2024 RD production outlook up, 2025 down: EIA

Spanish Market: Biofuels, Emissions
10/09/24

The US Energy Information Administration (EIA) today upped its forecast for 2024 domestic renewable diesel (RD) production but continued to trim its projections for 2025 as challenging economics for refiners persist.

The US is expected to produce on average 208,000 b/d of renewable diesel this year, EIA said Tuesday in its latest Short-Term Energy Outlook (STEO), up by around 1pc from August's forecast. Renewable diesel consumption is expected to hit 237,000 b/d this year, an increase of 1.3pc from the prior month's STEO.

But next year, EIA now expects 236,000 b/d of renewable diesel production, down by 3.2pc from the prior forecast and down by 19.7pc from the agency's initial projection in January this year of 294,000 b/d. The agency is also forecasting renewable diesel consumption to reach 255,000 b/d in 2025, a 2.3pc decrease from its estimate last month.

Renewable diesel producers have struggled over the last year, as ample supply of fuels used for compliance with government clean fuel programs has helped depress the prices of environmental credits and hurt production margins. More capacity has come online this year — with EIA recently pegging production of renewable diesel and related biofuels like sustainable aviation fuel at an all-time high of 4.9bn USG/yr in June — but uncertainty persists about whether future capacity additions will come on line as planned.

EIA also upped its projection for US net imports of renewable diesel, raising its 2024 forecast by 7.1pc to 30,000 b/d and its 2025 forecast by 5.6pc to 19,000 b/d. While a federal tax credit starting next year is expected to discourage biofuel imports, since the incentive can only be claimed for fuel produced in the US, EIA's projections have inched upwards over the course of this year.

Biodiesel output target up

US biodiesel production this year is expected to average 105,000 b/d, up by around 1pc from August's STEO. US Biodiesel consumption should reach 121,000 b/d this year according to the EIA, down by 0.8pc from the prior forecast.

For 2025, EIA raised its outlook for biodiesel production by 5.3pc to 100,000 b/d and for biodiesel consumption by 4.4pc to 94,000 b/d.

Today's outlook also includes for the first time more granular data about biodiesel and renewable diesel "that better capture how biofuels are being consumed and the share of total distillate fuel they account for," EIA said. While the agency expects total distillate fuel oil consumption to fall slightly this year, biofuels will account for 9pc of that consumption, up from 8pc last year and 5pc in 2022.

By Cole Martin

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07/10/24

Fossil fuel cars phase-out comes up again in Brussels

Brussels, 7 October (Argus) — The European parliament will this week debate a "crisis" facing the EU's automotive industry which could lead to "potential" plant closures, putting discussions on already-decided CO2 standards for vehicles on the forefront. Members have faced increased efforts by industry arguing for or against speedy review of the EU's regulation on CO2 emission standards for cars and vans. The regulation sets a 2035 phase-out target for new fossil fuel cars. The European commission is expected to give a statement to parliament, but a spokesperson told Argus that any change to the EU CO2 standards for cars and light vehicles would require a legal proposal by the commission to both parliament and EU member states. The priority, the spokesperson said, is on meeting 2025 targets for fleet CO2 reductions, agreed in 2019, but the commission is aware of "different opinions" in industry. Automakers association Acea has been calling for a "substantive and holistic" review of the CO2 regulation. The transition to zero-emission vehicles must be made "more manageable", assessing real-world progress against the ambition level. On the other hand, European power industry association Eurelectric today told members of parliament that bringing forward a review of the EU's regulation on CO2 standards for cars and vans to the start of 2025 would only encourage carmakers to hold off on making lower-priced and smaller electric vehicles (EV). The next CO2 target for car fleets is set to take effect in 2025. It requires a 15pc cut in emissions for newly registered cars. Some member states view the CO2 target cuts, and phase-out of the internal combustion engine (ICE) by 2035, as contentious. The regulation was only approved after a delay to normally formal approval. And parliament's largest centre-right EPP group is calling for a revision of CO2 standards for new cars to allow for alternative zero-emission fuels beyond 2035. As a counterweight to such pressure, Austrian, Belgian, Dutch and Irish ministers today called on commission president Ursula von der Leyen to step up EU action to push decarbonisation of company vehicles, notably light duty vehicles. "We need to consider action on the demand side in order to push zero-emission vehicles sales. Corporate fleets are the EU's most important market segment," the four ministers told von der Leyen. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Global bio-bunker demand to pick up, US left behind

04/10/24

Global bio-bunker demand to pick up, US left behind

New York, 4 October (Argus) — Tightening vessel carbon intensity indicator (CII) scores and looming 2025 FuelEU marine regulation are expected to raise biodiesel demand for bunkering, but non-competitive US prices should continue to weigh down on US bio-bunker demand. Houston B30, a blend of used cooking methyl ester (Ucome) and very low-sulphur fuel oil (VLSFO), in September averaged at $821/t, a $45/t premium to B30 sold in Amsterdam-Rotterdam-Antwerp, and a $55/t premium to B24 sold in the west Mediterranean hub of Gibraltar and Algeciras (see chart) . Houston B30 was also priced at $115/t and $61/t premium to B24 sold in Singapore and Guangzhou, China, respectively. The price premium would continue to incentivize ship owners with global, ocean-going fleets to pick Asia first for their biodiesel bunker purchases, followed by northwest Europe and western Mediterranean. US demand for biodiesel for bunkering would continue to stagnate unless the US passes a legislation allowing Renewable Identification Number (RIN) credit under the US Renewable Fuel Standard (RFS) program be used by ocean-going vessels fueling with biodiesel in US ports. The legislation could level US' price playing field. Two bipartisan bills were put forward in support of renewable fuel for ocean-going vessels, one in the US Senate this year and one in the US House of Representatives last year, but they are currently dead in the water. Conventional marine fuels are priced cheaper than biodiesel and green varieties of LNG, ammonia, methanol, and hydrogen. But tightening International Maritime Organization (IMO) and EU regulations are forcing the hand of ship operators to consider green fuels to avoid hefty penalties and having their vessels suspended from trading. Ship owners whose vessels are outfitted with LNG-burning engines, are poised to have the lowest marine fuel expense heading into 2025, as fossil LNG is currently ship owners' cheapest low-carbon fuel option. But retrofitting a vessel to burn LNG could range from $5-$35mn, depending on the size of the vessel. Biodiesel, a plug-and-play fuel that does not require a vessel retrofit, is the second cheapest low-carbon fuel option after fossil LNG. IMO's CII regulation came into force in January 2023 and requires vessels over 5,000 gt to report their carbon intensity, which is then scored from A to E. The scoring levels are lowered yearly by about 2pc, so even a vessel with no change in CII could drop from C to D in one year. If a vessel receives a D score three years in a row or E score in the previous year, the vessel owner must submit a corrective actions plan. E scoring vessels could be prohibited from entering some ports' territorial waters, but this penalty is yet to be imposed on any E vessels. In 2023, the IMO reported that 40pc of the vessels scored A or B, 27pc scored C, 19pc scored D or E and 14pc were unresponsive. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. It imposes a penalty of €2,400/t ($2,629/t) of VLSFO equivalent energy for vessel fleets exceeding its GHG limits. By Stefka Wechsler Biodiesel blends* Houston less global ports $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK confirms $28.5bn funding for two CCS, H2 clusters

04/10/24

UK confirms $28.5bn funding for two CCS, H2 clusters

Hamburg, 4 October (Argus) — The UK government has finalised a commitment to provide £21.7bn ($28.5bn) over the next 25 years to two planned clusters for carbon capture and storage (CCS) and connected projects, including for hydrogen production. The government has reached "commercial agreement with industry" for development of the clusters, it said today. The funding will go to the HyNet cluster in northwest England and the East Coast cluster in England's northeastern Humber and Teesside regions. The two projects were selected as "Track 1" priority clusters in 2021 and could together store some 650mn t of CO2. They could attract £8bn of private investment, the government said today. "The allocation of funding marks the launch of the UK's CCS industry," according to Italy's integrated Eni, which leads the development of HyNet's CO2 transport and storage system. Eni in February gave a start date of 2027 for HyNet. The East Coast cluster is led by the Northern Endurance Partnership, a joint venture between BP, TotalEnergies and Norwegian state-controlled Equinor. A range of projects will connect to the two hubs to transport and permanently sequester the carbon. These will include hydrogen production projects and supporting infrastructure. HyNet will involve projects developed by EET Hydrogen , a subsidiary of Indian conglomerate Essar, which is planning to bring a 350MW plant for hydrogen production from natural gas with CCS online by 2027 and another 700MW facility by 2028. The hydrogen will be partly used at EET Hydrogen's sister company EET Fuels at its 195,000 b/d Stanlow refinery but some will also be delivered to industrial consumers in the area. The HyNet cluster includes plans for 125km of new pipelines to transport hydrogen. The East Coast cluster involves Equinor's [600MW H2H Saltend] project and BP's 160,000 t/yr H2Teesside venture . German utility Uniper's 720MW Humber H2ub (Blue) project, UK-based Kellas Midstream's 1GW H2NorthEast plant and a retrofit facility from BOC , which is part of industrial gas firm Linde, could also connect to the cluster for CO2 storage. All the projects are due to enter into operation before the end of this decade. The funding confirmation for the CCS hubs "is a vital step forward, catapulting hydrogen towards long-term certainty we need in the UK", industry body the Hydrogen Energy Association's chief executive Celia Greaves said. The previous government last year picked two "Track 2" carbon capture clusters that are scheduled to start operations by 2030 — the Acorn facility in Scotland and the Viking project in northeast England. By Stefan Krumpelmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US light vehicle sales surged in September

03/10/24

US light vehicle sales surged in September

Houston, 3 October (Argus) — Domestic sales of light vehicles rebounded in September, increasing to a seasonally adjusted rate of 15.8mn on the strength of greater truck purchases. Sales of light vehicles — trucks and cars — rose from a seasonally adjusted annual of rate 15.3mn in August, the Bureau of Economic Analysis reported today. Sales have whipsawed the previous four months, but September's rate largely was in line with the 15.7mn unit rate in September 2023. The US Federal Reserve last month cut its target rate for the first time since 2020, bringing it down by 50 basis points from its 23-year highs as inflation has been easing. Lower inflation and Fed easing, which ripples across credit markets, make it more affordable for people to purchase new vehicles. Fed policymakers have penciled in another 150 basis points worth of cuts through 2025, as they hope to head off any weakening in the labor market that could scuttle the wider economy. Higher overall sentiment about the US economy, fueled by a robust 3pc growth in gross domestic product (GDP) in the second quarter, healthy labor conditions and consumer spending also have encouraged consumers to spend. Sequentially, light truck sales increased by 3.1pc to a 12.8mn unit rate in September, while sales of cars rose by 4.4pc to a 3mn unit rate in the same time period. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s Origin to exit Hunter Valley Hydrogen Hub

03/10/24

Australia’s Origin to exit Hunter Valley Hydrogen Hub

Sydney, 3 October (Argus) — Australian utility and upstream firm Origin Energy has decided not to proceed with its planned hydrogen development project, the Hunter Valley Hydrogen Hub (HVHH), in Australia's New South Wales. The decision to withdraw from the proposed 55MW HVHH and halt all hydrogen opportunities was made because of continuing uncertainty about the pace and timing of hydrogen market development, Origin said. The firm said the capital-intensive project, intended to progressively replace gas as a feedstock in a nearby ammonia manufacturing plant, carried substantial risks. Origin Energy had an initial agreement with Australian chemicals and explosives company Orica to take 80pc of the green hydrogen produced from the hub for Orica's 360,000 t/yr ammonia facility on Kooragang Island, near the city of Newcastle. Origin Energy and Orica in 2022 said they will study plans to develop the HHVH in Hunter Valley region of NSW, which is Australia's largest thermal coal-producing area. "It has become clear that the hydrogen market is developing more slowly than anticipated, and there remain risks and both input cost and technology advancements to overcome. The combination of these factors mean we are unable to see a current pathway to take a final investment decision on the project," said chief executive Frank Calabria on 3 October. Origin had planned to make a final investment decision on the project by late 2024. The hub, which was estimated to cost A$207.6mn ($143mn), had been allocated A$115mn in state and federal funding and was shortlisted for production credits under Canberra's Hydrogen Headstart programme. In July, Origin described the pace of development in the hydrogen industry as "slower than it had anticipated 12 months ago", said. The company expressed hopes that improved electrolysis efficiency would reduce the rising costs of production. The decision is a significant setback for Australia's green hydrogen ambitions, following the July decision by Australian miner and energy company Fortescue to postpone its target of 15mn t/yr green hydrogen output by 2030. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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