Generic Hero BannerGeneric Hero Banner
Latest market news

Biden win could boost carbon, REC markets

  • Market: Emissions
  • 03/11/20

The use of environmental markets in the US could get a boost if former vice president Joe Biden prevails in today's presidential election.

The Democratic presidential nominee has called for the US to achieve net-zero greenhouse gas (GHG) emission by the middle of the century, with a focus on the electric and transportation sectors. Markets for GHG allowances, renewable energy certificates (RECs), and potentially even low-carbon fuel standard (LCFS) credits, could all contribute to federal policy goals.

Biden has not explicitly called for a national carbon price, but he has left the door open to the use of a policy like cap-and-trade, saying he wants Congress to enact an "enforcement mechanism" to achieve net-zero GHGs that would make polluters "bear the full cost" of their emissions. It would also include "clear, legally binding emissions reductions" and cover the entire US economy.

To meet his goal of a zero-emissions electric grid by 2035, Biden has proposed something akin to a national REC market in calling for setting a technology-neutral "energy efficiency and clean electricity standard" for utilities and grid operators. It would "scale up best practice" from state-level clean energy programs that use RECs or similar credits for compliance.

Biden has said his approach would include a role for zero-emissions power provided by existing nuclear and hydropower generators. Many of the current state renewable energy mandates do not grant RECs for compliance to either resource.

When it comes to fuels, Biden has not said much about what he plans to do with the federal Renewable Fuel Standard (RFS), but he has criticized President Donald Trump's administration's handling of the program and has called for a "doubling down" on ethanol and advanced biofuels in US policy.

At the same time, Biden has said the US needs to do more to promote low-carbon fuels in aviation and other sectors, and he has called for setting aggressive motor vehicle standards that would eventually require the sale of only zero-emission models.

A national LCFS credit trading program could help achieve all of those policy goals.

The RFS as written runs through 2022, after which the US Environmental Protection Agency (EPA) will take more authority over setting the program's biofuel blending mandates.

Biofuel industry supporters in Congress have signaled a desire to update the program before then, while Democrats in Capitol Hill have, to varying degrees, embraced the idea of an LCFS. Senate Democrats say a LCFS should be on the table, while their colleagues in the House of Representatives have more specifically called for transitioning the RFS into a national LCFS along the lines of California's program, which requires a 20pc reduction in the carbon intensity of transportation fuels by 2030.

While the focus in California is on on-road fuels like gasoline and diesel, and alternatives like biofuels and electricity, it also allows sustainable aviation fuel to generate compliance credits that can be sold to regulated fuel suppliers.

A Biden victory would lead to a complete reversal of US climate policy, four years after president Donald Trump's election did the same, especially if Democrats win control of the Senate today.

Senate Democratic leader Chuck Schumer (New York) has promised to make climate legislation a priority next year if his party prevails.

"If Democrats take back the Senate, I promise we will vote on bold legislation," he told the Renewable Energy Finance Forum-Wall Street conference in September.

But of the potential environmental markets that could arise in a Biden administration, carbon pricing may prove to be the most difficult lift. Democrats may come out of the elections with control of both chambers of Congress but likely well short of the 60 votes needed in the Senate to overcome any potential Republican filibusters.

But some supporters remain optimistic that it can be done, as demand for action is growing among voters and the private sector, which could lead to more Republican support.

"I have been surprised by how interested industry is in having something like pricing carbon," US senator Mike Braun (R-Indiana) said in September during the National Clean Energy Week conference.

But he also conceded that is a policy that "politically would be something that would take some time for my side to digest.

Braun suggested his proposal to encourage US farmers to enter the carbon offset market could be the "perfect bill" for bipartisan action by Congress next year.

Even if carbon pricing stalls at the federal level, a Biden administration is likely to allow states to expand the use of markets themselves by eliminating a number of roadblocks Trump's administration has attempted to place in the way of emissions trading.

Trump's administration repealed the Clean Power Plan promulgated under former president Barack Obama's administration, replacing it with the far-less ambitious Affordable Clean Energy rule. That measure

prohibits the use of emissions trading as a compliance mechanism.

The Justice Department under Trump has sought — so far unsuccessfully — to scuttle California's carbon market link with the Canadian province of Quebec.

A course reversal on those fronts would at least give market supporters some confidence that they can play a role in achieving the goals of US and state climate policy.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

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.

News
29/01/25

Switzerland targets 65pc emissions cut by 2035

Switzerland targets 65pc emissions cut by 2035

Berlin, 29 January (Argus) — Switzerland has set a new greenhouse gas (GHG) reduction target, aiming to cut emissions by at least 65pc by 2035 across all sectors, compared with 1990 levels. The country submitted its new climate plan under the Paris agreement — its nationally determined contribution (NDC) — to the UN climate body the UNFCCC today. Countries party to the Paris accord are due to submit new NDCs including sectoral GHG reduction targets for 2035 by 10 February. "The target corresponds to a greenhouse gas budget of 106.8mn t of CO2 equivalents, which is equivalent to an average reduction of GHG emissions by at least 59pc over the period 2031–2035," according to the NDC. The targets are to be achieved "primarily" through domestic measures, but the country has the option of including reductions achieved abroad. "In this respect, Switzerland wishes to continue using internationally transferred mitigation outcomes (ITMO) — emission credits — from cooperation initiatives under article 6 of the Paris Agreement," the NDC said. Switzerland's dependence on the use of some non-domestic measures to meet its goals once again drew criticism, with environmental group 350.org today slamming the country's "unquantified" reliance on international carbon trading mechanisms. This raises "serious concerns" about the "credibility" of Switzerland's reduction commitment, 350.org said. The government said that the targets correspond to the recommendations of the Intergovernmental Panel on Climate Change (IPCC). The measures to achieve the reduction in emissions will be enshrined primarily in the amended CO2 law for the period from 2030. The government will send a draft bill to parliament "in due time". The long-term climate strategy assumes that in 2050 Switzerland will still be emitting about 11.8mn t/yr of CO2 equivalent (CO2e), mainly from the agriculture, industry, and waste sectors. The country will therefore need negative emissions exceeding these residual emissions to reach a net-negative balance. The country has already held its first tenders for net negative emissions technologies. Switzerland's climate policy last year came under fire as the European Court of Human Rights ruled that the country's authorities violated Article 8 of the European Convention on Human Rights by insufficiently protecting its citizens from the serious adverse effects of climate change. Switzerland's government rejected the ruling, arguing among other things that the court did not take into account the country's revised CO2 law, which came into force a month before the ruling in March 2024. The government also warned against extending the right of appeal to associations to include climate issues, as this would make the realisation of "urgently needed" infrastructure even more difficult. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

ECA's green export finance bypasses developing nations


29/01/25
News
29/01/25

ECA's green export finance bypasses developing nations

Berlin, 29 January (Argus) — The "greening" of export credit agency's (ECA) finance which occurred in the past decade has largely bypassed developing countries, with investments mainly flowing to higher-income countries, according to a study on ECA transactions. The study, carried out by researchers from the business schools HEC Lausanne, ETH Zurich and HEC Paris, shows that ECA energy finance going to lower-income countries dropped to below 30pc in 2022-23 from 47pc in 2013-15. ECAs, including export-import banks, are state-backed agencies that help national exporters finance deals abroad by providing guarantees or loans. The share of ECA renewables commitments — mostly offshore wind and, increasingly, green hydrogen — rose to around 40pc in 2022–23, from under 10pc in 2013. The complete phase-out of fossil fuel financing appears "distant", the researchers noted. While ECAs handle financing volumes "on a par with multilateral development banks such as the World Bank", the scope and direction of their energy investments have largely remained "opaque", the researchers said. The study is based on an analysis of almost 1,000 transactions between 2013-23 which financed energy-related infrastructure and were supported by ECAs. For some key ECA countries such as China or Canada, data is only partially available. The study also reveals "notable" disparities between countries. Most members of the Export Finance for Future coalition (E3F), a group of European countries committed to aligning their export finance with the Paris climate agreement, have introduced stricter fossil fuel exclusions and are boosting their renewable portfolios. At the same time, major players like South Korea, Japan, and China have maintained significant levels of oil and gas lending. OECD countries should introduce "more rigorous climate policies" and renew international cooperation, the researchers said, particularly with non-OECD countries such as China. The OECD — where ECA terms and conditions are negotiated — could relaunch the International Working Group on ECAs, they said, to help ensure that countries phasing out support for fossil fuels do not see their market shares grabbed by others. Better renewable investment support via ECAs could help scale up the new collective quantified goal (NCQG) on climate finance, set at a minimum of $300bn annually by 2035 at the last UN Cop 29 climate summit in November, the researchers said. And ECA mandates could also be broadened to accommodate the needs of lower-income regions. "It is high time for ECAs to complete the shift to renewable energy, and through carefully designed policies and international cooperation, become true catalysts for a rapid and just energy transition," lead author Philipp Censkowsky from HEC Lausanne said. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Brazil biofuels venture to add complex in Alagoas


28/01/25
News
28/01/25

Brazil biofuels venture to add complex in Alagoas

Sao Paulo, 28 January (Argus) — Brazilian advanced biofuels firm GranBio, biofuels producer Impacto Bioenergia and two sugarcane plant operators will build a biofuels complex in northeastern Alagoas state, the companies said on Monday. The biorefinery project, named Exygen I, will cost an estimated R1.5bn ($253mn) and produce carbon neutral ethanol, biomethane and biofertilizers. It will have production capacity of 160mn l/yr (2,760 b/d) by 2026 and use sugarcane byproducts as feedstock, according to GranBio. Exygen I's estimated biomethane production capacity will be 50mn m³/yr. The complex will produce the renewable gas from vinasse, a by-product of sugarcane processing. Future investments would include increasing Exygen I's storage capacity and biogas distribution. But the initial storage and biogas distribution capacities were not disclosed. The project's next step includes producing biogenic CO2 — made from organic matter decomposition — biofertilizers and e-methanol, used in marine fuels. The project is a joint effort between GranBio, Impacto Bioenergia, Alagoas-based producing unit Caete and sugar and ethanol firm Central Açucareira Santo Antonio. Brazil's fuels of the future law , approved in October, increased incentives for the country's biofuels market. By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Capacity markets need to reduce emissions: Aurora


28/01/25
News
28/01/25

Capacity markets need to reduce emissions: Aurora

London, 28 January (Argus) — European capacity markets focus too much attention on fossil fuel-fired plants and not enough on renewable sources of security of supply, according to a report issued by research firm Aurora that was commissioned by campaign group Beyond Fossil Fuels. Capacity markets in the six European countries that have them — the UK, France, Italy, Poland, Ireland and Belgium — have made payments totalling €89.6bn since a mechanism of this kind was first established in the UK in 2015, the report says. The mechanisms are intended to allow firm sources of generation to remain financially viable, even as increasing intermittent renewable generation reduces the number of hours that these types of plants can run profitably. Of this, nearly half went to support gas-fired capacity and 8pc to coal-fired plants, although there is some uncertainty over precise amounts because of data unavailability. Nuclear plants, mostly in France, received 12pc of the support, while storage — located mostly in the UK and Poland — took 13pc. Renewables, interconnectors and demand-side response took only 7pc, 5pc and 2pc, respectively. And 19GW of newbuild gas-fired plants have been funded through the schemes, with another 11GW of newbuild gas-fired plants having been awarded a contract for delivery in the next three years. Some of the plants will continue receiving funding until the 2040s, Aurora said, putting at risk European states' plans to move towards net zero greenhouse gas emissions. Payments for some assets in five of the countries studied continue until 2037-43, although France's unique decentralised system does not provide incentives beyond the front year. Payments to operators of battery energy storage systems (Bess) make up only a small part of the total, even though these units can provide zero-emissions short-term energy storage. Regulators should set up schemes to prioritise zero-emissions forms of security of supply, the report says. And alternative schemes, such as capacity reserves, in which fossil-fired capacity is kept back to resolve supply-demand imbalances but not allowed to act in wholesale markets, can ensure these plants do not lead to emissions increases. At the same time, a lack of viable long-term storage options could mean fossil fuel-fired technologies are needed for longer periods. Bess systems too can suffer from an inability to charge during long periods of low renewables output, which prompted Polish grid operator PSE to increase the technology's de-rating in an auction held last year. Other countries are considering setting up capacity markets, with discussions under way in Spain, Germany and Greece. Spain's planned market, which is under consultation , will allow payments for thermal generators only for a year in advance and in particular circumstances, with only renewables, storage and demand response being eligible for long-term support. By Rhys Talbot Capacity market spending by technology Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Republican floats repeal of 45Z clean fuel credit


27/01/25
News
27/01/25

Republican floats repeal of 45Z clean fuel credit

New York, 27 January (Argus) — A Republican lawmaker has quietly introduced a bill to repeal a key subsidy for low-carbon fuels, complicating a debate among lawmakers on what to do with clean energy incentives provided by the Inflation Reduction Act. The bill, HR 549, introduced this month by US representative Beth Van Duyne (R-Texas) would repeal the 2022 climate law's "45Z" incentive for clean fuels, which offers increasingly generous subsidies to fuels as they produce fewer greenhouse gas emissions. While the credit is currently in effect, the legislation as written would apply retroactively, striking the credit from the tax code after 2024. The proposal comes as Republicans prepare to pass major legislation this year through the Senate's reconciliation process, which bypasses the 100-member chamber's 60-vote requirement to advance most bills. Intent on extending tax breaks passed during President Donald Trump's first term but wary of adding to budget deficits, lawmakers are searching for ways to cut government spending. While changes to at least some Inflation Reduction Act programs are expected, biofuels policy is seen as a less likely target for Republicans than other climate policies. And even members supportive of scrapping clean energy subsidies might be wary of repealing incentives retroactively. Still, the new bill suggests that a full repeal of 45Z could at least be part of legislative discussions this year. The bill was referred on 16 January to the House Ways and Means Committee, of which Van Duyne is a member. Other Republicans on the Ways and Means Committee have expressed openness to updating but not necessarily eliminating the credit, with six members opening a request for information last year on options such as limiting foreign feedstocks or encouraging more "climate-smart" farm practices. Industry groups generally supportive of 45Z might even welcome some legislative changes, particularly those frustrated by incomplete guidance on qualifying for the credit issued in the waning days of former president Joe Biden's term. More information on lawmakers' plans could come soon, with House Republicans on Monday attending a policy retreat with Trump in Florida. Whatever changes are proposed, Republicans' slim majorities leaves them with little room for dissent and could give farm-state lawmakers leverage to ensure some type of biofuel tax credit survives legislative negotiations. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

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