UK launches SAF mandate consultation, unveils funding
The UK has begun consulting on a sustainable aviation fuel (SAF) mandate, proposing up to 10pc SAF by 2030 and up to 75pc by 2050 with the mandate starting in 2025.
The government proposed to implement the mandate as a greenhouse gas (GHG) emissions scheme, with the obligation set to fall on the fuel supplier, and to allow only waste-derived biofuels, renewable fuels of non-biological origin (RFNBOs), SAF from nuclear energy and recycled carbon fuels (RCFs).
The government said that it may cap the share of mandated SAF produced through the hydroprocessed ester and fatty acids (HEFA) pathway, in order to drive commercialisation of less-developed technologies and to prioritise biofuels use on roads in the short term. It will also consider the introduction of a multiplier or sub-targets for synthetic fuels.
To avoid the double counting of emissions saved through SAF, the UK proposed that product supplied under the mandate would not count towards decarbonisation targets from other legislated GHG obligations, either in the UK or abroad. The government will also seek feedback on whether a buy-out mechanism should be introduced.
The consultation closes on 19 September and results will be published in autumn or winter.
This follows the EU's proposal of a SAF mandate for jet fuel suppliers, which would require aircraft landing at EU airports to use blended jet fuel with a 2pc SAF share by 2025, 5pc by 2030, 20pc by 2035, 32pc by 2040 and 63pc by 2050. Synthetic aviation fuels, including hydrogen, would rise from a 0.7pc share by 2030 to 11pc by 2045 and 28pc by 2050.
To counter tankering strategies, where aircraft heading to airports with more expensive refuelling services take on larger amounts than needed to save on fuel costs, the EU has proposed that the amount of aviation fuel taken on by aircraft operators at EU airports must be at least 90pc of their annual fuel requirements.
Yesterday the UK's Department for Transport (DfT) said it will take steps to mitigate the potential risk of tankering in the UK.
The launch of the UK SAF mandate consultation coincides with the government's announcement that eight companies have been shortlisted to share £15mn government funding through its 'Green Fuel, Green Skies' competition to support development of production plants to turn waste into SAF. The shortlisted companies plan to produce at least a combined 500mn l of biojet from a combination of CO2 captured from the atmosphere with hydrogen from water, from alcohol derived from wastes, from everyday household and commercial waste and from sewage. The projects are at different stages of development and will be located across the UK.
Last week the UK began a consultation called Jet Zero, which commits the aviation sector to a net-zero emissions target by 2050. The government has also set a target to reach net-zero emissions in UK domestic aviation by 2040 and for all airport operations in England to have zero emissions by that date.
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Norway-German H2 pipeline hinges on demand: Equinor
Norway-German H2 pipeline hinges on demand: Equinor
London, 24 April (Argus) — Norway and Germany have renewed a commitment to the idea of a hydrogen pipeline, but Norwegian state-owned Equinor expects the link will come in a secondary stage of development as it is focused on hydrogen production in mainland Europe as a first step. Equinor plans to take a final investment decision in late 2025 on its 210,000 t/yr Eemshaven low-carbon hydrogen plant in the Netherlands, the company's director of H2 northwest Europe Henrik Solgaard Andersen said at the Hydrogen and Fuel Cells conference in Hanover. Equinor hopes the project will supply German buyers that participate in the country's carbon contracts for difference (CfD) auctions, which are designed to help large industry decarbonise, Andersen said. Equinor has entered the final phase of studies for the plant. The facility would reform natural gas from the Norwegian offshore to hydrogen with carbon capture and storage (CCS). Undertaking this in the Netherlands means existing pipelines can be used to carry the gas from Norway rather than having to build new links. Equinor sees this as its most mature hydrogen project, followed by one near the German port of Rostock , and one near Ghent in Belgium , according to Andersen. These "local European projects" are designed for early market development and "will be the first step," he said. Equinor expects to start large-scale production of hydrogen in Norway with pipeline exports to the continent only when there is a big enough market, he said. "You don't invest in a pipeline €4bn-6bn just for [transporting] a few molecules," he said. "You need to believe in the market." Equinor in early 2023 announced a plan to supply hydrogen from Norway to German utility RWE for use in power plants. But Berlin has shifted its plans for hydrogen power a couple of times since then. It also has ambitions to use hydrogen in sectors like steel, but companies have not yet taken firm investment decisions, meaning there is uncertainty about how much hydrogen demand will materialise and when. A joint government task force working on a Norwegian-German pipeline has identified the first regulatory barriers that need to be addressed, and private infrastructure companies will continue to study the logistics, according to an announcement from Oslo and Berlin. This will build on the positive feasibility study from last year. German gas system operator operator Gascade, which is developing the AquaDuctus North Sea pipeline connection to Germany, and Norwegian state-owned operator Gassco that is developing the Norwegian side, are aiming for a 2030 start date, the companies reaffirmed this week. Gascade has proposed an open access pipeline that would be able to aggregate hydrogen exports from England, Scotland, Norway, Denmark, and North Sea wind farms. By Aidan Lea Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil 1Q tallow exports triple on long-term contracts
Brazil 1Q tallow exports triple on long-term contracts
Sao Paulo, 22 April (Argus) — Brazilian beef tallow exports totaled 73,930 metric tonnes (t) in the first quarter, a three-fold increase from the same three-month period in 2023 on rising demand. Almost 93pc of outflows between January and March were shipped to the US, according to data from Brazil's trade ministry. Long-term contracts explain the rising flow of exports, even though spot market arbitrage was closed throughout the first quarter (see chart) . The price of tallow in the Paranagua and Santos ports was $960/t fob on 19 April, keeping the arbitrage closed to US Gulf coast buyers, where the reference product was at $901/t on a delivered inland basis. Brazilian tallow is also negotiated at a premium against soybean oil, which closed at $882/t fob Paranagua on 19 April. This scenario has been observed since the 1 December 2023 start of Argus ' tallow export price assessment. Historically, vegetable oil in Brazil was traded at a discount to tallow, but strong demand has boosted the price of animal fat. Some biodiesel plants have been purchasing used cooking oil (UCO) or pork fat as an alternative. In 2023, there were doubts about whether the outflow of tallow from Brazil would be constant. Market participants now believe that the 2024 start of operations at new renewable diesel refineries in the US should sustain exports. Local suppliers that have already signed supply guarantee contracts — some up to three years — with American buyers are also considering export opportunities with Asia, including a new renewable diesel plant in Singapore that could receive Brazilian cargoes. Expansion projects are propelling US demand, including work that would bring capacity at Marathon Petroleum's Martinez Renewables plants in California to 2.35mn m³/y (40,750 b/d)and the Phillips 66 Rodeo unit in northern Californiato 3mn m³/y. These and other new projects will increase annual US demand for tallow by 5mn t. Maintenance on the horizon Maintenance at US refineries has Brazilian sellers bracing for a short-term drop in prices. Between May and June the Diamond Green Diesel (DGD) unit in Port Arthur, Texas, will shut down for maintenance, a stoppage that could impact demand for Brazilian inputs. Market participants have already observed a slight increase in domestic tallow supply, a change they attribute to maintenance at DGD. The advance of the soybean crop in Argentina is also expected to increase the supply of feedstocks to North American plants, as some refineries are returning to soybean oil after a hiatus of several years. The soybean oil quote on the Chicago Board of Trade (CBOT) is an important reference for the price of tallow. By Alexandre Melo Renewable feedstocks in Brazil on fob basis R/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US biodiesel faces poor production economics
US biodiesel faces poor production economics
Houston, 19 April (Argus) — US biodiesel producers are facing worsening production economics, as evidenced by a deteriorating correlation between the soybean oil-heating oil (BOHO) spread and biomass-based diesel D4 renewable information number (RIN) credits. Historically, tighter values in the BOHO spread, an indicator of soybean oil-based biodiesel production margins, have applied downward pressure to D4 RIN values, as biodiesel producers change their credit position, depending on the economics of their operation. But rising renewable diesel production has swelled the supply of D4 RINS, reducing credit values and making it harder for producers to monetize RIN credits, as the correlation between the two production factors deteriorates. Regression analysis measuring the effect of the BOHO spread on the next month's D4 price shows a decoupling of the relationship in recent years, with BOHO in the last two years about half as predictive of the change in D4 credit prices as it was in the years since 2016. The least correlated periods were in the fourth quarter of last year and the first quarter this year. In those quarters, the predictability of the BOHO spread came to 32pc and 34pc, respectively, meaning they were not predictive. The drop coincided with falling credit prices as substantial growth in renewable diesel production oversupplied the D4 RIN market. Unlike biodiesel, renewable diesel draws from a more diverse pool of feedstocks including beef tallow and used cooking oil, making renewable diesel production economics less dependent on soybean oil. D4 RINs have fallen at a faster rate than BOHO over the last year. D4 credits averaged 58.2¢/RIN in the first quarter, down by roughly two-thirds on the year, while BOHO narrowed by 49pc to 79.64¢/USG in the same period. D4 RIN equivalence, a 1.5x multiplier applied to the RIN value that factors in the amount of generated RINs/USG of biodiesel produced, averaged a 7.66¢/USG premium to BOHO in the first quarter, down from 87.73¢/USG a year earlier, leaving producers less room to profit from producing biodiesel. D4 RIN equivalence ended the first quarter at a discount to BOHO, averaging 9.6¢/USG less than BOHO from 6 March-31 March, and obligated parties have had trouble recouping production costs using RINs. Current production fundamentals could force smaller soybean oil-based biodiesel producers to reduce output in the second half of the year, as some producers have not reached purchase agreements for that period, according to market participants. Some facilities have closed. In March, Chevron REG announced the closure of two biodiesel plants in Wisconsin and Iowa "due to market conditions." By Payne Williams and Matthew Cope D4 Prices Vs BOHO Spread $ Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Amapá cancela regime especial de ICMS
Amapá cancela regime especial de ICMS
Rio de Janeiro, 18 April (Argus) — O Secretário da Fazenda (Sefaz) do Amapá (AP) cancelou ontem o regime especial de tributação de empresas importadoras de combustíveis, colocando um fim a uma situação que gerava distorções de preços no mercado de diesel . A decisão do órgão foi publicada no diário oficial desta quarta-feira, dia 17, e contempla os regimes especiais do tributo estadual ICMS de oito empresas, entre elas a Refinaria de Manguinhos, que pertence ao grupo Fit, Amapetro, Axa Oil, Alba Trading e Father Trading. No caso da Amapetro, a empresa pagava uma alíquota efetiva de 4pc do valor da importação nas compras de outros países para uso próprio para consumo dentro do estado. Considerando a média do indicador Argus de importação de diesel de origem russa ao longo de março, isso equivaleria a R$136,9/m³.O valor atual do ICMS nos outros estados brasileiros é de R$1.063/m³ desde 1 de fevereiro. O estado teria importado 197.244m³ de diesel em março, de acordo com informações do Ministério do Desenvolvimento, Indústria, Comércio e Serviços (MDIC). Isso equivale a 15,9pc do total de diesel importado pelo Brasil no mês. O consumo de diesel A do estado foi de 6.250m³ no mês passado, equivalente a 0,1pc do consumo nacional, de acordo com os dados da Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP). As autorizações do estado criavam distorções de preços no mercado e perdas de arrecadação fiscal em várias estados onde o produto acabava sendo consumido. Associações de produtores e distribuidores de diesel vinham pressionando o poder público nos últimos meses para derrubar esses regimes especiais. De acordo com o Instituto Combustível Legal, a medida causou um prejuízo de R$1 bilhão aos estados onde o combustível importado no âmbito do regime especial era efetivamente consumido, citando os estados de São Paulo, Paraná e Pernambuco como principais destinos. No início do mês, a Refina Brasil, que reúne as refinarias de petróleo independentes do país, estimou que o contribuinte amapaense pagava um valor próximo a R$0,83/l em subsídios para importadores. Por Amance Boutin Envie comentários e solicite mais informações em feedback@argusmedia.com Copyright © 2024. Argus Media group . Todos os direitos reservados.
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