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Aemetis optimistic about LCFS update, tax credit

  • Spanish Market: Biofuels, Emissions, Natural gas
  • 02/08/24

US biofuels producer Aemetis expects supportive regulatory changes to boost profits, which have struggled recently on lower prices.

Chief executive Eric McAfee said Thursday that expected policy changes in the next year will "significantly increase the value of our products," which include ethanol and renewable natural gas. He cited the California Air Resources Board's (CARB) upcoming meeting in November in which regulators will consider updates to the state's low-carbon fuel standard (LCFS), as well as an Inflation Reduction Act federal tax credit for clean fuels kicking off in January and Environmental Protection Agency action to approve higher E15 ethanol blends in more of the country next year.

In California, regulators are weighing tougher targets for the LCFS program, where sagging credit prices over the last year could deter investments in decarbonizing transportation. They have floated an initial step down in carbon intensity limits in 2025 of 7pc or more. McAfee predicted that CARB would ultimately determine that a 9pc stepdown "basically is the minimum required, not the maximum, but the minimum required to move major oil companies forward on buying more credits now".

He said that in discussions with CARB officials, it was "pretty clear" that the growth in unused credits available for compliance in future years had exceeded expectations. The bank of credits, which do not expire, hit a record high at the end of the first quarter, according to data released this week.

The Inflation Reduction Act's 45Z tax credit, which will tie incentives to a fuel's lifecycle greenhouse gas emissions, could also benefit the company's expanding biogas business. McAfee said there is a "wide range" of potential outcomes, since it is unclear how federal regulators will account for fuels with negative carbon intensity. But he expects a worst-case scenario would still be a subsidy of around $7.20/mmBTU.

That credit will also be more generous to sustainable aviation fuel (SAF), although it is unclear when Aemetis' planned SAF and renewable diesel production facility in Riverbank, California, will come on line. The company received key air permits from local regulators in the first quarter this year and that it was "discussing the use of innovative pricing structures with our airline customers to accelerate the financing, construction, and operation of the SAF plant", McAfee said. Aemetis has signed offtake agreements with companies such as Delta Air Lines and Alaska Airlines.

The company did not immediately respond to a request for comment on its timeline for starting up the plant, which could produce 90mn USG/yr of SAF and renewable diesel.

Aemetis this week reported a net loss of $29.2mn in the second quarter this year, up from a net loss of $25.3mn during the same period last year. The company sold more ethanol and renewable natural gas in the US and less biodiesel in India but received lower prices for many of its products.


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08/11/24

California LCFS set for key decision Friday: Update

California LCFS set for key decision Friday: Update

Adds comments from meeting. Houston, 8 November (Argus) — Fuel producers today urged California regulators to preserve incentives in a newly uncertain market as residents asked them to start over with greater ambitions for a zero-emission future. California regulators may toughen carbon-slashing targets and raise hurdles for crop-based fuels to participate in North America's largest Low Carbon Fuel Standard (LCFS). On Friday California's Air Resources Board heard hours of final testimony on a rulemaking that has been underway for nearly a year — and on the verge of running out of time — to restore shrinking incentives in the state's program to decarbonize road fuels. The decision comes amid growing outcry over the cost of diversifying the state's fuel portfolio passed on to drivers. Choices made on incentives in the largest US renewable fuels and electric vehicle charging markets may offer some clarity to markets now roiled by uncertainty over the approach an incoming second Donald Trump administration will take. "The tools in our toolbox may become much more limited going forward," board chairwoman Liane Randolph said in opening remarks. "While we will do everything we can to protect our authority in California and our existing programs that we have to clean the air, we know that we must do all we can to use our existing state authority to bring clean fuels to California." Board consideration was not expected until late in the day. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed the annual limit incur deficits that suppliers must offset with approved, lower-carbon alternatives. California's program has helped spur a rush of new renewable diesel production that quickly overwhelmed the deficits generated from petroleum gasoline and diesel use in the state. LCFS credits do not expire, and leftover credits available for future compliance grew to 29.1mn metric tonnes by July. The program generated 22.4mn deficits in all of 2023. Tougher targets on tap Board approval of amendments considered today would immediately toughen program targets for 2025 by 9pc. The one-year drop would nearly double reductions first proposed last year, and require cuts six times deeper than the typical year-to-year change in targets. Regulatory staff published models in April suggesting such a target could thin a smothering inventory of excess credits available for future compliance by 8.2mn — roughly a third of the available excess credits. Other proposals would take longer to begin. California would require new attestations about land use for crop-based feedstocks by 2026, shifting toward tougher verification requirements for such feedstocks by 2031. Regulators would limit credit generation for existing suppliers of biodiesel and renewable diesel made from soybean oil or canola oil credits to only 20pc of such fuels they supply to California by 2028. And CARB would begin phasing out outsized credit generation from renewable natural gas used in transportation in 2040, after locking-in incentives for current projects regardless of any regulations that would mandate methane reductions. The program has faced a late push of opposition from fuel suppliers and environmental critics highlighting costs to previously unaware drivers. The campaign inspired an unusual volume of public comment filings in October from residents focused on gasoline costs. Hours of public comment included numerous residents near dairies and other infrastructure critical of incentives that continued operations worsening their air quality, as well as environmental groups opposed to incentives not focused on electric transportation. "This proposal is simply not worthy of your vote," Earthjustice staff attorney Nina Robertson said. "It represents a grab bag of giveaways to polluting special interest that have turned what was once a program for climate progress into a piggy bank for their false climate solutions." But CARB faces a 5 January deadline to approve the proposals. Missing it would restart the regulatory process, which staff has said could take another two years to complete. Credits available for future compliance nearly tripled over the past two years. Renewable natural gas, electric vehicle and even biofuels groups wary of elements of the proposal have issued statements of support this week. "While there is always room for improvement, in our view, there's no reason to delay adoption of this proposal today," Neste US president Peter Zonneveld said. "There is no time to waste." Randolph has repeatedly defended the program in public appearances as the temperature on fuel costs concerns rose. Board member Dean Florez said ahead of the meeting that he would vote against the amendments, citing what he considered a lack of clearer information on potential cost and emissions impact. "The opacity has eroded confidence in our intentions and planning," Florez wrote in a guest editorial. CARB's choices will ripple across fuel supply strategies around the world. California used two thirds of the renewable diesel consumed in the US during the second quarter, and access to the market can determine feedstock margins. With immediate federal choices on biofuel tax incentives or possible feedstock sanctions uncertain, clarity on California's may offer suppliers one of the fuel planning footholds this year. By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Carbon intensity reg pivotal to biobunkers in 2025


08/11/24
08/11/24

Carbon intensity reg pivotal to biobunkers in 2025

New York, 8 November (Argus) — The International Maritime Organization's (IMO) carbon intensity indicator (CII) regulation will propel biofuel bunker demand in 2025 as its restrictions tighten. The CII regulation came into force in January 2023 and thus far has had a muted effect on shipowners' biofuel bunker demand. But 2025 could be a pivotal year. CII requires vessels over 5,000 gross tonnes (gt) to report their carbon intensity, which is then scored from A to E. A and B vessel scores are regarded as superior energy efficiency, while C, D and E are considered moderate to inferior scores. The scoring levels are lowered yearly by about 2pc, so a vessel with no change in CII could drop from from C to D in one year. If a vessel receives a D score three years in a row or E score the previous year, the vessel owner must submit a corrective action plan. The IMO has not established penalties or restrictions for vessels scoring D. Thus, theoretically a ship owner could have scored D in 2023 and 2024 with no consequences. Year 2025 will mark CII's third year, when ship owners whose vessels were scoring D in 2023 and 2024 will need to rethink their sustainability approach or risk getting D again and having to produce corrective actions plans in 2026. That is in addition to the ship owners whose vessels will score E in 2024. To improve its CII score, a ship owner could reduce its speed and burn low-carbon fuels, among other solutions. Biofuel is the only plug-and-play low-carbon fuel option that does not require a costly vessel retrofitting. in 2023 of the vessels 5,000 gt and over, 3,931 scored D, 1,541 scored E and 3,967 did not report scores, according to the latest IMO data ( see chart ). Assuming that the non-responders refrained from reporting to avoid sharing their low D and E scores, then the total number of D and E scoring vessels could be as high as 9,439, or 33pc of the total vessel count. The bulk of the vessels reporting D and E were dry bulk carriers at 1,853 and 641, respectively, followed by oil tankers at 743 and 349, respectively, according to IMO data. The dry bulk carrier category also had the highest number of non-responders at 1,015 vessels. The vessel classification society American Bureau of Shipping concluded that a reference case container vessel with 154,000t deadweight could see its rating improve from D to C in 2025 if it switched from burning conventional marine fuel to B25 biofuel. FuelEU, EU ETS: All bark, no bite Separately from the CII regulation, ship owners traveling in, out and within EU territorial waters will see the implementation of a new FuelEU marine regulation on 1 January and the tightening of the existing EU ETS regulation. But neither would be major driving forces behind biofuel for bunkering demand in 2025. The EU ETS will require that vessel operators pay for 70pc of their CO2 emissions next year. But even with the added cost of CO2, a B30 biofuel blend is more expensive than conventional marine fuel. In Rotterdam in October, B30 — comprised of 30pc used cooking oil methyl ester (Ucome) and 70pc very low-sulphur fuel oil (VLSFO) — with a 70pc CO2 cost added would have averaged $924/t, compared with VLSFO with added 70pc CO2 cost at $682/t, according to Argus data. In order for the EU ETS to entice ship owners to burn biofuels, at current VLSFO and Ucome prices, the price of CO2 has to rise up to $300/t. And CO2 has fluctuated from $55-$102.5/t from January 2023 to October 2024. Starting on 1 January 2025, the EU's FuelEU regulation will require that vessel fleets' lifecycle greenhouse gas intensity is capped at 89.34 grams of CO2-equivalent per megajoule (gCO2e/MJ) through 2029. For vessels which do not meet this cap, a low biofuel blend can meet the requirement. A B5 blend, comprised of 5pc Ucome and 95pc VLSFO, emits less than 89 gCO2/MJ. At this rate, albeit higher, demand for biofuels would not spike dramatically. Unlike the CII scores which apply to individual vessels, FuelEU applies to vessel pools. Different shipping companies are allowed to pool their vessels together to share compliance and meet the EU ETS emissions limits. Thus several biofuel or LNG burning vessels can compensate for the emissions generated by the majority of the older, less fuel efficient vessels burning conventional marine fuel in the pool. By Stefka Wechsler CII vessels rating Number of vessels (5,000 GT and over) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Austria to ask EU to act if German gas levy not removed


08/11/24
08/11/24

Austria to ask EU to act if German gas levy not removed

London, 8 November (Argus) — Austrian energy regulator E-Control will "take all necessary steps" at an EU level if it looks like a law to abolish Germany's storage levy on gas exiting the country will not be passed in time, it told Argus today. E-Control will take action in close co-operation with the Austrian ministry, the European Commission and energy regulators' group Acer before the end of December if needed, the regulator's executive director, Alfons Haber, told Argus . The regulator is "very much concerned that the announced abolishment of the German gas storage levy at cross-border exit points is at risk now", Haber said. But E-Control remains optimistic that the German government will fulfil its promise to abolish the gas storage levy from 1 January 2025. The collapse of the German government earlier this week has made it uncertain whether parliament can pass the required bill in time. The German storage levy — set at €2.50/MWh at present — was introduced in 2022 to cover losses incurred by German market area manager THE to fill gas storage sites ahead of the winter. But the levy made the German import route uneconomical for its southern and eastern neighbours, which last year asked the EU to intervene. Germany agreed to scrap the levy on cross-border interconnection points in May , saying at the time that the change would have to be ratified by an act of parliament. The levy "severely impacts cross-border gas flows in Europe and has strong negative effects on the CEE region", Haber told Argus . Particularly in light of the risk that Russian gas transit through Ukraine would end after 1 January, German imports would become more significant for Austria, in which case the levy would "hurt" even more, Austrian market area manager AGGM board member Bernhard Painz said. Scope for levy law to be passed in time The incumbent government hopes to pass some bills "that cannot be delayed" before the end of this year, the chancellor said on 6 November. Economy and climate minister Robert Habeck on 7 November said he expects the interests of the government and the "democratic opposition" to align on energy security. But Habeck does not expect "a great deal of helpfulness", and "it remains to be seen" whether some decisions can be made together with the opposition on a case-by-case basis, he said. Major opposition party CDU today voiced a desire for an earlier election date in German parliament, asking Scholz to schedule a vote of no confidence as early as next week. This would drastically reduce the chance of any bill being passed before the end of this year. The chancellor today said he was open to a "sober" discussion about the election date. Scholz expressed hope that the "democratic factions of parliament" could agree on which laws can still be passed this year. This common understanding could determine the "right moment" to trigger a vote of no confidence, he said. Only the chancellor can call a vote of no confidence under the German constitution. The opposition can do so only if they elect a new chancellor at the same time. Bill is not controversial among democratic parties Democratic parties showed no opposition to the bill to change how the storage levy is charged during its first reading in parliament, suggesting it could be passed as one of the bipartisan projects if it is high enough on the agenda. The bill, introduced to parliament in August , was framed as a way to align the storage levy with EU rules. The government asked for it to be expedited. The upper house of parliament, the Bundesrat, passed the law on to the lower house without comments on the proposed changes. During the first reading of the bill in the lower house, no democratic party raised any concerns about the law. CDU instead framed it as an attempt to fix what the government had done wrong in 2022. Then-governing parties the Greens, SPD and FDP were in favour of the law in light of its positive effects on EU solidarity. BMWK was not immediately available for comment on whether the storage levy was on the list of laws that the government would try to push through before the end of this year. By Till Stehr and Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Canada climate plans not equally at risk post-Trudeau


08/11/24
08/11/24

Canada climate plans not equally at risk post-Trudeau

Toronto, 8 November (Argus) — Canada's climate policies will be overhauled if prime minister Justin Trudeau loses an upcoming federal election, but the Conservative Party might not move to roll back all of the programs. Trudeau over nine years in office has pushed through a raft of carbon pricing policies, cracked down on provinces with insufficiently ambitious plans, and even started a global "challenge" to spur more jurisdictions to price emissions. But Canada's policies have exacerbated cost-of-living concerns at a time when voters across the world are punishing incumbents for inflation, and Conservative leader Pierre Poilievre has barnstormed the country with a pledge to "axe the tax." An election must happen no later than October 2025, and the ruling Liberals are down significantly in polls. "We are going to see change, significant change," said Lisa DeMarco, a senior partner at the law firm Resilient and a member of the International Emissions Trading Association board at the Canada Clean Fuels and Carbon Markets Summit in Toronto, Ontario, this week. What "axe the tax" might mean in practice is uncertain. Inevitable targets are the country's federal fuel charge, currently at C$80/t ($57.54/t) and set to gradually increase to C$170/t in 2030, and a recently proposed greenhouse gas emissions cap-and-trade program for upstream oil and gas producers. But other policies, especially those with industry support, could remain. The country's distinct system for taxing industrial emissions, which includes a federal output-based pricing system that functions as a performance standard, "will likely be untouched," said former Conservative leader Erin O'Toole. A point of debate at the conference was what Poilievre might do with the country's clean fuel regulations, which function similarly to California's long-running low-carbon fuel standard and have boosted biofuel usage in the country. The policy is "certainly not at the top of the list" of Conservative priorities, said Andy Brosnan, president of low-carbon fuels at environmental products marketer Anew Climate. But that does not mean it will escape scrutiny. Conservatives could tinker with the program or push through more muscular changes like excluding electric vehicles, said David Beaudoin, chief executive of the climate consultancy NEL-i. "We should expect that regulation will be maybe not dismantled but somehow changed, perhaps fundamentally," Beaudoin said. In the gap left by the federal government, provinces could make up the difference with their own climate programs, panelists agreed. Quebec for instance has a linked carbon market with California, and British Columbia has its own low-carbon fuel standard. But policymakers should heed the lessons of Trudeau's declining popularity and reorient how they approach climate policy, O'Toole argued. "Try to be minimally disruptive on economically vulnerable citizens," he said. "Try not to pit industry against industry or region of the country against region." By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Talks to restart as port of Vancouver lockout drags


08/11/24
08/11/24

Talks to restart as port of Vancouver lockout drags

Calgary, 8 November (Argus) — A labour disruption at the port of Vancouver is now into its fifth day, but the employers association and the locked-out union are to meet this weekend to try to strike a deal and get commodities moving again. Workers belonging to the International Longshore and Warehouse Union (ILWU) Local 514 on Canada's west coast have been locked out by the BC Maritime Employers Association (BCMEA) since 4 November. This came hours after the union implemented an overtime ban for its 730 ship and dock foreman members. The two sides will meet on 9 November evening with the assistance of the Federal Mediation and Conciliation Service (FMCS) in an effort to end a 19-month long dispute as they negotiate a new collective agreement to replace the one that expired in March 2023. The FMCS was already recruited for meetings in October, but that did not culminate in a deal. Natural resource-rich Canada is dependent on smooth operations at the port of Vancouver to reach international markets. The port is a major conduit for many dry and liquid bulk cargoes, including lumber, wood pellets and pulp, grains and agriculture products, caustic soda and sodium chlorate, sugar, coal, potash, sulphur, copper concentrates, zinc and lead concentrate, diesel and renewable diesel liquids and petroleum products. These account for about two-thirds of the movements through the port. Grain operations and the Westshore coal terminal are unaffected while most petroleum products also continue to move, the Port of Vancouver said on 7 November. As the parties head back to the bargaining table, the ILWU Local 514 meanwhile filed a complaint against the BCMEA on 7 November, alleging bargaining in bad faith, making threats, intimidation and coercion. "The BCMEA is trying to undermine the union by attempting to turn members against its democratically-elected leadership and bargaining committee, said ILWU Local 514 president Frank Morena on 7 November. "They know their bully tactics won't work with our members but their true goal is to bully the federal government into intervention." But that is just "another meritless claim," according to the BCMEA, who wants to restore supply chain operations as quickly as possible. The union said BC ports would still be operating if the BCMEA did not overreact with a lockout. "They are responsible for goods not being shipped to and from BC ports — not the union," Morena says. The ILWU Local 514 was found to have bargained in bad faith itself already, according to a decision by the Canada Industrial Relations Board (CIRB) in October. Billions of dollars of trade are at risk with many goods and commodities at a standstill at Vancouver, which is Canada's busiest port. A 13-day strike by ILWU longshore workers in July 2023 disrupted C$10bn ($7.3bn) worth of goods and commodities, especially those reliant on container ships, before an agreement was met. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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