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Australia should have CBAM on some commodities: Review
Australia should have CBAM on some commodities: Review
Sydney, 13 February (Argus) — Australia should consider introducing a carbon border adjustment mechanism (CBAM), starting with imports of cement and clinker and potentially expanding to products such as hydrogen, steel, and ammonia and derivatives like urea and ammonium phosphate, according to a key report released by the government today. The identified commodities face risk of future carbon leakage from imports, which could lead to greenhouse gas (GHG) emissions being relocated from Australia to overseas. The carbon leakage review , led by Australian National University professor Frank Jotzo between July 2023 and March 2025, assessed leakage risks in 2030 for all 75 trade-exposed commodities under Australia's safeguard mechanism across 42 commodity groups. The review was announced as part of the 2023 reform of the safeguard mechanism While current safeguard mechanism settings are effective at mitigating carbon leakage risk in the short- to medium-term, the declining emissions baselines under the scheme could put some of the identified sectors at a "more significant" risk over time, according to the report. Cement and clinker first, others to follow Risks are higher for cement and clinker, and the implementation of a border carbon adjustment for these products "is likely to be simplest," according to the report. Australian production of lime and glass, on the other hand, is only partially covered under the safeguard mechanism, and a CBAM application would face more complexity. Hydrogen, steel, and ammonia and derivatives carry material carbon leakage risks, but feature more complexity with respect to production methods, supply chains, and product diversity. Some of these products are also only partially covered by the safeguard mechanism. The government should also consider potential risks for a second group of commodities, consisting of aluminium and alumina, refined petroleum, and pulp and paper. These products face mixed evidence related to leakage risk indicators and analysis of trade and investment leakage, but the government could assess them in the forthcoming review of the safeguard mechanism scheduled for the July 2026-June 2027 financial year and consider particularly the suitability of arrangements for emissions-intensive trade-exposed activities for all commodities under the scheme. Preference for fees instead of ACCU surrenders The safeguard mechanism covers over 200 individual facilities emitting more than 100,000t of CO2 equivalent (CO2e) in a compliance year across the oil and gas, mining, manufacturing, transport and waste sectors. Facilities earn Safeguard Mechanism Credits (SMCs) if their reported scope 1 emissions fall below their baselines, and must surrender SMCs or Australian Carbon Credit Units (ACCUs) if emissions exceed the threshold. If the Australian government decides to pursue a CBAM, it should consider applying liabilities only to scope 1 emissions that exceed the relevant safeguard mechanism baseline at the time of import. The assessment should be based on explicit carbon prices only, and the liability should account for the differences between the effective carbon price paid in the originating country and an Australian benchmark price. While importers could, in principle, clear the liability by paying a fee or surrendering ACCUs, there was "broad support" for the fee option during the consultation, according to the report. Surrendering ACCUs would more closely reflect domestic requirements, but trading in ACCUs has legislative requirements that would have to be met by importers which would require careful consideration, the report warned. The ACCU purchase option would create additional demand for the product, raising prices. But stakeholder feedback "reflected concerns about the potential impact on ACCU supply" if these carbon credit units were used to meet carbon border adjustment liabilities. The government should not consider a carbon border adjustment that provides rebates for exports, as that would be inconsistent with Australia's emissions reduction targets and could raise considerable international trade law concerns. "Rebating emissions obligations to exports would effectively exempt production for export from emissions reductions obligations, running counter to overall policy objectives towards net zero and increasing the required emissions reductions elsewhere in the economy," the report read. Teba provisions could be removed Trade-exposed, baseline-adjusted (Teba) facilities operating in emission-intensive sectors that might face unfair competition from imports from countries with weaker or no emission reduction policies currently benefit from discounted baseline decline rates under the safeguard mechanism. Decline rates can be as low as 2pc for non-manufacturing sectors or 1pc for manufacturing sectors, compared with the standard 4.9pc/yr declining rate until 2030. The Teba provisions for a commodity should be removed once a border carbon adjustment is fully implemented for that commodity, according to the review. Limited impact on downstream activity The report also noted that analysis indicates the impact of a carbon border adjustment on downstream activity, such as construction, would be "very limited". "The review's analysis suggests that the maximum price impacts on final goods that incorporate commodities that may be subject to a border carbon adjustment, such as wind farms, house construction and crops like wheat, would be vanishingly small as a share of product prices," the report said. The government said today it will continue to consult on carbon leakage with affected industries, and will consider the report's recommendations in the safeguard mechanism review. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Singapore mulls keeping carbon tax at low end of target
Singapore mulls keeping carbon tax at low end of target
Singapore, 13 February (Argus) — Singapore is considering keeping its carbon tax at the lower end of the targeted range against the backdrop of slowing global momentum on climate action, said prime minister Lawrence Wong at the unveiling of the country's budget on 12 February. Singapore's carbon tax is now at S$45/t ($35.60/t) and is planned to reach $50-80/t by 2030. But in light of international developments, Singapore is assessing its carbon tax trajectory carefully, Wong said. Singapore currently has the highest carbon tax rate in Asia, and "if global climate momentum continues to weaken, we may need to position ourselves towards the lower end of the $50-80/t range by 2030," he said. Some governments are scaling back their climate ambitions, but this is not an option for Singapore, said Wong. A "key pillar" of the country's climate strategy is the carbon tax, which has already had an impact, with firms investing more in low-carbon solutions and raising energy efficiency, he added. Separately, Singapore has achieved its 2030 solar deployment target of 2GW peak (GWp) ahead of schedule, and it has therefore raised the target to 3GWp by 2030, said Wong. Beyond 2030, Singapore will continue to maximise solar deployment across all viable surfaces, and will progressively set higher targets. Singapore is also "advancing plans" to import low-carbon electricity from the region, said Wong, although further details were not provided. The country aims to import 6GW of low-carbon power by 2035 and has already signed a few supply agreements with neighbouring countries to achieve this. The country is looking at opportunities to diversify its energy mix , including hydrogen, geothermal energy and nuclear power. In terms of transport, the country aims to achieve 100pc cleaner vehicles by 2040, and incentives are already in place for the early adoption of electric vehicles, with charging infrastructure also being expanded across the country. Singapore also targets 1pc sustainable aviation fuel (SAF) use for flights departing the country this year. And in shipping, the government is looking at developing low-carbon ammonia bunkering solutions on Jurong Island. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
US E15 group floats fewer biofuel mandate waivers
US E15 group floats fewer biofuel mandate waivers
New York, 12 February (Argus) — US lawmakers are weighing a proposal that would make it harder for oil refiners to win exemptions from annual biofuel mandates but still let regulators decide which companies deserve relief. The US House of Representatives last month punted on legislation that would allow year-round sales of 15pc ethanol gasoline (E15) and revamp the biofuel quota program, instead tasking a "rural domestic energy council" of more than 20 Republican lawmakers with hashing out reforms. One provisional plan circulated by the council this week would cap the total volume of future exemptions, according to four people familiar with the proposal and a draft framework shared with Argus . The US Environmental Protection Agency (EPA) requires oil companies to annually blend biofuels or buy Renewable Identification Number (RIN) credits from those that do, while letting small refineries bid for hardship exemptions that can save them tens of millions of dollars. Exemption decisions have varied wildly over time, from mass denials under former-president Joe Biden to generous exemptions under President Donald Trump that has frustrated farmers. 450mn RIN cap The House task force's proposal would make the program somewhat more predictable. EPA would initially have to exempt 450mn RINs from annual biofuel obligations but no more, prioritizing companies that prove the most hardship. That would be a substantial drop from the nearly 1bn RINs the Trump administration has already exempted from 2024 quotas, initially set at 21.5bn credits. If mandates rise over time, EPA must proportionally raise that 450mn RIN cap. One gallon of corn ethanol generates 1 RIN, while more energy-dense fuels like renewable diesel earn more. Unexpected exemptions can hurt RIN prices, cutting into biorefinery margins and curtail demand for crops like corn and soybeans. Other changes would limit — but not entirely eliminate — EPA's discretion. Regulators would have to largely stick to their current system for measuring hardship, which factors in criteria like a refinery's access to capital. EPA would also have to consider "additional materials" determined by the council to limit "abuse", though the framework does not elaborate on what this would entail. An earlier proposal backed by the American Petroleum Institute and ethanol groups would have restricted exemptions to companies with limited collective refining capacity, angering some larger companies that would have lost the ability to win exemptions for smaller units they own. The latest proposal would leave it to EPA to decide which facilities deserve relief, letting small companies, mid-sized refiners like Delek and even oil majors like Chevron still compete for a smaller pool of exemptions. EPA could not force larger oil companies to blend more biofuels to offset exemptions for their smaller rivals and would have to automatically extend exemptions if it takes more than six months to weigh a company's new request. The framework would also keep the program focused around fuels that retailers can easily blend, blocking EPA from ever reviving a Biden plan to credit biogas that powers electric vehicles. The proposal shared with Argus makes no explicit mention of removing summertime limits of E15, though that is the top priority for farm-state lawmakers on the council keen to help corn farmers. Trump has made clear too he wants to expand E15 access . The framework would require EPA to finalize E15 labeling and storage standards. The proposal includes no details on timing. Some biofuel advocates have pushed delaying any changes to 2028, worried that near-term shifts could delay the Trump administration's goal of finalizing new biofuel quotas before April. Not final, still an uphill battle The framework is just one idea the council is weighing and could change. A legislative source familiar with the debate told Argus that "nothing definitive has been decided". The council has a goal of aligning around fuel market reforms by 15 February. Afterwards, any plan would likely need to be added to larger legislation to have a chance of passing, such as a farmer aid package. Advocates of the plan face an uphill battle. Some Republicans, including in the US Senate, have long pushed for more substantial reforms to the biofuel mandates than what the task force has contemplated. The framework only alludes to these concerns, requiring a government watchdog agency to regularly study how the program impacts fuel prices and US refining capacity. Democrats, already frustrated they were left off the council, could also resist permanently excluding electricity. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Malaysia's Fathopes defers FID on biofuels plant
Malaysia's Fathopes defers FID on biofuels plant
Singapore, 12 February (Argus) — Malaysian biofuel feedstock supplier Fathopes Energy has postponed the final investment decision (FID) and commissioning target date for its upcoming 300,000 t/yr hydrotreated biofuels plant in Port Klang, Malaysia. Fathopes now targets an FID by the first quarter of 2027, instead of mid-2026 as announced in April 2025. It also aims to commission the plant in mid-2030, instead of 2029 — the original target for commissioning of the plant. The plant will produce sustainable aviation fuel (SAF) or hydrotreated vegetable oil (HVO) via the hydroprocessed esters and fatty acids (Hefa) pathway, depending on commercial considerations. It decided to commission operations later to ensure greater technical accuracy and bankability for the plant, Fathopes Energy told Argus . Fathopes integrated Abu Dhabi conglomerate Bin Zayed International (BZI) as a financial investor in the project in October 2025, after the companies signed an initial agreement to build the plant in April 2025. Fathopes has also allocated more time to find reliable technology partners for the plant's technical feasibility study, with a formal announcement expected in late February, they said. Front-end engineering design (FEED) for the plant is slated to begin in early third quarter 2026 and will be completed by the end of the year. Fathopes also pushed back the plant's commissioning date to incorporate standard oil and gas industry quality for the plant's FEED, as well as its engineering, procurement and construction (EPC) phases. Meanwhile, the plant's 300,000 t/yr capacity captures economies of scale and avoids higher capital outlays typically associated with larger projects, it said, adding that the plant's estimated capital expenditure (Capex) was within industry range. These findings come after the company completed an independent financial feasibility study for the plant, it said last week. Malaysia's access to competitively priced domestic natural gas for hydrogen production provides a cost advantage over plants reliant on imported LNG, Fathopes said. Proximity to regional feedstock supply, direct access to the jetty via pipeline and access to the Port Klang Free Zone, which affords duty exemptions on re-exported goods and streamlined customs procedures, are some of the plant's competitive advantages. The plant is also located near port operations manager and services provider Westports in Port Klang. Fathopes will tap on its original position as a biofuel feedstock aggregator and supplier to source feedstocks for the plant — with feedstock such as used cooking oil, palm oil mill effluent oil, empty fruit bunch oil, spent bleaching earth oil, among others — from locations including Malaysia, Indonesia, the Philippines, Singapore and Brunei, it said. It also has an advantage with its in-house applications — one for commercial partners like restaurants and industrial kitchens, and another for households and small vendors — which track each litre of feedstock to ensure compliance with International Sustainability and Carbon Certification (ISCC) requirements, it added. By Sarah Giam Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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