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SAF market is far from takeoff: Airlines

  • Spanish Market: Agriculture, Biofuels, Emissions, Oil products
  • 27/09/24

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.


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25/02/25

Reopening New Zealand refinery could cost $4bn: Study

Reopening New Zealand refinery could cost $4bn: Study

Sydney, 25 February (Argus) — Reopening New Zealand's mothballed 135,000 b/d Marsden Point refinery (MPR) could take six years and cost up to NZ$7.3bn ($4.2bn), according to a government-commissioned study. MPR, New Zealand's only refinery that is located north of largest city of Auckland, was converted to an oil product import terminal in 2022. The interim report, which was commissioned by New Zealand's National-led government last year, cited Australian professional services firm Worley's estimates that reestablishing refining would require NZ$4.9bn-7.3bn. This imposes significant risks and costs on MPR owner Channel Infrastructure, which has imported oil products since refining ended in 2022. A reopening would provide more resilience against quality issues with imported fuels, increase stockholding and provide local employment. But this is offset by a dependence on crude imports, with MPR becoming a single point of failure risk, and increased greenhouse gas emissions associated with refining. Fuel Security Study The Ministry of Business, Innovation and Employment on 25 February separately released a Fuel Security Study, which found that fuel security remains threatened by supply disruption. It recommends that the nation instead focus on increased storage and zero-emission vehicles instead of reopening MPR. The strategies considered for improving New Zealand's fuel supply security included reopening the refinery or building a new one, increasing jet fuel and diesel storages, expanding trucking capacity to mitigate against infrastructure failures, investing in biofuels production and increasing uptake of zero-emissions transport. Resurrecting MPR or building a new refinery for locally produced crude would be inefficient given either expense or the limited effectiveness that a new facility would have in supplying all fuel types required, the study found. The most cost-effective security enhancement is increasing storage levels of diesel and jet fuel, while gasoline was less of a concern given generally high stocks, with more gasoline storages to be converted to other fuels as demand falls owing to electric vehicle (EV) uptake. EVs will likely diminish New Zealand's reliance on gasoline but diesel use will taper off more slowly given less advanced alternatives, while jet fuel demand is likely to rise without other realistic options in the short term. Biofuels were found to be viable for securing domestic jet fuel and diesel supply, but further study is required and developing this sector would cost more. About 70pc of New Zealand's fuel imports are from Singapore or South Korea, exposing the country to shipping disruptions, but fuel companies' ability to adjust supply chains would mitigate any major impacts, the study said. Internally, the threat of natural disasters impacting pipelines or import terminals should lead to more thorough planning for such events. New Zealand would carefully weigh the costs and benefits of the actions suggested in the fuel study, associate energy minister Shane Jones said on 25 February, including considering the creation of energy precincts and special economic zones to spur a domestic biofuels sector. Jones, a member of the NZ First party in coalition with National, added that creating such zones with special regulations and investment support could help attract overseas investors. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Climate downgraded in EU due diligence rule update


24/02/25
24/02/25

Climate downgraded in EU due diligence rule update

Brussels, 24 February (Argus) — A legislative proposal will this week ease requirements under the EU's corporate sustainability due diligence directive (CSDDD) that would oblige large firms to adopt business models compatible with keeping global temperatures within 1.5°C of pre-industrial levels, as per the Paris climate agreement. The proposal, if adopted by the European Parliament and EU member states, would amend the directive to require firms only to "adopt" a transition plan for climate change mitigation, with implementing actions, with the goal of limiting global warming to 1.5°C compared with pre-industrial levels. The European Commission's proposal cuts out the words "put into effect" as an obligation for transition plans that also cover the objective of achieving climate neutrality by 2050. "The revised wording sends mixed signals to companies, creating uncertainty about whether they must follow through on their plans. This ambiguity leaves them exposed to potential legal action compelling them to align with the 1.5°C target," said Amandine Van den Berghe, a lawyer for environmental organisation ClientEarth. The group also criticised "private" commission consultation, notably with the oil and gas sectors. Earlier in the month, EU economy commissioner Valdis Dombrovskis highlighted the need for "simplification" of the CSDDD, but did not specify whether this would address Qatari concerns that the 2024 directive will negatively affect LNG exports to the EU. Ahead of the commission's presentation of the simplification proposals, Green chair of parliament's internal market committee Anna Cavazzini said dismantling sustainability laws will not solve structural economic problems. EU laws must be as "unbureaucratic as possible", she said. "The leaked reform of the EU due diligence law goes far beyond that and simply guts it." By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Brazil's Zeg launches REDD+ project


24/02/25
24/02/25

Brazil's Zeg launches REDD+ project

Sao Paulo, 24 February (Argus) — Brazilian biogas firm Zeg launched a new business division that will invest in reforestation in the Rio Branco valley, in northern Roraima state. The new unit, dubbed Zeg Florestal, will protect 14,000 hectares (ha) of the Amazon to keep it from being converted to cattle ranching and soybean planting. The state issued a decree in 2022 which reduced the legal reserve requirements on rural properties to 50pc from 80pc, clearing the way for property owners to legally deforest a larger share of their land holdings. The project is the first in Roraima state to use the REDD+ framework, which aims to preserve standing forests and reduce emissions from deforestation. The project also focuses on biodiversity preservation and promotion of the bioeconomy, which includes the sale of sustainable products from the forest to help create jobs for area communities. The project will use global certification agency Verra's Verified Carbon Standard (VCS) and Climate, Community and Biodiversity (CCB) standards. The company estimates that the project will avoid a combined 4mn metric tonnes of CO2 emissions in 2025 and 2026. The project comes amid rising concerns about the legitimacy of carbon offsets from REDD+ projects, following a federal police investigation in June last year that exposed fraud for a project in Amazonas state. The large-scale corruption scheme involved around R180mn ($31.6mn) in carbon offsets that were generated from roughly 500,000ha of illegally occupied lands in the state. The police investigation also uncovered illegal deforestation and cattle ranching on land that was supposedly being preserved . Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Germany’s Habeck fears climate policy regression


24/02/25
24/02/25

Germany’s Habeck fears climate policy regression

Berlin, 24 February (Argus) — Outgoing German economy and climate minister Robert Habeck today voiced his fear of a climate policy "regression" under a new government following Sunday's federal elections, as right-of-centre CDU candidate for chancellorship Friedrich Merz is likely to form a government with outgoing federal chancellor Olaf Scholz's left-of-centre SPD. Habeck, who was also the Greens' candidate for chancellorship, had hoped to join the government as a junior partner to the CDU and its Bavarian sister party the CDU. But a CDU/CSU-Green Party combination would lack a majority, and the Greens will not be needed as they had hoped, until the final results came out last night, to provide a CDU/CSU-SPD alliance with a stable parliamentary majority. A CDU/CSU-SPD coalition government is one that "dodges problems" and "lacks a willingness to act", Habeck said at a press conference in Berlin, pointing to the years of CDU/CSU-SPD coalition governments with their perceived air of stagnation and focus on "management", coupled with a lack of "innovation". "Saying I'm concerned is putting it politely," Habeck said. He warned that demands by the CDU/CSU to postpone the EU-mandated phase-out of combustion engine cars by 2035 will make it difficult for Germany to reach its climate targets. Habeck also flagged the pledges made by the CDU/CSU group to at least dilute, if not abolish, the buildings energy law and its renewable share mandates. And he pointed out suggestions made by the CDU/CSU to soften climate targets, by aligning Germany's ambitious climate target to the EU's. Germany aims to reach greenhouse gas (GHG) neutrality by 2045, the EU by 2050. The issue of climate policy played hardly any role during the electoral campaign, and it was similarly barely broached on Sunday evening as party leaders convened in different formats to discuss the results and the way forward. Party leaders, including from the Green Party, were mostly focused on addressing the need for far greater investments in defence given the current geopolitical situation, and on boosting economic growth. The issues of cost of living and illegal migration were also major topics. Merz has pledged to "quickly" form a government. With the pro-business FDP kicked out of parliament on Sunday, outgoing foreign minister Annalena Baerbock of the Green Party called on the CDU/CSU to give up its resistance against reforming the constitutional debt brake, thereby allowing the necessary investments to tackle the different challenges faced by the country. The FDP had left the outgoing government in November last year, not least owing to ongoing fights over the budget, with the FDP opposed to any easing of the debt brake, a change necessitating a two-thirds majority in parliament. The debt brake and budget constraints had abruptly ended a range of climate and energy policy support programmes under the outgoing government. Climate had played a bigger role in the run-up to the preceding federal elections of September 2021. But the relevance of climate policy diminished over the year then too, with the Greens in early 2021 polling second ahead of the SPD. They came out third in the 2021 elections, and were fourth this year. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Gasoline price in southern Germany down on ample supply


24/02/25
24/02/25

Gasoline price in southern Germany down on ample supply

Hamburg, 24 February (Argus) — Suppliers in southern Germany are lowering gasoline prices compared with the nationwide average on ample supply and slow demand. Gasoline availability in Southern Germany has remained sufficient enough to cover local demand even though refinery outages hampered supply, because demand has remained slow, around Karlsruhe especially. This has forced some suppliers to keep prices well below the national average. Gasoline prices in the region have fallen significantly compared with the rest of the of Germany with discounts of over €2,20/100l in the past week. Production at the Bayernoil consortium's 215,000 b/d Vohburg-Neustadt refinery in Bavaria and the Miro joint venture's 310,000 b/d Karlsruhe refinery is still restricted. Both facilities experienced technical problems within days of each other at the end of January. While a third of Miro's production capacity is expected to remain offline until the beginning of March, the operators of the Bayernoil refinery began the process of bringing the affected units back online on Sunday. Meanwhile, suppliers in Cologne are selling gasoline with a premium of up to €1,60/100l to the national average. This sudden price jump points toward reduced availability at Shell's 334,000 b/d Rhineland refinery complex. Although traders in the region have not reported any gasoline shortages, the upcoming end of crude refining at the 147,000 b/d Wesseling plant of the Rhineland refinery in March could already be having an effect on prices. By Natalie Muller Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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