EDITOR'S COMMENT
OILS & FATS INTERNATIONAL
VOL 37 NO 4 MAY 2021
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Oils & Fats International
2 OFI – MAY 2021
Comment May.indd 1
Biden and biofuels As US president Joe Biden approached his first 100 days in office on 30 April, his climate policies have already set him apart from his predecessor and made an impact on the vegetable oils market.
Biden’s election has given a huge push to green fuels, particularly biodiesel in the USA, Godrej International director Dorab Mistry told the Virtual Price Outlook Conference (POC) on 24 March. Fossil fuel refineries in the USA have been switching to biofuel/ HVO production and US biodiesel demand for soyabeans has been so high that top global canola producer Canada has been importing the oil from Europe to meet edible oil demand in North America, he said. Vegetable oil prices are currently at historic highs, double what they were last year due to a global production deficit, low stocks and biofuels consumption. Biodiesel blending mandates in key oil crop producing countries – such as Indonesia, the USA and Brazil - have helped to keep prices high. Those not in the oils and fats business might find it surprising that around 17.9M tonnes of palm oil (some 23% of world palm oil consumption) is projected for use in biodiesel and HVO this year. For soyabean oil, the figure is 12.6M tonnes, according to Oil World executive director Thomas Mielke. Now, President Biden has announced a new US target of reducing greenhouse gas (GHG) emissions by 50-52% by 2030 against a 2005 baseline, including renewable fuel as one tool to achieve this. “Agriculture is a key part of the solution to climate change,” Biden has said in his election pledges. “Advanced biofuels are now closer than ever as we begin to build the first plants for biofuels, creating new solutions to reduce emissions in planes, ocean-going vessels and more.” Biden announced the new target on 22 April as he hosted 40 world leaders at a virtual Earth Day summit in an effort by his administration to reclaim credibility on climate change after four years of inaction under Donald Trump. Leaders of countries like Brazil, Canada and Japan made commitments to curb domestic GHG emissions, with Brazil president Jair Bolsonaro vowing to end illegal deforestation in the country by 2030; and Japanese Prime Minister Yoshihide Suga pledging to curb emissions by 46% by 2030 compared with 2013 levels, an increase from its previous 26% goal. China, meanwhile, re-affirmed commitments to peak emissions before 2030. Pledges are one thing. There are still thorny issues to overcome such as coal use (China’s coal output will continue to increase under its current five-year plan which ends in 2025), carbon pricing, and how much wealthy countries should foot the bill for change considering they are responsible for the majority of carbon already in the atmosphere. Thorny issues aside, it can only be a positive thing that the USA is re-engaging in global climate talks, considering it is the world’s second largest GHG emitter after China. Meanwhile, biodiesel will continue to provide the floor to vegetable oil prices, which experts at the Virtual POC conference believe will peak soon. LMC International chairman James Fry said high prices will ration food demand and oil crop output should rise slowly, reviving stocks, with Mistry adding that high prices will incentivise farmers to eventually produce more. This will no doubt come as a relief to buyers in the market. Serena Lim serenalim@quartzltd.com www.ofimagazine.com
29/04/2021 11:57:37
