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California governor eyes carbon market extension

  • : Biofuels, Electricity, Emissions
  • 25/01/10

California governor Gavin Newsom (D) is planning to start discussions with lawmakers to enact a formal extension of the state's cap-and-trade program.

Newsom included the idea in the 2025-26 budget proposal he released on Friday.

"The administration, in partnership with the legislature, will need to consider extending the cap-and-trade program beyond 2030 to achieve carbon neutrality," the governor's budget overview says.

The California Air Resources Board (CARB) believes it has the authority to operate the program beyond 2030, but a legislative extension would put it on much firmer footing.

The cap-and-trade program, which covers major sources of the state's greenhouse gas (GHG) emissions, including power plants and transportation fuels, requires a 40pc cut from 1990 levels by 2030. CARB is eyeing tightening that target to 48pc as part of a rulemaking that could take effect next year to help keep the state on a path to carbon neutrality by 2045.

Newsom's budget proposal highlighted the need to weigh the revenue received from the program carbon allowance auctions. That money goes to the Greenhouse Gas Reduction Fund (GGRF), which supports the state's clean economy transition through programs targeting GHG emissions reductions, such as subsidizing purchases for zero-emission vehicles (ZEVs).

The budget plan added few new climate commitments, instead prioritizing funding agreed to last year.

The governor's $322.3bn 2025-26 budget proposal would continue cost-saving measures the state enacted in its 2024-25 budget to deal with a multi-billion-dollar deficit. These included shifting portions of expenditures from the state general fund to the GGRF over multiple budget years, such as $900mn for the state's Clean Energy Reliability Investment Plan.

The state's $10bn Climate Bond, passed by voters in November 2024, would cover the majority of new climate-related spending, including taking on $32mn of the reliability plan spending. The change in funding source would allow the state Department of Motor Vehicles to utilize $81mn in GGRF funds to cover expenditures from CARB's Mobile Source Emissions Research Program.

The governor's budget would also advance his proposal from October for CARB to evaluate allowing fuel blends with 15pc ethanol (E15) in the state, as a measure to lower gas prices. CARB would receive $2.3mn from Newsom's proposal to finish the multi-tier study it began in 2018 and implement the necessary regulatory changes to allow E15 at the pump.

Currently, California allows only fuel blends with up to E10 because of environmental concerns, such as the potential for increased emissions of NOx, which contributes to smog, by allowing more ethanol.

With the administration predicting a modest surplus of $363mn from higher state revenues, it is unlikely that California will return to the belt tightening of the past two state budgets. But the state cautions that tension with the incoming president-elect Donald Trump, potential import tariffs and ongoing state revenue volatility should leave California on guard for any potential future fiscal pitfalls.

The state's legislature's non-partisan adviser cautioned in November that government spending continues to outpace revenues, with future deficits likely.

The administration is keeping an eye on the issue, which could result in changes through the governor's May budget revision, state director of finance Joe Stephenshaw said.


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25/02/07

Ecuador vows to cut GHG emissions by 7pc in 2035

Ecuador vows to cut GHG emissions by 7pc in 2035

Quito, 7 February (Argus) — Ecuador committed to reduce its greenhouse gas emissions (GHG) by 7pc by 2035 compared with the baseline projected emissions for that year, it said in its second Nationally Determined Contributions (NDC) this week. The reduction is the equivalent to 8.8mn metric tonnes (t) of CO2 equivalent (CO2e). Ecuador emitted 88.3mn t of CO2e in 2022 mainly from the energy sector (47pc), including transportation and power generation; land use (29pc); agriculture (13pc); waste management (6pc) and industrial processes (5pc). If the current trend projected since 2010 continues without any actions, Ecuador's annual emissions will reach almost 130mn t of CO2e in 2035. But by applying mitigation measures such as more renewable energies, sustainable methods of production and mobility, with domestic funding, the emissions will be reduced to about 121.2mn t of CO2e, for a 7pc cut. With more financial support from the international community, Ecuador aims to reduce its GHG emissions by another 8 percentage points. That would cut another 10.6mn t of CO2e, for a total reduction of 15pc and emissions of 110mn t of CO2e in 2035. The mitigation measures will cost Ecuador about $6.5bn. In 2019, Ecuador launched its first NDC and set the goal to reduce GHG emissions by 9pc annually from 2020-2025. But it missed the goal, mainly because the 2020 pandemic generated an economic crisis that cut funds to implement mitigation measures. By Alberto Araujo Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia’s Orica mulls selling safeguard carbon units


25/02/07
25/02/07

Australia’s Orica mulls selling safeguard carbon units

Sydney, 7 February (Argus) — Australian chemicals and explosives firm Orica is eligible to receive safeguard mechanism credits (SMCs) for the July 2023-June 2024 compliance year and is now considering options for the units, including potential sale to a third party, it told Argus . Orica did not disclose how many SMCs it was eligible to receive or whether the units have already been issued. It has two facilities under the scheme — Kooragang Island in New South Wales (NSW) and Yarwun Nitrates near the Queensland state city of Gladstone. SMCs are issued if a facility reports scope 1 greenhouse gas (GHG) emissions below its baseline. Orica said in November that it did not expect a requirement to surrender Australian Carbon Credit Units (ACCUs) for the July 2023-June 2024 compliance year. It still does not expect such a requirement, it told Argus on 6 February. Both the company's facilities are registered as carbon projects, and Orica received a total of nearly 600,000 ACCUs from the Kooragang Island decarbonisation project last year . The credits are generated as a result of tertiary emissions abatement reactors installed across three nitric acid plants at the facility, which includes ammonia and ammonium nitrate plants. "In line with Orica's carbon market strategy, we anticipate holding originated ACCUs for future safeguard mechanism compliance obligations," the company told Argus on 6 February. SMC data expected for early March The Clean Energy Regulator (CER) earlier this week said it issued the first ever SMCs into eligible accounts in the new registry that will replace the Australian National Registry of Emissions Units (ANREU). It did not say how many SMCs have been issued so far but noted that further issuances are likely this month. "The CER will publish the 2023-24 safeguard data, including facility-level information about SMC issuances, by 15 April 2025," it told Argus on 7 February. "The CER will also start to include SMC observations in its quarterly carbon market reports." The quarterly report for the fourth quarter of 2024 is expected to be published in early March, the regulator added. The main data for that period was published in late January, showing ACCU supply and demand at new highs . Market participants said no SMC trades had been seen so far, although some companies have been exploring potential sales. Now that the first SMCs have been issued, account holders with SMCs in their accounts are already able to transfer the units between accounts, the CER noted. Australia's Climate Change Authority (CCA) said late last year that 60 out of 215 facilities covered by the safeguard mechanism reported scope 1 GHG emissions below their baselines and could be eligible to apply for a total estimated 9.2mn SMCs , far higher than previously estimated, impacting market sentiment for ACCUs. Spot prices for generic ACCUs ended the week below A$35 ($22), down slightly on the week and compared to levels close to A$43 in mid-November. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ethanol prices up on uncertainty, low margins in Feb


25/02/06
25/02/06

Ethanol prices up on uncertainty, low margins in Feb

London, 6 February (Argus) — Spot ethanol prices in northwest Europe firmed to a six-month high at the start of February after several months of remaining largely steady. The minimum 64pc greenhouse gas (GHG) savings ethanol spot price reached €700/m³ on 4 February, its highest since 2 August 2024. Despite this, participants are reporting ample supply in the region, sufficient to meet current demand. The gains are largely attributed to a closed arbitrage with the US, higher production costs and ongoing uncertainty surrounding potential US tariffs. Some market participants believe the price rise in the ARA region is partially driven by higher ethanol prices in the US, which have been supported by rising corn prices . These participants said European prices may have tracked US price gains given the closed arbitrage with the country, with expectations that the arbitrage between the regions will reopen as a result of higher ethanol prices in ARA. Looking ahead, some market participants predict that ethanol imports will be reduced in the second quarter, which has caused the ethanol forward curve to shift into contango, with prices peaking at €711/m³ for the second quarter on 5 February. Trump tariffs turmoil Participants said prices are also being supported by uncertainty surrounding US president Donald Trump's plans to impose tariffs on imports from the EU. The European Commission said this week it will respond "firmly" should Trump "unfairly or arbitrarily" impose tariffs on EU goods. Trump made a similar complaint about the UK, but said he thinks "that one can be worked out". Retaliatory tariffs from the EU could affect ethanol flows, as the EU is a net importer of fuel ethanol. It imported almost 69,000t of undenatured ethanol — usually used for road fuel blending in most EU member states — from the US in January-November 2024, according to provisional EU customs data. The UK imported almost 600,000t of ethanol during the same period. The UK can leverage favourable arbitrage opportunities to import ethanol from the US and redirect it to the EU. Producers face higher costs Argus calculations show ethanol production margins for corn and wheat at €168.69/m³ and at €146.71/m³ on 5 February, down from €223.56/m³ and €205.33/m³ a year ago. Variable costs of yeasts, enzymes, chemicals and denaturants are not included in these calculations. Market participants said producers continue to adjust to a poor 2024-25 harvest season in Eastern Europe, caused by unfavourable weather conditions in Ukraine and France. Higher feedstock costs have contributed to higher ethanol prices, although the production margins are still tighter than last year. In Ukraine, Europe's largest wheat exporter excluding Russia, Argus forecasts wheat production will drop to 22.3mn t during 2024-25 , down from a five-year average of 24.7mn t. Corn supply from the country for 2024-25 is projected to fall to 22.9mn t, down from 31.5mn t in the previous season, according to Argus data. France — Europe's largest producer of ethanol — has cut its wheat production outlook for 2024-25 because of wet weather. Rainfall in other parts of Europe has affected corn toxin levels, potentially leading to poorer quality ethanol. This is likely to weigh on ethanol output in 2025 as it will strain feedstock supplies, push production costs up and squeeze margins for producers. More recently, European market participants said a late-winter cold snap may affect winter crops in Ukraine, and if so, strain feedstock supplies and push ethanol production costs up further. It comes as markets are still waiting for an update on level 2 in the nomenclature of territorial units for statistics GHG emission values, the so called Nuts 2 values. Biofuel producer Archer Daniels Midland expects ethanol profit margins to narrow this year, after posting wider margins in the fourth quarter. The company expects ethanol margins to drop to break-even in the first quarter on higher industry run rates, even as robust demand for exports from the US supports improved volumes, it said. ADM is one of the largest exporters of ethanol to Europe, according to those in the market. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU SAF mandate resets US market as credits uncertain


25/02/06
25/02/06

EU SAF mandate resets US market as credits uncertain

Houston, 6 February (Argus) — Looming questions over federal tax credits, supply concerns, and the future of trade flows are causing concerns for US sustainable aviation fuel (SAF) market participants, while buyers address needs in Europe given newly introduced mandates. The domestic SAF market in the US is spurred by incentives in the form of tax credits and subsidies. This "carrot instead of stick" method is meant to bridge the gap between the high cost of investment and production of SAF, making it feasible for airlines to consume and utilize the carbon-abating abilities of the low carbon fuel. The recent expiration of the 40B blenders tax credit has made its mark on the biofuels landscape, eating into the margins of products made with more carbon-intensive feedstocks and altering trade flows on a global level. With importers to the US west coast unable to capitalize on the federally backed incentive, producers like Neste who made up more than half of the SAF market in the US in 2024 direct their Singapore-based volumes elsewhere. US west coast delivered prices during the fourth quarter of 2025 ranged from $4.80/USG to $5.98/USG, reflective of volatility in the conventional jet basis as well as inconsistent supply available at major points of uplift. Prices in the third quarter of 2024 ranged from $4.20/USG to $5.50/USG given greater anticipation of sufficient supply later in the year. Coupled with limited domestic production that decreased from 16.5mn USG in the third quarter to 6.6mn USG in the fourth quarter, the supply of SAF in the US available on a spot basis has dwindled. EU-wide SAF mandates kicked in at 2pc this year, rising to 6pc by 2030. But it is not until 2035 when the obligation hikes up to 20pc — with a 5pc sub-mandate for renewable fuels of non-biological origin — that the region will tip into a short position. The UK is on a similar demand trajectory, going from 2pc this year to 10pc by 2030 and 15pc by 2035, while aiming for a 52pc cap on the SAF total being Hydrotreated Esters and Fatty Acid-based. Combined, this could result in Europe's supply/demand balance going from a 200,000 t/yr surplus in 2030 to a -9.1mn t deficit by 2035, according to Argus Consulting estimates. Given the newly introduced European SAF mandate, air carriers that operate in both regions look to secure volumes at major points of uplift around western Europe. Given the lower supply in the US and fluctuating prices given those changes in supply on the west coast, market activity maintains fixed on the other side of the Atlantic. By Matthew Cope and Amandeep Parmar Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU red tape ‘unsustainable burden’ for transition


25/02/06
25/02/06

EU red tape ‘unsustainable burden’ for transition

London, 6 February (Argus) — EU regulations in their current form are hindering rather than enabling the energy transition, limiting access to funding and slowing renewable installations, delegates at the Financial Times International Energy Policy Forum in Brussels heard this week. EU regulation has become "duplicative", Anthony Gooch Galvez, secretary general of the European Round Table for Industry (ERT), told delegates this week. "The burden is unsustainable" even for ERT members, which tend to be big companies, he said, pointing to the additional problems this would cause small to medium-sized businesses. The EU is "too prescriptive" and expects perfection from day one, Ann Mettler of Bill Gates-founded Breakthrough Energy said, leading to low-carbon technologies not being deployed. The "regulatory tsunami did not lead to the desired outcome", and the bloc should give more space to the private sector to support their development, she said. A lack of policy planning has contributed to the problem, Mettler said, pointing to the low number of final investment decisions that have been taken on hydrogen projects. Companies need to be able to implement their plans, she said. "Very cumbersome licensing and permitting processes" are also impeding progress in the region, IEA executive director Fatih Birol told delegates, calling for these to become "much more nimble". And while funding is technically on the table, it is often difficult to access, Gwenaelle Avice Huet of French firm Schneider Electric said, of which the EU's Recovery and Resilience Facility is a prime example. "It's not just about the level of money available." US presents opportunity But the stability of the EU's Green Deal, which was announced in 2021 and remains in place, does offer a stark contrast to the US, said Sebastien Treyer, executive director of think-tank the Institute for Sustainable Development and International Relations. Other speakers also noted the importance of stability and predictability within regulatory frameworks. "You need to have rules to play a good game", Galvez said. In the US, policy has fluctuated wildly between regimes, with president Donald Trump pausing some funding from the country's Inflation Reduction Act in the first days of his new term. This shift could mean US-based investors in the transition look to the EU for opportunities, said Marcin Korolec, president of the Green Economy Institute. "The federal government is not the whole of America. Many other economic players are still very willing to collaborate," Treyer agreed. But a lack of urgency from the European Commission could see the EU fail to capitalise on this, Korolec warned. He criticised in particular the bloc's planned competitiveness fund, announced last week, which would be funded under the EU's next budget starting in 2028, towards the end of Trump's term. "Sitting in a chair for three years waiting is absurd," he said. By Victoria Hatherick and Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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