Was this already here, a company notification to a customer. Disruptions were practically not noticed, maybe it affected someone:
13.1.2025
Neste MY Renewable Diesel - and Neste MY Renewable Heating Oil - products available normally
Dear customer,
We informed you on 16.12.2024 about disruptions in the availability of Neste MY Renewable Diesel and Neste MY Renewable Heating Oil products. The fire at Neste’s Rotterdam refinery on 8.11.2024 and the resulting production disruption no longer affect the availability of these products, and they are once again normally available for order as direct deliveries and from our service station network.
We apologize again for any inconvenience this situation may have caused. Thank you for your patience.
In this article, a few thoughts from Neste regarding SAF – mainly, what’s interesting is the ambiguity concerning the application of the mandate. I don’t want to be a pessimist, but these are just EU-level matters, that such a fundamental issue is still open even though Refuel EU preparations have been ongoing for many years
USA’s actions, as a transition from BTC to CFPC, don’t look like a Strömsö-level performance, even though, as in the EU, there have been years to prepare and decide.
BP intends to return solely (?) to fossil fuels and shut down several renewable energy projects. I didn’t have time to check if they were involved in Neste’s field at all.
Edit: Based on a quick search, something is or has been there:
Quantum had this headline:
So, as I understand it, in Australia, the conversion work of a traditional refinery to produce renewable diesel/SAF has been suspended (allegedly).
For some reason, the big players (British Petroleum/Shell) do not see enough potential in the renewables business.
Is this development now seen as a positive or negative thing for Neste: is it squandering resources in renewables where good returns are not in sight, or are competitors being eliminated and Neste’s position strengthened?
I personally see this as positive news; competition will decrease, and prices will start to rise. It might even be that these will have a liquid price of 20€ before Christmas.
I, for one, want to see this as a positive thing. The less competition, the better the prices.
Fossil fuels cannot achieve emission targets, so using renewables is completely inevitable. Once Refuel EU is finalized, demand will surely grow even further. And why wouldn’t it?
We are already so far behind with climate change, and all transport and logistics cannot be electrified, at least not in a reasonable timeframe. One would think there would be enough demand for renewables, but regulation and politics can water down good intentions. I would think this is good for Neste, but on the other hand, it perhaps signals that the changes are not nearly as fast as I thought, for example, in the spring.
If the big players believe that renewables are not profitable, then surely they will start a considerable lobbying effort towards the EU against renewables? So, essentially, more obstacles despite the good intention, money decides here too, and the better for these dinosaur juice producers the less renewables are supported. A sick world, but what can you do.
Big players can correct their mistakes later simply by buying out their competitors or merging themselves with another giant. It wouldn’t be the first time that salaried executives make short-sighted decisions to secure their jobs and bonuses.
Then, ten years from now, we can wonder why there were no contingency plans, because it was already obvious back in 2020-2025 that the use of renewables would become widespread in the future, but those decision-makers are now retired or advisors to an American think tank.
Yesterday, Trump, by executive order, suspended all federal funding under the IRA legislative package, as he promised during his campaign. This includes, among other things, 45Z support for biofuels. I’m not entirely sure what happens if, for example, Neste now applies for the 45Z tax credit on its federal tax return; the tax authority might simply not grant it because there is no funding (?). In any case, companies are entitled to these, so the companies’ next step will likely be to sue the federal government and collect these tax receivables through legal means if the funding freeze is prolonged. In any case, the cash flow problem for biofuel producers will likely become topical again as a result of the situation. Trump’s next promised step would be the repeal of the IRA law itself through Congress. Previously, it was estimated that a partial repeal of the IRA would perhaps be a more likely scenario than the entire package. Bloomberg had such a colorful scenario map, from which one can read that positive scenarios for foreign biofuels (Neste) would be the repeal of all tax subsidies or the continuation of the old BTC support (40A extension):
Isn’t it also the case that the exact guidance for the 45z credit hasn’t even been fully published yet? This is a rather absurd situation, because the credit is in effect.
“45z Guidance” was supposed to be published before the end of the Biden administration, but in practice, only loopholes were published. Thus, it’s not even clear what dollar amount of credit companies would be entitled to.
That suspension of all federal IRA funding is, in my gut feeling, of little impact if it’s short-term. Wouldn’t the tax credit ultimately materialize only at the end of the year?
For BTC, i.e., the blenders tax credit, there is support on the Republican side, because it favors farmers in red states. Didn’t Trump also extend this credit in 2019? So, it’s quite possible that BTC will be continued.
which suggests that positive scenarios for foreign biofuels (for Neste) would be the repeal of all tax subsidies
Is that so straightforward? Is Neste “foreign” in the US market if Martinez is going full throttle? Neste, however, widely uses foreign raw materials, and to my understanding, is almost solely responsible for the rocketing of Chinese UCO (Used Cooking Oil) imports last year.
Furthermore, even if the scenario of “repealing all tax subsidies” might place foreign fuels in a more competitive position than domestic ones, this might be a somewhat naive description, because wouldn’t this make renewable fuels as a whole unprofitable in terms of pricing? On the other hand, this would likely also crash feedstock prices, allowing the strongest to survive.
There has been news coverage regarding the 45z guidance, according to which UCO, i.e., Used Cooking Oil, which Neste uses extensively for HVO hydrogenation, would be completely excluded.
In practice, this is a slightly simplified truth:
With respect to used cooking oil (UCO) feedstocks, the Treasury Department and the IRS are concerned about (1) the improper identification of a substance that is not UCO as UCO (for example, virgin palm oil mislabeled as UCO), which could have substantially greater emissions impacts than genuine UCO, and (2) the uncertainty of market impacts caused by incentivizing UCO (for example, the degree to which increased UCO demand would be backfilled by virgin oils such as palm oil). Both of these concerns are particularly acute for imported UCO given the lack of transparency regarding the local sources. Due to these significant concerns about the ability to reliably distinguish between imported UCO and palm oil, and the resulting risk of crediting ineligible fuels, the Treasury Department and the IRS are considering ppropriate substantiation and recordkeeping requirements for imported UCO. As a result, pathways that use imported UCO will not be available in the 45ZCF-GREET model until the Treasury Department and the IRS publish further guidance. UCO is considered to be imported if it originates from a source (for example, restaurant or food processor) outside the United States and/or is purchased from an aggregator located outside the United States.
My own interpretation of this is that the primary reason for this is lobbying by soybean farmers, attempting to weaken the share of UCO that has flooded the market, as it has reduced the profitability of soybean oil. And as mentioned, UCO is apparently specifically imported by Neste. I don’t know how much this massive UCO import to the US is related, for example, to the expiration of the BTC credit, and how dependent US production is specifically on UCO. One would think, however, that UCO would be absorbed by the EU markets.
It is possible, however, that UCO will still be included in the GREET model used for calculating emission reductions later, which could significantly lower the calculated emissions of Neste’s fuel and thus increase the value of the credits Neste receives.
Disclaimer: This answer delves quite deeply into U.S. politics, but it also concerns Neste’s IRA subsidies and their potential issues. @Sijoittaja-alokas can move this to the U.S. politics thread if necessary.
This is a correct thought, and in a normal situation, that’s exactly how it is. I’ll provide some background on what this is about. The IRA is a legislative package approved by the U.S. Congress. This means that the president cannot act against the law with their own executive order, i.e., permanently suspend the implementation of the law. The president is obligated to continue implementing the law. This has been the stance of the U.S. Supreme Court since a court case decades ago.
However, the president can temporarily suspend the implementation of a law with their own executive order for a maximum of 90 days. After this, they must continue implementing the law, or they will violate the Supreme Court’s interpretation of the separation of powers and harm Congress’s legislative authority.
If, despite this, the president does not continue implementing the law after 90 days, Congress can intervene by impeaching the president for not following a law enacted by Congress. Everyone can consider what a Republican-controlled Senate and House of Representatives would do in this situation if they had to defend a law enacted by a Democratic president against their own Republican president. In this context, it’s worth looking at what happened with Trump’s two previous impeachments.
President Donald Trump was impeached twice during his single term in office. In each case, he was acquitted on all counts by the Senate.
The situation is further complicated by a Supreme Court decision in the summer of 2024, which grants the president immunity from prosecution for actions taken in the performance of their duties and considered “Official acts.” What constitutes such an official act is not clear. Perhaps not following a law enacted by Congress could be one? How will the Supreme Court, with 6 Republican justices and the same composition that granted the president unprecedented broad powers if he chooses to use them, act? And according to the latest information, Trump does not have many restraints. For example, he issued an executive order that would revoke birthright citizenship enshrined in the Constitution. This has only just been challenged in court, and no one will know the outcome for a long time.
“A former president is entitled to absolute immunity from criminal prosecution for actions within his ‘conclusive and preclusive constitutional authority.’” They added, “There is no immunity for unofficial acts.” Rather than make clear that trying to overthrow the Constitution’s peaceful transfer of power is not an official act, the justices send the whole matter back to trial judge Tanya Chutkan. Expect more consideration, more parsing, more rulings, more appeals. It will all likely end up at the Supreme Court again in a year, if the whole prosecution isn’t shut down entirely.
In any case, a very fundamental redistribution of power is now underway in the United States, where the president’s authority is being measured against Congress’s legislative power and the Constitution, both of which Trump has challenged with his executive orders. The final outcome may not be seen for years, but the effects are already visible. None of the accustomed legal interpretations may necessarily work in the current situation.
Good points, and many things are indeed not straightforward.
The Treasury eventually published its so-called 45Z-GREET calculator, which can be used to determine how much 45Z support each facility can apply for. It can be found here: https://www.energy.gov/eere/greet Although the guidance is preliminary, the idea seems to have been that based on the calculator, one can already file a tax return and apply for 45Z support.
This is likely true for corporate income tax, but the former BTC credit could be used as an excise tax credit instead of a corporate tax credit, in which case it was applied for and paid quarterly. In practice, all companies chose this option. The BTC was also refundable, meaning that if a taxpayer incurred a loss, the Treasury would pay the portion exceeding tax liabilities in cash to companies if necessary.
The 45Z credit is not refundable, nor can it be used as an excise tax credit to be received quarterly. However, companies practically convert future 45Z tax receivables into cash with the help of financing companies, meaning they essentially sell them below nominal value to American banks, which then deduct them from their own taxes. This, of course, lowers the value of the credit that the biofuel producer receives, but they get the money immediately.
Whether BTC or 45Z is in effect should, in theory, not affect biofuel producers’ margins at all. These are production subsidies that do not impact the demand for biofuels, which is determined by federal volume obligations. In practice, through these tax subsidies, taxpayers merely subsidize the prices of RIN certificates, because if there were no tax subsidies, RIN prices would rise until producers once again had the same economic incentives (and the same margins) to produce the volume of biofuels required by the volume obligation. However, a situation where 45Z should be in effect, but perhaps isn’t, is difficult because no one knows what to do, and the market cannot react.
Due to its greater monetary value and perhaps simplicity, many parties naturally want the BTC back and are likely actively lobbying the Trump administration in that direction. Of course, many would also like to include conditions that it will only be granted for local production or for biofuels made from local raw materials in the future. But these credits are in themselves minor adjustments, and what would be truly more essential is what the Trump administration’s environmental agency does with those volume obligations. The entire collapse of margins began due to their low number relative to the biofuel capacity completed in the United States, and no real improvement can occur if they are not increased. Here is also an image of the problem: producers in the United States have enthusiastically built biofuel production capacity a good 60% more than the demand stemming from volume obligations:
Hong Kong-based RD and SAF producer Ecoceres appointed Neste’s former long-time executive Matti Lievonen as CEO last week (he was previously Ecoceres’ Chairman of the Board). Now Bloomberg reports that the company is considering a possible IPO in Europe next year. https://renewablesnow.com/news/hong-kong-biomass-firm-ecoceres-mulls-listing-in-europe-report-1269833/ Private equity firm Bain Capital is the driving force/owner. According to the plan, Ecoceres would be valued at approximately 5 billion dollars, and the company would raise 500-1000 million dollars in new funding through a share issue. I could not find financial figures, but Ecoceres has a combined RD and SAF production capacity of approximately 500,000–750,000 tons next year. If realized, the valuation would thus be interesting compared to Neste, which has 4,500,000 tons of SAF and RD capacity and an enterprise value of approximately 15 billion dollars.
[quote=“Homeros, post:3026, topic:252”]
The valuation, if realized, would be interesting compared to Neste, which has 4,500,000 tons of SAF and RD capacity and an enterprise value of approximately 15 billion dollars.
[/quote]
The market doesn’t seem to believe that Kilpilahti has value. Anttonen probably sees the value of Kilpilahti and knows what RD capacity costs.
Now Kilpilahti can be acquired practically for free if the market prices a pure RD company with those multiples. I myself would see that Ecoceres is overpriced.
