Traders beef up U.S. renewable fuel teams as demand soars

Citadel Income Fund

18/06/2021 16:35

By Laura Sanicola and Devika Krishna Kumar
    June 18 (Reuters) - Commodity merchants and investment firms
such as Citadel, Gunvor  GGL.UL  and Trafigura  TRAFGF.UL  are
bolstering U.S. teams that specialize in trading renewable fuels
as demand soars, according to people familiar with the matter.
    Many trading firms already have an established presence in
Europe, but the production of advanced biofuels that act as
petroleum fuel substitutes has driven hiring in the United
States in recent months, the sources said. Renewable fuels
account for roughly 12% of U.S. energy consumption, according to
government data, and are growing every year.
    In April, hedge fund Citadel made its first entry in the
U.S. renewable fuels trading space, a source close to the firm
said. The firm brought in Jay McCall as head of North America
Environmental Products Trading based in San Francisco, according
to source familiar with the matter and his LinkedIn page. McCall
previously was director of environmental commodities trading at
DTE Energy Trading  DTE.N .
    In the same month, commodities trader Gunvor hired Shane
Foster to its renewable energy division based in New York,
according to his LinkedIn profile. 
    Gunvor is already active in some U.S. renewables markets
such as biodiesel and feedstocks and the company is actively
seeking to expand across the renewables supply chain, three of
the sources said. 
    Rival trader Trafigura is looking to hire traders
specializing in renewable natural gas, renewable diesel and
feedstocks, a source with direct knowledge of the matter said.
    Last year, Trafigura hired Scott Adair in Calgary, Alberta,
to trade power, renewable energy and environmental commodities. 
    Trafigura, Citadel and Gunvor declined to comment when
contacted by Reuters.
    Production of renewable fuels is rising as refiners look for
ways to offset carbon emissions, and to take advantage of state
and federal incentives such as California's Low Carbon Fuel
Standard which makes such fuel production lucrative.
    U.S. refiner Valero Energy Corp's  VLO.N  renewable diesel
segment reported a record operating income of $203 million in
the first quarter of 2021, while its petroleum refining unit
posted a loss.  urn:newsml:reuters.com:*:nL1N2MF28I
    Several U.S. petroleum refiners and other companies
announced plans to produce more fuels from animal fats and
soybean oils at their facilities, but the majority of those
projects remain to be built.
    Trading shops are also boosting efforts to reduce their
carbon footprint.
    DK Gunvor said in March that it aims to cut its Scope 1 and
Scope 2 emissions by 40% in absolute terms by 2025. Scope 1
covers direct emissions from owned or controlled sources, while
Scope 2 covers indirect emissions from purchased electricity,
steam, heating and cooling consumed by the reporting company.
Gunvor has also set up a new subsidiary to invest in
non-hydrocarbon projects. 
    Gunvor's new unit will invest in biofuel, renewable power
projects such as solar and biomass, and the commercialization of
alternative fuels like hydrogen and ammonia.  urn:newsml:reuters.com:*:nL1N2LS0P5

 (Reporting by Laura Sanicola and Devika Krishna Kumar in New
York
Editing by Matthew Lewis)
 ((Laura.Sanicola@thomsonreuters.com;))