SAF still best emissions tool for airlines: Panel
Sustainable aviation fuel (SAF) is still the airline industry's best way to limit emissions in the short- term, according to panelists at an Argus event today, despite its higher costs and technical challenges.
The ability to use SAF in existing infrastructure and aircraft without the need to replace equipment highlights the fuel as a "now solution" to carbon reduction, said Southwest Airline's director of environmental sustainability, Helen Giles, at the Argus North American Biofuels, LCFS & Carbon Markets Summit in Monterey, California.
The cost of SAF production, current availability and blend limits with conventional aviation fuel — which is currently at 50pc — are headwinds to its increased use. But other alternatives, like hydrogen and batteries, also face significant challenges, including their potential weight increase for aircraft and the loss of passenger space. They also must play catch-up to the current and proposed SAF developments.
SAF demand has surged in recent years even though production remains in the early stages of development, said Chris Cooper, president of Neste US, the US subsidiary of the world's largest renewable fuels producer. Global demand has Neste selling "every drop" of SAF produced in the next 10 years, Cooper said.
More competition among SAF producers will be welcome, said Tim Cesarek, chief operational officer for US renewable fuel producer GEVO. Developments in all seven SAF pathways, such as using vegetable oil and animal fats as feedstocks, is needed to close the gap between conventional jet fuel and SAF consumption, Cesarek said.
GEVO acknowledged that it may need to rely on sectors that value the decarbonization benefits of SAF to minimize the costs to other customers.
Related news posts
Norwegian Cruise swings to 1Q profit
Norwegian Cruise swings to 1Q profit
New York, 1 May (Argus) — US-based cruise ship operator Norwegian Cruise Line's (NCL) swung to a profit in the first quarter on record bookings. The company posted a $69.5mn profit in the first quarter, compared with a $127.7mn loss during the same period of 2023. Revenue rose by 20pc to $2.19bn in the quarter from a year earlier as the cruise operator reported record quarterly bookings. Cruise operating expenses were up by 8pc at $1.39bn in the quarter from a year earlier. Norwegian rerouted some of its voyages that were previously expected to sail through the Red Sea. But demand from other regions offset the effect of the redeployed voyages. The company spent $197.7mn on marine fuel in the first quarter, 1pc up from $194.9mn in the first quarter of 2023. The company burned 269,000t of marine fuel and did not disclose its fuel consumption for the first quarter of 2023. It expects to burn about 245,000t in the second quarter and 995,000t for full 2024, split evenly between residual fuel oil and marine gasoil. Currently, it has hedged about 35pc of its fuel oil consumption at $395/t and 75pc of its marine gasoil consumption at $746/t for the entire 2024. Starting this year, Norwegian had been applying to the EU innovation fund with the goal of accelerating the transition of six of its vessels from being methanol ready to being fully methanol capable. Biomethanol was pegged at $2,223/t very low-sulphur fuel oil equivalent (VLSFOe) or 3.7 times the price of VLSFO average in April in the Amsterdam-Rotterdam-Antwerp bunkering hub, Argus assessments showed. Methanol was assessed at $699/t VLSFOe or 1.2 times the price of VLSFO. The company also has half of its fleet equipped with shoreside technology allowing it to use port electricity and minimize emissions during port stays. Norwegian has ordered eight new vessels for delivery from 2025-2036. Separately, its subsidiaries Oceania Cruises and Regent Seven Seas will take delivery of three new vessels from 2025-2029 and two new vessels from 2026-2029, respectively. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Derailment may interrupt SoCal renewable diesel
Derailment may interrupt SoCal renewable diesel
Houston, 1 May (Argus) — A Union Pacific train derailment in Colton, California, this week could curtail rail-delivered renewable diesel (RD) availability near Los Angeles. Up to three train cars derailed on the morning of 30 April in the Union Pacific West Colton rail yard, about 65 miles east of Los Angeles, Union Pacific said Wednesday. The cars remained upright during the incident, and cleanup was ongoing as of Wednesday morning. Renewable diesel market participants said the terminal — a hub for the product — was sold out pending the restart of deliveries, although there was no immediate price reaction in the R99 spot market. Spot differentials for rail delivered R99 in Los Angeles have ranged from 20-30¢/USG above Nymex ULSD this week. Renewable diesel deliveries by rail into PADD 5 were down in the first two months of 2024, according to Energy Information Administration data. Rail volumes totaled around 1.19mn bl in February, the lowest monthly total since May 2023 and a 10pc monthly decline after deliveries from the Midwest more than halved from January. By Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Treasury updates SAF tax credit guidelines
US Treasury updates SAF tax credit guidelines
Houston, 30 April (Argus) — The US Treasury Department released long-awaited guidance on tax credit eligibility for ethanol-derived sustainable aviation fuel (SAF) Tuesday, incorporating so-called climate-smart agricultural (CSA) practices. As part of the new guidance, the agencies comprising the SAF Interagency Working Group (IWG) are jointly releasing the 40B SAF-GREET 2024 model, which provides another methodology for SAF producers to determine lifecycle greenhouse gas (GHG) emissions rates of their production for the credit. It also incorporates a pilot program to encourage the usage of CSA practices for SAF feedstocks. In collaboration with the US Department of Agriculture (USDA), the major changes include further guidance on farming practices, including no-till farming, planting cover crops and enhanced efficiency fertilizer. The $1.25/USG 40B SAF credit applies to a qualified fuel mixture containing SAF for certain sales or uses after 31 December 2022, and before 1 January 2025. To qualify for the credit, the SAF must have a minimum lifecycle greenhouse gas emissions reduction of 50pc compared with petroleum-based jet fuel. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50pc, for a maximum credit of $1.75/USG. The modified version of the Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) also incorporates new data, including updated modeling of key feedstocks and processes used in aviation fuel and indirect emissions. The modified GREET model also integrates key GHG emission reduction strategies, such as carbon capture and storage, renewable natural gas, and renewable electricity. The notice provides a safe harbor for use of the USDA Climate Smart Agriculture Pilot Program to further cut the emissions reduction percentage calculated for domestic soybean and domestic corn feedstocks and for certifying the related requirements. For corn ethanol-to-jet, the pilot provides a greenhouse gas reduction credit if a "bundle" of certain CSA practices — no-till farming, cover crop planting, and enhanced efficiency fertilizer — are used. It would also allow a greenhouse gas reduction credit for soybean-to-jet production if the soybean feedstock is produced using similar CSA practices. This is a pilot program specific to the 40B credit under the Inflation Reduction Act (IRA), which is in effect for 2023 and 2024. A new 45Z-GREET will be developed for use with the 45Z tax credit, which starts on 1 Jan 2025. Given the similar language between section 40B and section 45Z of the IRA regarding methods for determining lifecycle greenhouse gas emissions reduction percentages, it is expected that the positions taken by Treasury and the IRS related to the section 40B credit will be similar for the new clean fuel producer credit under section 45Z. Industry reaction mixed Renewable fuels groups welcome the updated pathway for ethanol-to-jet, but the groups expressed concern over the scope of the guidance. "We are encouraged that, for the first time ever, this carbon scoring framework will recognize and credit certain climate-smart agricultural practices," Renewable Fuels Association president and chief executive Geoff Cooper said. "However, RFA believes less prescription on ag practices, more flexibility, and additional low-carbon technologies and practices should be added to the modeling framework to better reflect the innovation occurring throughout the supply chain." Kailee Buller, chief executive of the National Oilseed Processors Association, also said the new guidance has shortcomings. "We are concerned the requirement to implement climate-smart ag practices simultaneously will limit this opportunity, particularly in parts of the country where it may not be possible to plant a cover crop or the cost to implement new practices is too steep," Buller said. Both groups said they would continue to work with the Biden administration to further opportunities for SAF development. By Matthew Cope and Payne Williams Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
New US rule may let some shippers swap railroads
New US rule may let some shippers swap railroads
Washington, 30 April (Argus) — US rail regulators today issued a final rule designed to help customers switch railroads in cases of poor rail service, but it is already drawing mixed reviews. Reciprocal switching, which allows freight shippers or receivers captive to a single railroad to access to an alternate carrier, has been allowed under US Surface Transportation Board (STB) rules. But shippers had not used existing STB rules to petition for reciprocal switching in 35 years, prompting regulators to revise rules to encourage shippers to pursue switching while helping resolve service problems. "The rule adopted today has broken new ground in the effort to provide competitive options in an extraordinarily consolidated rail industry," said outgoing STB chairman Martin Oberman. The five-person board unanimously approved a rule that would allow the board to order a reciprocal switching agreement if a facility's rail service falls below specified levels. Orders would be for 3-5 years. "Given the repeated episodes of severe service deterioration in recent years, and the continuing impediments to robust and consistent rail service despite the recent improvements accomplished by Class I carriers, the board has chosen to focus on making reciprocal switching available to shippers who have suffered service problems over an extended period of time," Oberman said today. STB commissioner Robert Primus voted to approve the rule, but also said it did not go far enough. The rule adopted today is "unlikely to accomplish what the board set out to do" since it does not cover freight moving under contract, he said. "I am voting for the final rule because something is better than nothing," Primus said. But he said the rule also does nothing to address competition in the rail industry. The Association of American Railroads (AAR) is reviewing the 154-page final rule, but carriers have been historically opposed to reciprocal switching proposals. "Railroads have been clear about the risks of expanded switching and the resulting slippery slope toward unjustified market intervention," AAR said. But the trade group was pleased that STB rejected "previous proposals that amounted to open access," which is a broad term for proposals that call for railroads to allow other carriers to operate over their tracks. The American Short Line and Regional Railroad Association declined to comment but has indicated it does not expect the rule to have an appreciable impact on shortline traffic, service or operations. Today's rule has drawn mixed reactions from some shipper groups. The National Industrial Transportation League (NITL), which filed its own reciprocal switching proposal in 2011, said it was encouraged by the collection of service metrics required under the rule. But "it is disheartened by its narrow scope as it does not appear to apply to the vast majority of freight rail traffic that moves under contracts or is subject to commodity exemptions," said NITL executive director Nancy O'Liddy, noting it was a departure from the group's original petition which sought switching as a way to facilitate railroad economic competitiveness. The Chlorine Institute said, in its initial analysis, that it does not "see significant benefit for our shipper members since it excludes contract traffic which covers the vast majority of chlorine and other relevant chemical shipments." By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more