Viewpoint: SAF market length puzzle persists

: Biofuels
26/01/05

The sustainable aviation fuel (SAF) market faces the same supply puzzle in 2026 — the gap between perception and reality.

Analysts broadly agreed the global market was structurally long in 2025, reinforced by shelved projects including a $1bn write-down by Shell. Yet SAF premiums hit two-year highs in mid-November — roughly double first-half levels — before easing in December.

The case for a well-supplied market is compelling. Demand from the EU, the world's largest SAF consumption centre due to its size and its blending mandate, will be largely unchanged, with the bloc's quota steady at 2pc in 2026. Global voluntary demand remains fickle and liable to retreat when prices become unfavourable or if climate-sceptic headwinds undermine company commitments.

New SAF plants in Europe, Asia-Pacific and North America will add supply. Chinese exports are likely to rise after Beijing approved more licences in October. And unlike in the second half of 2025, when several SAF producers entered maintenance at the same time, supply disruptions are unlikely to align at the same scale.

But several factors in 2026 could trim the perceived surplus. European hydrotreated vegetable oil (HVO) demand will rise under new legislation in Germany and the Netherlands. This will trim some SAF capacity, as both fuels share production units, balancing the ratio of each according to demand.

The UK's SAF mandate will nearly double to 3.6pc in 2026, from 2pc in 2025. And London's Heathrow Airport plans to ramp up its incentive scheme, which should spur extra voluntary buying in the UK. Singapore's levy-funded SAF procurement scheme could phase in towards the end of 2026, adding some demand from Asia-Pacific.

Administrative hurdles that delayed SAF buying until partway through 2025 — such as certification issues for producers, midstream terminals and blending facilities — have largely been resolved. This should allow obligated parties to spread purchases more evenly across 2026 and reduce the risk of late buying pressure.

Yet trading strategies and behavioural patterns may prove harder to shift. The 12-month obligation cycle reduces urgency for early deals and tempts buyers to wait for cheaper or opportunistic offers later in the year. This dynamic contributed to fourth-quarter price spikes in HVO in 2024 and SAF in 2025, suggesting a seasonal pattern may be emerging. If market participants anticipate an avalanche of supply and cheaper prices later in 2026, they could fall into the same trap as 2025 — creating price volatility even in a well-supplied market.

Participants again predict structural length in the SAF market for 2026, and the perfect storm of 2025 looks unlikely to repeat in full to support prices in the same way. That said, the mandate changes, and the incentive and procurement schemes, could tighten the market. And after forecasts of oversupply flattered to deceive, most obligated parties are likely to tread cautiously in 2026.

By Aidan Lea

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26/01/06

HVO-Preisanstieg zum Januar fundamental unbegründet

Hamburg, 6 January (Argus) — HVO100 wird im deutschen Großhandel nach dem Jahreswechsel teurer angeboten, obwohl sinkende Preise in ARA und höhere THG-Erlöse eigentlich dagegen sprechen. Stattdessen ist der Preisanstieg der Kopplung von HVO- an Dieselpreise geschuldet. HVO100 wird an deutschen Tanklagern seit dem Jahreswechsel gut 6 €/100l teurer angeboten als noch am 30. Dezember 2025. Dieser Preisanstieg passt jedoch nicht zu den fundamentalen Preisentwicklungen von HVO im europäischen Handel: HVO der Klasse II, welches aus Altspeiseöl (UCO) hergestellt wird, vergünstigte sich im gleichen Zeitraum um 3 €/100l. Der Wert, der durch die Inverkehrbringung von HVO generierten THG-Zertifikate, stieg zeitgleich um gut 50 €/100l. All dies spricht gegen einen Anstieg der HVO-Preise im Vergleich zum Dezember und für eine sinkende Differenz zu Diesel. Mit dem Jahreswechsel sank die Differenz bereits um knapp 5 €/100l. Jedoch verteuerte sich Diesel aufgrund des Anstiegs von CO2-Abgabe und THG-Quote, die für HVO nicht anfallen um etwa 11 €/100l. Ende Dezember lag die Differenz zu HVO noch bei ebenfalls etwa 11 €/100l. Daher hätten sich HVO und Diesel preislich angleichen müssen. Da viele Unternehmen HVO jedoch mittels eines Aufschlags zu Diesel kalkulieren und auch viele Versorgungsverträge mit fixen Aufschlägen arbeiten, folgen die HVO-Preise grob dem Anstieg beim Diesel (siehe Grafik). Gleichzeitig herrscht auch noch viel Unsicherheit und Unentschlossenheit bei Marktteilnehmern. Viele unter der THG-Quote verpflichtete Unternehmen sind sich noch uneins, ob sie HVO als Erfüllungsoption lieber als Reinkraftstoff oder als Blendstock in Verkehr bringen sollen. Entsprechend unterschiedlich werde HVO derzeit bewertet, so Händler. Darüber hinaus ist noch viel Diesel im Umlauf, der bereits in 2025 versteuert wurde. Händler rechnen damit, dass die Preisdifferenz zwischen Diesel und HVO100 weiter schrumpft, wenn dieser Diesel aus dem Markt geht. Von Max Steinhau Preisentwicklung in Deutschland Senden Sie Kommentare und fordern Sie weitere Informationen an feedback@argusmedia.com Copyright © 2026. Argus Media group . Alle Rechte vorbehalten.

Viewpoint: Waste feedstock demand grows with RED III

26/01/05

Viewpoint: Waste feedstock demand grows with RED III

The Hague, 5 January (Argus) — European waste feedstock demand is set to rise in 2026, supported by higher targets under the EU's new Renewable Energy Directive (RED III) and the Netherlands' shift to greenhouse gas (GHG)-based mandates. The Netherlands is moving to a GHG savings target without multipliers, while Germany is phasing out double-counting of certain fuels made from feedstocks listed in Annex IX Part A (9A) of RED III. As a result, GHG savings of biofuels and their feedstocks will become the key compliance driver in both countries next year. Caps on Annex IX Part B (9B) feedstocks — such as used cooking oil (UCO) and tallow categories 1 and 2 — are pushing obligated parties towards 9A feedstocks, broadening and fragmenting the sourcing pool. UCO supply and pricing outlook Demand looks well supported heading into 2026, driven by rising mandates and EU-wide frameworks outside RED III, such as ReFuelEU Aviation and FuelEU Maritime, now entering their second year. Hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) producers are expected to dominate UCO procurement this year, with strong margins and firmer obligations pulling more feedstock into hydrotreated esters and fatty acids (HEFA) pathways. Most market participants expect UCO prices to remain broadly stable into the first quarter of 2026, with negotiations pointing to similar levels as late 2025. Some upside risk could emerge if China brings online a planned 500,000 t/yr of SAF capacity in 2026, boosting domestic UCO demand and pushing seaborne prices higher. At the same time, additional Chinese SAF supply — not subject to EU anti-dumping duties unlike HVO and biodiesel — could pressure European prices lower, tightening the SAF/UCO spread and squeezing margins. UCO's high GHG savings continue to underpin demand even as double-counting disappears from Dutch compliance, though it remains in Mediterranean countries in 2026. European UCO methyl ester (Ucome) producers will be squeezed if UCO costs rise, but Germany's removal of double-counting for most 9A feedstocks could support some domestic Ucome demand. Advanced feedstocks gain traction Higher RED III 9A sub-targets are accelerating advanced biofuel uptake and reshaping a fragmented feedstock landscape. Buying interest for 9A-listed food waste oil (FWO) rose in the fourth quarter of 2025, alongside steady demand for soapstock acid oils (SSAO). Forestry-based crude tall oil (CTO) is gaining traction on strong Nordic supply and new co-processing investments, including Neste's European Commission-funded project in Finland . Technical corn oil (TCO), a high GHG-savings ethanol by-product, continues to expand beyond Germany, where it is classified as advanced and eligible for quota generation. But treatment remains uneven across the EU — TCO is not listed as advanced in the Netherlands, with the Dutch Emissions Authority yet to clarify its status. Cashew nut shell liquid (CNSL) is also drawing attention as a marine blendstock and co-processing feed. Regulatory uncertainty persists over cover and intermediate crops — such as camelina and carinata — as their use depends on how member states classify them under RED III during national transpositions. Tighter Pome oil outlook Palm oil mill effluent (Pome) oil faces regulatory pressure across Europe, including in Ireland, Germany, Portugal and the Netherlands, as authorities deepen investigations into traceability and origin verification. Ireland excluded Pome-based advanced biofuels from receiving additional renewable fuel certificates from 1 July last year, while Portugal removed ISP energy-tax exemption for Pome oil and empty palm fruit bunches, though both retained double-counting status. Germany's cabinet-approved RED III draft allows crediting of Pome-based biofuels placed on the market before 2027, reversing expectations of a full exclusion in 2026. The additional year could stimulate compliance-driven buying, levelling the playing field across feedstocks. This regulatory change may lead to firmer demand in the Amsterdam-Rotterdam-Antwerp (ARA) hub, a key entry point for feedstock flows into Germany. Supply uncertainty remains. Indonesian policies to divert material into the domestic biodiesel pool have already firmed prices, with further constraints expected as the country moves toward a B50 biodiesel blend programme in the second half of 2026 and advances plans to scale waste-based SAF output to 1mn kl/yr by 2030. With limited new collection capacity and sustained European demand, Pome oil is expected to stay structurally tight in 2026, supporting a higher price floor. By Anna Prokhorova Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

Viewpoint: RIN market awaits US policy clarity

26/01/02

Viewpoint: RIN market awaits US policy clarity

New York, 2 January (Argus) — US renewable fuel credits have traded in a narrow range for months but are likely to break out soon, when President Donald Trump's administration provides more clarity on incentives in the new year. Under the Renewable Fuel Standard, US oil refiners and importers must annually blend different types of biofuels or buy Renewable Identification Number (RIN) credits from those that do. The RIN market is closely watched by producers and marketers of biofuels such as ethanol, biodiesel and renewable natural gas, since higher credit prices make blending economics more attractive. Policy shifts supported RIN prices in 2025, including new tax credit rules that slashed subsidies for many fuels and encouraged the use of scarcer low-carbon feedstocks, as well as a plan Trump administration plan to require record-high blending during the next two years and to halve RIN credits for foreign fuels and feedstocks. Following the release of that proposal in June, values for current-year ethanol D6 and biomass-based diesel D4 credits rose to their highest levels since September 2023. RIN traders anticipated more expensive input costs, as reflected in a widening soybean oil-heating oil spread, hurting credit generation at the same time as the Trump administration moved to mandate more blending — the perfect storm for rising prices in 2026. But uncertainty over other policies has limited RIN credit growth more recently. Since October, current-year D4 and D6 credits have closed each session between 100¢/RIN and 110¢/RIN, rare for markets that are prone to frequent volatility. The government's unclear approach to exemptions from the biofuel blend program — which eligible small refiners can request at any time for any year — is one wrinkle. During Trump's first term, officials granted small refinery exemptions en masse, injecting a burst of added supply into the RIN market that sank credit prices and made it easier for refiners to reach their targets. Last summer, the Trump administration granted dozens of full and partial exemptions, and more requests are pending, raising fears of a similar supply shock. But the potential weakness comes with a parachute. The Trump administration has floated making oil companies without exemptions bring more biofuels to market over the next two years to offset recent waivers. The plan has divided the industry and kicked off a last-minute lobbying campaign, with oil majors hoping to avoid picking up the slack and biofuel advocacy groups warning of pain for farmers if biofuel demand lags. So the market is at a standstill, with RIN traders guessing as to future policy. Strong mandates, penalties for foreign feedstocks and compensating for recent exemptions would support prices. But shifts in policy — coupled with guaranteed higher tax breaks for crop-based fuels in 2026 — threaten the opposite. Even if administration officials stay quiet until regulations are finalized, the calendar could provide RIN traders with an important signal. The Trump administration last told a court that it expects to finalize updates to the biofuel blend program in first-quarter 2026 , meaning the industry will start the year lacking clarity on how many biofuel gallons — and what type — they should bring to market. The delay is important because US regulators have been more cautious in the past when finalizing retroactive biofuel mandates to avoid legal scrutiny. But the biggest price moves will ultimately depend on final policy clarity. By Matthew Cope and Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

Viewpoint: US policy shift elevates domestic feedstocks

26/01/02

Viewpoint: US policy shift elevates domestic feedstocks

Houston, 2 January (Argus) — US biofuel producers may increasingly turn to domestic feedstocks as restrictive biofuel and trade policies limit the use of foreign materials. The clean fuel production tax credit, known as 45Z, launched in 2025 to replace the $1/USG blender's tax credit. Under 45Z, foreign used cooking oil (UCO) became ineligible for credits, while foreign tallow retained access until tariffs introduced in the third quarter disrupted trade. Starting in 2026, 45Z will apply exclusively to biofuels made from North American feedstocks , effectively excluding all other foreign products. President Donald Trump's administration's push to curb imports aims to strengthen domestic feedstocks, particularly soybean oil, in US biofuel production. US soybean crush capacity has grown by 13pc since 2022, reaching 2.97bn bushels (bu)/yr w ith the addition of 10 new crush plants. Expanded capacity drove a record 227.6mn bu of soybean crush in October, with multiple monthly records set throughout 2025. The US biodiesel sector continues to rely on soybean oil as its primary feedstock, with soybean oil accounting for roughly 70pc of the biodiesel feedstock mix in 2024. Meanwhile, the renewable diesel (RD) and sustainable aviation fuel (SAF) industries have increasingly targeted lower-carbon feedstocks to maximize credit value, resulting in soybean oil demand failing to meet the demand expectations of crushers. Agricultural lobbyists have long blamed foreign feedstocks for displacing domestic crop-based materials and have consistently pushed for restrictions. Heavy imports since early 2023 sidelined domestic supply, with Chinese UCO flooding the market and Brazilian and Australian tallow following suit. This surge drove record-high UCO consumption in July 2024, while tallow hit its own record in July 2025 . Feedstock imports slowed in the second half of 2025 with new 45Z rules and import tariffs. Chinese UCO shipments in January-October 2025 fell by 65pc from a year earlier, while Brazilian tallow volumes plunged below 22mn lbs in the fourth quarter after 50pc tariffs were imposed in August, down from a record 154mn lbs in June. Australian tallow maintained strong flows until October despite 10pc tariffs, but volumes were expected to decline in late 2025 and beyond as 45Z restrictions take effect. In June, the Environmental Protection Agency (EPA) proposed record-high blending requirements for 2026 and 2027 , alongside a measure to halve Renewable Identification Number (RIN) credit generation for fuels made abroad or from foreign feedstocks. This proposal sparked a rally in domestic feedstock prices, with most categories hitting yearly highs in July. Agricultural lobbyists and waste-based feedstock suppliers support these RIN changes, viewing them as a boost for domestic feedstock demand. But optimism for domestic feedstocks is tempered by uncertainty surrounding the 45Z credit and delays in biofuel mandates, which are expected to extend into 2026. The Trump administration confirmed in December that mandates would not be finalized before year-end, leaving market players without guidance about final mandatory volumes and potential import RIN credit cuts. Also in December, the US Department of the Treasury submitted a new 45Z proposal to the White House , as market participants seek updated guidance on filing tax credit claims for 2025, though officials will likely permit the use of existing guidance for 2025 claims. This lack of clarity has triggered production cuts across multiple RD plants nationwide. Biofuel refiners such as Phillips 66 and Diamond Green Diesel have publicly announced rate reductions as renewable diesel margins dipped below 2024 levels. Some refiners continued tapping foreign feedstocks until December, avoiding some tariffs by claiming duty drawbacks and exporting the finished fuel abroad. Others remain cautious, as the half-RIN provision, if finalized, poses a significant risk to margins. Looking ahead, existing tariffs, new 45Z policies, record-high biofuel mandates, and the half-RIN provision are expected to support soybean oil demand in first-quarter 2026 as producers seek to maximize credits through domestic feedstock use. US soybean oil futures closed at 49.44¢/lb on 30 December, down by 14pc from their July peak of 57.54¢/lb, making soybean oil more attractive compared to waste-based feedstocks. Agriculture groups claim that expanded crush capacity and record production will provide sufficient soybean oil to meet biofuel demand, reducing reliance on imported feedstocks. In addition, the 45Z credit premium for soybean oil is expected to rise in 2026 as regulators stop considering potential land-use impacts of crop-based fuels, narrowing the gap with credit values for waste-based feedstocks. Soybean oil is also positioned to gain a competitive advantage over canola oil, which receives a roughly 50pc lower credit value. By Jamuna Gautam Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

Viewpoint: US jet fuel output seen rising with demand

25/12/31

Viewpoint: US jet fuel output seen rising with demand

Houston, 31 December (Argus) — US jet fuel production could increase in line with airline demand in 2026 despite the Energy Information Administration's (EIA) projections of a production decrease due to biofuel blending policy for road fuels. The International Air Transport Association (Iata) expects global airline demand to increase in 2026, with global passenger volumes expected to reach 5.2bn, up by 4.4pc compared to 2025, while cargo volumes are expected to increase by 2.4pc to 71.6mn t. But the EIA reported in its December Short-Term Energy Outlook that 2026 jet fuel production will average 1.73mn b/d, down by 4.9pc compared to 2025estimated average, noting weakening demand in the next year. The agency expects the first quarter production to average 1.71mn b/d and the fourth quarter production at 1.68mn b/d, keeping the full-year production average down. But a number of factors — including continued use of less fuel-efficient jets and higher costs for meeting US road biofuel rules — should support US jet fuel production. Jet output is expected to keep pace with 2025 levels or higher, averaging 1.81mn b/d, Argus Consulting forecasts. Bottlenecks in the production of more fuel-efficient next-generation aircraft delayed the flow of new planes this past year, and are expected to worsen, limiting growth in the aviation section until at least the 2030s. Aircraft delivery delays from major manufacturers like Boeing have increased over the past year due to several factors, including tariffs on metals and electronics deriving from US-China trade tensions and engine production outpaced by airframes output. Costs around US biofuel blending obligations, particularly for distillates like biodiesel and renewable diesel, are also supportive of jet fuel production. Prices for D4 and D6 RINs, which reflect the cost of meeting Argus Renewable Volume Obligations (RVO) for biodiesel and ethanol, respectively, rose during 2025, from 9.45¢/USG on 2 January, cresting at 17.04¢/USG in June, before falling to roughly 15¢/USG for much of December. In June, the EPA proposed record-high blending targets in the biomass-based diesel category for the next two years — which will likely make compliance costs for those fuels even more expensive. But unlike road fuels such as gasoline and diesel, jet fuel is not bound by these blend mandates under the RFS. This means refiners looking to taper their blending obligations may retool production assets for more jet fuel and less diesel. A number of refiners are already making that pivot. Marathon Petroleum, one of the largest US independent refiners, is spending millions of dollars to increase jet fuel capacity at its 253,000 b/d Robinson, Illinois, refinery, which is expected to be completed by the end of 2026. US independent refiner HF Sinclair is also planning to boost jet fuel capacity at its 145,000 b/d Puget Sound refinery in Anacortes, Washington, to help serve the western US market, the company said in a third-quarter earnings call. CVR Energy started producing jet fuel at its 132,000 b/d Coffeyville, Kansas, refinery during the third quarter of 2025. Another independent refiner, Delek, has upgraded its 83,000 b/d El Dorado, Arkansas, refinery to produce jet fuel, the company said in May. The EIA does expect more demand for jet fuel in 2026. The product supplied projections for 2026 in the latest STEO was 1.74mn b/d, up by 0.6pc compared to 2025. But it still projects first quarter production to drop to 1.61mn b/d and fourth quarter to reach 1.72mn b/d, with second and third quarter projections higher at 1.82mn b/d and 1.81mn b/d, respectively. Originally expected to be finalized in late 2025, the EPA is set to confirm biofuel blending targets, as well as consider the reallocation of exempted volumes approved during 2025 in the first quarter of 2026 . Doing so would provide biofuel producers and obligated parties alike with a clearer view of expectations for 2026 and 2027. Unless biofuel production overshoots the thresholds for blending demand, or the EPA chooses not to reallocate a substantial volume of small refinery exemptions, market participants anticipate further continued strength for RIN prices. If these mandates do come to fruition and toughen the obligation refiners face for producing diesel, retooling and pivoting to a higher jet output would alleviate the added cost of producing finished road fuels. By Hunter Fite and Matthew Cope Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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