EPA probes US biofuel producers' UCO supplies
The US Environmental Protection Agency is auditing used cooking oil (UCO) supply chains of domestic renewable fuel producers to verify whether the feedstock qualifies under the Renewable Fuel Standard (RFS).
Under the RFS, EPA requires renewable fuel producers to submit UCO collection points that are used for biofuels production. Among other inspections, EPA is evaluating those UCO collection locations, the agency said on Wednesday.
After the EPA announcement, current-year biomass-based diesel D4 RINs traded as high as 60.5¢/RIN, which was 5.75¢/RIN higher than Tuesday's closing. Activity on renewable feedstocks was minimal on Wednesday, making it harder to gauge market reaction.
"These inspections and any follow-up investigations are part of EPA's routine evaluation of compliance with RFS under the Clean Air Act and reflect the agency's commitment to a stable RFS program that strengthens the nation's energy independence, advances low-carbon fuels, and supports agricultural communities," EPA spokesperson Tim Carroll said. The agency could not discuss the number of inspections, facility identities, and dates of the inspections, he said.
A coalition of US farm groups recently called on the Biden administration to restrict biofuels produced with foreign feedstocks from qualifying for a new tax credit as US imports of UCO continue to increase. The group argued that the imports are displacing US feedstocks.
US lawmakers also asked the administration to provide more visibility on the UCO supply chain and requested clarity from EPA on how they are ensuring that UCO imports are not blended with palm oil.
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Brazil allocates R514mn to combat fires: Correction
Brazil allocates R514mn to combat fires: Correction
Corrects value of funding in headline and lead. Sao Paulo, 18 September (Argus) — Brazil will allocate R514mn ($94.3mn) to combat fires spreading across the country, presidential chief of staff Rui Costa and environment minister Marina Silva said this week. The funds are considered "extraordinary" and not a part of the country's overall budget because they are part of a special budget authorized by the supreme court to tackle climate change. Brazil is facing severe drought in all states but two, leading to fires in several regions. The flames are likely to cut the country's 2024-25 sugarcane output , while low river levels have roiled logistics . Part of the funds will be allocated to the environment ministry to reinforce monitoring and combating fires, Costa said. The federal police and the national public security force will also receive extra resources to reinforce investigations and battle environmental crimes. The armed forces will also receive some funds to support operations to extinguish the flames. Another portion will be earmarked to buy food for families in the north that are affected by the low water levels caused by droughts. The government will also issue another provisional measure this week to ease the release of resources from the Amazon Fund, Costa said. President Luiz Inacio Lula da Silva, supreme court chief justice Luis Roberto Barroso, head of the senate Rodrigo Pacheco and lower house speaker Arthur Lira all attended the announcement as a show of unity among the branches. Brazil is also considering increasing penalties for environmental crimes, which Silva considers to be "too low" at the moment. "The sentence of two to four years in prison is light," she said. "And some judges go further and completely relax this sentence." Brazil — which is trying to bolster its image as a climate leader — is also considering creating a climate authority and technical-scientific committee to "support and coordinate the federal government's actions to combat climate change." By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hoekstra to face 'tough' EU parliamentary hearings
Hoekstra to face 'tough' EU parliamentary hearings
Brussels, 18 September (Argus) — EU climate commissioner Wopke Hoekstra, who has been nominated again for the role, is expected to face "tough" hearings in the European Parliament, according to a senior European official. The official told Argus that Hoekstra might have a "slight" advantage, as he underwent parliamentary hearings in 2023 when he took over fellow Dutchman Frans Timmermans' climate portfolio. At the time, Hoekstra was questioned extensively about past work with Shell and on climate issues. European Commission president Ursula von der Leyen put forward new commissioner candidates on 17 September, assigning Hoekstra the climate, net-zero, and clean growth portfolio. All candidates will undergo hearings before the EU parliament votes on the new commission line-up. Hoekstra has said he is "honoured and humbled", but formal appointment depends on how he performs during the hearings before the European Parliament's energy, environment and other committees. Hoekstra's mandate would include drafting legislation to enshrine a 90pc cut in greenhouse gas (GHG) emissions by 2040, from 1990 levels, into European law. The commission's 2040 target, revealed in February, referred to a "net GHG emissions reduction of 90pc". Hoekstra last year made a "personal" commitment to defend a "minimum target of at least 90pc" net GHG cuts. Von der Leyen has tasked Hoekstra with designing climate policies for the post-2030 period and developing an Industrial Decarbonisation Accelerator Act. Other key objectives include channelling investment toward net-zero infrastructure and ensuring revenues from the EU's emissions trading system (ETS) are used "effectively" to drive decarbonisation. Hoekstra's responsibilities extend to advancing a single market for CO2, boosting carbon removals for hard-to-abate sectors, and phasing out fossil fuel subsidies. Hoekstra would work closely with former Danish climate minister Dan Jorgensen, who is nominated for the energy and housing portfolio, if both are appointed. Jorgensen will be responsible for advancing the Electrification Action Plan for industrial transition and overseeing a roadmap to phase out Russian energy imports. He is tasked with ensuring the "full use" of joint procurement mechanisms, with a mandate to extend the current aggregated demand system from gas to include hydrogen and potentially other commodities. Supervising both Hoekstra and Jorgensen, in addition to von der Leyen, will be Teresa Ribera, Spain's former climate minister. Ribera has been nominated as executive vice-president for a clean, just and competitive transition. European Parliament officials expect to receive financial declarations and other procedural documents in the coming days. That will allow parliamentary committees to send written questions to Hoekstra and other nominated commissioners, officially kicking off the hearing process. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Asia-Pacific faces $815bn/yr green financing shortfall
Asia-Pacific faces $815bn/yr green financing shortfall
Singapore, 18 September (Argus) — Asia-Pacific holds significant investment opportunities in the energy transition, but obstacles such as insufficient public funding, lack of regulation and investment risks have resulted in a financing shortfall in the region. The Asia-Pacific region needs at least $1.1 trillion/yr in climate financing, but actual investment falls short by at least $815bn/yr, said Singapore's ambassador for climate action Ravi Menon at a conference in Singapore last week, referencing data from the International Monetary Fund (IMF). There is existing green funding in the region such as from the Asian Development Bank (ADB), which estimated its investments amounted to $10.7bn in 2023, and bilateral arrangements like the $600mn India-Japan fund, established by India's National Investment and Infrastructure Fund and Japan Bank for International Co-operation in October 2023. But this is insufficient, especially as the region's energy demand is only set to rise further. Energy demand in Asia is growing by 2.9pc/yr, the highest of any region in the world, said Menon. Renewables such as solar and wind are now more cost-competitive than fossil fuels, but the region needs more grid connectivity and capacity to make renewable energy a viable option. Building transmission lines and energy storage in the region alone will cost about $2.4 trillion over the next 10 years, added Menon. Obstacles to capital flows Total energy investment worldwide is expected to exceed $3 trillion in 2024, with about $2 trillion going to clean technologies and slightly over $1 trillion toward fossil fuels, according to the IEA's World Energy Investment 2024 report. Fossil fuel financing by the world's 60 largest banks rose to $705bn in 2023 , up by 4.8pc from $673bn in 2022, with the rise largely driven by LNG financing. The continued investments in fossil fuels and fossil fuel-based technologies will lead to more carbon-intensive infrastructure, divert capital from clean energy alternatives and undermine climate targets, derailing Asia-Pacific from its energy transition goals. Emerging economies typically have "many developmental needs" to take care of, hence public financing in these countries cannot shoulder the overall trajectory of growth of energy transition financing, said the Institute for Energy Economics and Financial Analysis' (IEEFA) sustainable finance and climate risk research lead Shantanu Srivastava at the IEEFA Energy Finance 2024 conference earlier this month. Many smaller economies rely on financing from multilateral development banks (MDBs), but this comes in "bits and pieces" and with many strings attached, he added. It is hence essential to bring in private capital, but the region faces challenges in attracting private investments. The lack of a sound climate information architecture hampers accurate assessment and tracking of climate risks, which impedes investors' ability to make decisions and prevents the scale-up of climate finance, according to the IMF. Other measurable risks — such as political risk, credit risk, and foreign exchange risk — often significantly raise the risk premium of investments into the region. Investors tend to expect higher returns on investments with higher risk premiums, but there are limited investment opportunities available which would provide such returns and this prevents foreign capital from scaling, according to Srivastava. Insufficient regulatory and government measures in the region as well as the inconsistency of existing ones also deter private investors, as these increase project execution risks. Policy continuity and long-term visibility of what the country is going to do is essential as a "policy flip-flop" deters investor confidence, Srivastava said. Tools to attract more climate finance Blended finance is necessary to mobilise private capital for Asia's energy transition, according to Menon. Governments and development finance institutions could provide concessional or risk capital in the form of grants and limited guarantees, while MDBs can provide technical assistance in the form of development expertise, capacity building and institutional support, he said. Finance can also be encouraged through sovereign sustainable bonds, which can stimulate local sustainable bond markets by setting long-term price benchmarks, boosting liquidity, and serving as models for private issuers, according to IEEFA. The issuance of these bonds also signal a dedicated government commitment to sustainability goals and can drive the development of a robust and transparent regulatory environment, IEEFA added. This is crucial for the long-term growth and stability of the region's sustainable bond markets, which is essential for boosting investors' confidence. Another method is through revenue generation tools, such as carbon pricing and carbon taxes, according to the Financing Just Transition Through Emission Trading Systems report released earlier this month by think-tank Asia Society Policy Institute (ASPI). Carbon pricing sends a strong signal to reduce greenhouse gas emissions and indicates the government's intent to intensify efforts related to energy transition, which encourages private capital flow, stated the ASPI report. Carbon pricing also has the potential to generate substantial revenue, which can be allocated to climate funds to support low-carbon technology innovation and aid enterprises in making green investments, to aid low-carbon transition efforts, the ASPI report added. By Joey Chan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EPA already at work on 2026-forward RFS rules
EPA already at work on 2026-forward RFS rules
Monterey, 17 September (Argus) — The Environmental Protection Agency (EPA) has started work on the second set of rules for the Renewable Fuel Standard (RFS), expected to span multiple years beginning in 2026, a spokesperson said today. The rule will likely establish renewable volume targets for multiple years under the RFS, although the exact timeframe has not been confirmed, EPA deputy office director Ben Hengst said today at the Argus North American Biofuels, LCFS and Carbon Summit in Monterey, California. Work on the incoming rule was originally not expected to begin until early 2025. Updated analysis, especially regarding advanced biofuels and feedstocks, will inform new rulemaking, as well as the inclusion of regulatory changes intended to improve the program's implementation, Hengst said. Unprecedented growth in US biofuels imports led overall advanced biofuel supply in 2023 to far surpass EPA projections. But biomass-based diesel volumes for the current rules were based on projected growth in North American feedstock supply — not international availability nor the nameplate capacities of US refineries, Hengst said. There were also large increases in imported feedstocks for biofuel production, namely in used cooking oil and tallow. But the potential for an upset in global trade flows remains an agency concern. Domestic policy in some countries could boost offshore consumption of feedstocks and finished fuels that have arrived to the US market in recent years, while the US policy environment itself remains vulnerable to change. The EPA is also navigating recent adverse judgments against its interpretation of the Small Refinery Exemption program and is prioritizing the development of options that would comply with court orders. There was no clarity provided on eRINs as the EPA continues to consider its options. By Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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