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EU agrees on shipping sector GHG fuel intensity cuts

  • Market: Biofuels, Emissions, Fertilizers, Hydrogen, Natural gas, Oil products
  • 23/03/23

The European Parliament and EU member states have today agreed that the greenhouse gas (GHG) intensity of fuels used in ships over 5,000 gross tonnage (GT) should be cut by 80pc by 2050, from a 2020 baseline, increasing the sector's contribution to the wider EU emissions target.

The parliament and council also agreed that the GHG intensity of fuels in the shipping sector needs to decrease by at least 2pc from 2025, 6pc from 2030, 14.5pc from 2035, 31pc from 2040 and 62pc as of 2045. The regulation would double count GHG cuts from renewable hydrogen and green ammonia.

The targets cover CO2, methane and nitrous oxide emissions over the full lifecycle of the fuels, according to the commission. It applies to energy used on board ships, in or between EU ports and to 50pc of the fuel used "on voyages where thee departure or arrival port is outside of the EU or in EU outermost regions".

All GHG cuts are relative to a defined 2020 GHG level of 91.16g of CO2 per MJ. The agreement also sets out that if the commission reports that the share of renewable fuels of non-biological origin (RFNBOs), including hydrogen, accounts for less than 1pc of the shipping sector fuel mix in 2031, a 2pc RFNBOs fuel use target will be set from 2034.

The commission put forward the legal proposals in July 2021 to mandate an average GHG intensity cuts for energy used in the shipping sector by 6pc by 2030, by 49pc by 2050 and by 75pc by 2050, all from 2020 levels.

It is charged with reviewing the rules by 2028, and if appropriate, proposing extending the GHG intensity cuts to smaller ships, or increasing the 50pc coverage of GHG cuts for non-EU journeys.

The political agreement, which needs to be formally approved by EU member states and the whole parliament, obliges containerships and passenger ships to use on-shore power supply from 2030 and in the rest of EU ports from 2035.

Waterborne transport accounted for 3-4pc of the bloc's total CO2 emissions in 2021, according to the EU, which said that the new targets will give the legal certainty that ship operators and fuel producers need and support production of sustainable maritime fuels on a large scale.

Swedish centre-right EPP member Jorgen Warborn said the regulation will guarantee the shipping sector long-term rules and predictability. And EU transport commissioner Adina Valean said the agreement sets a long-term signal to shipowners, operators, fuel producers, shipyards and equipment manufacturers to invest in sustainable maritime fuels and zero-emission technologies.

But German green Jutta Paulus said the compromise falls "far short" of what is "technically possible and necessary" from a climate policy perspective. "The EU limits itself to microscopic quotas for the 2020s and provides no incentives for additional investments in sustainable synthetic fuels," Paulus said, pointing to a "Swiss cheese" law with numerous exceptions.

"This is the beginning of the end for fossil fuels in shipping," said Faig Abbasov, director of shipping at campaign group Transport & Environment (T&E). "LNG is still a compliant fuel for some time," he added, noting less room for LNG to more stringent GHG reduction targets, mandates and mulitipliers for RFNBOs like hydrogen and green ammonia.

EU energy ministers had previously faced difficulties agreeing among themselves on the GHG reduction targets for the maritime sector and the on-shore power supply (OPS) requirements, penalties and geographical scope.

The European Community Shipowners' Associations (ECSA) had pushed — unsuccessfully — for member states to accept mandatory requirements on fuel suppliers so as to ensure that shipowners are not "unduly penalised" if the sustainable fuels necessary for compliance are not delivered.

ECSA secretary general Sotiris Raptis told Argus earlier this month that if fuel suppliers were not included in the regulation there would "no guarantee that there will be sufficient quantities of renewable and low carbon fuels".

The International Maritime Organization (IMO) is currently only targeting a 70pc cut in CO2 emissions intensity by 2050 from a 2008 baseline, with a target to reduce total annual GHG emissions by at least 50pc by 2050. IMO member countries are focusing on "revising" their initial 2018 strategy by mid-2023.


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17/07/24

Climate finance goal is top priority: Cop 29 president

Climate finance goal is top priority: Cop 29 president

London, 17 July (Argus) — Addressing and aiming to finalise a new climate finance goal will be the "centrepiece" of the UN Cop 29 climate summit, the event's president, Mukhtar Babayev said today. Cop 29 is scheduled to take place in Baku, Azerbaijan, on 11-22 November. Babayev — officially Cop president-designate until the summit begins — is the country's ecology and natural resources minister. The Cop 29 presidency's "top negotiating priority is agreeing a fair and ambitious" new climate finance goal — known as the new collective quantified goal (NCQG) — Babayev wrote in a letter to countries and other stakeholders. He had previously been clear that finance will be a key topic at Cop 29. The NCQG represents the next stage of the $100bn/yr of climate finance that developed countries agreed to deliver to developing countries over 2020-25. But much is still up for discussion and must be finalised at Cop 29, including the amounts involved and timeframe. Babayev noted "disagreements", flagging that "the politically complex issues will not be solved by negotiators alone". The Cop 29 presidency has appointed Egyptian environment minister Yasmine Fouad and Danish climate minister Dan Jorgensen to lead consultations on the NCQG, Babayev said today. Announcements on ministerial pairs for other issues are expected in September, he said. "Adopting the NCQG will be a pivotal moment for whether parties can make progress on the means of implementation and support, and the Paris Agreement more broadly", Babayev said. Climate finance needs a "substantial increase", and the presidency "will spare no efforts to act as a bridge between the developed and developing nations", he added. Babayev also called for more financial pledges to the loss and damage fund , which countries agreed at Cop 27 to establish, to address the unavoidable effects of climate change in vulnerable countries. He encouraged all countries to submit national climate plans — known as nationally determined contributions (NDCs) — aligned with the Paris agreement, which seeks to limit the rise in global temperature to "well below" 2°C above pre-industrial levels, and preferably to 1.5°C. "The Cop 29 presidency will lead by example", Babayev said. Azerbaijan and its "Troika" partners, Cop 28 host the UAE and Cop 30 host Brazil, are working on 1.5°C-aligned NDCs, he said. The Article 6 mechanism of the Paris agreement, which relates to international carbon trading, will also be a priority at Cop 29, Babayev said. The presidency "is committed to finalising the operationalisation of Article 6 this year", he added. Cop 28 ended without a deal on Article 6, but "in recent months… there was clear will to advance work" on the topic, Babayev said. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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EU fertilizer industry calls for support: Q&A


17/07/24
News
17/07/24

EU fertilizer industry calls for support: Q&A

London, 17 July (Argus) — As the EU gears up to install a new European Commission for 2024-2029, LAT Nitrogen's chief executive officer Leo Alders tells Argus political support remains necessary to tackle a range of challenges threatening EU industry, including subsidised US ammonia production with carbon capture, use and storage (CCUS), and the EU's 'unrealistic' goal of cutting net greenhouse gas (GHG) emissions by 90pc by 2040. But Alders sees growing political "goodwill" to help EU industry against cheap fertilizer imports from Russia, which are used to fund the country's war against Ukraine. Edited highlights follow. What does the fertilizer industry want from the next European Commission? Clear points are effectively releasing emissions trading system (ETS) funds for converting the industry to green fertilizers. We also want carbon sequestration to be allowed as it is in the US. And we need a policy on nutrient efficiency, which has never really happened. For us, too, spillage is not the desired objective. The international context, too, is important. Grey ammonia produced in Europe could move to the same cost levels as US blue ammonia with subsidised CO2 sequestration. If or when that happens, then Europe will see massive imports of US blue ammonia. We think that by 2027 or 2028, volumes coming out of the US will grow exponentially. That's a trend that we think is unstoppable. The underlying issue, of course, is that energy in Europe is at higher price levels than on any other continent. We need to stay in Europe with our production capacity. But the threat is there. Are 90pc GHG cuts by 2040 feasible for you? When discussing the ETS measures, the carbon border adjustment mechanism, and so on, we took a positive approach as an industry. And we go alon g with the zero [carbon] target for 2050. That's all right. But now the [2040] target is not official, more a desired milestone that emissions will be cut by 90pc by 2040. As an industry, we think that target is totally unrealistic and cannot support it. That's a clear point of view. Converting to a green industry will require massive capital. Technologically, it takes time to do all of this. Is the ETS working well for the fertilizer industry? Proceeds from ETS certificates go partly to national budgets and partly to the EU budget. That's all nice. But our industry needs to invest massively to complete the transition. We pay massive amounts of money for CO2 certificates. There was the promise that national and EU levels would subsidise decarbonisation projects from the ETS. In reality, we've seen very few subsidies materialising. So we actually have a counter-proposal: why not allow the industry to park the money for green investments? In theory, the national level is obliged to reinvest 50pc of ETS income back into the industry. The reality is different. Isn't the EU still wary of prohibitive €100-150/t tariffs on Russian fertilizers? A ban on Russian fertilizer imports would require unanimity. Tariffs, though, require majority support among EU states. That seems feasible. At least 15 states appear to support the idea. There is actually no supply issue. We don't have any issues replacing Russian volumes. There may be a possible time element and rebalancing in the first three or four months. But after that, the European industry would be fully capable of supplying our farms. So political support is growing? More and more people understand how Russian gas is being transformed into fertilizer. They've understood that routing gas to Europe is becoming more and more difficult. The EU has been totally unsuccessful in pushing back against Russian urea, so Russia is building some 650,000 t/yr in extra capacity, expected on line next year or thereafter. As an industry, we don't want to be shutting down units in Europe because of cheap subsidised Russian fertilizers. And then, what happens if one day Russia decides to cut or weaponise fertilizer supplies? 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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German sulphur exports drop 53pc in Jan-May


17/07/24
News
17/07/24

German sulphur exports drop 53pc in Jan-May

London, 17 July (Argus) — German sulphur exports halved in the first five months of this year, GTT data show, as production has declined and consumption is recovering from the post-pandemic slump. Average monthly exports dropped to just 11,000t from 23,000t in the same period last year. Imports remained stable at 23,000t. Top export markets in 2023 Belgium, the Netherlands, France and Sweden dropped to zero this year. Belgium previously received 52,000t, Netherlands 26,000t and Sweden and France 13,000t each. Minor Swiss exports at 7,000t maintained stable. German sulphur production has dropped as a result of sanctions on Russian crude imports. This has particularly impacted the 150,000t/yr sulphur capacity TotalEnergies Leuna and the 175,000t/yr PCK Schwedt refineries previously connected via pipeline to Russian crude supply. Sanction impact was followed by Red Sea insecurity cutting a further 10pc of the region's sulphur production as Middle East feedstocks declined, and sweeter slates became even more widespread. European refineries, German plants included, were running at high rates last year with refining margins very high, and this year's maintenance season has been heavier as a result of deferred turnarounds. In Germany, Miro's 131,000t/yr sulphur capacity Karlsruhe refinery was under maintenance in April. Two refinery conversions to biofuels production are planned to take place in 2025, with Shell's Wesseling plant to take 80,000t/yr of sulphur production capacity off line and BP's Gelsenkirchen a further 25,000t/yr. This is a trend repeated in other countries in the region, in a move to meet emissions reduction targets, so sulphur production is set to decline further. Sulphur consumers which have struggled with low downstream demand, high energy prices and inflation, as well as competition from cheaper Chinese imports of caprolactam and titanium dioxide, are beginning to see some improvements. The European fertilizer industry has been more resistant, and some capacity additions are bucking the general European trend. This has led to several companies targeting the European molten sulphur market with high-priced spot tonnes in this year, as well as others accelerating planning of new remelting capacity, to address the deepening shortages. Some companies are looking into adding molten sulphur tanker capability to import more spot tonnes to the liquid-only market, where most buyers have no capacity to handle solid sulphur imports. New projects along these lines are expected to be announced in the coming months. By Maria Mosquera Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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TotalEnergies agrees to sell stake in Nigeria SPDC JV


17/07/24
News
17/07/24

TotalEnergies agrees to sell stake in Nigeria SPDC JV

London, 17 July (Argus) — TotalEnergies has agreed to sell its 10pc stake in Nigeria's SPDC onshore oil and gas joint venture to Africa-focused independent Chappal Energies for $860mn. Other partners in the SPDC joint venture comprise operator Shell with a 30pc interest, state-owned NNPC with 55pc and Italy's Eni with 5pc. Shell agreed to sell its stake in the joint venture to a consortium of five companies for up to $2.4bn in January. That deal remains subject to a due diligence process by regulators. The joint venture's assets include around 50 producing oil and gas fields across 18 licences. TotalEnergies will transfer its 10pc interest and all its rights and obligations in 15 of the licences to Chappal. These licences mainly produce oil and netted TotalEnergies around 14,000 b/d of oil equivalent last year. The other three licences — OML 23, OML 28 and OML 77 — mainly produce gas and account for 40pc of supply to the Nigeria LNG (NLNG) joint venture, in which TotalEnergies has a 15pc stake. TotalEnergies will also transfer its 10pc stake in these licences to Chappal but it will retain "full economic interest" in them, it said. The divestment "allows us to focus our onshore Nigeria presence solely on the integrated gas value chain and is designed to ensure the continuity of feed gas supply to Nigeria LNG in the future", said TotalEnergies' exploration and production president Nicolas Terraz. Chappal specialises in taking over and operating mature fields. It agreed a deal in November last year to acquire Norwegian firm Equinor's stake in Nigeria's OML 128 block, a transaction that was finally approved earlier this month . The company said last month that it is contemplating issuing a bond to raise up to $450mn to help it finance acquisitions. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Yara to supply PepsiCo with reduced-carbon ferts


17/07/24
News
17/07/24

Yara to supply PepsiCo with reduced-carbon ferts

London, 17 July (Argus) — Norwegian fertilizer producer Yara has signed an agreement to supply global food and beverage manufacturer PepsiCo with 165,000 t/yr of fertilizer using feedstock from Yara's renewable and CCS ammonia production projects. The agreement stipulates Yara will work towards supplying PepsiCo with fertilizer products exclusively from Yara's ‘Climate Choice fertilizers' range by 2030. The length and start date of the supply agreement were not disclosed. Yara's Climate Choice fertilizers range will include nitrate fertilizer products which are produced using ammonia from the company's 20,000t/yr renewable ammonia plant in Porsgrunn . The plant began commissioning earlier this year. The range will also include products using ammonia feedstock from Yara's carbon capture and sequestration (CCS) production project at Sluiskill , which is expected to begin CCS operations in 2026. The range also includes Yara's premium nitrate-based fertilizer products, with which newer catalyst technology results in carbon footprint reductions when compared to older production plants. The carbon footprint of the ammonia feedstock will vary dependent on these production pathways. Porsgrunn ammonia can produce nitrate mineral fertilizers with a 70-90pc carbon reduction when compared to fossil-fuel natural gas production pathways. Argus estimates nitrate fertilizers require 0.26-0.43t ammonia per tonne of nitrate product on average (see table). The ammonia consumption rate varies on the nitrate product concerned, and whether it is technical or fertilizer grade. Argus estimates Yara's supply agreement with PepsiCo could equate to a requirement of around 43,000-71,000t of ammonia. Yara has signed similar agreements with other agriculture companies within Europe. In January the company signed an agreement with Nordic grocery chain Reitan Retail, Norwegian agriculture co-operative Felleskjopet Agri and Norwegian milling group Norgesmollene, to supply the consortium with nitrate-based fertilizer products with a reduced carbon footprint. And in 2023 Yara signed a similar agreement with German flour producer Bindewald, Gutting Milling Group and German bakery Harry Brot. Pricing structures for the agreements have so far not been disclosed, but the producer is expecting a premium for the low-carbon attributes of its finished fertilizers, especially once the EU's Carbon Border Adjustment Mechanism (CBAM) becomes operational in 2026. Once CBAM is applied, the increased cost for more carbon-intensive products will determine the achievable premium for lower-carbon nitrate fertilizer, the company expects. By Lizzy Lancaster Tonnes ammonia per tonne nitrate product AN (technical grade) 0.41 AN ( fertilizer grade) 0.43 CAN 0.34 AS 0.26 Argus Average ammonia feedstock estimates, actual rates vary by country. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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