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EU parliament to favour e-fuels, hydrogen: EPP lawmaker

  • : Biofuels, Hydrogen, Natural gas
  • 24/06/10

EU parliament to favour e-fuels, hydrogen: EPP lawmaker

The new EU parliament will be more pragmatic in 2024-2029, favour continuation of the internal combustion engine (ICE) beyond 2035 as well as more flexible rules for low-carbon hydrogen, e-fuels, biofuels, and other CO2-neutral fuels, outgoing member of the European Parliament Markus Pieper told Argus. The centre-right European People's Party (EPP) MEP was the key lawmaker behind the EU's revised renewable energy directive.

Will the next parliament favour renewable liquid fuels in spite of provisions for an ICE phase-out?

For me, the end of the internal combustion engine (ICE) has not been decided yet. The next European Parliament will likely have a majority supporting the continuation of ICE beyond 2035. This would provide planning security for investments in innovation and facilities for e-fuels, biofuels, and other CO2-neutral fuels, including power-to-x (P2X) fuels. Instead of an outright ban on combustion engines, there should be a phase-out of fossil fuels, enabling us to achieve climate targets more quickly and cost-effectively, without overloading power grids. We need to start working on a clear legal framework today. The blending of new fuels must be standardised and regulated.

Do you see the EU parliament favouring greater flexibility in the conditions for renewable hydrogen?

Yes, we have a review clause in the renewable energy directive, whereby the European Commission shall submit a report to council [of ministers] and parliament by 1 July 2028. If this assessment indicates that we cannot achieve targets for green hydrogen in industry due to a lack of supply, then we must adjust the definition of green hydrogen. If we do not adapt, the industry may relocate to regions with fewer environmental regulations. We need to be flexible in our legislation and ready to adjust rules due to worldwide competition.

How can a new EU parliament improve on existing legislation for 2030 climate and energy goals?

The magic word is technological openness. We need to get the best out of all energy resources. Additionally, we need to invest significantly more in the energy transition, especially in the expansion of cross-border green electricity projects. The new European Parliament will likely be more pragmatic and realistic in its energy goals.

Does the EU need to rethink the 2040 goals?

There's no need to rethink the 2040 CO2 reduction target of 90pc [compared with 1990 levels]. But we need to rethink how to achieve goals and keep a close eye on China and India. Europe must constantly redefine and adapt legislation as necessary. One crucial step is reaching new trade arrangements [to balance higher EU climate standards for domestic industry than global competitors]. We have to be more realistic.

Do you think EU 2030 targets for hydrogen are too ambitious?

Yes, the target for green hydrogen to represent 42pc of hydrogen used by industry in 2030 is too ambitious from today's point of view. And I currently don't see the capacity to produce enough hydrogen in Europe. As for imports, non-EU producers often do not meet the same standards for producing green hydrogen. This means we'll need to adapt our definition of green hydrogen and consider more low-carbon solutions. The Paris Climate Agreement remains our primary goal. If we can achieve these goals with low-carbon hydrogen, why not? Still, it remains possible to meet the 2030 green hydrogen targets if we adapt the definition.


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24/11/07

EU's Hoekstra balances divergent calls on climate

EU's Hoekstra balances divergent calls on climate

Brussels, 7 November (Argus) — EU climate commissioner Wopke Hoekstra, nominated again for the role, balanced conflicting calls around climate legislation in a hearing today with members of the European Parliament (MEPs). Some MEPs were in favour of tougher climate legislation, while others demanded delays to targets. Hoekstra defended key climate energy legislation, including EU CO2 reduction targets for cars and vans, while maintaining a cautious approach on expansion of the EU emissions trading system (ETS) to new sectors. Hoekstra committed to a 2026 ETS review that touches upon maritime, aviation, municipal waste and negative emissions, in response to a question from German centre-right EPP MEP Peter Liese, who has been a key parliament negotiator for ETS reforms. "Negative emissions are a cornerstone of making it to net zero. I'll absolutely look into the ramifications, whether this could be included," said Hoekstra, commissioner-designate for climate, net-zero and clean growth. If international efforts to reduce aviation emissions do not deliver, Hoekstra is also open to an ETS that equally impacts EU and international aviation. Hoekstra underlined the pivotal importance for "predictability" of legislation for industry, referencing certain firms' concern at a 12-month delay to the bloc's deforestation regulation. Hoekstra promised a "dialogue" with the car industry about sticking to CO2 standards for cars and vans and the phase-out, from 2035, of new vehicles with an internal combustion engine (ICE). Hoekstra is "all in" for ensuring the EU car industry's success. But the Dutch politician is reticent about delaying penalties for carmakers that do not meet CO2 standards from 2025. For biofuels and e-fuels, Hoekstra does not want to change current EU legislation. The EU should not open the "box that was closed" by EU legislation, notably with a 2035 phase-out that only foresees use of the ICE with non-biogenic CO2 neutral fuels. "I feel there is a bright future for biofuels. We need more, particularly in many other domains," he said, equally noting that the EU needs to "focus first and foremost on electrification". And Hoekstra could give no clear deadline for phasing out fossil fuel subsidies in the EU, but said he would do his best to create transparency on the issue. Speaking notes prepared in advance of the hearing already indicated a cautious approach to new elements in future climate policy. Hoekstra underlined the need for a "business case" for decarbonisation in agriculture and forestry, mirroring the approach taken by EU agriculture commissioner-designate Christophe Hansen. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US RFS, RIN markets face uncertainty under Trump


24/11/06
24/11/06

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


24/11/06
24/11/06

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.

Europe gas market shows muted reaction to US Trump win


24/11/06
24/11/06

Europe gas market shows muted reaction to US Trump win

London, 6 November (Argus) — The European gas market showed only a limited downward reaction this morning to the US election result, and while some market participants expect a second Donald Trump presidency to ease geopolitical tensions, others see the potential for destabilising effects in the medium term. While vote counting was still ongoing at the time of publication and vice-president Kamala Harris has yet to concede defeat, the Associated Press and major US television networks have concluded that Trump secured enough votes in the Electoral College to win the presidency. European gas prices fell during morning trading, despite the US dollar strengthening by about two basis points against the euro. European gas prices typically move higher in euro terms when the US dollar strengthens to offset the higher cost of dollar-denominated LNG supply. Some market participants attributed the small price fall during morning trading to the expectation that a second Trump administration would seek de-escalation on several geopolitical fronts — such as in Ukraine and the Middle East — which, they say, had supported gas prices in recent weeks. But European gas prices reversed their limited gains by the 16:30 GMT market close. And the European gas price reaction was notably muted relative to the considerable volatility of less than a week ago when a media report had raised the prospect of an imminent deal between European buyers and Azerbaijan for gas transit through Ukraine. These European buyers later denied that a contract would soon be signed . Few market participants foresee a material effect on the gas market stemming from the US election result. "The impact is too vague to really price in," a trading firm said. "Given the tight global supply-demand balance, any setback will be short-lived," another market participant said. The result may fuel speculation that the war between Russia and Ukraine could come to an end sooner, but with the new president set to take office in late January, the change in presidency will have no effect on the possibility of reaching a deal that would allow Russian gas flows through Ukraine to continue beyond the expiry of the transit contract and interconnection agreements between the two countries at the end of this year. If a normalisation of relations with Russia leads a Trump administration to unblock sanctions preventing the use of the Novatek-led 19.8mn t/yr Arctic LNG 2 export terminal, this might bring more LNG supply to the market in 2025 than previously envisaged. Looking further ahead, Trump's pledge to reverse incumbent president Joe Biden administration's LNG licensing pause and speed up the approval of new liquefaction projects may have boosted expectations of global LNG supply towards the end of this decade. But other market participants expressed concern about a potential threat to US LNG exports to Europe in the medium term if the new administration opts not to co-operate with the EU on establishing a framework for monitoring, reporting and verifying methane emissions, which may hamper US-EU LNG trade flows once the EU methane emissions regulation is fully implemented. This, coupled with a "drill, baby, drill" policy in the US domestic market, may lead to a deeper gulf between the two markets, some said. Trump's pledge to impose tariffs on imports into the US, particularly against China, may trigger the risk of retaliation that could affect LNG flows from existing facilities — as was the case in 2019, when deliveries of US LNG to China fell to zero as a result of the trade war between the two countries, before rebounding sharply in 2021 after the two countries agreed on a preliminary trade deal. Only one Chinese buyer had US offtake at the time, but many more subsequently signed on for US LNG, totalling about 22mn t/yr from existing and planned liquefaction projects. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EU expected to approve climate, energy commissioners


24/11/06
24/11/06

EU expected to approve climate, energy commissioners

Brussels, 6 November (Argus) — Former Danish climate minister Dan Jorgensen is expected to be confirmed late this month as EU energy and housing commissioner, having received clear support after his hearing in front of EU parliament members. Similarly, centre-right political support is expected to ensure a vote for reconfirmation of Wopke Hoekstra as climate commissioner. Jorgensen has received approval from the joint hearing committee, after his hearing yesterday. During the hearing, he promised a plan for affordable energy, a roadmap to end Russian energy imports, a clean energy investment plan and an electrification action plan. He focused on cost, noting the need to work towards lower energy prices in Europe and recognised nuclear energy as "part of the solution". But Jorgensen avoided giving detail on contentious issues, adding no precise date for an end to Russian energy imports. Although he backed a 2040 renewables target, he gave no approximate percentage share, or range, for renewables in final energy consumption by that date. German member Christian Ehler said his centre-right EPP group would "in the end" support Jorgensen following "reasonable" performance. Ehler wants the future commissioner's statements on hydrogen and related delegated acts, especially on low-carbon hydrogen, to be "concretised quickly". Industry group SolarPower Europe welcomed Jorgensen's clarity around not seeking fundamental changes to electricity market rules, but their proper implementation. A power industry source, though, pointed to his "other ideas" on specifics, notably on how to increase market liquidity . Documents prepared for the 7 November hearing of current climate commissioner Wopke Hoekstra give little concrete detail on revision of the bloc's emissions trading system (ETS). Hoekstra is expected to take a similarly cautious approach as that of designated EU agriculture commissioner Christophe Hansen on ETS integration to cut agriculture's 11pc share of EU greenhouse gas (GHG) emissions. But Hoekstra is expected to be more open about using the 2026 ETS review to lower thresholds for EU ETS inclusion from 2031, including for maritime shipping, bioenergy with carbon capture and storage (Beccs) and direct air capture with carbon storage (Daccs). The European Parliament is expected to vote on the new commissioners during its 25-28 November plenary in Strasbourg. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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