Our sources at French Ministries directed us towards the third “Loi de Finance rectificative 2020” (third rectified budget law for 2020) to confirm that a new incentive has been granted to Fame -10° for the August-December period. We explain it all here.
The new text of law was published on July 31 in the Official Journal. The Article 9 introduces a new measure under the TIRIB (Taxe Incitative relative à l’Incorporation de Biocarburants) mechanism: EMAG (= Fame based on vegetable oils) with a CFPP below or equal to -10°C without additives improving cold properties, will be counted at its real value majored by 20%. In other words, Fame -10° based on vegetable oil (= pure RME or Fame blends with a big share of RME) will enjoy a 1.2 multiplicator for the rest of 2020.
This development is unexpected, coming as the result of the government’s response to requests from the French agriculture sector to support the rapeseed outlet during difficult times. As far as we can remember, this is the first time in the biodiesel industry that a 1G quality enjoys a multiplicator towards a national incorporation obligation in the whole Union.
Updating our compliance model, we cut our SME forecast by 200 KT (approximatively what was supposed to be used during the period) and increased RME by 165 KT (a quantity equivalent to 200 KT SME when the 1.2 multiplicator is applied during the period).” Despite this equivalence, operators will still maximize the B7 blend wall so they will replace all they can (200 KT, not only 165 KT, thus “extending” the theoretical blend wall. That will have a negative impact on HVO. Also, RME could take up some share on the other single counted qualities (TME C3 and sunflower) but the quantities are quite limited (max. 150 KT for the whole 2020 year). Some market sources reflected big RME additional volumes to be used by French operators (up to 400 KT). Since a big share of the Q3-Q4 volumes have been booked in advanced, with suppliers suggesting no contract arrangement has been yet made by buyers, we believe the effect on the RME demand will not materialize at this level (but rather close to 200 KT, which is already a fairly optimistic number).