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Indonesia to finalise roadmap to develop SAF by June

  • Spanish Market: Biofuels, Electricity, Emissions
  • 31/05/24

The Indonesia government hopes to finalise a national roadmap and action plan for the industrial development of sustainable aviation fuel (SAF) by June.

The roadmap and proposed action plan consists of three main pillars, demand, supply and enablers, according to the Coordinating Ministry for Maritime Affairs and Investment on 29 May. This involves ensuring raw material availability, certainty of SAF offtake, and mechanisms to reduce impact on prices, among other aims. The country also plans to announce a presidential regulation related to the SAF roadmap on the sidelines of the Bali International Air Show in September, with no further details disclosed.

The action plan is prepared with a 2025-30 timeline and will be reviewed and updated periodically. The demand pillar was discussed previously, and the ministry is holding a meeting on 31 May to discuss the supply and enablers pillars.

The roadmap currently focuses on used cooking oil (UCO) and crude palm oil (CPO) residue as SAF feedstocks. Seaweed is also a potential raw material to be researched, said Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan on 29 May.

"SAF is the most effective solution" to reduce carbon emissions, based on various data, studies, and increasing aviation activity, said Luhut.

The government might choose to keep more feedstocks like UCO domestically, given the country's aims to produce more SAF, and potentially impose export taxes, raise export levies or adjust domestic market obligations (DMO), market participants said. But they noted these measures to regulate exports will be more likely with higher domestic refinery capabilities to take waste-based feedstocks, and nothing is concrete for now.

Pertamina

State-owned oil company Pertamina plans to power a plane with a small amount of imported blended SAF during the Bali International Air Show in September, said a company source. The SAF will be UCO-based and consist of around 15pc SAF blended with fossil jet fuel.

Pertamina previously supplied 2.4pc SAF-blended jet fuel to national airline Garuda Indonesia, and the country's first successful test flight using a commercial aircraft was conducted on 26 October 2023.

Pertamina previously produced SAF and renewable diesel at its Cilacap and Dumai refineries, but using refined, bleached and deodorised palm oil. It plans to bring the second phase of its Cilacap "green refinery" on line in 2026's fourth quarter, which will use palm and waste-based feedstocks such as UCO and palm oil mill effluent (Pome) oil to produce around 132,000 t/yr of SAF.

Indonesia exported an average of 235,800 t/yr of UCO between 2019-23, according to GTT data. Malaysia was the top recipient of volumes as the country is also a main location where UCO is aggregated before beingexported elsewhere, followed by the Netherlands and Singapore.


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30/09/24

Some eastern US rail shipments restart after Helene

Some eastern US rail shipments restart after Helene

Washington, 30 September (Argus) — Some railroad operations in the southeastern US have resumed in the aftermath of Hurricane Helene, but major carriers warn that some freight may be delayed while storm-damaged tracks are repaired. Rail lines in multiple states were damaged after Hurricane Helene made landfall on the northeastern Florida coast on 26 September as a category 4 storm and traveled northwards as a downgraded but still dangerous storm into Georgia, Tennessee, and the Carolinas. The storm left significant rain and wind damage in its wake, including washed-away roads, flooded lines, downed trees and power outages. Eastern railroads CSX and Norfolk Southern (NS) said they are working around the clock to restore service to their networks. Norfolk Southern said it had made "significant progress" towards its recovery with most major routes back in service including its Chattanooga, Tennessee, to Jacksonville, Florida, line as well as its Birmingham, Alabama, to Charlotte, North Carolina route. Norfolk Southern said freight moving through areas that are out of service could "see delays of 72 hours". Several of Norfolk Southern's other routes remain out of service, including rail lines east and west of Asheville, North Carolina, because of historic levels of flooding. There are multiple trees to remove along a 70-mile stretch from Macon, Georgia, to Brunswick, Georgia. And downed power lines are keeping the railroad's lines from Augusta, Georgia, to Columbia, South Carolina, and Millen, Georgia, out of service. CSX said "potential delays remain" but did not provide specifics. However, the railroad said it had made "substantial progress" in clearing and repairing its network. The railroad's operations in Florida have mostly reopened, as have rail lines in its Charleston subdivision, which crosses South Carolina and Georgia. But bridge damage and major flooding has kept CSX's Blue Ridge subdivision out of service. A portion of the line running from Erwin, Tennessee, to Spartanburg, South Carolina, has been cleared, but CSX said "a long-term outage" is expected for other parts of the rail line. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US July ethanol output highest ever: EIA


30/09/24
30/09/24

US July ethanol output highest ever: EIA

Houston, 30 September (Argus) — US production of fuel ethanol in July set a monthly record at 1.09mn b/d as producers were incentivized by low feedstock prices amid robust demand. July output was up by 5.1pc from the previous month and 5.6pc higher than a year earlier, according to data released by the Energy Information Administration (EIA) on Monday. Output during the month was 2,000 b/d above the previous record set in August 2018. Low prices for corn feedstock, which arrived during the demand-heavy summer driving season for gasoline — a proxy for ethanol blending and demand — helped bolster production rates. Front month CBOT corn prices in July averaged 398¢/bushel, the lowest since September 2020 and 28pc less than a year earlier. Value for corn has been under pressure from healthy domestic crop yields. US supplied finished motor gasoline reached 9.3mn b/d, up by 177,000 b/d from June and about 300,000 b/d higher than a year earlier. Ethanol blending in July was 914,000 b/d – little changed over the month and from a year earlier. By Payne Williams Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Southeast Asia risks missing 2025 renewables goal: Ace


30/09/24
30/09/24

Southeast Asia risks missing 2025 renewables goal: Ace

Singapore, 30 September (Argus) — Member countries of the association of southeast asian nations (Asean) could miss its 2025 renewable energy target, unless the region ensures the implementation of national renewable energy policies and power development plans, according to the Asean Centre for Energy (Ace). Asean aims for a 23pc share of renewable energy in its energy mix by 2025, but its share of renewable energy in 2022 was only 15.5pc, according to Ace's 8th Asean Energy Outlook 2023-2050 released on 26 September. Asean countries include Brunei Darussalam, Malaysia, Vietnam, Singapore, Cambodia, Indonesia, Lao PDR, Myanmar, Philippines, Thailand and Vietnam. "It is challenging for Asean to achieve the remaining 7.4 percentage points within three years," according to the outlook. But if countries follow through on their renewable energy policies, the 23pc target could be reached by 2030, and the share of renewable energy could rise further to 38.1pc by 2050. The outlook sets out projections for the region based on different scenarios, using 2022 as the reference year. The baseline business-as-usual scenario assumes no interventions to meet existing national renewable energy targets and excludes plant capacity additions from power development plans. The Asean member states targets scenario (ATS) assumes the attainment of national policies for renewable targets with modelling interventions, and includes planned capacity additions. Installed power capacity in 2022 was still heavily reliant on fossil fuels, which accounted for 66.4pc of the total energy mix. Asean has set a target of 35pc of renewable energy in installed capacity by 2025, and managed to achieve 33.6pc in 2022. The baseline scenario is expected to fall short of the target, reaching 34.1pc in 2025. But the ATS could surpass the target to reach 39.6pc by 2025, and 69.4pc in 2050. But energy financing still poses a challenge. The region faces huge power investment costs to develop the additional capacity required to meet demand. Power investment requirements over 2023-30 range between $20bn-56bn, while for 2041-50 this ranges from $28bn-371bn, according to the report. Fossil fuels to stay in the mix Southeast Asia's population and economic growth continue to rise, and the region's total energy consumption under the baseline scenario is expected to reach 1.1bn t of oil equivalent by 2050, more than doubling from 2022 levels. Fossil fuels will likely remain the primary source of energy, making up 76.1pc of total energy supply in 2050 under the baseline scenario, but under the ATS, this could be brought down to 63.4pc by 2050. Natural gas use is set to continue rising across all scenarios, as it is considered a bridging fuel in the energy transition, especially for the phase-out of coal. Gas can complement the intermittent nature of renewable energy sources like solar and wind, stated the report. Under the baseline scenario, Asean is projected to become a net importer of natural gas by 2027 as production in the region is set to decline. But this increasing reliance on imports also raises concerns over energy security. An integrated gas market could help to boost energy security as it fosters interconnection networks, and competition would expand the gas pool, in turn lowering business costs and enhancing resource allocation efficiency, according to the report. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Focus on Article 6 as VCM flounders


30/09/24
30/09/24

Focus on Article 6 as VCM flounders

Washington, 30 September (Argus) — As the UN Cop 29 climate summit in Baku, Azerbaijan, approaches in November, the focus is increasingly on whether countries will finally agree on the rules that can unlock future carbon markets under Article 6 of the Paris agreement. Market proponents consider a repeat of last year's Cop 28 in Dubai — where parties failed to agree on the mechanism's rules — would be the worst possible outcome. But they are optimistic given Article 6's placement high on the agenda. "Now it is at the heads of delegation level, which we've never seen," International Emissions Trading Association managing director Katie Sullivan says. But she warns that uncertainty over Article 6's fate is keeping potential carbon market capital "on the sidelines". The voluntary carbon market (VCM), which allows firm to offset their emissions with carbon credits, has found itself in a reputational crisis since last year, with prices crashing. Many potential host countries that are Article 6-ready have felt the impact of climate change this year as they battle with droughts or floods. A functioning market could plough much-needed finance into those countries. But the recent difficulties in the VCM also highlight the importance of integrity. And it is precisely the issues that set Article 6 apart from the VCM that have proved the trickiest to solve. A crucial difference is the need for a corresponding adjustment under Article 6 to prevent double counting by countries of mitigation outcomes. It took five years of talks leading up to Cop 26 in Glasgow to resolve the issue, an EU negotiator said at a World Bank event in Berlin this month. The negotiator, also a member of the supervisory body for the more regulated Article 6.4 mechanism, stressed that "only" three years have passed since Glasgow, and that integrity will continue to go before speed in reaching an agreement. Progress has been slow this year, as the supervisory body works on the rules and standards for the permitted methodologies underlying mitigation and removal activities, and on revising the methodologies of the Kyoto Protocol's Clean Development Mechanism (CDM) that Article 6.4 essentially replaces. Some progress was made this summer on standards for proving "additionality" — that the mitigation would not have happened without the project finance — and setting the "baseline" against which the emissions outcome is measured. Missing rules In contrast, Article 6.2, which allows parties to form bilateral agreements for carbon mitigation projects that generate "internationally traded mitigation outcomes", already provides the possibility of engaging in carbon credit trades. In Berlin, several buyer countries, including Japan and Singapore, made it clear that they will press ahead with deals even if an agreement fails in Baku. Parties under Article 6.2 will typically resort to CDM or the strictest VCM methodologies to underpin their mitigation activities, as they await a final agreement at UN level. And there are no removals projects in the Article 6.2 pipeline, given the lack of precedent in the CDM. They said the main problem is a lack of capacity at host country level, and not so much the missing rules. But some of those missing rules also affect Article 6.2, such as those for credit registries, and more crucially, the timing and scope of credit authorisation, and the extent to which an authorisation might be revoked. German deputy special envoy for climate action Norbert Gorissen last week called for progress on mitigation and ambition at Cop 29. "I'm very concerned that the focus of the incoming presidency is only on finance," he said. The EU does not intend to take part in Article 6 activities. One reason behind the failure in Dubai was stiff opposition from the EU, on grounds of environmental integrity. By Chloe Jardine and Michael Ball Voluntary carbon credits Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

SAF market is far from takeoff: Airlines


27/09/24
27/09/24

SAF market is far from takeoff: Airlines

New York, 27 September (Argus) — Airline executives descended on climate events in New York this week to emphasize their commitments to use more sustainable aviation fuel (SAF) — and to hint that these goals will prove difficult absent additional government support. At events tied to the UN General Assembly and Climate Week NYC, supporters of alternative jet fuels said that a range of policies were growing the market, including tax incentives, US states' low-carbon fuel standards and increasingly stringent mandates for SAF usage in the EU. While US production capacity of SAF is expected to rise significantly in the coming years, there is still concern that limited supply and a steep premium to conventional petroleum jet fuel will hinder adoption. SAF "will always be more expensive because it's a better product," said Aaron Robinson, vice president of US SAF for the International Airlines Group, a holding company that includes British Airways and Iberia. Executives, while calling generally for more policies to stimulate supply and demand, were more inclined to support subsidies over mandates. The airline industry already runs on tight margins, and executives fear that prospective customers could stay home instead of paying more for lower-carbon flights. "I think the worst thing we could do right now is choose a very short-term solution that takes that green premium and directly saddles it onto our customers," said Delta Air Lines chief sustainability officer Amelia DeLuca. She argued that the EU's SAF mandates were "pushing the fuel forward a little bit too fast in terms of where the supply and the green premium are." Still, the most prominent government subsidy for SAF — a tax credit kicking off next year in the US that will offer up to $1.75/USG for domestic SAF producers — was described as helpful but insufficient. The Inflation Reduction Act, which included that credit, was "historic, monumental, not good enough," said United Airlines chief sustainability officer Lauren Riley. President Joe Biden's administration has frustrated US biofuel groups by not yet providing guidance around qualifying for that credit, known as "45Z," which requires SAF to meet an initial carbon intensity threshold and increases the subsidy as the fuel's greenhouse gas emissions fall. Regardless, airlines and fuel producers say that the credit — which expires at the end of 2027 — is too short-lived to build up a supply chain. Policies like the 45Z credit should "have an end" but the end needs to be "far enough into the future," ExxonMobil vice president of strategy and planning for product solutions Tanya Vetter said this week at a clean energy event in Washington, DC. Competing interests Prolonging the 45Z credit would require legislation, but reopening a debate over clean fuels incentives in Congress could divide groups generally supportive of SAF. Airlines and refiners support more flexibility around feedstocks — including fuels produced from foreign sources like Chinese used cooking oil and fuels produced by co-processing petroleum — while farm groups want policy to increase demand for domestically produced vegetable oils and corn ethanol. A bipartisan group of farm state lawmakers this week introduced legislation that pairs an extension of the 45Z credit through 2034 with restrictions on fuels sourced from foreign feedstocks. With Congress set to debate tax policy next year regardless of who controls the White House, airlines supportive of more generous and longer-lasting SAF subsidies will also have to contend with Republicans that want to repeal much of the Inflation Reduction Act and with competing lobbies that would rather devote funds to extending other incentives. For instance, Justine Fisher — the chief financial officer at the Canadian carbon capture company Svante — signaled interest this week in increasing a tax credit for carbon capture, utilization, and storage that is included in the law. The incentive, which offers $85/metric tonne for captured carbon and is more popular than other parts of the law among oil and gas companies, is currently not "high enough to make project economics work," she said. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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