Japan's Astomos to commission LPG-fuelled VLGC

Spanish Market: Emissions, LPG
06/08/21

Japanese LPG importer Astomos plans to start operating a LPG-fuelled very large gas carrier (VLGC) in late August, prompted by tightening environmental restrictions and hopes of promoting LPG as a marine fuel.

Astomos will receive the 84,229m³ VLGC Crystal Asteria from domestic shipbuilder Kawasaki Heavy Industries (KHI). KHI is currently building the vessel at its Sakaide shipyard in Japan's southwest Kagawa prefecture, on Shikoku island. Singapore-based shipowner Kumiai Navigation will operate the vessel for Astomos.

The VLGC will be equipped with KHI's dual-fuel LPG engine, known as ME-LGIP, which can run on both pressurised LPG and fuel oil. The engine can reduce sulphur oxide emissions by 90pc and CO2 emissions by 20pc compared with conventional fuel oil.

Astomos may consider further switching to LPG rather than fuel oil as a bunker fuel. Japan's LPG industry has been eyeing marine fuel as a new source of growth to help offset shrinking domestic demand, which has been falling since 2006. Japan used 13mn t of LPG in the April 2020 to March 2021 fiscal year, down by 30.6pc from 2006-07, according to the Japan LPG association.

By Nanami Oki

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24/12/25

Viewpoint: Tax credits will shape US ethanol market

Houston, 24 December (Argus) — US ethanol investments and business decisions driven by 45Z and 45Q tax credits are slated to be the primary drivers of industry changes next year, as carbon capture and sequestration (CCS) begins to take hold in the midcontinent and Gulf coast regions. Major ethanol producers such as Archer Daniels-Midland (ADM), Green Plains and POET are investing heavily in CCS, which captures CO2 generated from ethanol production. The captured carbon is then piped to sites with geological formations suitable for injection and storage, some of which are located around Wyoming, the Dakotas and in the US Gulf coast. Ethanol production in conjunction with CCS allows for a lower carbon intensity score and creates a more valuable product that is eligible for 45Z and 45Q incentives. Sustainable energy company Tallgrass has successfully injected carbon via its Trailblazer pipeline in southeastern Wyoming. But other CCS companies have had bumpier journeys. Summit Carbon Solutions was denied a pipeline permit earlier this year in South Dakota but has since made progress in other states through which the company is looking to build its pipeline. Further south, EPA in November granted Texas permission to issue permits for CCS wells . There are 61 well applications under review in Texas, one-third of which were received in the last 12 months, according to EPA. Besides the backlog, the CCS industry is outpacing federal agencies in other ways. The US Internal Revenue Service and Department of Treasury recently issued stopgap guidance in the event that Environmental Protection Agency (EPA) tools for reporting CCS are not up and running by the middle of next year. Although tax credits allow for bigger producer opportunities, ethanol supply-demand fundamentals will be tested heading into next year. US ethanol production this year has reached all-time highs at multiple points, slowly driving ethanol stocks upward and putting more emphasis on currently robust export markets. Ethanol exports this year through September averaged 135,000 b/d, the highest level ever for the nine-month period in US Department of Agriculture (USDA) data going back to 2012. Market sentiment remains bullish on exports going into the first quarter, with robust demand coming from Canada, the UK and Europe, although trade routes are always subject to policy changes. Canada is mulling volume minimums to support domestic low-carbon fuels. Although not yet law, the bill indicates potential for Canadian renewable fuels to partially displace some US exports to that country. Domestic ethanol demand is poised to grow modestly over the next year as 15pc ethanol blends (E15) expand into new markets as the policy landscape becomes more welcoming. California passed legislation in October allowing E15 sales. However, the California Environmental Policy Council still needs to approve the legislation before the California Air Resources Board (CARB) can go about deciding how to implement the policy. The state's inclusion of E15 comes as oil refineries close and as the state faces a goal to achieve net-zero greenhouse gas emissions in a decade. At the federal level, fuel groups are lobbying to get the White House on board with a bill that would lead to higher ethanol blends year-round and remove the need for seasonal waivers from the EPA. Any permanent changes to year-round E15 would have to be in the form of legislation from Congress. Previous bills involving year-round E15 have been unsuccessful. Boosting biofuel blending has proven divisive as congress members attempt to manage interests from agricultural and oil constituents. By Thom Dwyer Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: LCFS ambitions lack diesel power

24/12/25

Viewpoint: LCFS ambitions lack diesel power

Houston, 24 December (Argus) — US low-carbon fuel standard (LCFS) programs are rumbling toward their steepest targets yet with little of the fuel powering them in the tank. West coast regulators and lawmakers have approved ambitious reductions in carbon levels for automotive fuel following a four-year deluge of renewable diesel production. The fuel grew over that time into the largest source of new credits needed to meet California, Oregon and Washington regulatory obligations. But federal uncertainty and feedstock challenges this year have left renewable diesel producers spinning their wheels. West coast states have claimed up to 90pc of all US renewable diesel consumption in recent quarters. Made from seed oils, animal fats or used cooking oil, and in some of the same equipment used to produce petroleum diesel, the lower-carbon alternative remains chemically identical to its conventional cousin. This means it can move seamlessly in the same supply systems and engines, leaving customers to manage only the higher price. Renewable diesel accounted for nearly three-quarters of California's total liquid diesel pool early this year, up from just a quarter of state supply in 2020. Programs in Oregon and Washington lured the fuel further north to account for around 25pc of the total diesel in those markets during recent peaks. That consumption produced a torrent of credits for the state LCFS programs. The fuel has generated as much as 40pc of new California quarterly credits in recent years, helping credits grow to 1.8 times more than new deficits in 2024. Inundated by supply and concerned about biofuel reliance, California regulators finalized much tougher carbon targets that also limit the types of feedstocks, including for renewable diesels, eligible to meet them. LCFS programs reshaped both the domestic refining sector and the west coast road fuel markets with incentives driving lowest-carbon alternatives. But this year demonstrated that federal policy remains the heaviest hand on the wheel steering fuel decisions. Federal proposals to favor US producers and domestic oilseeds with tax and other incentives, alongside hostility toward foreign lower-carbon feedstocks and fuels, stifled renewable diesel output. Total renewable diesel supplied in the US during the first 10 months of the year fell by 19pc compared with the same period of 2024, the first year-over-year drop in supplies since 2018. Diamond Green Diesel, the largest US renewable diesel producer, left one of its production units idled for most of an unprofitable 2025. Phillips 66 and Marathon Petroleum reduced runs at California facilities converted to produce renewable diesel, while CVR Energy will convert units from renewable to conventional diesel production at its Wynnewood, Oklahoma refinery . Oregon demonstrated the west coast's diesel dependency earlier this year. When facility downtime and other factors cut renewable diesel deliveries in late 2024 and early 2025, credits available for LCFS compliance began to shrink. Credit prices more than doubled from May to July in response to data reporting the supply drop. California's gasoline carbon intensity limit will start next year 12pc lower than the targets in place in January 2025. Previous years have fallen by 1-2pc. The state will also soon limit credit generation from crop-based diesels to just 20pc of the volume supplied, and require verification standards that agribusiness groups have decried as overly onerous. Washington state lawmakers early this year adopted a 5pc tougher carbon intensity target for 2026 to rekindle alternative fuel incentives in the state. Credit generation has slowed amid declining renewable diesel supplies this year. The right price can inspire the right supplies, yet the cost of these state incentives ultimately adds to what drivers pay at the pump. Fears of retail price hikes helped slow the adoption of changes to the California LCFS programs this year. Growing national sensitivity to costs could add scrutiny to rising low-carbon incentives in 2026. By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

UK refiners seek unused CO2 allowances after closures

23/12/25

UK refiners seek unused CO2 allowances after closures

London, 23 December (Argus) — UK downstream association Fuels Industry UK has urged the government to reallocate unused free CO2 allowances from two recently closed refineries to help remaining plants cope with rising emissions compliance costs. The group wants allowances granted under the UK Emissions Trading Scheme (ETS) for the 150,000 b/d Grangemouth and 105,700 b/d Lindsey refineries to be redistributed. Each allowance permits the holder to emit one tonne of CO2 equivalent. Grangemouth and Lindsey were allocated 441,925 and 541,475 allowances for 2025, respectively. It is unclear how many remain after their closures in April and August. The association warned the sector "may not survive that long" without temporary support, citing carbon costs that exceed those faced by overseas competitors until the UK's carbon border adjustment mechanism (CBAM) takes effect. ExxonMobil's 270,000 b/d Fawley refinery — the UK's largest — will spend $70mn-80mn on carbon costs this year, rising to $150mn within five years, the company's UK chair Paul Greenwood told MPs during an Energy Security and Net Zero Committee hearing in October. Fuels Industry UK chief executive Elizabeth de Jong also addressed the committee, highlighting broader cost pressures. It remains unclear whether refined fuels will be covered by the UK CBAM, which starts in January 2027. Fuels Industry UK is seeking confirmation that they be included from January 2028, and it wants additional free UK ETS allowances distributed to sectors not covered by CBAM during a "volatile" period linked to expected UK-EU carbon market linkage. Such linkage would exempt UK and EU from each other's CBAMs, but talks have yet to start. UK refiners have also missed out on government energy price support schemes during the gas price surge triggered by Russia's invasion of Ukraine, de Jong told MPs. Refiners paid market rates to power operations at their UK sites, missing out on discounts afforded to UK companies under the Energy Bill Relief Scheme, which ran between October 2022-March 2023, and then under the Energy Bills Discount Scheme between April 2023-March 2024. By contrast, US refiners access natural gas at roughly one-third of UK prices, Greenwood said. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Policy is key for Cop 30 sustainable fuels pledge

23/12/25

Policy is key for Cop 30 sustainable fuels pledge

London, 23 December (Argus) — A UN Cop 30 climate summit pledge, known as "Belem 4x", to quadruple "sustainable fuels" use over 2024-35 has so far drawn 27 signatories, including major biofuels producers and consumers. But such a substantial increase could face constraints, including feedstock and land availability, and will depend on supportive legislation. The signatories pledged at Cop 30 to "expand sustainable fuels use globally by at least four times by 2035 from 2024 levels", including by "adopting ambitious national policies". Sustainable fuels, in the context of the pledge, refers to liquid biofuels, biogases, "low-emissions hydrogen and hydrogen-based fuels", according to energy watchdog the IEA. The pledge follows an IEA report in October developed for the Cop 30 presidency, which found that a fourfold increase "is ambitious yet achievable". Under the IEA scenario, liquid and gaseous biofuels would meet around two-thirds of sustainable fuel demand in 2030, while hydrogen and hydrogen-derived fuels would "expand rapidly" after 2030. Cop 30 host Brazil proposed the pledge in September , based on the IEA's preliminary findings, and the commitment was launched with India, Italy and Japan at the pre-Cop event in Brasilia, Brazil in October. The pledge now has 27 signatories from Latin and North America, Asia, Africa and Europe, encompassing sustainable fuels producers and consumers. Canada, Indonesia, Mexico and the Netherlands are among the signatories. The pledge "sends an important political signal: scaling up sustainable fuels is not only necessary for climate goals, but feasible", the European Waste-based and Advanced Biofuels Association (Ewaba) told Argus . "Europe's biodiesel sector shows how sustainable biofuels can strengthen energy security, reduce import dependence and deliver immediate climate benefits using existing vehicles and fuel infrastructure," Ewaba added. Rising demand Sustainable fuels are typically used in transport sectors, which are among the highest-emitting, particularly in advanced economies. Although transport electrification is expanding, it is typically not moving fast enough to hit climate targets in line with the Paris Agreement, while shipping and aviation will require multiple decarbonisation solutions. Hydrogen and related fuels are also likely to see uptake from industry and power generation. Global demand for sustainable fuels doubled over 2010-24, and is already expected to grow this decade, boosted by policies designed to drive emissions reductions and support energy security. Conversely, the removal of tax credits for electric vehicles in the US, and recent weakening of the EU target for zero-emission cars are also likely to support increased biofuels consumption. The full implementation of existing and announced policies and targets, "plus the removal of market barriers, could lead to a near-doubling of sustainable fuel use in just six years", the IEA said. This could attract investment for new production capacity, it added. It also recommended prioritising infrastructure and supply chain development, as well as innovation funds for new technologies. The IEA found that sustainable fuels could cover 10pc of road transport demand, 15pc of aviation demand and 35pc of shipping fuel demand by 2035 — although it would "vary widely" by region. In an accelerated case, the IEA found that liquid biofuels could provide 8.07EJ in energy in 2030, up by 62pc from 2024 levels. The picture shifts by 2035 in the scenario, with biogas supply more than doubling and low-emissions hydrogen more than quadrupling, both from 2030. Land-use concerns But a near-term focus on increased biofuels production sparked concerns from several organisations about feedstock availability and the land conversion implications. "Such a massive uptake in biofuels could have calamitous consequences for the environment and climate, depending on how this pledge is interpreted," European non-governmental organisation (NGO) Transport & Environment (T&E) said. It flagged land cleared for crops such as palm oil, soy, sugarcane and corn. T&E projections show that "under current growth trends and policies, 90pc of biofuels will still be reliant on food and feed crops by 2030." The IEA noted "limited" expansion opportunities for biofuels from waste oils and fats, while it recommended improving crop yields for other feedstocks. But climate change is likely to hamper crop output. The UN Environment Programme warned recently that under a ‘business as usual' pathway, land degradation "is expected to continue at current rates, with the world losing fertile and productive land the size of Ethiopia or Colombia annually". Cop pledges often aim to drive an existing trend faster, and this is typically evident in the signatories — a coalition of the willing. Brazil has vast ethanol production capacity and strong domestic consumption mandates, like India, while another signatory, Chile, is forging ahead with renewable hydrogen production. The pledges, like all climate action, rely on strong policy, but commitment from key countries is more likely to achieve results. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Viewpoint: WCI changes still in the works

23/12/25

Viewpoint: WCI changes still in the works

Houston, 23 December (Argus) — The Western Climate Initiative (WCI) — the joint California-Quebec carbon market — has spent over two years waiting for clarity on potential program changes with growing concerns that it may not appear until 2026. Bullish sentiment initially pervaded the WCI market in December as California Air Resources Board (CARB) originally planned on publishing its long-awaited draft of cap-and-invest amendments by the end of the year. But this sentiment has been tempered by the possibility that CARB may instead release guidance on its plans because of the limited time left in the year, with a draft published in early 2026, sources said. The WCI partners are considering more-stringent program rules for 2027 and beyond, including increased incentives for participants to reduce greenhouse gas (GHG) emissions. But market participants may feel like they are experiencing deja vu — at this same time last year, they were expecting to see draft plans for updates to each program. CARB delayed publishing a draft of these program amendments multiple times over the last two years, which in turn has resulted in Quebec delaying the release of its own proposed changes. The agency earlier this year deferred to state legislators and their work to extend the state's 'cap-and-invest' program to 2045 from its previous 2030 sunset date. Lawmakers passed this program extension package, AB 1207 and SB 840, in September , putting the ball back in CARB's court. Staff at an October workshop said CARB planned to publish its amendment proposal, which includes changes required by the legislation, by the end of this year and bring it before its board for review by April. At the meeting, staff floated the idea of removing at least 118mn metric tonnes (t) from the 2027-2030 program allowance budgets to keep the program on target for a 40pc reduction in GHG emissions, compared with 1990 levels, by 2030. The agency previously considered setting a stricter 48pc or 55pc by 2030 target, which would have required the removal of a larger number of allowances through 2030. The change in the program's ambition was a central point of the agency's rulemaking discussions since they started in 2023 . The 40pc target is a more "viable" option at this time, but this decision is not final, CARB staff said in October. The change in the US economy and federal policy away from Inflation Reduction Act incentives and greenhouse gas regulation this year may have contributed to CARB's 2030 target shift, said Nick Roy, a national and state energy policy research associate with environmental policy think tank Resources for the Future. "It is probably true that there is not the governor's office pushing for the same level of ambition that they were originally because of federal policy changes," Roy said. WCI partner Quebec is considering removing 17.5mn allowances, equal to historical carbon offset use in the program, and limiting future offset use for compliance, the province's environment ministry said in an October 2024 market notice. The province has also weighed transitioning to a government purchase and retirement system to replace carbon offsets as part of these changes, but it has not provided further details. The province plans to publish its draft regulations in winter 2026, with adoption in spring-summer 2026. A formal proposal would shed light on CARB's plans going forward as well as how the agency plans to implement program changes required by AB 1207 and SB 840. CARB has one year to adopt the new regulations after it publishes the draft. Legal scrutiny Whether the administration of President Donald Trump plans to act on its threat of legal action against California's "cap-and-invest" program is still unclear. An 8 April executive order directed US attorney general Pam Bondi to evaluate legal action against state and local laws hindering the development or use of domestic energy resources. The order specifically cited California's carbon market. California Carbon Allowances for December delivery fell by more than $2.50/t to $26.74/t the day after the order, but have since climbed above $30/t. Market participants believe the Trump administration could target a proposed link between the WCI and the Washington state carbon markets. Such a link could happen in mid- to late-2027, according to California and Washington regulators. This could create a narrow window for any federal action before Trump leaves office in January 2029. The threat of federal legal action still pervades the market, but participants expect that a lawsuit becomes increasingly unlikely as time passes. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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