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OILS & FATS INTERNATIONAL VOL 37 NO 4 MAY 2021

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Biden and biofuels

As US president Joe Biden approached his fi rst 100 days in offi ce 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 electi on has given a huge push to green fuels, parti cularly biodiesel in the USA, Godrej Internati onal director Dorab Mistry told the Virtual Price Outlook Conference (POC) on 24 March.

Fossil fuel refi neries in the USA have been switching to biofuel/ HVO producti on and US biodiesel demand for soyabeans has been so high that top global canola producer Canada has been importi ng 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 producti on defi cit, low stocks and biofuels consumpti on. 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 fi nd it surprising that around 17.9M tonnes of palm oil (some 23% of world palm oil consumpti on) is projected for use in biodiesel and HVO this year. For soyabean oil, the fi gure is 12.6M tonnes, according to Oil World executi ve 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 soluti on to climate change,” Biden has said in his electi on pledges. “Advanced biofuels are now closer than ever as we begin to build the fi rst plants for biofuels, creati ng new soluti ons 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 eff ort by his administrati on to reclaim credibility on climate change aft er four years of inacti on under Donald Trump.

Leaders of countries like Brazil, Canada and Japan made commitments to curb domesti c GHG emissions, with Brazil president Jair Bolsonaro vowing to end illegal deforestati on 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-affi rmed commitments to peak emissions before 2030.

Pledges are one thing. There are sti ll thorny issues to overcome such as coal use (China’s coal output will conti nue to increase under its current fi ve-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 positi ve thing that the USA is re-engaging in global climate talks, considering it is the world’s second largest GHG emitt er aft er China.

Meanwhile, biodiesel will conti nue to provide the fl oor to vegetable oil prices, which experts at the Virtual POC conference believe will peak soon. LMC Internati onal chairman James Fry said high prices will rati on food demand and oil crop output should rise slowly, reviving stocks, with Mistry adding that high prices will incenti vise farmers to eventually produce more. This will no doubt come as a relief to buyers in the market.