Biofuels and feedstocks
Overview
Demand for biofuels is increasing significantly, driven by the need to decarbonise road transport as part of the energy transition. Global biofuels output is expected to rise by more than 3mn b/d in the next five years, and such rapid growth means that new challenges and opportunities are constantly emerging. Keeping on top of the ever-changing biofuels landscape requires accurate pricing, insightful analysis and access to the latest data.
The Argus biofuels solution provides in-depth pricing and market analysis across the entire global renewable fuel supply chain, from original feedstock to finished fuel, with prices and key insights into regional biodiesel, ethanol and feedstock markets.
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US Gulf VLCC freight rates hit record highs
US Gulf VLCC freight rates hit record highs
New York, 7 October (Argus) — Freight rates for very large crude carriers (VLCCs) loading on the US Gulf coast (USGC) soared to historic highs today as Asia-Pacific buyers continue to scramble to secure barrels to maintain their refined products output. A charterer put a Sinokor-owned VLCC on subjects for a US Gulf coast to Asia-Pacific voyage loading from late November at $81mn lumpsum today, the highest recorded rate on the route since Argus began assessing it in 2017. The deal represented a $17.75mn jump day-over-day for the rate on the route, dwarfing that rate's pre-Iran war high of $22.5mn by over $63mn. That deal was the latest after a run-up in freight rates from steady activity over the course of the day, with another charterer putting the Sea Jade VLCC on subjects for a US Gulf coast-South Korea voyage loading from early November at $77mn. Strong Chinese crude restocking demand, which kicked off in late September, is fueling the rally in crude freight rates globally as Chinese refiners look to supply high refined products demand from throughout Asia-Pacific, with Mideast Gulf flows mostly off line. This wave of demand hit Aframaxes and Suezmaxes first, ballooning rates for these segments to their own all-time highs before sweeping back to the already elevated VLCCs after savings offered by the midsize segments shrunk. Charterers put only three VLCCs on subjects within the spot market for US Gulf coast-loading voyages in the second half of September, compared to the deluge of midsize tanker shipments in that period. Iranian attacks on shipping within the strait of Hormuz are tightening VLCC supply overall by not only creating longer, inefficient alternative voyages but also by trapping VLCCs within the Mideast Gulf itself. At the same time, a "shuttle service" of VLCCs by operators capitalizing on very high freight rates for transiting via the strait of Hormuz to transfer crude onto tankers waiting just outside the waterway has further reduced the size of the global fleet. What were once single VLCC shipments of crude from the Mideast Gulf now involve multiple vessels, with the additional waiting time these ships need to complete transfer operations within a rapidly changing environment creating inefficiencies for every vessel segment engaged in the trade. Meanwhile, some of these inefficiencies are holding up individual VLCCs for a month of extra travel time. A charterer put the DHT Opal VLCC on subjects today for a Yanbu, Saudi Arabia, to South Korea voyage loading from late October at $73.9mn. Notably, this shipment will require the vessel to transit north via the Suez Canal, travel west out of the Mediterranean and around the bottom of Africa to then complete its journey because of the threat of Houthi attacks within the Red Sea on Saudi shipping. The typical voyage via the strait of Bab el-Mandeb would take around 23 days, but this new routing instead requires over 50 days. There are 29 VLCCs actively carrying Saudi crude from either Yanbu or Sidi Kerir, Egypt — the latter port from where Saudia Arabia has been shipping crude for export via the Sumed pipeline to bypass the Suez Canal — into Asia-Pacific via this route to avoid Bab el-Mandeb on 7 October, Vortexa data show. By Ross Griffith Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Q&A: DCC Energy urges support for BioLPG in RED IV
Q&A: DCC Energy urges support for BioLPG in RED IV
London, 6 October (Argus) — Renewable liquid gases such as bioLPG could play a greater role in decarbonising heating and industry, particularly in sectors where electrification is difficult or costly, but stronger demand signals and long-term policy certainty are needed to support investment and production growth, according to Dublin-based LPG distributor DCC Energy. Argus' Evelina Lungu spoke with Emmanuel Mannooretonil, director of sustainable gas at DCC Energy and a board member of Liquid Gas Europe, about bioLPG supply growth, renewable heating policy and the outlook for renewable liquid gases in Europe. Edited highlights follow. To what extent does the current Renewable Energy Directive (RED) framework support investment in renewable liquid gases, and where are the remaining gaps? RED III sets clear and ambitious targets for renewable energy in transport fuels, which have facilitated significant investment in production over recent years. However its provisions for renewable liquid and gaseous fuels in buildings and industry are framed more as indicative targets for member states. The challenge has been to translate these targets into predictable market signals, ideally at European level, while giving member states sufficient flexibility to deploy the solutions best suited to their national circumstances, including renewable liquid and gaseous fuels. Greater long-term certainty around the role of these fuels would help support investment in large-scale production projects. As well as demand-side policy, supply-side incentives — such as the UK's Revenue Certainty Mechanism being designed for sustainable aviation fuel (SAF) producers — will also be necessary in order to de-risk investment for producers. This is especially true when considering production growth from technologies not yet available at commercial scale. How do you see BioLPG fitting into the EU's broader decarbonisation strategy for heating and industry, particularly alongside the strong policy push towards electrification? We strongly believe that electrification will be a key pathway for decarbonisation of heating, and indeed DCC Energy is rapidly growing its presence in this segment, including through our solar offer for commercial and industrial customers in multiple European markets. However there are LPG market segments, such as heating for buildings off the gas grid and industries requiring high temperature process heat, where electrification may not be the most practical or cost-effective decarbonisation solution. In these cases bioLPG is an alternative to electrification which can be deployed rapidly, with no changes required to existing equipment and distribution infrastructure. It can deliver greenhouse gas reductions of 80pc or more compared to fossil LPG, and recent research by Frontier Economics found that this can come at a Total Cost of Ownership which is comparable to or even better than electrification. In parallel bioLPG, when produced from locally sourced feedstocks, will contribute to reducing Europe's dependence on imported fossil fuels. European policy should therefore not fall into the trap of focusing on electrification alone as it risks making decarbonisation less accessible for many of the millions of households and thousands of businesses in Europe who rely on LPG today for heating, cooking and hot water. Supply is often cited as a constraint for BioLPG — what progress have you seen in scaling production, and how quickly can volumes realistically grow? Currently most bioLPG is produced as a byproduct of hydrotreated vegetable oil (HVO) and SAF production, and so as production of these grows in response to RED III and ReFuelEU Aviation mandates, production of bioLPG will also grow. We however see that, in the absence of firm demand signals for bioLPG, refiners may see stronger incentives to consume bioLPG internally rather than releasing to market, which can limit availability for consumers. Liquid Gas Europe's 2025 analysis finds that supply of renewable liquid gases in Europe could reach between 2mn t and 7mn t by 2040, all derived from locally available feedstocks. These could substitute up to 50pc of current LPG consumption, but reaching these levels is highly dependent on the level of policy support available. Ireland's experience with biomethane policy highlights some of the challenges around EU rules — what lessons should governments take when designing national support schemes? DCC Energy fully supports policy design centred around technology neutrality and equal access for producers of renewable fuels to markets across the EU. However a ‘one size fits all' approach may not be the right solution for all markets, especially those at early stages of development. For example, it is currently uncertain whether biomethane imported into Ireland via the connected UK gas grid will be recognised as counting towards the forthcoming Renewable Heat Obligation (RHO). This means that domestically produced biomethane may be the only eligible substitute for natural gas under the RHO. In this case, the proposed certificate multiplier for domestically produced biomethane would have been a significant factor in the rapid scale up of Ireland's nascent local production to achieve the RHO's objectives. We would urge national governments and the EU to take full account of specific local circumstances in policy design and seek creative and pragmatic solutions which can remove roadblocks to scaling renewable fuels while respecting the principles of technology neutrality and the integrity of the single market. The recently leaked RED IV impact assessment appears to move away from post-2030 heating and cooling sub-targets in favour of technology-specific indicators for heat pumps, geothermal and solar thermal, while a broader heating fuel obligation was discarded. How does DCC Energy view this direction of travel? We see the lack of firm demand signals as the most significant factor holding back investment in and growth of renewable liquid gas production. We recognise that the impact assessment does not necessarily present a final legislative proposal, and believe that there remains a strong case for the commission to revisit the role that renewable liquid and gaseous fuels can play in heating beyond 2030 to complement those technologies named in the leaked impact assessment. Renewable Heating Obligations remain a key part of our recommended approach, whether set at EU level or by national governments — such as are already under development in Ireland and Germany — but we would welcome other measures which create credible demand for renewable liquid and gaseous fuels in applications where electrification is difficult or disproportionately costly. Demand-side measures will also need to be complemented by enabling measures, such as targeted production cost support. Updates to mass-balance and chain-of-custody rules would also be required to recognise the highly decentralised nature of liquid gas supply chains and facilitate the scaling of renewable fuels across the single market — while maintaining robust tracking and certification of sustainability credentials. Providing this combination of long-term demand certainty, national flexibility and robust market rules through RED IV and related policy instruments will be important if Europe is to realise the potential of renewable liquid gases to contribute to its 2040 decarbonisation objectives. Are there specific technologies — such as bioLPG, DME, or waste-to-energy — that you are prioritising with capital allocation, and why? DCC Energy is not an energy producer, but together with SHV Energy we have been collaborating with multiple technology providers and developers to identify production pathways for renewable liquid gases which have the potential to be deployed at scale and made available for long-term offtake by distributors. These might include renewable DME via gasification of biogenic wastes and bioLPG via alcohol-to-fuel processes. We believe that a few different pathways will be required to achieve the industry's growth potential, building on the availability of bioLPG via HVO and SAF production. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Germany weighs maritime GHG loophole closure
Germany weighs maritime GHG loophole closure
Hamburg, 5 October (Argus) — The German ministry for the environment, climate action, nature conservation and nuclear safety (BMUKN) is examining various options for closing the so-called maritime loophole. The market has already reacted, with German renewable fuel tickets generated through the maritime loophole now being priced at wider discounts, reflecting increased concerns over potential invalidation. The ministry confirmed to Argus that it is assessing relevant options. No draft proposal currently exists, nor is there a timetable for a possible amendment. The ministry also pointed out that the federal government is already empowered to exclude renewable energy carriers used outside land-based transport from counting towards the Greenhouse Gas Reduction Quota (GHG quota). This authority was introduced through the Second Act on the Further Development of GHG quota. The legislator justified the measure on the grounds that "negative effects on the GHG quota market" should be prevented where they arise "from the use of renewable energy products outside land-based transport — for example in maritime transport". The existing regulation gap allows renewable fuel tickets to be generated for road fuels that are ultimately used in maritime transport. Under article 52 of Germany's energy tax law (EnergieStG), the volumes are initially taxed voluntarily as road transport fuel, making them eligible for compliance under the GHG quota system pursuant to the Federal Immission Control Act. The energy tax paid can subsequently be reclaimed once the fuel has been used in the maritime sector, while the generated renewable fuel tickets remain valid. Market participants said the regulation gap can be used with various biofuels, although advanced B100 biodiesel and bio-LNG are currently the most relevant. According to market participants, the regulation gap is being utilised by established companies in the fuel sector and by specialist firms whose business model is based on the marketing of such renewable fuel tickets. Market participants said the prospect of regulatory changes is already affecting the valuation of the corresponding renewable fuel tickets. Renewable fuel tickets for the category Other current compliance year that were generated through this mechanism are now being traded at discounts of around €40/tCO2e. Previously, discounts had been around €20/tCO2e. Market participants attributed the widening discount to recent discussions about a possible closure of the regulation gap by the BMUKN and resulting concerns over the potential invalidation of affected volumes. At the same time, several market participants considered the retrospective invalidation of previously transferred or already submitted renewable fuel tickets unlikely. Instead, uncertainty relates primarily to the future eligibility of such volumes should the regulation gap be closed. Some buyers have also introduced contractual provisions, excluding the transfer of renewable fuel tickets generated through the loophole to avoid potential regulatory risks. By Ricco Schalamon and Marcel Rothenstein Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Air, sea sustainable fuel tipping points still far off
Air, sea sustainable fuel tipping points still far off
Strong global policy is needed to change sustainable shipping fuel economics, writes Michael Ball Washington, 2 October (Argus) — Significant work remains to transition the world away from fossil fuel in aviation and shipping, despite repeated support pledged at UN climate talks. The need to ramp up the use of alternative fuels will be a focus of the UN's Cop 31 climate summit next month in Antalya, Turkey. The host wants countries to join a new pledge to boost electricity to 35pc of all global final energy consumption by 2035, up from about 20pc currently. Last year's host, Brazil, has its own initiative to quadruple global output and use of sustainable fuels, including biofuels, by 2035. And past Cops have produced other pledges to reduce emissions in aviation or shipping. But alternative fuels have not yet reached their tipping point, accounting for less than 1pc of the fuel used in aviation or shipping globally. Cost and politics remain two of the major roadblocks. The sustainable aviation fuel (SAF) industry has shown signs of growth. Major fuel users, including Delta Airlines and FedEx, have recently extended and expanded SAF offtake agreements . And production is on the rise. For example, Neste, the leading producer of SAF, currently has production capacity of 1.5mn t/yr, which it plans to grow to 2.2mn t/yr in 2027, or about 750mn USG. But SAF still makes up a small, but growing, sliver of fuel use. Suppliers in the EU blended nearly 3pc into jet fuel last year , surpassing the bloc's 2pc mandate in its first year. In the US, SAF accounts for roughly 1pc of jet fuel supply, although the US EIA expects that to soon reach about 2pc. Global production this year is set to exceed 790mn USG, up by 26pc on the year, according to the International Air Transport Association. The story is similar in shipping. Globally, ships of at least 5,000 gross tonnage used more than 223mn t of fuel oil in 2024, about 92.5pc of which came from heavy fuel oil, light fuel oil or diesel, according to International Maritime Organization (IMO) data. Only about 0.8pc came from "other" fuels, despite biofuels jumping to more than 1.2mn t from less than 400,000t in 2023. But the slow pace of fleet turnover, and the need for more engines that can use alternatives, means that the course the industry plots over the next few years could determine whether it can meet the IMO's goal of net zero emissions by 2050, according to a recent report from the Global Centre for Maritime Decarbonisation (GCMD). Cost calculations Cost remains a major hurdle to greater SAF use in aviation and shipping. SAF can reduce emissions under the International Civil Aviation Organisation's Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) system, which seeks to offset any growth in aviation CO2 above 85pc of 2019 levels. But using Corsia carbon offsets currently costs significantly less. Argus assessed Corsia phase 1 credits at $12.45/t this week, compared with an abatement cost as high as $310/t for the US west coast. In other parts of the world , the cost of abating 1t of CO2 equivalent in emissions by using SAF instead of jet fuel is even higher. In shipping, GCMD says strong global policy is needed to change the economics of sustainable fuels, as national and sub-national efforts will fall short. At the top of the list is the IMO-proposed carbon pricing system, the adoption of which was delayed last year in the face of US opposition. IMO pledged to try again this year. The agency will meet next month to consider next steps toward achieving its greenhouse gas emissions goals. "Achieving a price signal of this magnitude will be challenging, but without it, the economics are unlikely to support the transition to new fuels at scale," the GCMD said. Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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