Looming EU targets drive Ucome price higher
With fuel suppliers rushing to meet their renewables blending mandates for transport fuels before the end of the year, demand for used cooking oil methyl ester (Ucome) — a waste-based biodiesel incentivised under the EU's Renewable Energy Directive (RED) — has driven prices in the Amsterdam-Rotterdam-Antwerp (ARA) region to near record levels amid tight supply.
While Ucome is not usually a preferred product during the winter period because of an associated cold filter plugging point (CFPP) of 0°C, many in the market have been focusing on the high greenhouse gas (GHG) savings product, which can be double-counted by volume towards transport targets as per RED legislation for wastes and residues. Demand for the waste-based biodiesel in northwest European prompt physical markets has increased sharply this quarter, with a record 60,000t traded on the spot market in October alone.
The Argus RED Ucome fob ARA range spot price, with GHG savings of 87pc, has hit highs not seen since June 2014 this week — rising to $1,235/t yesterday, up by $111/t compared with 1 October. For comparison, Fame 0°C CFPP — a European benchmark price comprising crop-based biodiesel — was set at $803/t on 12 November on a fob ARA range basis.
With rival waste-based biodiesel made from tallow (TME) having a CFPP of around 12-13°C and renewable diesels produced through non-esterification processes being much more expensive, Ucome has become the primary option for market participants looking for double-counting product to reach their targets before the end of the year.
The increase in demand has come at a time of limited availability. The European market lost around 80,000 t/yr of Ucome production in August after Dutch producer Biodiesel Kampen was declared bankrupt and Ucome imports of Chinese origin have slowed in recent months.
Prices for imported used cooking oil (UCO) have also been increasing steadily on a cif ARA basis, with values hovering around the $700/t mark in October and the first half of November, much higher than a year earlier when they averaged $610/t in the same period.
The RED Ucome price will likely soften, more in line with seasonal norms, in the first quarter of next year, as participants renew their focus on biodiesel with lower CFPP in the first few months of the new year. The supply picture is also expected to ease, as production will resume at Kampen's 80,000 t/yr plant in Overijssel, Netherlands, having been acquired by another local producer Sunoil. But this comes against a backdrop of higher renewables blending targets across EU member states as they seek to hit a 10pc share of transport fuels for 2020 under RED, which should drive the Ucome price higher still from the second quarter.
By Giulia Squadrin
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Gunvor set for buying spree after windfall: CEO
Gunvor set for buying spree after windfall: CEO
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Japan’s Idemitsu, Zen-noh tie up on SAF feedstock
Japan’s Idemitsu, Zen-noh tie up on SAF feedstock
Osaka, 11 April (Argus) — Japanese refiner Idemitsu has agreed to collaborate with Zen-noh Grain, a US subsidiary of Japan's national federation of agricultural co-operative associations (Zen-noh), to secure feedstock to produce sustainable aviation fuel (SAF). Idemitsu will work together with Louisiana-based Zen-noh Grain to establish an SAF supply chain, by developing various types of its feedstocks in North America and bringing some of them to Japan to produce SAF, Idemitsu announced on 11 April. Under the deal, the companies plan to extract oil from soybeans, which Zen-noh handles in Japan and the US, and process it to SAF by using hydrotreated esters and fatty acids (Hefa) technology. The firms are also aiming to develop other non-edible oilseed feedstocks, such as camelina sativa, carinata and winter rapeseed, as off-season soybean crops in North America, while studying possible uses for the leftover residue after extraction of oil from pongamia in Japan. Idemitsu is gearing up efforts to secure sufficient SAF feedstocks to meet its SAF output target of 500mn litres/yr by 2030, by utilising Hefa and alcohol-to-jet (ATJ) technologies. The company plans to start up its first 100mn l/yr ATJ plant at its Chiba refinery in the April 2026-March 2027 fiscal year. It is also considering Hefa SAF production at its Tokuyama petrochemical complex. Japan's demand for SAF is expected to continue rising, to meet its net zero greenhouse gas emissions in 2050 goal. Demand is expected to reach 1.71bn l/yr by 2030, with Japan's trade and industry ministry (Meti) planning to mandate that SAF make up at least 10pc of total jet fuel consumption by volume. Meti forecasts SAF supplies to be 1.92bn l/yr, but there is uncertainty because of feedstock availability and technology development. A number of Japanese firms are attempting to secure used cooking oil (UCO), as UCO is potentially a key feedstock in SAF production. But its supply remains limited. Around 380,000t of UCO was collected in Japan during the April 2021-March 2022 fiscal year, according to the country's federation for UCO recycling co-operatives, UCO Japan. Out of this, 200,000t was used for livestock feed, mostly for chicken, while 120,000t was exported to mainly Europe. To ensure a stable supply of SAF feedstocks, the Tokyo Metropolitan Government (TMG) is planning to conduct a feasibility study to produce SAF from general waste in Tokyo, or industrial waste from inside and outside Tokyo if securing suitable general waste is difficult. The TMG aims to select around three projects through a public tender, which is open for bids from 4-25 April, with a plan to provide up to ¥25mn ($163,169) of subsidies per project. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan backs coconuts as alternative SAF feedstock
Japan backs coconuts as alternative SAF feedstock
Tokyo, 11 April (Argus) — Non-standard coconuts have been registered as a feedstock to manufacture sustainable aviation fuel (SAF) by the International Civil Aviation Organisation (ICAO) after being promoted by the Japanese government. Japan's Ministry of Land, Infrastructure and Transportation (MLIT) suggested ICAO recognise non-standard coconuts, which are discarded and non-edible because of mould and cracks, as an official SAF feedstock under ICAO's Carbon Offsetting and Reduction Scheme for International Aviation. There are 5mn t/yr of non-standard coconuts produced globally, according to MLIT, which can produce around 300,000 t/yr or 380,000 kilolitre (kl)/yr) of SAF. MLIT promoted the use of non-standard coconuts because supplies of SAF's main feedstock used cooking oil (UCO) are tight, with demand for SAF expected to grow rapidly with the decarbonisation of the aviation industry. Diversification of feedstocks is necessary to boost SAF production, said MLIT. Japan's SAF demand is expected to reach 1.71mn kl/yr by 2030, with Japan's trade and industry ministry (Meti) planning to mandate that SAF make up at least 10pc of total jet fuel consumption by volume. Meti also forecast SAF supplies to be 1.92mn kl/yr but there is uncertainty because of feedstock availability and technology development. Japanese companies have attempted to secure stable UCO supplies. Refiner Eneos plans to buy an unspecified volume of UCO from Japanese real estate firm Tokyu Land's shopping centres, hotels and golf clubs. It targets to operate a 400,000 kl/yr SAF plant in west Japan's Wakayama prefecture from the April 2026-March 2027 fiscal year. Japan Airlines has started collecting UCO from households in Yokohama with an aim of starting to produce SAF from 2025. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California considers tougher LCFS ‘step down’
California considers tougher LCFS ‘step down’
Washington, 9 April (Argus) — California regulators may set more aggressive near-term targets for the state's Low Carbon Fuel Standard (LCFS) to help reduce the large volume of excess credits available in the market as they continue to explore guardrails for crop-based biofuels. Those are among the changes the California Air Resources Board (CARB) floated in a staff presentation published on Tuesday ahead of a rulemaking workshop taking place tomorrow. CARB's initial proposal, published in December , included a more stringent target of a 30pc reduction in transportation fuel carbon intensity by 2030, mechanisms to automatically make the program tougher when new credits outstrip new deficits by certain levels, and other modifications to the eligibility of certain fuels to create credits and deficits. But following significant public feedback, the agency delayed a potential vote on the amendments and scheduled the new workshop. CARB staff plan to maintain the 30pc by 2030 and 90pc by 2045 targets from the December proposal but are exploring using a steeper "step-down" in 2025 than previously proposed. It could be set at 7pc or 9pc, instead of 5pc. These steeper targets could help draw down the oversupply by 17mn-27mn credits cumulatively from 2024-2046, according to the staff presentation. The program had a record surplus of about 20.6mn credits at the end of the third quarter of 2023, according to the latest program data. The cumulative drawdown could be even greater, around 170mn credits, if the proposed auto-adjustment mechanism is triggered twice over the next few years, according to the presentation. Stakeholders have raised concerns on future impacts of crop-based biofuels during past workshops. CARB continues to explore guardrails to encourage the use of waste-based feedstocks and ensure that biofuel production does not come at the expense of deforestation or food production, it said in the workshop materials. The agency has proposed requiring an independent feedstock certification process, implementing a built-in timeline to develop these standards and approval processes by third-party certifiers, and removing palm-derived fuels from being eligible for credit generation. CARB would leverage existing certification programs, including the International Sustainability and Carbon Certification (ISCC). The agency has proposed that all crop and forest-based feedstocks require certification by 1 January 2028. For non-waste feedstocks, the carbon intensity score includes land-use change (LUC) value. The agency is evaluating whether to increase LUC for certain fuel/feedstock combinations, in an effort to minimize deforestation risks. LCFS programs require yearly reductions in the carbon intensity of transportation fuels. Higher-carbon fuels that exceed the annual limit incur deficits that suppliers must offset with credits generated from the distribution of approved, lower-carbon alternatives. The program currently requires a 20pc carbon intensity reduction by 2030. By Michael Ball and Jessica Dell Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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