US fuel mandates no salve for farm trade losses
Higher US biofuel blending mandates cannot make up for lost export trade opportunities, according to farm groups caught in the crossfire of the country's trade war with China.
US independent refiners show little concern that the administration will blunt sharply lower exports to China by pressuring more renewable fuels into the domestic transportation supply. While renewables groups continue to seek rising targets and stricter enforcement of US fuel blending mandates, the scale of renewable volume obligations (RVO) imposed on refiners and fuel importers each year falls well short of the agricultural commodities shipped to China.
"It would take a heck of an RVO number, on the biodiesel side, to even put a dent or a ripple in the pond to make up for China," said Rob Shaffer, an Illinois farmer and boardmember of the American Soybean Association and National Biodiesel Board. "We would appreciate any increase, but it just takes so much to make up for China."
President Donald Trump's decision to hike import tariffs on Chinese goods this month drew expected countermeasures from Beijing. Tariffs on certain corn and soy products will rise by 25pc on 1 June, intensifying policies that have priced soy farmers especially out of a market that took decades to cultivate. US farmers exported 22.6mn t of soybeans to China during the 2016 crop year, according to US Department of Agriculture (USDA) data. The US sent 23.8mn t to China between October 2017 and March of 2018. That fell to 5.2mn bt over the same period ending in March 2019. US farmers meanwhile start the season with a record 995mn bushel inventory to clear while placing this year's crop.
The administration has turned to biofuel mandates before to curry favor — or simply patience — from agriculture producers. Trump announced in an Iowa campaign stop last fall that he would direct the Environmental Protection Agency (EPA) to allow the year-round sale of higher-ethanol blends of gasoline, called E15, currently blocked by clean air laws from sale during the peak summer driving months. EPA this month continued to race to finish that rule before the formal 1 June start of the summer driving season. Proponents of that change have estimated that the change could add 350mn of ethanol blending by 2021 — roughly 125mn bushels of corn demand. EPA paired them to changes to the trading market of credits used to prove compliance with federal mandates unpopular with integrated refiners and blending operations.
Summer fuel changes would have almost no effect on soy-based biodiesel consumption. Biodiesel producers instead face ongoing risk from EPA waivers slashing federal renewables mandates and sluggish attention to expired tax incentives to blend the fuel.
The blender tax credit (BTC), a $1/USG incentive to add biodiesel to conventional diesel, expired at the end of 2017. EPA has cited the BTC as the most influential driver of US biodiesel blending. Congress has repeatedly extended the credit after allowing it to expire, but has allowed the current limbo to stretch to 17 months. Sources familiar with negotiations around the tax extension do not expect earnest talks in the US House of Representatives, where tax legislation must begin, before July.
The industry may not know the future of the credit before fall. The extended uncertainty has cut blending demand and biodiesel production, adding another headwind for soybean consumption.
The DC Circuit Court of Appeals last week rejected a request to block EPA from exempting more small refineries from fuel blending requirements. The 36 waivers the agency issued for the previous compliance year effectively cut total mandates by almost 10pc. EPA was considering 39 applications for the next compliance year, according to the latest disclosure issued last week.
Previous waiver recipients expected the EPA to continue issuing the exemptions despite the court challenges.
"We expect the [exemptions] to continue to be granted, consistent with the recent practice under the Trump administration," HollyFrontier chief executive George Damiris told investors.
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Canada furthers investment in GHG reductions
Canada furthers investment in GHG reductions
Houston, 18 April (Argus) — The Canadian government plans to have C$93bn ($67.5bn) in federal incentives up and running by the end of the year to spur developments in clean energy technology, hydrogen production, carbon capture utilization and storage (CCUS) along with a new tax credit for electric vehicle (EV) supply chains. The Canada Department of Finance, in its 2024 budget released on 16 April, said it expects to have the first planned investment tax credits (ITCs), for CCUS and renewable energy investments, in law before 1 June. The ITCs would be available for investments made generally within or before 2023 depending on the credit. The anticipated clean hydrogen ITC is also moving forward. It could provide 15-40pc of related eligible costs, with projects that produce the cleanest hydrogen set to receive the higher levels of support, along with other credits for equipment purchases and power-purchase agreements. The government is pursuing a new ITC for EV supply chains, meant to bolster in-country manufacturing and consumer adoption of EVs with a 10pc return on the cost of buildings used in vehicle assembly, battery production and related materials. The credit would build on the clean technology manufacturing ITC, which allows businesses to claim 30pc of the cost of new machinery and equipment. To bolster reductions in transportation-related greenhouse gas (GHG) emissions, the government will also direct up to C$500mn ($363mn) in funding from the country's low-carbon fuel standard to support domestic biofuel production . Transportation is the second largest source of GHG emissions for the country, at 28pc, or 188mn metric tonnes of CO2 equivalent, in 2021. But the province of Alberta expressed disappointment at the pace of development of ITC support that could help companies affected by the country's move away from fossil fuels. "There was nothing around ammonia or hydrogen, and no updates on the CCUS ITCs that would actually spur on investment," Alberta finance minister Nate Horner said. The incentives are intended to help Canada achieve a 40-45pc reduction in GHG emissions by 2030, relative to 2005 levels. This would require a reduction in GHG emissions to about 439mn t/yr, while Canada's emissions totaled 670mn in 2021, according to the government's most recent inventory. The budget also details additional plans for the Canada Growth Fund's carbon contracts for a difference, which help decarbonize hard-to-abate industries. The government plans to add off-the-shelf contracts to its current offering of bespoke one-off contracts tailored to a specific enterprise to broaden the reach and GHG reductions of the program. These contracts incentivize businesses to invest in emissions reducing program or technology, such as CCUS, through the government providing a financial backstop to a project developer. The government and developer establish a "strike price" that carbon allowances would need to reach for a return on the investment, with the government paying the difference if the market price fails to increase. CGF signed its first contract under this program last year , with Calgary-based carbon capture and sequestration company Entropy and has around $6bn remaining to issue agreements. To stretch this funding further, the Canadian government intends for Environment and Climate Change Canada to work with provincial and territorial carbon markets to improve performance and potentially send stronger price signals to spur decarbonization. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Korea’s Hyundai starts operations at biodiesel plant
Korea’s Hyundai starts operations at biodiesel plant
Singapore, 18 April (Argus) — South Korean refiner Hyundai Oilbank has started commercial operations at its 130,000 t/yr biodiesel plant at Daesan as of 17 April, according to a source from the company. The plant is currently being fed with palm oil fatty acid distillates (Pfad). Most of the produced biodiesel will likely be kept to meet domestic demand, said other South Korea-based market sources. Hyundai had been trialing feedstocks at the plant since last December, which include Pfad, used cooking oil (UCO) and soybean oil. It previously entered an agreement with food manufacturer Lotte Confectionery in 2022, which involved Lotte supplying UCO as feedstock to the plant. The refiner said earlier this year that it is also considering co-processing biofuels at its 520,000 b/d Daesan refinery. It has plans for another 500,000 t/yr plant that can produce renewable diesel, sustainable aviation fuel and bio-naphtha, initially scheduled to come on line in the middle of the decade. But a final investment decision has yet to be reached for this plant. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UAE air traffic recovery begins after storm disruptions
UAE air traffic recovery begins after storm disruptions
Singapore, 18 April (Argus) — Air traffic at Dubai International (DXB) has begun to recover after an unprecedented storm hit the country on 16 April, although flight delays are expected to continue. "DXB resumed inbound flights of international airlines operating out of terminal 1", a spokesperson for DXB operator Dubai Airports said on 18 April. But it urged travellers not to come to the terminal for outbound flights before confirming their flight status, as it said the access to the terminal is "strictly limited" to guests with confirmed departures. Prolonged flight disruptions at DXB, which was ranked the second-busiest airport in the world in 2023, according to the Airports Council International's preliminary ranking, could affect regional jet fuel demand. Dubai low-cost carrier flydubai said it has now resumed partial operations from DXB, having previously cancelled all of its flights scheduled to depart from Dubai on 16 April evening until 10am on 17 April. Select outbound flights were to operate from DXB's terminal 2 with scheduled operations resuming after 8pm on 17 April, it said, while flights from terminal 3 were due to resume after midnight. But Dubai-owned Emirates Airlines has extended the suspension on check-in for passengers departing DXB until 9am on 18 April, after having initially suspending it between 8am and midnight on 17 April. The airline said the extension was because of "continued operational challenges caused by bad weather and road conditions". Neighbouring Abu Dhabi's Zayed international airport said it is "operating smoothly", despite issuing a warning on 17 April that some flights might be delayed. By Ieva Paldaviciute Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
June deadline set for Citgo auction bids
June deadline set for Citgo auction bids
Houston, 17 April (Argus) — Bidders for Citgo's US refining assets have until 11 June to submit offers for the company's 805,000 b/d of refining capacity and associated assets, with a tentative sale hearing set for 15 July. Documents filed Tuesday in the US District Court for the District of Delaware set 11 June as the deadline for interested parties to submit final binding bids after non-binding bids were received 22 January. The court began the auction process for Citgo's parent PdV Holding (PdVH) in October, part of the process of satisfying debts owed by Venezuelan-state owned oil company PdV. The court will file a notice of a successful bid "as soon as reasonably practicable" following the 11 June deadline and selection of a successful bidder. No date has been set for the filing of objections to the sale or replies to the objections before the tentative 15 July hearing. The legal wrangling over Citgo is unlikely to conclude even if the Delaware court successfully executes the sale as 27 businesses have filed claims against Citgo amounting to more than $21bn. The scale of Citgo's operations in the US are also a challenge to any potential buyer. Few companies look ready to buy the company's three refineries, three lubricants plants and retail and midstream assets. The assets have been valued by various analysts anywhere between $6.5bn and $40bn, with a lofty valuation potentially deterring bidders. But the auction process itself has been the main cause for concern. Independent refiner PBF Energy's chief executive Matthew Lucey previously called the auction a "quagmire" , considering its ties to a complex geopolitical situation in Venezuela, saying he did not expect the sale to go anywhere in the near term. Marathon Petroleum expressed similar disdain. "We're not interested in the auction process," Marathon chief executive Michael Hennigan said on an earnings call in October . By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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