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

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.

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.

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.

Japan will start formal policy discussions July 28 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, sources told S&P Global Commodity Insights July 26. The talks will be launched by the Ministry of Economy, Trade and Industry's natural resources and fuel committee, which will present ideas for new regulations and review regulatory responses from the last round that expired at the end of March, the METI sources said. The new regulations would likely follow the framework of the third round of regulations, with new elements relating to decarbonization efforts by refiners to be considered as part of the regulatory response, the sources said. The refiners' potential use of blue and green hydrogen instead of gray hydrogen in the refining process could be considered among the decarbonization efforts, the sources added. The third round of regulations required refiners to achieve a national target vacuum residue ratio, the daily residual processing volume as a percentage of the daily crude processing volume, of 7.5% by the end of March 2022. Given a significant drop in Japanese refiners' refining volumes in the past two years because of the pandemic-led demand slump, Petroleum Association of Japan President Tsutomu Sugimori said March 22 that "It will be difficult to achieve." "However, we are in the midst of emergency situations such as the coronavirus pandemic and the Ukraine issues, so that we expect to see some sort of mitigation," Sugimori added at the time. Previous regulations The third round of regulations introduced in 2017 focused on increasing processed volumes at residue cracking units across Japan's refining fleet with improvements in productivity. The previous two rounds of regulations had led to a reduction in Japan's overall crude distillation capacity. The third round of regulations required refiners to increase processing volumes of vacuum residue by the end of fiscal year 2021-22 (April-March) from baseline average volumes processed over FY 2014-15 to FY 2016-17. Under its definition, vacuum residue has a true boiling point of more than 565 degrees Celsius. This includes atmospheric residue, vacuum residue, vacuum gasoil and other residues processed at fluid catalytic cracking and residue fluid catalytic cracking and cokers. In order to comply with the third round of regulations, refiners had been expected to revamp their facilities, including carrying out work to upgrade pumps and change catalysts to be able to process more residues at units such as FCCs, RFCCs and cokers by the end of March 2022. Japan's nameplate refining capacity was 3.5188 million b/d across 22 refineries as of March 31, 2017 down 7.1% from 3.7897 million b/d earlier, following local refiners' response to the earlier rounds of refining regulations. The country's operable refining capacity stood at 3.4578 million b/d across 21 refineries at the end of March 2022.

Platts, part of S&P Global Commodity Insights, will launch daily carbon-accounted Aframax dirty tanker freight assessments on four key routes in Europe, effective Aug. 1, 2022, to provide further transparency into this developing market. These new assessments will reflect the cost to move crude oil or fuel oil on an Aframax tanker on each route, including the additional cost required to offset 100% of the carbon dioxide emissions created through the combustion and exhaust of a ship's marine fuel through the European Union's Emissions Trading System (ETS). These assessments add to the suite of freight carbon intensity values and freight carbon intensity premiums Platts has already been publishing since October 2021 , which measure the impact of greenhouse gas emissions to transport various crude grades from production storage terminals to typical refinery locations around the world. The new carbon-accounted Aframax freight assessments will be published in Worldscale points as well as in US dollars/mt. The new assessments are: Assessment Name Cargo Size Daily Code Monthly Average Code Carbon-Accounted Aframax UKC-UKC WS 80 ANEUH00 ANEUH03 Carbon-Accounted Aframax Baltic-UKC WS 100 ANEUB00 ANEUB03 Carbon-Accounted Aframax Ceyhan-Med WS 80 ANEUF00 ANEUF03 Carbon-Accounted Aframax Black Sea-Med WS 80 ANEUD00 ANEUD03 Carbon-Accounted Aframax UKC-UKC $/mt 80 ANEUG00 ANEUG03 Carbon-Accounted Aframax Baltic-UKC $/mt 100 ANEUA00 ANEUA03 Carbon-Accounted Aframax Ceyhan-Med $/mt 80 ANEUE00 ANEUE03 Carbon-Accounted Aframax Black Sea-Med $/mt 80 ANEUC00 ANEUC03 Last July, the European Commission proposed adding shipping to the EU ETS gradually from 2023 to 2026, when shipowners would need to buy permits covering all their emissions inside the EU and 50% of their emissions from international voyages beginning and ending in the EU. The Environmental Committee of the European Parliament voted in May 2022 to delay the inclusion of the shipping sector into the EU ETS from 2023 to 2024, but require that 100% of emissions from intra-EU voyages be covered from the outset, dropping previous plans for a phase-in period between 2023-2026. The latest EU proposals will look to cover 50% of emissions for voyages into and out of the European Economic Area until 2027, and 100% of emissions of these voyages thereafter. The vessel speed and bunker fuel consumption used in the calculations of the new carbon-accounted freight assessments were arrived at by extensive market survey and reflect market practice. The calculations will use the daily EU Emission Allowance Nearest-December price (EADLP00) as published by Platts. The tank-to-wake carbon emissions based on the fuel consumption will be calculated using the carbon conversion factors published in Annex 1 of Regulation (EU) 2015/757 of the European Parliament and of the Council on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport. These carbon conversion factors, to be published by Platts from Aug. 1, are: Assessment Name Value Daily Code Carbon Conversion Factor 0.5% VLSFO 3.151 t-CO2/t-fuel ASFOA00 Carbon Conversion Factor 0.1% MGO 3.206 t-CO2/t-fuel AMGOA00 Platts will publish the values defined in the relevant European legislation and will reflect any updates accordingly. The new assessments will be published in the Platts Dirty Tankerwire; on Platts Global Tanker pages PGT1960 and 1961, Platts Shipping Alert pages 1430 and 1431, as well as in the Platts price database under the codes above. Please send all comments or questions to shipping@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 to the public upon request.

The US Environmental Protection Agency would be held to a June 14, 2023, deadline to issue final biofuel blending requirements for 2023, under a proposed consent decree awaiting review by a federal district court. The proposal submitted July 22 to the US District Court for the District of Columbia would settle litigation brought by ethanol group Growth Energy over the agency allegedly "continuing its multiyear trend of disregarding statutory deadlines" and delaying issuance of annual mandates for the Renewable Fuel Standard program. In the settlement agreement, the EPA does not admit to any undecided issues of fact or law but agrees to sign a notice of proposed rulemaking establishing 2023 RFS requirements by Nov. 16 and to sign a final rule on the matter by June 14, 2023. The agreement, which is expected to be approved by the court in the coming weeks, "is an important milestone in setting the pace for growth as we usher in a new era of the RFS," Growth Energy CEO Emily Skor said in a statement July 23. The group filed a complaint with the district court in April as the Clean Air Act calls for the EPA to craft rules establishing renewable volume obligations for the 2023 and later RFS compliance years by "no later than 14 months before" the year for which the RVOs apply ( Growth Energy v. Regan, et al , 1:22–cv–01191). The complaint followed Growth Energy's previous success in getting the EPA to lockdown June 3 as the date it would issue a rule setting the amount of renewable fuel that had to be mixed with gasoline and diesel for the 2020 through 2022 compliance years . 'Irreparable' injuries Like its prior complaint, Growth Energy argued in the April court filing that because the RVOs set by the EPA "directly dictate the level of national demand for renewable fuels," biofuel producers have and continue to suffer economic injury from EPA's delays. Specifically, it may be too late for biofuel producers to adjust their operations to assure output meets RFS compliance requirements by the time the EPA issues the 2023 RVO, the group asserted. "This uncertainty and inability to plan future production directly affects plaintiff's members' bottom lines." And the EPA's practice of retroactively setting RVOs to match actual renewable fuel consumption for the year causes further monetary harm as it lowers biofuel demand "in comparison to what would have been demanded" through timely RFS standards intended to spur growth in renewable fuel use, the group said. "These injuries are irreparable," Growth Energy told the court. "Once an opportunity to plan supply or to sell renewable fuel has passed, it cannot be regained; the transportation fuel will have already been sold and used by the consumer without plaintiff's renewable fuel. And plaintiff cannot obtain compensatory damages from EPA for its unlawful actions." Skor said the new consent decree "ensures the certainty of the 2023 RFS requirements and further underscores Growth Energy's steadfast commitment to keeping the RFS on sound footing now and into the future." Deadline extension The EPA posted notice of the proposed consent decree in the Federal Register May 23 and took comments through June 22 on its plan for settling charges that it had failed to perform its nondiscretionary duties. The agency, through a court filing, said it received four comments, but it along with the Justice Department determined that none of those comments warranted withdrawing the decree or withholding their consent. However, after the comment period, the agency and Growth Energy agreed to extend the initially proposed deadlines for EPA action. The EPA had previously agreed to having a proposed rule ready by Sept. 16 and a final rule issued by April 28, 2023. A joint motion from the EPA and Growth Energy described the consent decree filed to the court with the later deadlines as "substantively fair and in the public interest because it establishes judicially enforceable deadlines by which EPA will complete the rulemaking at issue." "The deadlines reasonably take into account EPA's available resources and competing priorities," the motion added. "Both parties achieve certainty, and this certainty outweighs the possibility that either party might achieve a better result after protracted and costly litigation."

Saudi Arabia is set to double the capacity amount in renewables tenders this year and in 2023, setting the stage for faster growth in mostly solar and wind projects in the Middle East after lagging other regions in recent years. Saudi Arabia's current online renewable energy capacity as tendered by the renewable energy program is 700 MW, the energy ministry told S&P Global Commodity Insights. The online capacity figure is expected to increase "sharply" over the next few years as projects with a total capacity of 7.1 GW have been tendered to the market and are currently in various stages of completion, it said. An additional 15 GW is expected to be tendered in 2022 and 2023, it said. The Middle East has up until now mostly lagged the rest of the world with total renewable energy capacity last year rising 5.4% to 23.962 GW, led by Iran at 11.929 GW, Israel at 2.615 GW and the UAE at 2.579 GW, according to International Renewable Energy Agency data released in a July report on its website. The vast majority of Iran's capacity is renewable hydropower, with solar at 3.8% of the total, according to the data. Global capacity climbed 9.25% last year, with all regions except Africa, Central America/Caribbean and Eurasia showing faster growth than the Middle East, according to IRENA. Saudi Arabia's total last year jumped almost fourfold to 443 MW from 113 in 2020 after no growth in 2020 but was still well behind Iraq and Jordan. Efforts to get Saudi Arabia and other crude producers to boost oil production for exports given steps to find an alternative to Russian fuels may be the incentive to get Saudi Arabia to accelerate even more its renewables installations, said Miguel Brito, low carbon electricity analyst at Platts Analytics. "For some GCC countries such as Saudi Arabia, the situation may renew focus on displacing oil in the power mix with natural gas and solar energy to free capacity for more valuable exports as well as positioning them as key partners for European markets in the energy transition through green hydrogen" he said. "This could spur action on deploying the levels of solar capacity needed to achieve the nation's aggressive target of 50% renewable energy generation by 2030." The Middle East's renewables capacity lags all parts of the world except for Central America/Caribbean, which was at 17.352 GW last year, according to the IRENA data. Some countries in the Middle East region may still see lower growth. Dubai's only utility DEWA imposed lower limits on distributed solar project sizes based on consumer connected load, with an overall cap of 1 MW, which could hamper the sector's growth in the emirate, particularly commercial and industrial solar projects, Brito said. The UAE's solar capacity jumped 25% in 2021 to 2.578 GW, displacing Israel as the Middle East's largest, according to IRENA. Country Target Renewables plans UAE Net zero emissions by 2050 Installation of 14 GW of 'clean energy' by 2030 Saudi Arabia Net zero emissions by 2060 Installation of 58 GW of renewables by 2030 Bahrain Net zero emissions by 2060 Renewables to be responsible for 10% of power generation in 2035 Oman Reduce emissions by 7% by 2030 30% of energy generation to come from renewables in 2030 Qatar Reduce emissions by 25% by 2030 Renewables to be responsible for 20% of power generation in 2030 Source: S&P Global Commodity Insights Oceania had the fastest growth in renewables capacity last year, at 12.27% to 49.191 GW, while the biggest region was Asia at 1,455 GW, up 11.88% on the year, according to IRENA. In the Middle East, the UAE's total renewable capacity jumped 25%, while Oman's capacity increased 16% to 188 MW and Jordan's climbed 8.8% to 2.171 GW. Iraq's capacity has been at 1.594 GW for five consecutive years and Kuwait's has been at 106 MW for three straight years, according to the data.

Asian fuel oil was expected to face further downward pressure over July 25-29 as the market pushes increasingly into trading second-half August loading cargoes. The Asian low sulfur fuel oil market was likely to ease on the back of near-term demand-supply balance, pointing to an easing of availability of both finished grade product and low sulfur blending components in August. The Asian high sulfur fuel oil market, on the other hand, was likely to garner support in the near term on optimism that demand was likely to see an uptick from the utility sector, especially in the West, where high gas prices have turned focus on alternative burning fuels. Morning trades for the September ICE Brent futures contract were seen at $102.50/b at 0345 GMT July 25, down from $103.90/b at 0830 GMT July 22, Intercontinental Exchange data showed. Marine fuel 0.5% ** The Singapore marine fuel 0.5% August/September swap was heard pegged at $35/mt in mid-morning trade, unchanged from its assessment on July 22. ** The downstream low sulfur bunker fuel market was also likely to come under pressure in the near term. The Singapore-delivered marine fuel 0.5%S bunker premium over benchmark Singapore marine fuel 0.5% cargo touched a record high $117.85/mt July 20, but finished the week ended July 22 lower at $103.63/mt, S&P Global Commodity Insights data showed. ** The low sulfur bunker fuel premium was also likely to be further pressured in the Middle Eastern port of Fujairah by competitive selling interest. The Fujairah-delivered marine fuel 0.5%S bunker premium over Singapore marine fuel 0.5% cargo averaged $96.26/mt in the week ended July 22, down from $113.84/mt the week before, S&P Global data showed. ** Supply of South Korea's LSFO bunker for balance July delivery dates is expected to tighten as local refiners have mostly sold out July inventories, market sources said. ** Despite rising LSFO stockpiles at the North Asian bunker hub of Zhoushan, a forecasts for inclement weather over July 25-29 is likely to subdue demand and weigh on bunker premiums, local bunker suppliers said. ** Amid the recent inflow of LSFO replenishment cargoes to Hong Kong, traders expect rising inventories to soften bunker premiums, while downstream demand reportedly remains lackluster. High sulfur fuel oil ** The Singapore 380 CST HSFO August/September swap was pegged at $3.50/mt in mid-morning trade, up from $3/mt at the Asian close July 22, broking sources said. ** Determined buying interest saw the cash differential for Singapore 380 CST HSFO cargo over Mean of Platts Singapore 380 CST HSFO average a premium of 14 cents/mt in the week ended July 22, up from a discount of $2.46/mt the week before. ** The downstream 380 CST high sulfur bunker fuel market reflected the uptick in the upstream market, with the premium for Singapore-delivered 380 CST bunker rising to average $16.04/mt in the week ended July 22 from $15.25/mt the week before. ** Amid increasing arrivals of container liners calling at South Korean ports, which strengthened HSFO bunker demand, local bunker suppliers expect higher inflows of HSFO imports to slow the inventory drawdown. ** Lackluster demand for HSFO bunkers amid ample inventories is likely to pressure Hong Kong's bunker premiums, according to market sources. ** Market participants in Japan expect HSFO bunker premiums to remain competitive amid lukewarm downstream demand for late July-early August deliveries, while adequate stockpiles would likely also keep prices steady.