports could lower the availability of renewable fuels next year. Biomass-based diesel D4 and ethanol D6 RIN credits, which make up more than 90pc of all RINs generated on a monthly basis, rose slightly early Wednesday, following upward pressure from a rise in soybean oil futures. The soybean oil-heating oil (BOHO) spread rose to its highest level recorded in 2024 at $1.21/USG on Wednesday. RIN prices for current year D4 and D6 rose to 70.75¢/RIN, with both posting 2.5¢/RIN in gains on the day. While farm state lawmakers in both chambers are likely to resist any Trump efforts to repeal biofuels incentives, long-term prospects for the Inflation Reduction Act's "45Z" credit set to kick off in January are now uncertain. The incentive ends at the end of 2027, which gives Trump and his Republican allies substantial negotiating power over the terms of any extension — such as barring refiners from using foreign feedstocks. The election results also mean a Trump administration will have the power to set new biofuel blend mandates under the Renewable Fuel Standard (RFS) for 2026 and subsequent years. The Environmental Protection Agency (EPA) during Trump's first term tried to strike a balance between refiner and biofuel interests, setting increasing volume mandates but issuing more waivers from program obligations. While a second Trump term could be similar, regulators under the program's "set authority" now have more discretion to weigh various economic and environmental factors when setting volumes instead of tracking mandated volumes that lapsed after 2022. Federal judges weighing EPA's authority under this new phase of the program last week expressed concern about some of the agency's decision-making, meaning any court order to rethink or reset volumes would now fall to a Trump administration. Under the Clean Air Act, which sets the framework for the RFS, refineries that process 75,000 b/d or less of crude have a pathway to waive biofuel blending obligations if they can prove they would suffer "disproportionate economic hardship." Precedent over these small refiner exemptions (SREs) affect the supply and demand balance of credits, which in turn alter the economics biofuel producers face as they rely on RIN credits as a source of revenue. From 2017-2021, the first Trump administration dialed back environmental regulations and more generously doled out SREs. During that span of time, EPA also chose not to adjust the renewable volume obligations on larger refineries to account for those that had secured waivers. This helped create an oversupply of D4, D5, and D6 credits and drove prices down to more than five-year lows. Cellulosic biofuel D3 credits in today's market also face a different set of parameters from the program's earlier years. The cellulosic waiver credit allowed producers to purchase waivers for D3 obligation given a shortage of RINs. But this mechanism changed under EPA's "set authority" and the Biden administration has brushed off a request from refiners to both lower requirements and make available waiver credits. Current year D3 prices have risen as high as 350¢/RIN this year as a result as cellulosic biofuel production trails agency expectations. A Trump administration could be more sensitive to future industry requests to relax these requirements and could set less ambitious cellulosic targets for future blend mandates. RINs are credits traded and produced by refiners and importers to show compliance with the RFS. Obligated parties can produce credits when renewable fuels are blended into conventional transportation fuels or can purchase credits from other RIN producers. By Matthew Cope and Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump win could reshape US biofuels incentives


06/11/24
06/11/24

Trump win could reshape US biofuels incentives

New York, 6 November (Argus) — Donald Trump's return to the White House next year will give Republicans the power to rethink biofuel incentives that have spurred a boom in production under President Joe Biden. Biden-controlled agencies may try to use their final months in power to push through tax credit guidance that encourages biorefineries to do more to reduce their greenhouse gas emissions. But in both the executive branch and in Congress, Republicans will soon have leverage to shift away from Democrats' recent efforts to tie biofuel incentives to climate impacts. The Inflation Reduction Act's "45Z" tax credit, starting in January, will offer greater federal subsidies to fuels that produce fewer emissions. The Biden administration could issue long-awaited guidance spelling out how the government will calculate carbon intensities for different fuels and feedstocks, but that might just delay the inevitable. A Republican-controlled Congress could use the Congressional Review Act next year to repeal any guidance lawmakers see as too restrictive to farmers, and a Trump administration will regardless be able to develop new rules that reprioritize which companies benefit from the credit. Republicans could focus on imported feedstocks, which have surged in recent years as refiners cashed in on state clean fuel incentives by sourcing waste feedstocks primarily from Asia and South America. Farm groups, fearing that ample supply of foreign used cooking oil and tallow is curbing demand for domestic biofuel feedstocks like soybean oil, have pushed for the US government to restrict refiners using foreign feedstocks from claiming 45Z. An outright ban has legal risks, but Trump officials could think more creatively around deterring feedstock imports – potentially through guidance that is generous to crop-based fuels or that imposes carbon penalties on feedstocks that travel long distances to reach the US. Expected tariff hikes on foreign imports could alone curb demand for global biofuel feedstocks, with Chinese used cooking oil a likely target. But products like Brazilian tallow and Canadian canola oil potentially could be affected as well. Congress could also complicate the tax picture before Trump takes office. Senator Chuck Grassley (R-Iowa) said before the election Tuesday that he expects a proposal to extend the $1/USG blenders tax credit for biomass-based diesel another year to feature in an end-of-year package. Current bill language would not repeal 45Z but would allow fuel to claim whichever incentive offers the larger benefit, likely boosting crop-based diesels set to earn much less than $1/USG under 45Z. There is no guarantee a lame duck Congress will take up such a proposal, especially with various other policy priorities on lawmakers' agendas. But expiring biofuel credits could feature in negotiations, including a blenders credit for sustainable aviation fuel and a credit that benefits cellulosic ethanol producers, biofuel lobbyists said. A potential vehicle for longer-lasting policy changes is an expected fight in Congress next year over tax policy. Republicans, hoping to pay for extending Trump-era tax cuts that would otherwise expire, could do so by repealing Inflation Reduction Act incentives. But farm state lawmakers, especially in a House of Representatives that looks like it will be closely contested between Republicans and Democrats, would also have leverage to push for some federal biofuel incentives to remain, even if they look different than the current 45Z mechanism. Importantly too, the 45Z incentive is set to expire after 2027. Whether details are hashed out in Congress this year, next year, or afterwards, Trump and his allies will be able to tie any credit extension to desired policy objectives. There are two bills in Congress that would extend the credit into the 2030s, but the only one with Republican support bars foreign feedstocks from qualifying. Federal momentum around boosting biofuels in a second Trump term will also depend on how policies beyond tax credits develop. Increasingly ambitious state climate policies – such as California's low-carbon fuel standard, which could be made more stringent this week – could keep planned renewable diesel and sustainable aviation fuel capacity additions on track. At the same time, retaliatory tariffs from China could hurt farmers more than higher domestic biofuel sector demand helps. And Trump could use planned updates to federal renewable fuel blend mandates to either assuage biofuel producers struggling to plan around policy uncertainty or to lower compliance costs for oil groups that strongly backed his candidacy. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK parliament approves SAF mandate from 2025


06/11/24
06/11/24

UK parliament approves SAF mandate from 2025

London, 6 November (Argus) — The UK parliament has approved the proposed sustainable aviation fuel (SAF) mandate that will come into effect on 1 January, 2025. Obligated suppliers will have to deliver a 2pc share of SAF in 2025, increasing to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation will remain at 22pc from 2040 "until there is greater certainty regarding SAF supply". The obligation arises at the point at which a supplier's jet fuel can be supplied only to UK aviation. Hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but will be capped at 71pc in 2030 and 35pc in 2040. An obligation for Power-to-Liquid (PtL) SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 0.5pc in 2030 and 3.5pc in 2040. Buy-out mechanisms will be set at the equivalent of £4.70/l ($6.10/l) and £5.00/l ($6.50/l) for the main and PtL obligations, respectively. "It is projected that, between 2025 and 2040, the SAF mandate could deliver up to 25mn t of SAF, securing a saving of up to 54mn t of carbon dioxide", said transport minister John Hendy. The UK confirmed on 17 July it will introduce the Sustainable Aviation Fuel (Revenue Support Mechanism) bill to support SAF production. The government previously said it aims to introduce the mechanism, which will be industry funded, by the end of 2026 . "Together with the SAF mandate, [the mechanism] will give the investment community confidence to invest in these novel and innovative technologies", Hendy said. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Asia marine biodiesel: B24 prices drop $3.50/t


05/11/24
05/11/24

Asia marine biodiesel: B24 prices drop $3.50/t

Singapore, 5 November (Argus) — Marine biodiesel prices in Asia fell at the close of trading, although the used cooking oil methyl ester (Ucome) market in China remained firm, with prices assessed higher at $970-990/t on a free-on-board (fob) basis. B24 Singapore prices were lower despite steady Ice Brent Singapore crude futures at $75.18/bl and a rise in very-low sulphur fuel oil (VLSFO) cargo prices by $6/t to $573.50/t fob. Enquiries for marine biodiesel were brisker for B24 in Singapore and Port Klang, while there was an indication for B30 at the port of Singapore. B24 prices in Singapore were assessed in a wider range at $710-725/t on a delivered-on-board (dob) basis, but $3.50/t lower from 4 November. There was an outright indication for B24 at $725/t dob, while other indications on a delivered premium basis were cited around $130-140/t range or $703.50-713.50/t dob. Singapore B30 was also indicated at $823.5/t dob. In Port Klang, Malaysia, a Ucome-based B24 deal was concluded for 1,000t at about $762/t dob for 20 November. Prices in Guangzhou were assessed at $750-765/t dob, with the Singapore-Guangzhou spread standing at $40/t. The east-west arbitrage value stood at $95/t, with Singapore's B24 prices continuing to fetch a hefty discount versus Ucome-based B30 prices at $812.5/t dob basis in the Amsterdam-Rotterdam-Antwerp (ARA) region in overnight trading. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US railroad-labor contract talks heat up


04/11/24
04/11/24

US railroad-labor contract talks heat up

Washington, 4 November (Argus) — Negotiations to amend US rail labor contracts are becoming increasingly complicated as railroads split on negotiating tactics, potentially stalling operations at some carriers. The multiple negotiating pathways are reigniting fears of 2022, when some unions agreed to new contracts and others were on the verge of striking before President Joe Biden ordered them back to work . Shippers feared freight delays if strikes occurred. This round, two railroads are independently negotiating with unions. Most of the Class I railroads have traditionally used the National Carriers' Conference Committee to jointly negotiate contracts with the nation's largest labor unions. Eastern railroad CSX has already reached agreements with labor unions representing 17 job categories, which combined represent nearly 60pc of its unionized workforce. "This is the right approach for CSX," chief executive Joe Hinrichs said last month. Getting the national agreements on wages and benefits done will then let CSX work with employees on efficiency, safety and other issues, he said. Western carrier Union Pacific is taking a similar path. "We look forward to negotiating a deal that improves operating efficiency, helps provide the service we sold to our customers" and enables the railroad to thrive, it said. Some talks may be tough. The Brotherhood of Locomotive Engineers and Trainmen (BLET) and Union Pacific are in court over their most recent agreement. But BLET is meeting with Union Pacific chief executive Jim Vena next week, and with CSX officials the following week. Traditional group negotiation is also proceeding. BNSF, Norfolk Southern and the US arm of Canadian National last week initiated talks under the National Carriers' Conference Committee to amend existing contracts with 12 unions. Under the Railway Labor Act, rail labor contracts do not expire, a regulation designed to keep freight moving. But if railroads and unions again go months without reaching agreements, freight movements will again be at risk. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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