California posts new record LCFS credit build: Update

: Emissions, Oil products
23/01/31

Adds fuel usage data in fifth, sixth paragraphs.

A second consecutive record build in California Low Carbon Fuel Standard (LCFS) credits added pressure to spot and forward markets today.

New LCFS credits outpaced program deficits by a record 1.7mn metric tonnes (t) in the third quarter of 2022, building unused credits available for compliance to 13.4mn t, according to California Air Resources Board (CARB) data released today.

New credits have exceeded deficits for six consecutive quarters, and posted new record increases for the past two. The rising volume of credits that can be used to comply with state mandates and do not expire have raised alarms from renewable fuel producers seeking tougher new standards for one of the top low-carbon fuel markets.

LCFS programs require yearly reductions in transportation fuel carbon intensity. Conventional, higher-carbon fuels that exceed the annual limit incur deficits that suppliers must offset with credits generated from the supply of approved, low-carbon alternatives.

Rising supplies of these low-carbon fuels have met sluggish demand for California's gasoline blendstock and largest LCFS deficit source, CARBOB. The fuel still generated 79pc of all new deficits during the third quarter, even as overall consumption fell by 3.1pc from the previous quarter and by 8.5pc from the third quarter of 2021. Petroleum diesel consumption fell by 29pc from the third quarter of 2021.

Deficits generated from the consumption of petroleum gasoline and diesel in the state fell by 3.5pc from the previous quarter as demand for both shrank during the period.

Credit generation meanwhile continued to climb, up by 2.7pc from the previous quarter, as renewable natural gas, ethanol and electric vehicle charging all produced more credits than in the previous quarter.

Renewable diesel credits meanwhile shrank, as smaller volumes of higher-carbon production found their way to the state during the quarter. Both used-cooking oil- and tallow-based renewable diesel consumption exceeded volumes in the third quarter of 2021 but fell by a combined 22pc from the previous quarter. Corn oil-based renewable diesel increased sharply. Renewable diesel remained the leading source of new credits, at 39pc of all generated during the third quarter of 2022.

Lower, longer

California LCFS credit prices have groaned under the weight of record supplies. Credits do not expire, and so parties may use the growing bank of untapped credits to meet current and future obligations.

Spot credits that traded around $200/t in January 2021 slumped to a six-year low in September 2022, near $60/t. Spot credits have traded between $60-70/t since then, even as CARB reported the previous 11.3mn t record volume of unused credits at the end of October.

Credits immediately sank following the data release early in the second half of today's trading session. Bids for prompt through second quarter 2023 credit transfers briefly dipped to $58/t.

Renewable fuel suppliers have clamored for CARB to respond to the rising unused credit volume with tougher targets. CARB staff have said that a rulemaking to consider revisions to the LCFS would begin early this year.

By Elliott Blackburn

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24/12/13

Syria faces fuel supply conundrum

London, 13 December (Argus) — The overthrow of Syrian president Bashar al-Assad has left the country's trading relationship with Iran on an uncertain footing, putting pressure on the new transitional government to upgrade refining infrastructure and find alternative sources of fuel supply. As the Assad regime's closest ally, Iran has been Syria's main source of both crude and oil product imports since western sanctions were imposed on Damascas in the early stages of its civil war in 2011. The product shipments are difficult to track as they are carried out by Iran's 'dark fleet', but consultancy FGE estimates Iran has been sending around 10,000-20,000 b/d to Syria in recent years. Those trade flows are no longer guaranteed, given that Hayat Tahir al-Sham (HTS), the main militant group behind the armed revolt to topple Assad, has close ties to Iran's regional rival Turkey. Syria is now likely to import oil products from other local sources, a trading analyst told Argus . Turkey itself is an option, although one Turkish trader ruled out any immediate business plans to supply Syria. Watad, HTS' affiliated oil trading arm, has previously imported oil and gas from Turkey and has marketed gasoline thought to have come from Ukraine via Turkey, according to a regional analyst. Egypt is another possible supplier. It has enough capacity to export refined products to Syria for the time being, according to a refining source in the country. Vortexa data show gasoil was last loaded from Egypt's Sidi Kerir terminal in July. Syria's transitional government may also attempt to increase domestic supply, although that will require rehabilitating the country's 140,000 b/d Banias and 110,000 b/d Homs refineries. Run rates have halved since 2011, the IEA estimates. Only the Banias refinery is operating at a reasonable level, according to sources. Iran earlier this year proposed a €140mn revamp of the Homs refinery, which has been operating below capacity for years because of infrastructure damage incurred during the civil war . Syrian demand for oil products has seen a structural decline since the civil war, with consumption dropping by around 60pc between 2011 and 2022, according to the IEA. But with Assad's overthrow signalling a potential return of refugees from neighbouring Turkey, Lebanon and Jordan, demand may pick up in the coming months, intensifying pressure on the transitional administration to seek new trade flows and repair the country's refining infrastructure. By George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Canada sets 2035 emissions reduction goal

24/12/13

Canada sets 2035 emissions reduction goal

London, 13 December (Argus) — Canada has set a new 2035 climate goal, aiming to reduce its greenhouse gas emissions by 45-50pc by 2035, from a 2005 baseline. This builds on its 2030 target of a 40-45pc emissions reduction, again from 2005 levels. Canada's emissions had been in 2015 projected to rise by 9pc by 2030, from 2005 levels, "but we are now successfully bending the curve", the Canadian environment and climate change ministry said. The newly-announced target is in line with a pledge Canada made at the UN Cop 29 climate summit last month. Countries that are party to the Paris climate accord must submit new national climate plans by 10 February 2025, to cover a timeframe up to 2035. Canada, the EU, Mexico, Norway and Switzerland committed at Cop 29 to set out new plans with "steep emissions cuts" that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The plans are known as nationally determined contributions (NDCs). Canada's NDC is being considered by the cabinet, and the country plans to submit it by the deadline, Canadian climate change ambassador Catherine Stewart told Cop 29 delegates on 21 November. Tackling climate change is "both an environmental imperative and an economic opportunity", she added. The target was informed "by the best available science, Indigenous Knowledge, international climate change commitments, consultations with provinces and territories and expert advice", the ministry said. Canada will also "seek feedback on how to help companies take advantage of the economic opportunities that come with building a clean economy" in the near term, it added. Although the plan is not yet available, the ministry said that it will examine the role of carbon removal technologies for the energy transition. "Canadians are increasingly experiencing record-breaking extreme weather," the ministry noted. The country experienced record wildfires in 2023. Carbon emissions from wildfires this year were second only to the "unprecedented" levels in 2023, EU earth-monitoring service Copernicus found this month. Canada has a legally binding target of net zero emissions by 2050. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Tarmac to receive bitumen at UK Dagenham terminal

24/12/13

Tarmac to receive bitumen at UK Dagenham terminal

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NordBit to exit Dunkirk bitumen terminal at year-end

24/12/12

NordBit to exit Dunkirk bitumen terminal at year-end

London, 12 December (Argus) — Hamburg-based bitumen supply and trading firm NordBit will end its operations at the Dunkirk bitumen terminal in northeast France at the end of this year, a source familiar with the firm's operations said. NordBit — a bitumen joint venture between German firms Mabanol and H&R — has been operating the 11,000-12,000t capacity terminal since 2019 . The bitumen facility is part of a wider oil products and chemicals complex at Dunkirk. According to vessel tracking data, the bitumen terminal at Dunkirk has received 25,900t this year, although no cargoes have been discharged since August. Market participants said the terminal is in need of upgrading and will probably need the work done ahead of renting. The imminent halt to NordBit's operations at Dunkirk comes as French building conglomerate Vinci's Eurovia subsidiary nears completion of its own new and separate 16,000t capacity bitumen terminal in Dunkirk which is scheduled to start operating from March or April next year. By Fenella Rhodes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

EPA defends 'good neighbor' efficacy

24/12/11

EPA defends 'good neighbor' efficacy

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