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India looks to make carbon credits ineligible for export US solar facing delays, offshore wind prospects brighten Germany’s Salzgitter launches green steel program Two major developments rocked Asia’s clean energy markets – India’s power and renewable energy minister Raj Kumar Singh said that the country’s carbon credits will not be eligible for exports, and China suspended climate dialogue with the US on the back of speaker Nancy Pelosi’s visit to Taiwan. India’s announcement, made during the passage of a bill in the lower house of parliament to set up a domestic carbon market, has put ongoing carbon projects in jeopardy as developers await clarity. Meanwhile the suspension of US-China climate talks has raised concerns that progress on several issues could be delayed ahead of the COP27 talks in Egypt this November. A Trump-era ban on offshore wind leasing in the US Southeast would be lifted under the Inflation Reduction Act, which could trigger a surge of interest in wind leasing off the coasts of North Carolina, South Carolina, Georgia and Florida. The IRA is the latest of several efforts by lawmakers and the Biden administration to reverse the ban. If passed, the new leasing would help several states reach their decarbonization goals. Meanwhile, new utility-scale solar projects have been suffering delays stemming from supply chain constrains and the US Department of Commerce’s investigation into allegations of solar parts tariff circumventions. In the first half of 2022, just 4.2 GW of solar capacity came online – less than half of what the industry planned to install. German steelmaker Salzgitter has approved a Eur700 million investment in the first stage of its SALCOS low CO2 steelmaking program, “marking the largest investment since the company's listing in 1998," Salzgitter CEO Gunnar Groebler said. If all goes to plan, by 2033 the company will have cut its carbon emission by 95%, using gas, then renewable hydrogen in a switch from blast furnace to direct reduction. Meanwhile very few shipping firms have started preparing for inclusion in the EU's Emissions Trading System next year, shipbrokers say. Incremental inclusion from 2023 will see around 2,000 vessel operators required to buy allowances covering 20% of verified emissions, rising to 100% in 2026. Henry Edwardes-Evans Asia SPGlobal.com India close to setting up local carbon market, ban carbon credits exports: report ANALYSIS: China’s suspension of dialogue with US may further delay climate agenda ANALYSIS: India fancies renewables actively but doesn't want to let go of coal Premium content (available exclusively on Platts Dimensions Pro ) China's new energy vehicle production hits new high in July, sales soar: CAAM FEATURE: ICAO’s carbon offset scheme fails to promote sustainable aviation fuel use AMER SPGlobal.com Microsoft to buy tech-based carbon removal credits from Heirloom Despite compromise, oil, gas bemoans climate bill while renewable groups rejoice Platts Dimensions Pro Senate reconciliation bill would lift US Southeast offshore wind moratorium Plug Power says would refocus investments into US if Inflation Reduction Act passes US utility-scale solar project delays in 2022 nearly double a year ago: EIA report EMEA SPGlobal.com Salzgitter approves largest investment in low-carbon steelmaking EU ETS' initial decarbonization effects for shipping in doubt ScottishPower, Hutchison Ports explore 100 MW electrolyzer at Felixstowe Premium content (available exclusively on Platts Dimensions Pro ) UK shortlists 20 power, hydrogen carbon capture projects within clusters Orsted hikes wind investment, UK's 1.3-GW Hornsea-2 set for August start Price of the week GBP306.20/MWh UK Offshore Wind capture prices have been rising all summer, up 42% since the start of July as volatile power prices respond to Russian gas supply shocks Quote of the week Sustainable aviation fuel “is a much more expensive route of achieving GHG reductions than buying carbon offsets” -- Nikita Pavlenko, International Council on Clean Transportation Chart of the week

The Inflation Reduction Act of 2022 would make available $369 billion in energy security and climate change spending over the next decade. The bill offers a mixed bag of wins and losses for an array of stakeholders. But the biofuel industry feels they made out pretty well. Growth Energy Vice President of Government Affairs John Fuher joined the podcast to weigh in on how the ethanol industry could put the new funding and tax credits for renewable fuels to use, if the legislation passes. He also tackled questions on potential hurdles in the bill’s language, competition with EVs and what he’d like to see Congress do that wasn’t included in the Senate deal. Senators were gearing up to likely work through the weekend, as this podcast was being produced, with votes on the bill set to begin Aug. 6 and Republicans promising to make the process “hell” for their Democratic colleagues. Stick around after the interview for Starr Spencer with the Market Minute, a look at near-term oil market drivers. Related content: Biofuels get boost from tax credits, infrastructure funding in surprise US Senate budget proposal Oil industry not on board with surprise climate package despite some wins Massive US climate package contains 'robust' clean energy, fuels tax incentives (premium content) More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Indonesia's plan to increase sorghum and corn cultivation over the next two years was expected to increase feed grain availability for domestic livestock farming, but the impact on prices would hinge on the extent on the increase and the yield, market sources said Aug. 8. Coordinating Minister for Economics Affairs Airlangga Hartarto told a media briefing Aug. 4 that the government plans to prepare an additional 115,000 hectares of land in 2023 and another 154,000 hectares in 2024 for sorghum production. Indonesia currently produces about 15,000 mt/year of sorghum across 4,300 hectares, he said. S&P Global Commodity Insights calculates that the additional cultivation could boost production to more than 900,000 mt/year based on the current yield. The sorghum could be used for animal feed or bioethanol production. Airlangga days earlier had announced the government would increase corn production in Papua, West Papua and North Maluku and start a program to distribute higher quality seeds to increase corn production yields to up to 13 mt/hectare. "The corn yield in Indonesia is about 5 to 6 [mt/hectare], it's very low compared to yield in the US," an Indonesia-based source said. The US expects to produce 177 bushels of corn per acre this season, or about 11.9 mt/hectare, the US Department of Agriculture said in its World Agricultural Supply and Demand Estimates report for July. Indonesia's current corn production was estimated at 13 million mt/year, almost 90% of it in Java, Sumatra and Sulawesi, by the USDA. Indonesia does not allow feed grade corn imports or allow feed mills to directly import feed wheat. "It is still too early to determine the timeline and success [for the corn program]. I don't think many farmers or feed millers know about it yet," a poultry producer in Indonesia said. A source who procures raw material for feed millers in Indonesia said: "Historically, Indonesian corn prices were higher than the global prices. Since the start of the Ukraine invasion, domestic prices have started increasing to match the level of higher international prices." Domestic corn prices were currently around Rupiah 4,800-5,000/kg, or $320-$333/mt delivered to feed mills in Jakarta, according to market sources. South American corn for October-December shipments to Vietnam were heard at $330-$336/mt CFR Aug. 8. Ukraine war impact Indonesia's plans come after Russia's invasion of Ukraine halted grains exports from the Black Sea region for more than five months until the corn-carrying bulk vessel Razoni left Odesa Aug. 1. The suspension left major feed-producing countries exposed to high feed grain prices amid tight global supply, prompting policy changes in several countries to increase supply and reduce the price impact in downstream sectors. China, the world's biggest corn importer, has entered discussions with Brazil to bring forward its timeline for Brazilian corn imports as a move toward supply diversification, S&P Global Commodity Insights reported earlier. Brazil is expecting a bumper crop of more than 115 million mt of corn for its current marketing year 2021-22, up from 87 million mt in MY 2020-21. The Philippines has reduced corn import tariffs from 35% to 5% for imports with minimum access volume quotas and to 15% from 50% for imports outside the quota, S&P Global reported earlier.

Drought depletes Europe’s hydro winter buffer Inflation RA earns praise from all sectors of US energy industry India plans national carbon market framework In Asia, it is now India’s turn to put together a national carbon market framework, with an official announcement expected as early as August 15, the country’s Independence Day when the head of state addresses the nation. On Aug. 3 India’s parliament introduced a piece of legislation called the Energy Conservation (Amendment) Bill 2022 that sets the stage for a rollout of a national carbon policy and New Delhi is also set to update its Nationally Determined Contribution (NDC) to include a 50% target for renewables in the power mix by 2030. Meanwhile, experts said Australia's ongoing review of its carbon trading system is being viewed as critical to fixing the market, as the previous government had put more resources into issuing more carbon credits than fixing fundamental integrity issues. Extreme weather conditions in Europe are compromising the continent’s ability to build precious hydro resource ahead of winter. Depleted reservoirs and low rivers presage longer run times for coal and gas plant, a backward step for the transition. As UK balancing costs show, calling on thermal plant for security of supply has become prohibitively expensive, forcing politicians to consider fundamental market reform. While the logic of locational pricing is undeniable for systems based on renewables, politicians are understandably wary of a change in market design that leads to a postcode lottery for consumers. Utility, oil and clean energy companies all gave high marks to Democrats’ Inflation Reduction Act during second-quarter earnings calls last week after the bill was unveiled by surprise on July 27. Excelon executives praised the bill’s extension of renewable tax credits. Occidental Petroleum called the bill “good” for the oil and gas upstream industry. And Duke Energy CEO cheered the bill’s inclusion of nuclear production tax credits. The nascent US clean hydrogen industry also responded positively, with several already indicating that they would open new facilities or expand existing facilities if the bill is passed by Congress. -- Mriganka Jaipuriyar APAC SPGlobal.com India tables bill to enable national carbon market; launch 'possible' by 2023 China issues sectoral guidelines for industrial carbon peaking by 2030 Australia’s carbon market review crucial to addressing fundamental integrity concerns: experts Premium content (available exclusively on Platts Dimensions Pro ) India to update climate commitment with 50% renewable power mix pledge Singapore's MPA, Port of Rotterdam to form world’s longest 'Green and Digital Corridor' EMEA SPGlobal.com Droughts rattle Europe's hydropower market RWE sees tailwinds from Germany's 2030 green energy plan UK power balancing costs up 57% in June as constraints soar Premium content (available exclusively on Platts Dimensions Pro ) Carbon offsets market value nears $2 bil in 2021: Ecosystem Marketplace Polish offshore wind facing regulation, permit, grid barriers: audit office Americas SPGlobal.com US Inflation Reduction Act could incentivize clean energy, tax utilities: Exelon execs Plug Power, New Fortress Energy to bring green hydrogen plant to Texas coast Premium content (available exclusively on Platts Dimensions Pro ) Oxy eyes US Inflation Reduction Act as 'good' for the oil, gas industry US East Coast LNG projects challenged by Europe's climate agenda: KPMG Inflation Reduction Act would make green hydrogen ‘cheapest form of H2 in the US’: Bernstein Price of the week $4.22/kg Platts’ Saudi Arabia PEM electrolysis hydrogen price assessment is among the most competitive in the world Chart of the week European solar set a fresh record in July, up 21% year on year Quote of the week: "I worry with LNG investments as to how receptive Europe is going to be to gas and for how long. [With] the amount of time that it takes to get something on the East Coast that could potentially go to Europe, by then Europe could have been fully pivoted to renewables and green hydrogen such that they don't want that gas anyway." -- KPMG Global Head of Energy Regina Mayor

More evidence of demand destruction in advanced economies emerged Aug. 5 when a closely watched survey of consumer habits by the Office of National Statistics showed that 42% of adults in the UK had cut back on non-essential travel in vehicles in response to higher costs. The survey showed that 51% were now using less gas and electricity in response to the rising costs of living and commodities. The UK is the world's sixth largest economy and under normal conditions consumes about 280 million barrels of oil annually in the form of transport fuels to power its fleet of almost 40 million vehicles, according to official government figures. Crude oil prices have fallen in recent weeks amid growing signs that surging global inflation and slowing economies will hit demand growth. The front-month contracts for both ICE Brent and NYMEX crude have shed around $10/b in the week alone. Signs of possibly weakening UK demand come as the Bank of England warned inflation in the UK could close the year above 13% and enter a deep economic recession. Although a small participant in terms of global oil consumption, the stresses impacting the domestic transport fuels market are indicative of wider global concerns about demand now outweighing worries over spare capacity and drained stocks. OPEC agreed Aug. 3 to a modest supply increase of 100,000 b/d to its allotted output despite lobbying by the US and the majority of the alliance's producers pumping close to full capacity. Across Western Europe, gasoline and middle distillate demand has only just recovered to prepandemic levels of 1.8 million b/d and 5.6 million b/d, respectively, Platts Analytics estimates. However, regional demand for the fuels -- which peaked in 1992 and 2006, respectively -- is seen falling to 1.35 million b/d and 4.7 million b/d by 2030 under a reference case scenario.

The days of vaccine certificates and COVID-19 tests for travel are long gone for most, and yet jet fuel demand doesn’t seem to have fully recovered from the pandemic. S&P Global Commodity Insights reporters Virginie Malicier and Maxim Kotenev tell Francesco Di Salvo how record-high physical premiums have led to a flurry of eastern cargoes sailing to Europe, and how short-staffed airlines and airports have had to cap passenger capacity growth despite ample pent-up travel appetite. Check our Jet CIF NWE Cargo assessment (PJAAU00) on Platts Dimensions Pro. More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

India is to update its Nationally Determined Contribution (NDC) under the United Nations' Framework Convention on Climate Change to include a 50% target for renewables in the power mix by 2030, the Environment Ministry said Aug. 3. The update confirms some, but not all, of Indian Prime Minister Narendra Modi's COP26 pledges made in November last year. Then Modi pledged to reach net-zero emissions by 2070 and have 500 GW of renewables by 2030. India would strive to get 50% of its energy from renewable sources by 2030, reducing total projected carbon emissions by one billion tonnes, he said. "India now stands committed to reduce emissions intensity of its GDP by 45% by 2030, from 2005 level and achieve about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030," the Ministry said. There was no reference to the 500 GW renewables capacity or one billion tonne CO2 reduction goals, although the updated NDC is yet to be officially published. India's renewables installed capacity now stands at 168 GW, which is 42% of the total power capacity of 404 GW, Power Ministry data showed. The NDC would be implemented via government programs with support from states and union territories, the Ministry said without giving details. The government had launched several programs to scale up India's adaptation and mitigation efforts, the Ministry said. For instance, Indian Railways' net-zero emissions by 2030 alone would abate 60 million mt CO2 annually, it said. In its previous NDC India had committed to reduce emissions intensity by 33%-35% from 2005 levels, with non-fossil fuel sources accounting for 40% of the generation mix by 2030. Under Platts Analytics' Reference Case, India's power generation emissions are seen increasing from 1.28 billion mt in 2022 to 1.61 billion mt in 2050. Under a scenario putting India on course to meet Paris Agreement goals, the country's CO2 emissions from power generation would need to peak at 1.4 billion mt in 2023 before falling to 1.18 billion mt in 2030 and 997.46 million mt by 2050. Financial support The Environment Ministry called for funding assistance to deliver on the updated plans. "Providing new and additional financial resources as well as transfer of technology to address the global climate change challenge are among the commitments and responsibilities of the developed countries under UNFCCC and the Paris Agreement," it said. India needed its "due share" of international finance and technological support, it said. In the run up to COP26 the UK presidency admitted wealthy nations had failed to honor a pledge to provide $100 billion a year of climate support for less wealthy nations by 2020. The earliest the target cold be achieved was 2023, according to analysis by the Organization for Economic Cooperation and Development. June generation up Data from India's Central Electricity Authority, meanwhile, showed India's fossil-based thermal generation up 24% year on year in June to some 106 TWh. Renewable generation in May, the latest data available, was at 21 TWh, up 44% YoY, accounting for around 14% of the generation mix. INDIA: GENERATION MIX IN MAY (TWh) May-22 May-21 Thermal 108.38 87.51 Nuclear 3.47 4.00 Hydro 12.83 11.75 Import 0.35 0.57 Wind 10.17 7.10 Solar 8.83 6.00 Biomass 0.31 0.30 Bagasse 0.72 0.40 Small hydro 0.64 0.55 Others 0.21 0.18 Total 145.91 118.36 Source: Central Electricity Authority

Effective Sept. 1, 2022, Platts will no longer reflect Russian-origin product in its open-origin European assessments of gasoline barges and cargoes. The decision by Platts, part of S&P Global Commodity Insights, follows a review into the continued inclusion of Russian-origin material in its European barges and cargo assessments for gasoline, jet fuel and LPG as announced in a subscriber note published June 22 and reachable at: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/062222-platts-seeks-feedback-on-russian-product-in-european-gasoline-lpg-jet-fuel-assessments Platts assessments reflect the value at which a standard, repeatable transaction for merchantable material takes place, or could take place, in the open spot market at arms length. Feedback gathered from the market, as well as observed market activity in recent weeks, has shown a significant move away from Russian-origin material in the spot market. Furthermore, Platts has observed that Russian material does not constitute a typical flow and significant portion of supply European balances of gasoline. This affects the following assessments: Assessment Code Gasoline Prem Unleaded 10ppmS FOB Med Cargo AAWZA00 Gasoline Prem Unleaded 10ppmS CIF Med Cargo AAWZB00 Gasoline 10ppm CIF NWE Cargo AAXFQ00 FOB AR Eurobob Gasoline Barges AAQZV00 FOB AR E10 Eurobob Gasoline Barges AGEFA00 10ppm premium unleaded barges PGABM00 98 RON gasoline 10 ppm AAKOD00 FOB AR Reformate Barges AAXPM00 FOB NWE WAF-grade gasoline cargo AAKUV00 CIF WAF WAF-grade gasoline cargo AGNWC00 Please send any feedback, questions or comments to europe_products@spglobal.com and pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

The agriculture markets have been packed with headline-grabbing events, with extreme price volatility for all major grains and oil seeds in the last two years. The possibility of a continued La Nina is seen adding to the uncertainty. La Nina, Spanish for little girl, is a climate pattern having a varying impact on agriculture globally. Current forecasts see a 70% chance for the continuation of La Nina during the June-August 2022 season, and a 50%-60% chance for continuation beyond mid-2022. The ongoing La Nina coincides with the peak planting seasons in top grain and oilseed producing countries, bringing heightened uncertainty to weather forecasts as well as to output numbers. Another La Nina year can exacerbate crop supply concerns at a time when global grains and oilseed supplies are already limited due to various factors, including the Russia-Ukraine war. Click here for the full-size infographic

So, what exactly would a climate emergency declaration free the Biden administration to do? Senior editor Jasmin Melvin posed that question to Liz Craddock , a partner at the Holland & Knight law firm. She joined the podcast to explain what authorities President Joe Biden would newly have at his disposal, the key energy statutes that could possibly come into play and the potential political pitfalls as well as legal risks and challenges the administration would face from taking such action. This interview took place before Senator Joe Manchin’s deal with Senate Majority Leader Chuck Schumer on a party-line budget reconciliation package with clean energy and climate provisions was announced. But Craddock’s take raises some interesting points on a climate emergency and the options Biden may still need to weigh if the climate package falls through or concerns are raised that he hasn’t gone far enough to address climate change ahead of midterm elections. Stick around after the interview for Chris Van Moessner with the Market Minute, a look at near-term oil market drivers. Related content: Oil industry not on board with surprise climate package despite some wins Most of US will remain unusually hot through October, NOAA says Biden kicks off executive climate push as divided Congress struggles to take action (premium content) More listening options: No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor's Financial Services LLC or its affiliates (collectively, S&P).

Deal on $369 billion US climate spending China regional power market trials begin Middle East takes bold carbon capture steps A huge breakthrough in US climate action took place on July 27 with agreement between Democratic Senate Majority Leader Chuck Schumer and West Virginia Senator Joe Manchin on a $369 billion legislative package of climate and clean energy funding. At its core the bill creates tax credits that have the potential to decarbonize all sectors of the US economy – with expanded 45Q tax credits for carbon capture, clean hydrogen and first-of-a-kind rebates for electric vehicle purchases. Days before the agreement, however, the Environmental Defense Fund released a report demonstrating the warming effects of hydrogen emissions, urging industries to improve leak detection technology before widescale deployment. In Asia, China's southern regional power market has started trials, signaling accelerated power sector reforms that will eventually underpin the next phase of Beijing's decarbonization agenda. China's market for green certificates, however, faces growing uncertainty due to liquidity issues, lack of coordination with wider climate policies, and a rising number of competing green power products. In Japan, Asia’s oil refining power house, formal policy discussions have begun to introduce a fourth round of refining regulations aimed at boosting the processing volume of vacuum residue, with preferential treatment expected for efforts to decarbonize the refining process. The Middle East could become the world’s leading region to capture carbon dioxide for future use in enhanced oil recovery or for storage, with Mitsubishi Heavy Industries forecasting 50 million mt/year capture within a decade, led by the UAE and Saudi Arabia. Meanwhile Europe’s Aluminium Association has warned of significant impacts for renewables and networks from EU plans to cut natural gas demand by 15% this winter. “Europe’s economic and sustainability ambitions would be set back years or built on import dependencies from China or the Middle East without a Europe-based value chain,” the association said. -- Henry Edwardes-Evans Americas SPGlobal.com Warming impacts of hydrogen emissions are overlooked, underestimated: EDF Hydrogen tax credits preserved in new US Inflation Reduction Act Premium content (available exclusively on Platts Dimensions Pro ) Sempra, Entergy sign renewable power supply framework for Texas LNG project CNX Resources touts low-carbon gas production as key to new markets Massive US climate package contains 'robust' clean energy, fuels tax incentives Asia SPGlobal.com ANALYSIS: Southern China power market launch signals modernization, climate push ANALYSIS: Policy uncertainty clouds future of China’s green electricity certificates Japan to introduce new refining regulations, incorporate decarbonization efforts Premium content (available exclusively on Platts Dimensions Pro ) Vietnam approves National Climate Change Strategy to 2050 to meet net-zero pledge Australia tables Climate Bill to enshrine 43% emissions cut commitment by 2030 EMEA SPGlobal.com Middle East may become leader in global carbon capture European PPA index falls 11.3% in June as cost, risk discounts escalate: Pexapark Localized refining seen as potential hurdle in EU, UK battery value chain Premium content (available exclusively on Platts Dimensions Pro ) Portugal's 40,000 mt/year SAF project set for 2023 FID, Eur600 million investment European Aluminium calls on EU to implement 15% gas savings regulation carefully Chart of the week Leakage is a key challenge for hydrogen production and networks if the energy carrier is to be viewed as climate friendly Quote of the week "By a wide margin, this legislation will be the greatest pro-climate legislation that has ever been passed by Congress. . . [it] fights the climate crisis with the urgency the situation demands." ," Chuck Schumer, Democrat-New York, Senate Majority Leader Price of the week Eur271/MWh The average German solar PV capture power price in July, a record month for the energy source

Biofuel producers who have at times felt overlooked in the wake of the Biden administration's push for vehicle electrification cheered incentives for low-carbon fuels included in a surprise climate investment deal reached by the US Congress. The so-called Inflation Reduction Act of 2022, if passed, would make available $369 billion in energy security and climate change spending over the next decade. The legislation includes funding and key tax credits to boost biofuel production, as part of a deal unveiled late July 27 between Senator Joe Manchin, Democrat-West Virginia, and Senate Majority Leader Chuck Schumer of New York for a party-line budget reconciliation bill. "At long last, we are pleased to see the new Senate bill on climate change, which recognizes the important role renewable fuels like ethanol can play in a lower-carbon future for this nation," Renewable Fuels Association President and CEO Geoff Cooper said in a statement. The bill would make $500 million in grant funding available on a competitive basis for projects aimed at increasing the sale and use of biofuels through infrastructure improvements. Projects that aid with blending, storing, supplying or distributing fuels made from agricultural feedstocks would be eligible, with an eye on getting higher biofuel blends to market. The grants would help cover the costs to install or upgrade fuel dispensers, storage tanks and related equipment needed to dispense higher blends of ethanol and biodiesel. They could also be put toward the construction or retrofitting of distribution systems for ethanol and biodiesel, according to the bill's text. Tax credits The legislation also extends the $1/gal tax credit for biodiesel, renewable diesel and alternative fuels through 2024 and creates a new tax incentive through 2024 for sustainable aviation fuel. S&P Global Commodity Insights viewed the SAF tax credit as potentially helpful to closing SAF's price gap relative to renewable diesel. S&P Global assessed US renewable diesel without credits at $3.31/gal July 28, compared with SAF without credits at $4.06/gal. The average price gap between the fuels in July was around 72 cents/gal, up from a June average of about 61 cents/gal. The Biden administration in September 2021 announced an initiative to cut US aviation emissions by 20% by spurring production of 3 billion gal/year of SAF by 2030. The administration further set a target of meeting all US aviation fuel demand with SAF by 2050, requiring an estimated 35 billion gal/year of the low-carbon fuel. The SAF credit in the Senate deal would be at $1.25/gal plus an additional 1 cent/gal for every percentage point by which the life cycle greenhouse gas emissions reduction of the fuel compared with petroleum-based jet fuel exceeds 50%, granting producers a maximum incentive of $1.75/gal. Lifecycle GHG methodology Leading US bioenergy producers took issue with an earlier version of the SAF tax credit proposed in the draft Build Back Better Act, asserting that it relied on an outdated model for assessing lifecycle carbon emissions to determine program eligibility. Specifically, they argued that that the bulk of the model developed by the International Civil Aviation Organization referenced in the legislation was seven to 15 years old and had not kept pace with innovation in biofuel production. The new tax credit proposal for SAF would rely on the most recent carbon offsetting and reduction scheme for international aviation adopted by the ICAO or any similar methodology that satisfies certain Clean Air Act criteria. The Renewable Fuels Association deemed the new lifecycle GHG methodology an improvement but still imperfect. "Although the GREET model is still not explicitly mentioned for SAF under the provision, the language reverts to the House language and allows for both the ICAO methodology or a 'similar' methodology that meets the requirements of Clean Air Act Section 211," a spokesman said in an email. After 2024, the Senate deal lays out a new clean fuel production credit for 2025 through 2027 that would apply to all low-carbon fuels, starting at 20 cents/gal for on-road transportation and 35 cents/gal for aviation. On-road transportation fuels could receive up to a $1/gal credit while SAF would again be eligible for a maximum credit of $1.75/gal if certain labor requirements are met. Those amounts would be adjusted for inflation each year. RFS Under the bill, the Environmental Protection Agency would receive additional funds to carry out certain tasks tied to its annual obligation to determine the amount of renewable fuel that must be mixed with gasoline and diesel under the Renewable Fuel Standard program. The bill sets $5 million aside for the EPA to develop tests and protocols to gauge the environmental and public health effects of fuels and fuel additives , perform analyses to regularly update regulations and guidance for determining a fuel's lifecycle GHG emissions and to evaluate the impacts of transportation fuels on low-income and disadvantaged communities. Another $10 million would be allocated to the EPA for new grants to industry players and related activities to support investments in advanced biofuels. "For the US to meet its climate goals, we must quickly expand the volume of low-carbon biofuels available across the entire transportation sector – on the ground, in the air, and at sea," Growth Energy CEO Emily Skor said. "These provisions can jumpstart that climate progress, while delivering more savings at the pump, greater long-term energy security, and a welcome economic boon to rural communities."

The US Inflation Reduction Act, announced July 27, includes support for hydrogen through a new tax credit that will award up to $3/kg for low carbon hydrogen, subject to certain requirements. The multiplier mechanism would bring the tax credit amounts in the range that was previously proposed in the Build Back Better Act, which would also have offered up to $3/kg of clean hydrogen depending on its carbon intensity. The multiplier mechanism would be triggered if producers begin building new facilities within a certain time period and if they meet certain wage and labor requirements for the project, according to the bill's text, which was revealed July 27 by Senate Democrats. No Senate Republicans support the bill. Projects that meet those requirements can receive tax credits ranging from 60 cents/kg to $3/kg, while those that don't are eligible for credits in the 12 cents/kg to 60 cents/kg range. Similar to 2021's Build Back Better Act, exact credit amounts will be determined by an accounting of the hydrogen's full lifecycle greenhouse gas emissions. That emissions measurement scheme will be based on Argonne National Laboratory's Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies Model, known as GREET. Hydrogen Production Tax Credit Amounts Carbon intensity level per kg of produced hydrogen Tax credit amount 5x multiplier 4 kg of CO2e $0 $0 4-2.5 kg of CO2e $0.12 $0.60 2.5-1.5 kg of CO2e $0.15 $0.75 1.5-.45 kg of CO2e $0.20 $1.00 .45 kg of CO2e $0.60 $3.00 Source: Inflation Reduction Act of 2022 bill text Janice Lin, CEO of the Green Hydrogen Coalition, applauded the decision to keep tax credit amounts tied to lifecycle emissions analyses. "A well-to-gate methodology is crucial because it rigorously accounts for the climate impacts associated with hydrogen production pathways and would establish a level playing field when comparing the carbon intensity of alternative pathways," Lin said in an email July 28. "A nationally-applicable well-to-gate carbon intensity framework will create alignment, transparency and facilitate the development of a credible and economically viable/tradable green and clean hydrogen market for the United States that will accelerate decarbonization." Also included in the bill is a $2 billion fund earmarked for grants supporting the domestic production of clean transportation technologies, including fuel cell electric vehicles. All told, the hydrogen elements in the draft legislation, have the potential to impact all of the US economy's hard-to-abate sectors, said Jeff Bechdel, spokesperson for hydrogen advocacy group Hydrogen Forward. "This will encourage further growth of clean hydrogen, which will play a critical role in addressing hard-to-decarbonize sectors like transportation, heavy industry, agriculture and power generation," Bechdel said in an email. Hydrogen booster It may not be a surprise to see hydrogen spending provisions preserved in this new, slimmed-down version of Democrats' climate package. Democratic Senator Joe Manchin of West Virginia, who has until now single-handedly blocked the party's ambitious climate agenda, has been bullish on building out a US hydrogen economy. Until July 27, Manchin had rejected the Biden administration's climate agenda by blocking the Build Back Better Act. The announcement of the bill comes follows' signaled strong support for clean hydrogen tax credits during a Senate Energy and Natural Resources Committee hearing. It is expected to be voted on through the Senate's budget reconciliation process the week of Aug. 1.

Ukraine exported about 325,000 mt of wheat in the marketing year 2022-23 (July-June) as of July 29, down 53.2% on the year, the Ministry of Agriculture said in an update July 31. The country's wheat exports are anticipated to decline sharply in the current marketing year as the continued war with Russia has destroyed port logistics, traders said. Russia invaded Ukraine on Feb. 24 and the two countries signed a deal on July 22 to resume Ukrainian wheat shipments from Chernomorsk, Odessa, and Yuzhny. However, trade participants said they were unsure that exports from Ukraine would rise as Russia attacked the Odessa port within a day of signing of the deal and attacked Mykoliav city on July 31. Ukraine had exported slightly more than 18 million mt of wheat in MY 2021-22, according to its agriculture ministry. The Ukrainian Grain Association has projected the country's wheat exports at 10 million mt in MY 2022-23. The US Department of Agriculture has also forecast Ukraine's wheat exports at 10.8 million mt in MY 2022-23. Platts Analytics expects Ukraine to sell 10 million-12 million mt wheat in MY 2022-23. Platts assessed FOB prices of Ukraine's 11.5% protein wheat at $355/mt July 29, unchanged on the day, according to data from S&P Global Commodity Insights. However, export prices have declined nearly 7% on the month as buyers moved to other sources to procure wheat, traders said. Output likely to decline Ukraine's wheat output is also in focus as the war has adversely impacted farmland and destroyed farm equipment. As of July 29, Ukrainian farmers harvested 8 million mt wheat, down 52.7% on the year, according to ministry data. The data showed Ukraine had harvested around 16.9 million mt wheat till the same period last year. The Ukrainian Grain Association has its Ukraine wheat output estimate for MY 2022-23 at 20.8 million mt, 37% below the previous year's level. Ukraine harvested 33 million mt of wheat in MY 2021-22, according to data from Ukraine's agriculture ministry. Ending stocks for the crop will likely be at 10 million mt for MY 2022-23, according to the Ukrainian Grain Association. The USDA, in its July World Agricultural Supply and Demand Estimates report released July 12, pegged Ukraine's wheat harvest at 19.5 million mt in MY 2022-23. Platts Analytics sees Ukraine's wheat production in MY 2022-23 at 20 million-22 million mt.