Jet fuel
Overview
Jet fuel market volatility, whether from crude prices, supply issues from refining capacity, or ongoing regulation changes, is a continual risk to your bottom line.
Having a choice in fuel pricing is the best way to mitigate risk and stay on top of market changes. Argus constructs price indexation in a way that is appropriate for each market. By doing so, market participants can align their day-to-day operations, improve management of fuel costs and directly impact their net earnings.
Jet fuel makes up more than 40% of an airline’s total operating expense. The rise in importance of sustainable aviation fuel (SAF) from government mandates and self-regulations from airlines has a direct implication on these operating costs.
Argus helps the jet fuel market participants to make informed decisions and optimize their strategies with price assessments and information on deals done for conventional jet fuel and SAF, as well as the latest market-moving news, in-depth analysis, supply and demand dynamics, and price forecasts.
Latest jet fuel news
Browse the latest market moving news on the global jet fuel industry.
Shell will supply Brussels airport with SAF via DHL
Shell will supply Brussels airport with SAF via DHL
London, 21 November (Argus) — Shell and German logistics group DHL Express have signed a one-year deal for the supply of 25,000t of sustainable aviation fuel (SAF) at Brussels airport. Shell will deliver the SAF via pipeline to the airport. The SAF will be co-processed, meaning it will be produced in a fossil refinery by replacing fossil crude oil with renewable feedstocks. It will be certified by the international sustainability and carbon certification (ISCC) programme. DHL Express customers will be able to claim verified emission reductions (VER) carbon credits linked to the use of the SAF through DHL's book and claim model . DHL recently signed a supply agreement with US-based fuel supplier World Fuel Services for the latter to supply Miami International Airport with around 227mn l of blended SAF — 68mn l of which will be pure SAF — over a two-year period. DHL said it consumed 72,000t of SAF in 2023 for its Scope 1 operations — which refer to a company's direct emissions, becoming one of the top three SAF buyers globally. This amounts to around 15pc of global annual SAF output, based on the International Air Transport Association's estimate of around 500,000t of SAF produced in 2023. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK parliament approves SAF mandate from 2025
UK parliament approves SAF mandate from 2025
London, 6 November (Argus) — The UK parliament has approved the proposed sustainable aviation fuel (SAF) mandate that will come into effect on 1 January, 2025. Obligated suppliers will have to deliver a 2pc share of SAF in 2025, increasing to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation will remain at 22pc from 2040 "until there is greater certainty regarding SAF supply". The obligation arises at the point at which a supplier's jet fuel can be supplied only to UK aviation. Hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but will be capped at 71pc in 2030 and 35pc in 2040. An obligation for Power-to-Liquid (PtL) SAF will be introduced from 2028 at 0.2pc of total jet fuel demand, rising to 0.5pc in 2030 and 3.5pc in 2040. Buy-out mechanisms will be set at the equivalent of £4.70/l ($6.10/l) and £5.00/l ($6.50/l) for the main and PtL obligations, respectively. "It is projected that, between 2025 and 2040, the SAF mandate could deliver up to 25mn t of SAF, securing a saving of up to 54mn t of carbon dioxide", said transport minister John Hendy. The UK confirmed on 17 July it will introduce the Sustainable Aviation Fuel (Revenue Support Mechanism) bill to support SAF production. The government previously said it aims to introduce the mechanism, which will be industry funded, by the end of 2026 . "Together with the SAF mandate, [the mechanism] will give the investment community confidence to invest in these novel and innovative technologies", Hendy said. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil's Porto Alegre airport resumes operations
Brazil's Porto Alegre airport resumes operations
Sao Paulo, 21 October (Argus) — The Porto Alegre airport in Brazil's southern Rio Grande do Sul state resumed operations five months after record floods suspended all flights. The airport, managed by Germany's Fraport, will have the capacity to receive up to 128 flights/d, Fraport said. Initially, the airport is expected to receive 70 flights/d, with that number slated to increase to 122/d in November. Flights will still remain below previous levels. Prior to the floods, the airport had forecast that it would have 5,404 domestic and international flights and transport over 608,000 passengers in April. The airport was closed for 171 days after its terminal and runways flooded during record rainfall that devastated Rio Grande do Sul state in late April and early May. Fraport temporarily operated a reduced number of flights out of the nearby Canoas military base. Even with the closure of the Porto Alegre airport, Brazilian airlines transported over 7.9mn passengers in September, a 4.3pc increase from 7.5mn in the same month last year, according to civil aviation agency Anac. Demand for domestic flights, measured as revenue per kilometer (RPK), increased by 8.8pc in September from a year earlier. The supply of domestic flights, measured as available seat kilometers (ASK), was up by 7.1pc from a year earlier. Demand for domestic flights is up by 3.5pc in the 12 months ending in September, while supply increased by 1.7pc in the period. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Tax credit delay risks growth of low-CO2 fuels
Tax credit delay risks growth of low-CO2 fuels
New York, 15 October (Argus) — A new US tax credit for low-carbon fuels will likely begin next year without final guidance on how to qualify, leaving refiners, feedstock suppliers, and fuel buyers in a holding pattern. The US Treasury Department this month pledged to finalize guidance around some Inflation Reduction Act tax credits before President Joe Biden leaves office but conspicuously omitted the climate law's "45Z" incentive for clean fuels from its list of priorities. Kicking off in January and lasting through 2027, the credit requires road and aviation fuels to meet an initial carbon intensity threshold and then ups the subsidy as the fuel's emissions fall. The transition to 45Z was always expected to reshape biofuel markets, shifting benefits from blenders to producers and encouraging the use of lower-carbon waste feedstocks, like used cooking oil. And the biofuels industry is used to uncertainty, including lapsed tax credits and retroactive blend mandates. But some in the market say this time is unique, in part because of how different the 45Z credit will be from prior federal incentives. While the credit currently in effect offers $1/USG across the board for biomass-based diesel, for example, it is unclear how much of a credit a gallon of fuel would earn next year since factors like greenhouse gas emissions for various farm practices, feedstocks, and production pathways are now part of the administration's calculations. This delay in issuing guidance has ground to a halt talks around first quarter contracts, which are often hashed out months in advance. Renewable Biofuels chief executive Mike Reed told Argus that his company's Port Neches, Texas, facility — the largest biodiesel plant in the US with a capacity of 180mn USG/yr — has not signed any fuel offtake contracts past the end of the year or any feedstock contracts past November and will idle early next year absent supportive policy signals. Biodiesel traders elsewhere have reported similar challenges. Across the supply chain, the lack of clarity has made it hard to invest. While Biden officials have stressed that domestic agriculture has a role to play in addressing climate change, farmers and oilseed processors have little sense of what "climate-smart" farm practices Treasury will reward. Feedstock deals could slow as early as December, market participants say, because of the risk of shipments arriving late. Slowing alt fuel growth Recent growth in US alternative fuel production could lose momentum because of the delayed guidance. The Energy Information Administration last forecast that the US would produce 230,000 b/d of renewable diesel in 2025, up from 2024 but still 22pc below the agency's initial outlook in January. The agency also sees US biodiesel production falling next year to 103,000 b/d, its lowest level since 2016. The lack of guidance is "going to begin raising the price of fuel simply because it is resulting in fewer gallons of biofuel available," said David Fialkov, executive vice president of government affairs for the National Association of Truck Stop Operators. And if policy uncertainty is already hurting established fuels like biodiesel and renewable diesel, impacts on more speculative but lower-carbon pathways — such as synthetic SAF produced from clean hydrogen — are potentially substantial. An Argus database of SAF refineries sees 810mn USG/yr of announced US SAF production by 2030 from more advanced pathways like gas-to-liquids and power-to-liquids, though the viability of those plants will hinge on policy. The delay in getting guidance is "challenging because it's postponing investment decisions, and that ties up money and ultimately results in people perhaps looking elsewhere," said Jonathan Lewis, director of transportation decarbonization at the climate think-tank Clean Air Task Force. Tough process, ample delays Regulators have a difficult balancing act, needing to write rules that are simultaneously detailed, legally durable, and broadly acceptable to the diverse interests that back clean fuel incentives — an unsteady coalition of refiners, agribusinesses, fuel buyers like airlines, and some environmental groups. But Biden officials also have reason to act quickly, given the threat next year of Republicans repealing the Inflation Reduction Act or presidential nominee Donald Trump using the power of federal agencies to limit the law's reach. US agriculture secretary Tom Vilsack expressed confidence last month that his agency will release a regulation quantifying the climate benefits of certain agricultural practices before Biden leaves office , which would then inform Treasury's efforts. Treasury officials also said this month they are still "actively" working on issuing guidance around 45Z. If Treasury manages to issue guidance, even retroactively, that meets the many different goals, there could be more support for Congress to extend the credit. The fact that 45Z expires after 2027 is otherwise seen as a barrier to meeting US climate goals and scaling up clean fuel production . But rushing forward with half-formed policy guidance can itself create more problems later. "Moving quickly toward a policy that sends the wrong signals is going to ultimately be more damaging for the viability of this industry than getting something out the door that needs to be fixed," said the Clean Air Task Force's Lewis. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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