Biomethanol market slows, but shipowners eye offtakes

: Biofuels, E-fuels
24/05/16

The UK's biomethanol consumption fell by 37pc last year as competition from alternative renewable fuel compliance options weighed on demand.

The UK consumed 40mn litres of biomethanol in 2023, down from 63mn l in 2022, 53mn l in 2021 and 48mn l in 2020, according to provisional data from the country's Department for Transport.

Biomethanol is used as a blending component for gasoline in the UK. Market participants attribute the decline in demand to ample supply of competitively priced alternatives to meet the UK's mandate for the use of renewable fuels in the transport sector.

Fob ARA range biodiesel prices fell to a 19-month low towards the end of 2023, following an unusually large influx of supply to Europe from China since the start of the year. EU biodiesel imports from China reached a record 1.06mn t in 2023, up from 557,000t in 2022, according to GTT data.

The increase in imports contributed to lower renewable fuel ticket prices in key European markets, including the UK. Companies supplying biofuels for transport in the UK can generate renewable transport fuel certificates (RTFCs), which are tradeable and can help obligated parties meet the UK's renewables' mandate. The Argus UK non-crop RTFC reduction obligation price averaged 21.79 pence/RTFC in 2023, compared with 36.35p in 2022. The price has averaged 16.79p so far this year, compared with 26.40p and 37.39p in the same period in 2023 and 2022, respectively.

The drop in demand for biomethanol from the UK transport sector is weighing on domestic prices. The Argus cif UK biomethanol price has averaged $1,081.43/t so far in May, having been on a consistent downward trend since late October when the price peaked at $1,205/t. The price averaged $1,212.75/t in May 2023.

The slowdown in demand has put biomethanol production margins under pressure, prompting some producers to cut output.

Silver lining

Demand for renewable methanol, in the form of both biomethanol and e-methanol, could be supported by growing interest from the maritime sector in the coming years as shipowners seek to reduce their emssions. The EU's FuelEU maritime regulation is due to come into effect at the start of next year. It aims to reduce the greenhouse gas (GHG) intensity of marine fuels by 2pc in 2025 and by 80pc by 2050.

Shipping companies can choose from a wide range of alternative marine fuels to reduce their emissions, but several are betting on methanol and renewable methanol. Danish shipping giant Maersk has ordered 24 methanol-powered container ships for delivery and commissioning during 2024-25, and Japanese classification society ClassNK said in a recent report that it expects a total of 77 methanol-ready ships to be ordered by 2026, up from 27 methanol newbuilds expected to be ordered this year.

Offtake agreements for renewable methanol are also on the rise. Maersk has signed several letters of intent for the procurement of biometanol and e-methanol from producers such as Equinor, Proman and OCI Global. The company also said it has secured an agreement with Danish shipping and logistics company Goldwind for the offtake of 500,000 t/yr from 2024. Meanwhile, Singaporean container shipping group X-Press Feeders said last year that it will offtake biomethanol from OCI's Texas plant starting this year.

Another spanner in the works?

Although the outlook on renewable methanol demand from the shipping sector appears bright, the recognition of biomethane and biomethane-based fuels produced through mass balancing in non-EU grids is uncertain.

More than 40 energy companies and institutes have sent joint letters to the European Commission asking for these products to be included in the Union Database, which aims to prevent the relabelling of biofuels' sustainability declaration.

The UDB was launched in January 2024 for liquid fuels and will include gaseous fuels in November, but the commission plans to exclude automatic certification of biomethane and biomethane-based fuels if it is transported through gas grids outside of the EU.

The measure "is likely to reduce the availability and increase the cost of low- and zero-carbon bunker fuels for shipping" and may also impact hydrogen and hydrogen-derived fuels, one of the letters sent to the commission said.

By Evelina Lungu

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

25/01/15

Q&A: Waste-based biofuel to benefit Dutch bunkering

New York, 15 January (Argus) — With marine fuel greenhouse gas (GHG) emissions regulations tightening, shipowners are looking for financially feasible biofuel options. Argus spoke with Leonidas Kanonis , director for communications and analysis at European waste-based and advanced biofuels association (Ewaba), about biofuels for bunkering. Edited highlights follow. Do you think that the Netherlands government will scrap the HBE-G bio-tickets that it has been allocating for marine fuel for use by ocean-going vessels? HBEs are not disappearing in 2025, and the Dutch system will continue as normal, including HBE-G bio tickets. In 2026, the plan is that HBEs will be scrapped altogether, when the Dutch system switches to an Emissions Reduction Obligation. The Emissions Reduction Obligation would be a transposition of the Renewable Energy Directive (REDIII) spanning all transport sectors and HBEs would not exist under such a system. Annex IX of REDIII lists sustainable biofuel feedstocks for advanced biofuels (Part A) and waste-based biofuels (Part B). Under the proposed REDIII, EWABA is advocating those fuels made from feedstocks listed under Annex IX B, which include used cooking oil and animal fat, be allowed into the sustainability criteria for maritime transport. Allowing only "advanced" feedstocks listed under Annex IX A would put the Dutch bunkering sector at a cost-and-supply disadvantage compared with non-EU ports. The Annex IX B exclusion could also put the Netherlands in danger of not hitting its maritime sector target, which rises from a 3.6pc reduction in GHGs in 2026 to 8.2pc in 2030. Annex IX B biodiesel can bridge the gap while advanced technologies such as ammonia and hydrogen are more widely deployed. The EU imposed anti-dumping taxes on Chinese biodiesel imports in mid-August. What has been the effect on European biodiesel producers? Following the Chinese anti-dumping duties (ADDs), we have seen an uptick in domestic European waste-based biodiesel prices, widening the spread between the end product and the European domestic feedstock itself. On the other hand, on 1 December, the Chinese government cancelled the export tax rebate for used cooking oil (UCO), disincentivizing Chinese exporters and making Chinese UCO more expensive for European buyers. It is still early to say what the trend for 2025 will be, but as an industry we are optimistic about increased European biodiesel production. Over the past two years, our members have been suffering, mostly operating at sub-optimal production levels or forced to shut down production. In 2025, there is reserved optimism that the market will improve due to: the ADDs to Chinese biodiesel, the 2025 FuelEU maritime regulation, and the introduction of the EU Database for Biofuels introduced in 2024, which tracks the lifecycle of biofuels and strengthens transparency. Are there other threats next year that are facing the European waste-based and advanced biofuels producers? Overall challenges for the market would be demand for feedstock from competing industries, largely the sustainable aviation fuel (SAF) market with the introduction of the ReFuelEU mandate, but also competing regions as the US imported huge amounts of waste feedstocks from China last year, while southeast Asian and UAE countries promote their own bio-blending targets. Do you think Donald Trump's presidency would affect Europe's biofuel markets? We expect the Trump administration to possibly limit feedstock imports from outside the US, boosting the sales of local soybean and other crop feedstocks to produce domestic HVO, SAF and biodiesel. At the same time, the US government has noted they will impose duties on imports coming from anywhere, with China experiencing the most considerable level of duties of up to 60pc. For example, an import tax on European and UK biodiesel would mean that more fuel is available to fulfill the European and UK mandates, as the US is also relying on HVO and FAME from Europe and the UK to fulfill its own mandates. Biofuel for bunkering has been a popular low-carbon fuel option among container ship companies. But oil tanker owners and dry bulk carrier owners are slower to embrace biofuels. Do you see this changing? At the moment, most biofuels used in shipping are indeed for container ship companies that could more easily afford higher prices of bio components. The biofuels industry is receiving a lot of interest from tanker or carrier owners but for lower biofuel blends compared to container ship companies. Container vessels are willing to buy higher biofuel blends and are interested in B100. Oil tankers are focusing more on B15 and higher bio blends to comply with the minimum GHG reduction targets possible. But as the GHG reduction targets on the FuelEU rise, this will of course change as well. In 2030, what do you project will be the demand for biofuels for bunkering in Europe? As an estimation, we expect waste biofuels bunkering demand in Europe to surpass 2-2.5mn tons by 2030. Specification-wise, what are some of biofuel properties that ship owners need to look out for? We don't believe waste-based and advanced biodiesel fuel properties have considerable issues for ship operators. Especially for blends up to B30, there is nothing to worry about. For higher blends, viscosity and stability are the ones that I believe are more important. Storage time is also important to consider due to lower oxidative stability of FAME compared with fossil diesel alternatives that could be stored longer term. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Brazil's Bndes grants R480mn to ethanol producer

25/01/14

Brazil's Bndes grants R480mn to ethanol producer

Sao Paulo, 14 January (Argus) — Brazil's Bndes development bank approved R480mn ($79mn) for sugar and ethanol producer CMAA to increase biofuel production in the state of Minas Gerais. The bank will grant R220mn from its Climate Fund to raise the private-sector company's anhydrous ethanol output in its Vale do Pontal sugar and ethanol unit, in Limeira do Oeste city, by around 1,470 b/d. The plant will be able to produce up to 3,650 b/d. With new investments, the Vale do Pontal plant will process 4mn metric tonnes (t) of sugarcane/crop, up from 2.7mn t/crop previously, producing hydrous ethanol, raw sugar and electric power for the Brazilian domestic market. The Climate Fund will be also used to double CMAA's power generation to 68MW. The remaining R260mn will be taken from Bndes' services and machinery program to modernize existing equipment and buy new agricultural machines. CMAA's Vale do Pontal, Vale do Tijuco and Canapolis units are expected to use R50mn, R160mn and R50mn, respectively. These resources can be allocated to buy, sell or produce machines, industrial systems or technological and automation goods, as well as hiring national services and machine imports, Bndes said. The company will also be able to increase issuance of Cbio carbon credits, following the rise in ethanol output. By Maria Albuquerque Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's Jan-Nov tallow exports hit record high

25/01/14

Australia's Jan-Nov tallow exports hit record high

Sydney, 14 January (Argus) — Australian tallow exports during January-November 2024 reached the highest on record, surpassing the previous record for exports in the whole of 2023. Australia exported 517,364t of tallow in the first 11 months of 2024, surpassing the 504,409t of tallow in 2023, according to the latest data from the Australian Bureau of Statistics (ABS) accessed through Global Trade Tracker (GTT) (see graph) . The record export number was the result of a larger cattle herd, high slaughter rates and favourable weather conditions, while growing demand from the biofuels sector has also helped boost exports. Domestic cattle slaughter rates stood at 2.24mn head in July-September, the highest since the same period in 2015, because of processors' concerted effort to increase capacity. Australia's beef production hit a record high in July-September at 690,694t, according to ABS data. Over 90pc of Australian tallow was exported to either Singapore or the US in the first 11 months of the year, with each country receiving 53.2pc and 37.6pc respectively, according to GTT data. Market participants have indicated Australian tallow trade flows may swing towards the US this year because of the newly released guidance on the 45Z tax credit in the country. Prices for lower carbon intensity feedstocks like tallow increased following the new guidance, while imported used cooking oil will not qualify for the tax credit. By Tom Woodlock Australian tallow exports (t) Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

California governor eyes carbon market extension

25/01/10

California governor eyes carbon market extension

Houston, 10 January (Argus) — California governor Gavin Newsom (D) is planning to start discussions with lawmakers to enact a formal extension of the state's cap-and-trade program. Newsom included the idea in the 2025-26 budget proposal he released on Friday. "The administration, in partnership with the legislature, will need to consider extending the cap-and-trade program beyond 2030 to achieve carbon neutrality," the governor's budget overview says. The California Air Resources Board (CARB) believes it has the authority to operate the program beyond 2030, but a legislative extension would put it on much firmer footing. The cap-and-trade program, which covers major sources of the state's greenhouse gas (GHG) emissions, including power plants and transportation fuels, requires a 40pc cut from 1990 levels by 2030. CARB is eyeing tightening that target to 48pc as part of a rulemaking that could take effect next year to help keep the state on a path to carbon neutrality by 2045. Newsom's budget proposal highlighted the need to weigh the revenue received from the program carbon allowance auctions. That money goes to the Greenhouse Gas Reduction Fund (GGRF), which supports the state's clean economy transition through programs targeting GHG emissions reductions, such as subsidizing purchases for zero-emission vehicles (ZEVs). The budget plan added few new climate commitments, instead prioritizing funding agreed to last year. The governor's $322.3bn 2025-26 budget proposal would continue cost-saving measures the state enacted in its 2024-25 budget to deal with a multi-billion-dollar deficit. These included shifting portions of expenditures from the state general fund to the GGRF over multiple budget years, such as $900mn for the state's Clean Energy Reliability Investment Plan. The state's $10bn Climate Bond, passed by voters in November 2024, would cover the majority of new climate-related spending, including taking on $32mn of the reliability plan spending. The change in funding source would allow the state Department of Motor Vehicles to utilize $81mn in GGRF funds to cover expenditures from CARB's Mobile Source Emissions Research Program. The governor's budget would also advance his proposal from October for CARB to evaluate allowing fuel blends with 15pc ethanol (E15) in the state, as a measure to lower gas prices. CARB would receive $2.3mn from Newsom's proposal to finish the multi-tier study it began in 2018 and implement the necessary regulatory changes to allow E15 at the pump. Currently, California allows only fuel blends with up to E10 because of environmental concerns, such as the potential for increased emissions of NOx, which contributes to smog, by allowing more ethanol. With the administration predicting a modest surplus of $363mn from higher state revenues, it is unlikely that California will return to the belt tightening of the past two state budgets. But the state cautions that tension with the incoming president-elect Donald Trump, potential import tariffs and ongoing state revenue volatility should leave California on guard for any potential future fiscal pitfalls. The state's legislature's non-partisan adviser cautioned in November that government spending continues to outpace revenues, with future deficits likely. The administration is keeping an eye on the issue, which could result in changes through the governor's May budget revision, state director of finance Joe Stephenshaw said. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mercosur-EU deal to open Brazil ethanol flows

25/01/10

Mercosur-EU deal to open Brazil ethanol flows

Sao Paulo, 10 January (Argus) — A freshly inked EU-Mercosur trade agreement marks an important opportunity for Brazil's burgeoning ethanol market, but will likely not significantly impact the country's well established sugar trade. Announced in December, the landmark pact provides for the gradual exemption of tariffs on most exports from the four participating Mercosur countries to the 27 European countries that make up the EU. Goods considered sensitive, including sugar and ethanol, will be subject to a quota system with more limited benefits. Export quotas for specific products from each of the participating South American countries — founding members Argentina, Brazil, Paraguay and Uruguay — will be defined after the ratification of the agreement. For industrial ethanol originating in Mercosur and shipped to the EU, the agreement provides a maximum quota of 570,300 m³/yr (9,845 b/d), with tariffs gradually reduced to zero over the years. Non-industrial ethanol will have a quota of 253,400m³/yr, subject to a reduced tariff of €34-64/m³ ($34.82-65.55/m³), a third of current rates. The EU tariff on imported ethanol today ranges from €102/m³ for the denatured product — which includes chemical additives that make it unfit for consumption — to €192/m³ for the undenatured product. Quotas provided for in the agreement are more than enough to cover volumes Brazil exports to the EU. The South American country shipped 140,700 m³ of ethanol to countries in the European bloc in 2024, around 7pc of the 1.9mn m³ it exported in the year, according to trade ministry data. The terms of the agreement have caught the attention of market participants, who see an opportunity to revive trade flows to Europe, especially for industrial ethanol. EU countries soaked up around 30pc of Brazil's ethanol exports in 2022, but outflows have dropped significantly since. At the time, Brazil's ethanol gained a competitive edge during a period of rising energy prices in Europe amid the start of the Ukraine-Russia conflict and the aftershocks of the Covid-19 pandemic. The announcement of the agreement has put the EU back on the radar of Brazilian traders who stopped selling ethanol to Europe or those who are yet to enter the market. Slight impact for sugar The agreement is set to have less of an impact on Brazilian sugar exports, considering the approved quota and the volume normally exported to the EU. Mercosur will have a quota to send 180,000 metric tonnes (t)/yr of sugar to the European bloc with zero tariffs, while the excess volumes of raw sugar will face the current customs duty of €98/t. The tariff-free volume represents a small portion of the total sweetener normally shipped to the European bloc. Brazil's center-south — which includes the main producing states — alone exported 540,000t of sugar to the EU in January-November 2024, according to sugar and ethanol industry association Unica. Raw sugar accounted for around 87pc of that total. Shipments in 2024 were still below the 804,000 t/yr five-year average for Brazilian sugar exports to the EU. If volumes in the coming years remain close to historical levels, less than 25pc of the annual volume shipped from Brazil will benefit from the new import duties. The EU is expected to import 2.4mn t of sugar in the 2024-25 crop, which extends from October 2024 to September 2025. The volume makes the bloc the third largest importer in the world, only behind Indonesia and China, according to US Department of Agriculture data. The volume approved in the agreement with Mercosur would represent less than 5pc of the imports expected by the EU, which limits the potential competitiveness of Brazilian sugar in the European market. Negotiations on terms of the Mercosur-EU agreement have been concluded, but the pact will only enter into force after final signing and subsequent ratification. By Maria Lígia Barros and Maria Albuquerque Send comments and request more information at feedback@argusmedia.com Copyright © 2025. 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