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RLG production forecasts fraught with uncertainty

  • : Biofuels, LPG
  • 24/12/03

Government backing and co-operation between competitors are needed to align with the targets for RLG output, writes Matt Scotland

The production of renewable LPG and dimethyl ether (DME) is projected to rise to 60mn-120mn t/yr by 2050 under a supportive policy scenario, consultants told attendees of this year's LPG Week conference in Cape Town, South Africa, over 18-22 November. But such forecasts continue to be laced with uncertainty given the enormous challenges involved in reaching commercial-scale output.

Output of both fuels, often pooled together under the umbrella term renewable liquid gas (RLG), could grow to 4mn-9mn t/yr by 2030 and 8mn-27mn t/yr by 2040 under the same scenario, according to the findings from a soon-to-be-released report from consultancies NNFCC and Frazer-Nash. But under a situation where no policy support is forthcoming, volumes are about a quarter of these projections, NNFCC managing director Adrian Higson told the audience.

RLG production could then exceed 100mn t/yr by 2050-55 and 200mn t/yr by 2060-65, Frazer-Nash consultant Jeremy Revell said, adding the caveat that greater uncertainty exists over a long timeframe. Biogas to LPG "offers the best potential route to renewable LPG beyond 2050", while gasification to DME does likewise for rDME. "One of the main surprises was just how much liquid gas we could produce by 2050, especially the role rDME could play from the gasification pathway," Revell said. "It has high potential yields and a lot of feedstock to support it."

Speakers at the event were keen to emphasise the high level of uncertainty involved in RLG development, and just how much rests on the degree of government backing when it comes to projecting growth. And even assuming a supportive policy scenario does not necessarily equate to clear-cut support for RLG, bearing in mind it will be competing with other technologies, BioLPG LLC chairman Kimball Chen told delegates. "I don't know yet what supportive policies we want and for which solutions," he said.

More co-operation between competitors in the LPG industry is needed to ease uncertainty, while allowing for competition between individual firms or partnerships, Chen said. "SHV and DCC [through their recently announced RLG collaboration] and my consortium [bioLPG LLC] with 12 European and American companies share the same technical challenges and will be competing for the same feedstocks, so the way we think about competition and increasing our chances for success as an industry and individually need to be further delineated," he said.

Cost calculation

Feedstock availability in many of the study's pathways is not a concern, with the possible exception of bioLPG from hydrotreated vegetable oil and hydroprocessed esters and fatty acids, something not unexpected, DCC's director of sustainable gas, Emmanuel Mannooretonil, said. The issue is having feedstock at the right price. "Now we see that technically it's possible and the feedstock exists, the next question is can we make a product good enough from an environmental and affordability standpoint for policy makers to support?" he said. The maturity of the technology is a challenge for the LPG industry, with "decisions of large financial magnitudes" required to get there, Chen added. "We have a race against time."

Cost will remain a problem over the medium and long term because of the technological limits, Chen said. But perhaps the biggest challenge is the reluctance to build a first-of-a-kind plant, SHV Energy's head of sustainable fuels policy, Goher Ur Rehman Mir, said. SHV is testing a number of production routes for RLG, including converting ethanol to butane. But pilot plants and then demonstration facilities are required first, necessitating more investment and collaboration, he said. "We need to join forces, which is why we have signed [an initial agreement] with DCC Energy," he said. "But we are open to collaborating with other stakeholders to develop a consortium to progress this process fraught with difficulties."

Production pathways
SourceProduct
Alcohol Renewable LPG
Biogas Renewable LPG
CO2 and H2Renewable LPG and DME
Gasififcation with Fischer-TropschRenewable LPG
GasificationRenewable DME
HVO and HefaRenewable LPG
PyrolosisRenewable LPG

Renewable LPG, DME output forecast averages*

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25/02/06

Ethanol prices up on uncertainty, low margins in Feb

Ethanol prices up on uncertainty, low margins in Feb

London, 6 February (Argus) — Spot ethanol prices in northwest Europe firmed to a six-month high at the start of February after several months of remaining largely steady. The minimum 64pc greenhouse gas (GHG) savings ethanol spot price reached €700/m³ on 4 February, its highest since 2 August 2024. Despite this, participants are reporting ample supply in the region, sufficient to meet current demand. The gains are largely attributed to a closed arbitrage with the US, higher production costs and ongoing uncertainty surrounding potential US tariffs. Some market participants believe the price rise in the ARA region is partially driven by higher ethanol prices in the US, which have been supported by rising corn prices . These participants said European prices may have tracked US price gains given the closed arbitrage with the country, with expectations that the arbitrage between the regions will reopen as a result of higher ethanol prices in ARA. Looking ahead, some market participants predict that ethanol imports will be reduced in the second quarter, which has caused the ethanol forward curve to shift into contango, with prices peaking at €711/m³ for the second quarter on 5 February. Trump tariffs turmoil Participants said prices are also being supported by uncertainty surrounding US president Donald Trump's plans to impose tariffs on imports from the EU. The European Commission said this week it will respond "firmly" should Trump "unfairly or arbitrarily" impose tariffs on EU goods. Trump made a similar complaint about the UK, but said he thinks "that one can be worked out". Retaliatory tariffs from the EU could affect ethanol flows, as the EU is a net importer of fuel ethanol. It imported almost 69,000t of undenatured ethanol — usually used for road fuel blending in most EU member states — from the US in January-November 2024, according to provisional EU customs data. The UK imported almost 600,000t of ethanol during the same period. The UK can leverage favourable arbitrage opportunities to import ethanol from the US and redirect it to the EU. Producers face higher costs Argus calculations show ethanol production margins for corn and wheat at €168.69/m³ and at €146.71/m³ on 5 February, down from €223.56/m³ and €205.33/m³ a year ago. Variable costs of yeasts, enzymes, chemicals and denaturants are not included in these calculations. Market participants said producers continue to adjust to a poor 2024-25 harvest season in Eastern Europe, caused by unfavourable weather conditions in Ukraine and France. Higher feedstock costs have contributed to higher ethanol prices, although the production margins are still tighter than last year. In Ukraine, Europe's largest wheat exporter excluding Russia, Argus forecasts wheat production will drop to 22.3mn t during 2024-25 , down from a five-year average of 24.7mn t. Corn supply from the country for 2024-25 is projected to fall to 22.9mn t, down from 31.5mn t in the previous season, according to Argus data. France — Europe's largest producer of ethanol — has cut its wheat production outlook for 2024-25 because of wet weather. Rainfall in other parts of Europe has affected corn toxin levels, potentially leading to poorer quality ethanol. This is likely to weigh on ethanol output in 2025 as it will strain feedstock supplies, push production costs up and squeeze margins for producers. More recently, European market participants said a late-winter cold snap may affect winter crops in Ukraine, and if so, strain feedstock supplies and push ethanol production costs up further. It comes as markets are still waiting for an update on level 2 in the nomenclature of territorial units for statistics GHG emission values, the so called Nuts 2 values. Biofuel producer Archer Daniels Midland expects ethanol profit margins to narrow this year, after posting wider margins in the fourth quarter. The company expects ethanol margins to drop to break-even in the first quarter on higher industry run rates, even as robust demand for exports from the US supports improved volumes, it said. ADM is one of the largest exporters of ethanol to Europe, according to those in the market. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU SAF mandate resets US market as credits uncertain


25/02/06
25/02/06

EU SAF mandate resets US market as credits uncertain

Houston, 6 February (Argus) — Looming questions over federal tax credits, supply concerns, and the future of trade flows are causing concerns for US sustainable aviation fuel (SAF) market participants, while buyers address needs in Europe given newly introduced mandates. The domestic SAF market in the US is spurred by incentives in the form of tax credits and subsidies. This "carrot instead of stick" method is meant to bridge the gap between the high cost of investment and production of SAF, making it feasible for airlines to consume and utilize the carbon-abating abilities of the low carbon fuel. The recent expiration of the 40B blenders tax credit has made its mark on the biofuels landscape, eating into the margins of products made with more carbon-intensive feedstocks and altering trade flows on a global level. With importers to the US west coast unable to capitalize on the federally backed incentive, producers like Neste who made up more than half of the SAF market in the US in 2024 direct their Singapore-based volumes elsewhere. US west coast delivered prices during the fourth quarter of 2025 ranged from $4.80/USG to $5.98/USG, reflective of volatility in the conventional jet basis as well as inconsistent supply available at major points of uplift. Prices in the third quarter of 2024 ranged from $4.20/USG to $5.50/USG given greater anticipation of sufficient supply later in the year. Coupled with limited domestic production that decreased from 16.5mn USG in the third quarter to 6.6mn USG in the fourth quarter, the supply of SAF in the US available on a spot basis has dwindled. EU-wide SAF mandates kicked in at 2pc this year, rising to 6pc by 2030. But it is not until 2035 when the obligation hikes up to 20pc — with a 5pc sub-mandate for renewable fuels of non-biological origin — that the region will tip into a short position. The UK is on a similar demand trajectory, going from 2pc this year to 10pc by 2030 and 15pc by 2035, while aiming for a 52pc cap on the SAF total being Hydrotreated Esters and Fatty Acid-based. Combined, this could result in Europe's supply/demand balance going from a 200,000 t/yr surplus in 2030 to a -9.1mn t deficit by 2035, according to Argus Consulting estimates. Given the newly introduced European SAF mandate, air carriers that operate in both regions look to secure volumes at major points of uplift around western Europe. Given the lower supply in the US and fluctuating prices given those changes in supply on the west coast, market activity maintains fixed on the other side of the Atlantic. By Matthew Cope and Amandeep Parmar Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's Beach cuts FY24-25 oil, gas output target


25/02/06
25/02/06

Australia's Beach cuts FY24-25 oil, gas output target

Sydney, 6 February (Argus) — Australian independent Beach Energy has narrowed its oil and gas output guidance for the year to 30 June 2025, given delays in bringing the Western Australian (WA) 250 TJ/d Waitsia gas plant on line. Beach will produce 18.5mn-20.5mn bl of oil equivalent/d (boe/d) in 2024-25, it said in its half-year results to 31 December. It revised the top end of its previous forecast of 17.5mn-21.5mn boe down because of delays at Waitsia, which is operated by joint venture partner Japanese trading house Mitsui. Beach has maintained its guidance for first sales gas at Waitsia in April-June. The Adelaide-based firm last month reported its output at 10.2mn boe in July-December 2024, 15pc higher on the year, leading Beach to raise the bottom end of its guidance. The five Waitsia LNG swap cargoes that Beach has executed to date have brought forward revenue for the firm, which reported A$139mn ($87.1mn) from the two shipped in July-December 2024. A fifth cargo was lifted from Australian independent Woodside Energy's 14.4mn t/yr North West Shelf (NWS) LNG terminal in January, while a possible sixth may occur before the end of June. "We have opportunities for additional swaps in the market and we're looking very closely… I'm hoping to get another [cargo] out before the half-year," chief executive Brett Woods said on 6 February. About 35pc of the gas exported via swap cargoes to date were from Beach's own 20 TJ/d (534,000 m³/d) Xyris gas plant, meaning it will not need to be swapped back, Woods said. Beach expects 8-10 cargoes/yr of Waitsia gas to be shipped until 2028, with scope to further extend the project's LNG exports following the WA government's changes to onshore gas export rules. Waitsia partners hold a gas processing agreement with the NWS JV running until the end of 2028. Beach will start its Offshore Gas Victoria programme in 2025 as part of its ambition to become a major domestic gas supplier. This includes drilling the Hercules gas prospect in Victoria state's offshore Otway basin in April-June, described as a "large scale opportunity" with prospective reserves of 100bn ft³ (280mn m³). No change was made to Beach's 2024-25 capital expenditure guidance of A$700mn-$800mn. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

IMO mulls higher biofuel blend cargoes on Type I ships


25/02/05
25/02/05

IMO mulls higher biofuel blend cargoes on Type I ships

Singapore, 5 February (Argus) — The International Maritime Organization (IMO) is reviewing a proposal on the delivery of biofuel blends of up to 30pc on Type I barges, and is expected to approve this soon, according to several key maritime assessors and classification societies. The proposal, once approved by IMO, is expected to increase B30 bunkering globally as it would allow for the sale of B30 using the current available fleet of IMO Type I oil barges at any port, likely leading to a higher uptake of biofuel blends. B30 is a blend of 70pc very low-sulphur fuel oil (VLSFO) or high-sulphur fuel oil (HSFO) with 30pc used cooking oil methyl ester (Ucome). The draft circular on the carriage of blends of biofuels and MARPOL Annex I cargoes by conventional bunker ships was accepted by IMO's sub-committee on pollution prevention and response (PPR) during its 12th session from 27-31 January. The draft is expected to be approved at the next Marine Environment Protection Committee (MEPC) 83 meeting to be held from 7-11 April. Details of the 12th PPR meeting had not been published on IMO's website at the time of writing. The International Convention for the Prevention of Pollution from Ships (MARPOL) is an agreement that covers the prevention of pollution of the marine environment by ships. Annex I covers pollution by oil and oil products carried or operationally used by ships. Type I ships that deliver conventional bunker fuels can currently carry up to 25pc of biofuels under MARPOL Annex I, which has resulted in the adoption of the B24 blend in key ports across Asia, the Middle East and the Mediterranean region in the past few years. B24 consists of 24pc Ucome blended with 76pc fuel oil, which could be either VLSFO or HSFO. IMO has previously stated that Type II chemical tankers should be used for transporting biofuel blends with concentrations higher than 25pc. Shipowners have hence been waiting for the delivery of more Type II tankers, which are currently in limited supply at many ports. Market participants at the key port of Singapore are awaiting the impact of the decision in April. Enquiries for B30 have been surfacing in the past couple of months and refiners, traders, and shipowners are waiting for the outcome from MEPC 83, as well as subsequent decisions by the Maritime and Port Authority (MPA) of Singapore on how this will be implemented in the country, said several Singapore-based market participants. "[We] need to see if MPA agrees to follow IMO," said a key Singapore-based trader. MPA has not responded to a request for comment. The current push for higher biofuel blends comes as shipowners prepare to meet stricter compliance requirements set by IMO's Carbon Intensity Index and EU-led Emissions Trading Scheme and FuelEU Maritime. Demand for alternative marine fuels, especially biofuel blends and LNG, is expected to rise as shipowners look at reducing greenhouse gas (GHG) emissions across their fleets. By Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU maritime emissions continue to rise: EMSA


25/02/04
25/02/04

EU maritime emissions continue to rise: EMSA

London, 4 February (Argus) — Greenhouse gas (GHG) emissions from the EU's maritime sector have continued to rise since 2015, the European Maritime Safety Agency (EMSA) found in its 2025 environmental report, although "promising progress" has been made in some areas. Maritime activity was responsible for 26pc of methane emissions and 39pc of NOx emissions in the EU transport sector in 2022, as well as for 14.2pc of CO2 emissions from the sector, the report said. Methane emissions from maritime "at least doubled" from 2018-23, the report found, pushed up by growth in the LNG fleet. NOx emissions rose by 10pc from 2015-23, while CO2 emissions totalled 137mn t in 2022, having risen by 8.5pc from a year earlier. But sulphur oxide (SOx) emissions fell by approximately 70pc in 2023 compared with 2014 levels, EMSA said. This was driven mainly by the implementation of Sulphur Emission Control Areas (SECAs) in the Baltic and North seas, while the tightening of maximum sulphur levels in marine fuel in 2020 further contributed to the fall in SOx emissions. EMSA expects SOx emissions to drop further once a SECA is established in the Mediterranean Sea. And the northeast Atlantic countries may set up an emission control area by 2027. Biofuels are an "immediate, attractive and cost-effective solution" to cutting GHG emissions in the maritime sector, EMSA said. And synthetic and other drop-in fuels, which can be blended with fossil fuels, could help the shipping sector transition to lower emissions. But their costs could prove an obstacle because they are still "significantly higher" than for marine fossil fuels, the report said. Further electrification of ships could assist in decarbonising short-range waterborne transport, the report said. And the establishment of green shipping corridors — zero-emission maritime routes — could further encourage investment in sustainable fuels and supply chains, EMSA added. The EU emissions trading system-financed Innovation Fund has already supported more than 300 shipping projects, the report said, with funding to be deployed out to 2030. By Navneet Vyasan Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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