Arkansas, Oklahoma push delay for E15 petition

: Biofuels, Emissions, Oil products
23/10/17

Arkansas and Oklahoma have joined an oil industry effort to delay beyond 2024 a gasoline reformulation that eight Midwestern states have requested to preserve year-round sales of 15pc ethanol gasoline (E15).

Unless the fuel specification change is delayed until at least April 2025, the governors of Arkansas and Oklahoma worry their drivers will inadvertently face higher pump prices and fuel shortages. The governors cited warnings from the oil sector that, without more time to comply, the industry will be unable to provide enough of two new "boutique grades" of gasoline that are being requested by the eight Midwestern states.

"This will result in an insufficient supply of gasoline and add to the cost of gasoline at the pump for Arkansans," governor Sarah Huckabee Sanders (R) wrote on 9 October in a request for the US Environmental Protection Agency (EPA) to delay the fuel specification change.

Oklahoma governor Kevin Stitt (R), in a similar letter sent on 25 August, said the fuel specification change sought by other states would mean higher fuel costs for "unsuspecting Oklahoma motorists" at a time of already high gasoline prices. Stitt said he supported a congressional solution to the issue so the eight states would not require a "Band-Aid" to preserve year-round E15 sales.

E15 has been available for sale year-round nationwide since 2019, but absent intervention, the fuel blend will eventually face sales limits in the summer. A federal court in 2021 found the Clean Air Act offers a fuel volatility "waiver" exclusively to 10pc ethanol gasoline (E10), a ruling EPA has sidestepped for the last two summers by issuing temporary emergency orders citing the war in Ukraine.

To avoid future sales restrictions on E15, the eight Midwestern states — Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin — have filed a petition to rescind the longstanding Reid vapor pressure (RVP) waiver for E10, which would lead to the reformulation of the blendstocks used to produce both E10 and E15.

EPA this spring proposed approving the request from the eight states with an effective date of 28 April 2024, but it has yet to finalize the rule, leaving the oil sector uncertain about the change.

Not enough time to comply

US refiners say revoking the waiver will require them to supply two new fuel grades — regular and premium — to the eight states as soon as 1 March 2024, which they say will not offer enough time to comply.

Oil industry officials say the upgrades required to handle the new fuel grades could require years of work.

Magellan Midstream, which said it supplies the majority of gasoline sold in many of the eight Midwestern states, said it does not have adequate infrastructure at most of its terminals to accommodate the two new grades of gasoline the reformulation change would require.

"The timeline for new storage and infrastructure modifications is 24 months or more," Magellan said in an 18 August letter to the EPA requesting a one-year delay. Additional time would be needed for permitting and construction of the new infrastructure, and it would also make it more costly for Magellan to operate its entire pipeline system by reducing "fungibility" of the same 9 psi RVP gasoline to most states it serves.

Magellan also supplies fuel to Oklahoma, Arkansas, Kansas, North Dakota and Wyoming, which are not seeking the gasoline reformulation.

Change known about for months

Ethanol industry groups oppose delaying the effective date for the new fuel past April 2024, saying refiners and terminal operators have known for months that EPA was preparing a final rule requiring the fuel change.

"If refiners and pipeline and terminal operators don't like the idea of supplying lower-volatility gasoline in these eight states, they should join us in supporting recently introduced legislation that would permanently resolve this issue nationwide and make these state petitions unnecessary," Renewable Fuels Association president Geoff Cooper said.

The oil industry group the American Petroleum Institute, in a letter to EPA on 29 September seeking to delay the fuel change until 2025, said it supports a bill sponsored by US senator Deb Fischer (R-Nebraska) extending the E10 waiver to E15 as preferable to states seeking different rules.

But uncertainty over the prospects for that bill have raised concerns by the oil industry. Magellan said any spending to handle the new fuel grades sought by the eight states would be "high risk investments" that could be stranded if Congress grants a nationwide E15 waiver. Delaying the change to 2025 could provide time to develop a legislative solution, Magellan said.

EPA did not respond to a request for comment on the timing of its final rule.

By Chris Knight

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/11/22

Cop: Brazil eyes $300bn/yr for climate finance goal

Baku, 22 November (Argus) — Brazil has set out a suggestion of "at least" $300bn/yr in climate finance to be provided by developed countries to developing nations. Brazilian representatives set out their proposal today, in response to a draft text on a new climate finance goal. Brazil's proposal of $300bn/yr in climate finance by 2030 and $390bn/yr by 2035 are in line with the recommendations of a UN-mandated expert group. Negotiations at Cop are continuing late into the evening of the official last day of the conference, with no final texts in sight. Discussions centre around the new collective quantified goal (NCQG) — the climate financing that will be made available to developing countries in the coming years to help them reduce emissions and adapt to the effects of climate change. The presidency draft text released this morning put the figure at $250bn/yr by 2035, with a call for "all actors" to work towards a stretch goal of $1.3tn/yr. Representatives of developing countries have reacted angrily to the figure put forward in the text, saying it is far too low. Brazil's proposal appears to call for all of the $300bn-$390bn to be made up of direct public financing, which could then mobilise further funding to reach the $1.3tn/yr. It was inspired by the findings of a UN report, Brazil said. The UN-backed independent high-level group on climate finance today said that the $250bn/yr figure was "too low," and recommended the higher $300bn-390bn/yr goal. Brazil's ask would be a significant step up in the required public financing. The $250bn/yr target includes direct public financing and mobilised private financing, and potentially includes contributions from both developed and developing countries. Wealthier developing countries have been hesitant to see their climate financing fall in this category, which they say should be made up exclusively of developed country money, in line with the Paris Agreement. But $300bn/yr would represent an increase in ambition, Brazil said, while the $250bn/yr called for in the draft text would be very similar to the $100bn/yr goal set in 2009, after taking into account inflation. Delegates at Cop look set to continue discussions into the night. A plenary session planned for late in the evening, which would have allowed parties to express their positions in public, has been cancelled, suggesting groups still have differences to hammer out. By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Developing nations reject first finance offer

24/11/22

Cop: Developing nations reject first finance offer

Baku, 22 November (Argus) — Developing countries at the UN Cop 29 climate summit in Baku, Azerbaijan have rejected the first climate finance amount put forward by developed nations, and are mulling counter-offers. A revised draft text for a new climate finance goal was released earlier today. Parties are negotiating the next iteration of the $100bn/yr that developed countries agreed to deliver to developing nations over 2020-25 — known as the new collective quantified goal (NCQG). The new text stated that developed nations should contribute $250bn/yr by 2035 in climate finance for developing countries. This is up from the previous $100bn/yr that developed countries agreed to deliver over 2020-25, but still a fraction of the 1.3 trillion/yr that developing countries have been calling for. "The [$250bn/yr] offered by developed countries is a spit on the face of vulnerable nations like mine," said Panama's representative Juan Carlos Monterrey Gomez. "They offer crumbs while we bear the dead," he said, adding that the amount offered is "outrageous, evil and remorseless." There is still "a lot to fight for," said a delegate from Honduras, as others suggested that major edits to the text are likely. The negotiating block the Alliance of Small Island States (Aosis) pointed out that the text ignores minimum allocation floors for small island developing states (Sids) and least developed countries (LDCs) of at least $39bn/yr and $220bn/yr, as proposed at the start of the summit. The LDCs also complained that "rich" members of the group of 77 (G77) — a UN coalition of developing nations —insisted on no carve-outs for the poorer and most vulnerable countries, according to a Somalian delegate. The proposed $250bn/yr will severely stagnate climate action efforts and does not raise the bar from the previous ineffective $100bn/yr goal, the Aosis group said. "We cannot be expected to agree to a text which shows such contempt for our vulnerable people." Counter-offer A UN-mandated finance expert group indicated that the figure put forward by developing countries "is too low" and not consistent with the goals of the Paris Agreement. The group's analysis shows that the new finance goal for developing countries, based on the components that it covers, should commit developed countries to provide at least $300bn/yr by 2030, and $390bn/yr by 2035. "We believe that these targets are feasible," the group said. Brazil indicated that the country is now pushing for these targets. The final amount for the new finance goal could potentially be around $300bn-350bn/yr, a Somalian delegate told Argus. Developed nations, in contrast, offered more muted responses. "It has been a significant lift over the past decade to meet the prior goal [of $100bn/yr]," said a senior US official, and the new goal will require even more ambition and "extraordinary reach." A delegate from Norway told Argus that the text is "something to work on" and that they were "happier than yesterday." "We should leave Baku with a goal that at least gets to $300bn/yr by 2035," said climate think-tank WRI's finance programme director Melanie Robinson. "This is achievable with projected finance, further reforms and shareholder support at multilateral banks, and some growth in bilateral funding," she said. By Prethika Nair and Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Blenders credit extension stalled in US Senate

24/11/22

Blenders credit extension stalled in US Senate

New York, 22 November (Argus) — A push for US lawmakers to extend various biofuel incentives before the end of the year has met resistance in the Senate. A growing coalition of biofuel and soybean groups has endorsed extending for one year a $1/USG federal tax credit for blenders of biomass-based diesel, which would otherwise expire after December and be replaced by the Inflation Reduction Act's carbon-intensity-based "45Z" credit. But lawmakers have various other priorities in the final weeks of this legislative session, and a staffer with the Democratic-controlled US Senate Finance Committee confirmed that prospects for a deal to extend biofuel tax credits are slim. "Republicans have showed very little interest in working with Democrats on much of anything related to tax," said Ryan Carey, chief communications advisor and deputy policy director at the Committee on Finance. "Their focus is primarily on the next Congress, when they're going to attempt to pass an extension of the first Trump tax law on a partisan basis." Another Senate office acknowledged on background that it is "unlikely" Congress will come to any major tax deal before the end of the year. Congress has other priorities for its brief lame duck session before president-elect Donald Trump begins his second term, including government funding, the federal debt limit, and a new farm bill. Tax policy could still fit into an end-of-year package, with some less controversial tax provisions and a bipartisan business tax proposal backed by Senate Finance Committee chair Ron Wyden (D-Oregon) still under discussion. But prolonging the biodiesel blenders credit — plus other biofuel credits benefiting sustainable aviation fuel and cellulosic fuels that some groups have also pushed to extend — appears to be a tougher lift. With Trump in the White House and Republicans set to control both chambers of Congress, Republicans are now preparing major tax policy legislation next year to prolong tax cuts passed during Trump's first term that are set to expire at the end of 2025. Lawmakers are likely to look at repealing some Inflation Reduction Act clean energy subsidies to help offset the cost of that proposal. Republicans on the House tax-writing committee this week requested public input on the 45Z credit specifically, a signal that they are at least open to modifications — and are already looking to tax policy next year. Biofuel subsidies are seen by analysts and lobbyists as less likely targets for repeal than other Inflation Reduction Act credits, given support for the industry among farm state lawmakers. But the request-for-information this week suggested that Republicans are wary of elements of the current 45Z credit and could support changes that benefit agribusiness. Even biofuel groups generally supportive of the 45Z credit's structure have been frustrated by President Joe Biden's administration, which has yet to issue guidance clarifying how it will calculate the carbon intensities of different fuels and feedstocks. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Decision on 2026 host unlikely in Baku

24/11/22

Cop: Decision on 2026 host unlikely in Baku

Washington, 22 November (Argus) — A decision on which country will host the UN Cop 31 climate talks in 2026 may not come until next year, as Australia and Turkey vie to be the next host. Draft decision text released on Friday at Cop 29 in Baku, Azerbaijan, would punt the decision and call on western European and other States to accelerate their consultations" and be prepared to present an offer to host in June 2025. Australia formally bid in 2022 to host Cop 31 and had little competition other than Turkey, which has refused to back down. Pushing the decision to next year would shorten the amount of time the eventual host has to prepare. But Azerbaijan won its hosting duties [only last year] at Cop 28 in Dubai. Brazil, the host of Cop 30, had its bid accepted in May 2023 . Under the UN Framework Convention on Climate Change (UNFCCC), Turkey is part of a grouping of western European countries, while Australia is in a group of "other states" that also includes Canada, Iceland, New Zealand, Norway, Switzerland and the US. The Australian delegation in Baku did not immediately respond to a request for comment. The draft text said that Cop 32 will be held in an African country from 8-19 November 2027. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Drafts point to trade-off on finance, fossil fuels

24/11/22

Cop: Drafts point to trade-off on finance, fossil fuels

Baku, 22 November (Argus) — The new draft on the climate finance goal from the UN Cop 29 climate summit presidency has developed nations contributing $250bn/yr by 2035, while language on fossil fuels has been dropped, indicating work towards a compromise on these two central issues. There is no mention of fossil fuels in either the new draft text on the global stocktake — which follows up the outcome of Cop 28 last year, including "transitioning away" from fossil fuels — or in the new draft for the climate finance goal. Developed countries wanted a reference to moving away from fossil fuels included, indicating that not having one would be a red line. The new draft text on the climate finance goal would mark a substantial compromise for developing countries, with non-profit WRI noting that this is "the bridging text". Parties are negotiating the next iteration of the $100bn/yr that developed countries agreed to deliver to developing nations over 2020-25 — known as the new collective quantified goal (NCQG). The new draft sets out a figure of $250bn/yr by 2035, "from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources". It also notes that developed countries will "take the lead". It sets out that the finance could come from multilateral development banks (MDBs) too. "It has been a significant lift over the past decade to meet the prior, smaller goal... $250bn will require even more ambition and extraordinary reach," a US official said. "This goal will need to be supported by ambitious bilateral action, MDB contributions and efforts to better mobilise private finance, among other critical factors," the official added. India had indicated earlier this week that the country was seeking around $600bn/yr for a public finance layer from developed countries. Developing countries had been asking for $1.3 trillion/yr in climate finance from developed countries, a sum which the new text instead calls for "all actors" to work toward. The draft text acknowledges the need to "enable the scaling up of financing… from all public and private sources" to that figure. On the contributor base — which developed countries have long pushed to expand — the text indicates that climate finance contributions from developing countries could supplement the finance goal. It is unclear how this language will land with developing nations. China yesterday reiterated that "the voluntary support" of the global south is not part of the goal. The global stocktake draft largely focuses on the initiatives set out by the Cop 29 presidency, on enhancing power grids and energy storage, though it does stress the "urgent need for accelerated implementation of domestic mitigation measures". It dropped a previous option, opposed by Saudi Arabia, that mentioned actions aimed at "transitioning away from fossil fuels". Mitigation, or cutting emissions, and climate finance have been the overriding issues at Cop 29. Developing countries have long said they cannot decarbonise or implement an energy transition without adequate finance. Developed countries are calling for substantially stronger global action on emissions reduction. By Georgia Gratton and Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more