Japan firms study carbon neutral fuels for auto sector
A group of Japanese companies are exploring the possibility of expanding the use of carbon neutral fuels — such as synthetic fuels, or e-fuels, and biofuels — in the country's automobile sector, aiming to cut carbon dioxide (CO2) emissions from internal combustion engine vehicles.
Japanese auto manufacturer Toyota, engineering firm Mitsubishi Heavy Industries and refiners Idemitsu and Eneos said on 27 May that they had signed an initial agreement to jointly carry out a feasibility study by discussing scenarios, roadmaps and necessary regulations to introduce the clean fuels around 2030.
The partnership assumes domestic production of e-fuels and biofuels to enhance the country's energy security. They plan to produce e-fuels from CO2 and renewable-based hydrogen, while biofuels will be derived from plants and other sources. But potential output capacity is still unclear. It is also unknown how they will buy feedstocks to produce the clean fuels, creating the possibility for imports and domestic purchases.
Japan has pledged to ban sales of gasoline-only passenger cars and a shift to electric vehicles (EVs) by 2035, part of its 2050 net zero emissions goal. But EVs also include fuel-cell vehicles, plug-in hybrids and hybrid EVs. This suggests the country will need cleaner fuels to decarbonise engines burned by fossil fuels.
Toyota has already introduced in Brazil since 2007 a hybrid, flex-fuel vehicle that can run on biofuels and gasoline. The company will invest 11bn real ($2.1bn) in Brazil over the next six years to decarbonise and electrify its fleet. But it is still unclear how many flex-fuel vehicles it will introduce in Japan, the company said.
To help reduce CO2 emissions from the auto sector, Japan's trade and industry ministry already requires domestic refiners to use 500,000 kilolitres/yr (8,616 b/d) of the crude equivalent of ETBE or bioethanol. Brazil is currently the sole bioethanol supplier to Japan with 55,179 bl delivered in February.
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Q&A: Phillips 66 to balance fossil and renewable fuels
Q&A: Phillips 66 to balance fossil and renewable fuels
Houston, 14 June (Argus) — With Phillips 66's Rodeo, California, refinery expected to ramp up to over 50,000 b/d of renewable fuels production by the end of this quarter, all eyes are on the refiner for what is next. Zhanna Golodryga , executive vice president of emerging energy and sustainability for Phillips 66, talked to Argus at the refiner's Houston headquarters about how the company looks at investments, its focus on sustainable aviation fuel (SAF) production and why Texas might be the Silicon Valley of the energy transition. The conversation has been edited for clarity and length. When Rodeo reaches full capacity, it will represent about 3pc of your overall output. What will your fleet look like longer-term and what will be the renewables/petroleum split? Not all the refineries in our portfolio are created equal, and when we look at them what I call them is "lower-carbon energy hubs". Not low, lower, because it's going to be a combination of everything. We're looking at the assets we have in the portfolio and what we can do to help bring in lower carbon solutions and what can we build out. Our focus is going to continue to be SAF. We understand the limitations of feedstocks and we have a very strong commercial organization that is now working on providing feedstocks just for Rodeo. But we're also thinking about what we can do to bring in different feedstocks. Energy transition opportunities aren't going to replace our traditional fossil fuel refining. It's an "and", not an "or". You've highlighted a future focus on SAF. Does that mean a move away from renewable diesel (RD)? I think we have flexibility to do both and it will be market driven going forward. We have to look at demand but there is demand for SAF globally, not just in the US. Demand for gasoline is not as strong as demand for diesel and sustainable aviation fuel. That is what our focus is and then we want to diversify the feedstock. What is your outlook for RD? I think RD is here for quite some time. It's hard to predict what's going to happen by 2050 but I think we will have the demand. It's going to take a long time to electrify all future transportation. I think we have a much better opportunity for now to focus on what we're really good at. That's fuels, renewable fuels. You have faced activist investor pressure calling for Phillips 66 to focus on its core refining business. How do investors feel about the Rodeo conversion and your future plans? We have taken a pragmatic approach to the energy transition. We have criteria that we follow prior to taking any projects over the line, specifically the energy transition type projects. They must meet five key prerequisites: the right returns, the right technology that has been proven at scale, the right regulatory environment, preferably involve a partnership and be done at the right time. We have to prove with Rodeo that this is, as I call it, our license to continue to grow the business. This is our license to operate additional energy transition business. This one is going to be done extremely well. What are the policy tailwinds and headwinds to your renewables investments? When we look at our opportunities in our energy transition portfolio, we are building our economic model for them to produce the right returns without any incentives. That is our starting point. On the other hand, the IRA [US Inflation Reduction Act] has been a bipartisan initiative and we think it's going to stand for the greater good of the planet. We have to think globally, as we have the Humber refinery in the UK. It's interesting for us to see what's possible in the US with the IRA incentives, versus more of a stick in Europe. But the challenge for us is permitting and timing. We probably could have brought Rodeo online sooner if we didn't have to wait for some permits. Our headquarters are in Texas and Texas is the "energy transition Silicon Valley". I'm repeating someone's words and those are the words of Bill Gates. But I believe that. We're perfectly positioned on the Gulf coast to go to the next phase and build something here. You've mentioned Phillips 66's 265,000 b/d Sweeny refinery in Old Ocean, Texas, as a low carbon energy hub. Does that mean it is a candidate for renewable fuel conversion or co-processing? It could be an option, maybe not at Sweeny, but in the Gulf coast, maybe Lake Charles. It's driven by our hardware, just like what we've done at Rodeo. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Little progress on UN carbon markets at Bonn talks
Little progress on UN carbon markets at Bonn talks
Bonn, 14 June (Argus) — Negotiations in Bonn, Germany, on the future UN carbon markets closed yesterday evening with little progress, five months before the UN Cop 29 climate conference in Baku, Azerbaijan, in November. Negotiation texts on carbon market rules under both Article 6.2 and 6.4 of the Paris climate agreement, passed at the end of the Bonn UN climate talks, still included a range of options and a significant amount of bracketed text, which marks as yet undecided wording. Disagreement persists on issues touching on the registries for credits under both mechanisms, information disclosure requirements along the credit-generating process, and the timing and scope of credit authorisation, including the extent to which this authorisation might be revoked. One proposed option would allow host countries to transfer Article 6.4 emissions reductions credits that have been authorised, and therefore become so-called internationally transferred mitigation outcomes (Itmos), to the international or national registries for activities in the more informal market segment under Article 6.2. Some parties, including the US, were heard to oppose this option on grounds of "integrity", given that Article 6.2 is based on bilateral agreements between states and not strictly speaking a carbon crediting mechanism. Another option in the Article 6.2 negotiation text, upheld by several potential host countries, allows either participating party "to change and/or revoke the authorisation of Itmos at any time". One option also calls for bilateral agreements themselves to be subject to authorisation, not just the Itmos generated subsequently. Switzerland, a frontrunner on Article 6.2, has adopted the approach of authorising the actual co-operative agreements. Environmental non-governmental organisation Carbon Market Watch (CMW) today commended the stronger focus on the crucial role of transparency during the Bonn talks, with negotiating parties tasking UN climate arm the UNFCCC with developing a code of conduct on "treating and reviewing" information they classify as confidential about their trade agreements, although it remains to be seen how ambitious the code of conduct will be, CMW said. On the UNFCCC-regulated market mechanism under Article 6.4, which will broadly replace the clean development mechanism under the Kyoto Protocol, there is hope that the supervisory body will solve outstanding issues in the meetings it has lined up before Cop 29. These include the methodologies underpinning permitted credits and how to deal with credits generated by carbon removal activities. The Bonn talks also saw a push for a verdict on the eligibility of carbon credits generated by emissions avoidance activities. But countries ended up sticking to the position agreed at Cop 28 to postpone a decision on the issue until 2028. "Completing the remaining elements on Article 6 in Baku will unlock further funding for national climate plans and adaptation," the UNFCCC said today. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Low-CO2 biofuel feedstock imports to rise: USDA
Low-CO2 biofuel feedstock imports to rise: USDA
New York, 13 June (Argus) — A new US tax credit kicking off next year that is more generous for fuels that produce fewer greenhouse gas emissions will likely spur more imports of low-carbon feedstocks, the US Department of Agriculture (USDA) said in a report this week. A raft of government incentives, including the federal renewable fuel standard and low-carbon fuel standards (LCFS) in states like California, has already spurred a boom in renewable diesel production, upping demand for feedstocks that can be used to make the fuel. The US was a net soybean oil importer for the first time ever in 2023 because of strong demand from domestic refineries, and the value of US imports of animal fats and vegetable oils more than doubled from 2020 to 2023 according to the report. That trend could become even more pronounced next year as the Inflation Reduction Act's 45Z tax credit, which offers up to $1.75/USG for sustainable aviation fuel and up to $1/USG for other fuels like renewable diesel, comes into force. The credit can only be claimed for fuel produced in the US, likely cutting biofuel imports and sending more feedstocks that would have been refined abroad to the US instead, the report says. The 45Z credit will also be more generous to fuels with lower carbon intensity, upping demand for waste feedstocks like used cooking oil that already fetch greater discounts in LCFS programs. Fast-rising imports of China-origin used cooking oil have already frustrated some agricultural groups, which lose out if there are more ample supplies of waste feedstocks. The report says that while soybean oil was the "crucial feedstock" allowing for the recent growth in US renewable diesel, its share of the feedstock mix has been trending downwards because of competition from lower-carbon feedstocks and lower-cost canola oil from Canada. While soybean oil exports have plunged because of the renewable diesel boom, they could recover slightly if refineries increasingly turning to waste feedstocks cuts into US soybean oil's current premium over global vegetable oils. The report adds that soybean oil's role in renewable diesel production is also at risk from rising supplies of soybean meal, which is produced alongside oil at crush plants and where the global demand picture is less clear. "Based on global demand for soybean meal, soybean oil cannot continue to fuel renewable diesel production growth at current rates during the next few years without major changes to global soybean meal demand, shifts in exporter market shares, or lower supplies in other exporting countries," the report says. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Bonn UN climate talks fail to advance new finance goal
Bonn UN climate talks fail to advance new finance goal
Bonn, 13 June (Argus) — Talks at the UN Framework Convention on Climate Change (UNFCCC) in Bonn, Germany, are coming to an end today and parties have little to show for their two weeks of negotiations on climate finance for developing countries. Progress on agreeing a new climate finance target — to replace a pledge that was missed by developed countries to give $100bn/yr to developing countries by 2020 — was limited and there are still significant divisions among parties, think-tank E3G said today. Details of the updated target must be finalised during the UN Cop 29 climate summit in Baku, Azerbaijan later this year. But so far negotiators have remained entrenched in their positions on key issues such as how much finance should be provided, who should contribute, who should benefit or qualify as "particularly vulnerable" and the quality of the finance — loans over grants — along with the role of private finance. Developed countries have not come forward with a number during the negotiations, despite being pressed repeatedly by developing nations to do so. The latter, including Saudi Arabia, India and African nations, are calling for at least $1 trillion-1.3 trillion/yr. The US said that it supports a goal that is "fit for purpose" and "from a floor of $100bn/yr". The EU and other developed nations argue that certain high-emitting developing countries, such as China or Saudi Arabia, should shoulder some of the finance, thereby broadening the donor base. But China made clear that it has no intention of doing that. "Developing countries voluntarily support each other beyond our capacity and we have no intention to make your numbers look good," the Chinese negotiator said. Pakistan's delegate rejected developed countries' proposals, which he said were not in line with the Paris Agreement, such as the obligation on developing countries to implement certain domestic measures in exchange for funding. Australia called parties out on a "game of word-count to measure balance" and said the new target amount should be "the star at the top of the Christmas tree" because "it is dependent on the structure, types of sources, the timeframe and breadth of contributor base". Meanwhile, Barbados pleaded for parties "to move forward" on the text as otherwise "more Small Island Developing States and Least Developed Countries will simply disappear from this gathering because we disappear from this planet". Although UNFCCC executive secretary Simon Stiell called for "serious progress" to be made on finance and for parties to move from "zero-draft to real options", these key issues will be left for top negotiators and ministers to tackle in Baku. The US election — which will take place a week before Cop 29 starts — is one of the biggest factors in moving the finance discussions forward, E3G policy adviser Tom Evans said. Convergence Consensus does seems to be forming on some issues, such as the need to make access to finance easier to least developed and vulnerable countries, discussing unsustainable debt and the cost of capital, and the need for more transparency — possibly in the context of the Enhanced Transparency Framework (ETF). The framework obliges parties to draw up biennial transparency reports, with the first due at the end of the year. The "very fundamental divide" between the two blocs on their perceptions around climate finance is underpinned by a lack of trust in the system, senior attorney Erika Lennon from the Center for International Environmental Law said. This is understandable given the time it took developed countries to fulfil their $100bn/yr pledge and the underwhelming performance so far of the different funding programmes, she added. With neither camp ready to compromise in Bonn, it remains to be seen who will "give", Evans of E3G said. By Chloe Jardine and Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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