Europe makes legislative push for aviation transition
Interest in cleaner alternatives to jet fuel is being stoked by the EU's push to reduce carbon emissions by 55pc by 2030 compared with 1990 levels.
A raft of new country-level emissions and blending legislation is being met by plans to increase production of biojet, or sustainable aviation fuel (SAF), which could lead to a narrowing of the currently huge price premium that SAF commands over fossil-based jet fuel. But the success of this part of the energy transition will depend in part on demand for air travel recovering from the heavy blow landed by the Covid-19 pandemic.
The European Commission launched a consultation in March with the aim of introducing measures to promote the decarbonisation of the aviation sector. It proposes the introduction of a 1-2pc EU-wide blending quota as well as the revision of the 1.2x multiplier component for SAF under the recast Renewable Energy Directive (RED II). The commission has tentatively scheduled SAF legislation by January, but pending a decision on an umbrella quota, several countries have begun to introduce measures to reduce greenhouse gas (GHG) emissions in the sector and to promote the development of competitive biojet.
France this week proposed a 1pc SAF quota from 2022, and Germany last week published a draft law calling for airlines to increase the share of SAF of non-biogenic origin in their fuel mix to 0.5pc by 2025, 1pc by 2028 and 2pc by 2030. Paris had already proposed to increase its SAF blending target to 2pc by 2025, 5pc by 2030 and 50pc by in 2050.
In the UK, a public-private partnership called the Jet Zero Council will promote the development of biojet. Members of UK industry group Sustainable Aviation have already committed to achieve net-zero carbon emissions by 2050 and to boost SAF development.
Nordic countries are at the forefront of efforts to reduce GHG emissions from aviation. Norway will introduce a blending requirement of 0.5pc of biojet from 2020, and the new government in Finland has approved 30pc biofuels penetration by 2030. In Sweden, the government is evaluating an emissions reduction of 0.8pc from jet fuel used in Sweden in 2021, increasing to 27pc by 2030.
The growing legislative push is leading to an increase in Europe's biojet production. UK company Velocys is developing Europe's first waste-to-SAF facility, Netherlands-based biojet producer SkyNRG is developing a 100,000 t/yr aviation fuel plant at Delfzijl, and Finland's St1 will commission a 200,000 t/yr biorefinery in Gothenburg, producing HVO and biojet, at the end of 2021.
Finland's Neste — Europe's largest SAF producer, with 100,000 t/yr from its Porvoo refinery — plans to produce 1mn t/yr from 2022 at a refinery in Singapore that is under construction, and 450,000 t/yr at a proposed facility in Rotterdam from 2023.
Several European refiners have moved to accelerate a switch to biofuels production in light of prospects for a swift energy transition and because of weaker refining margins for transport fuels arising from the pandemic. Such moves are given added urgency by fierce competition from newer, lower-cost refineries in the Middle East and Asia-Pacific. Total last week said it will convert its 93,000 b/d Grandpuits refinery near Paris into a biorefinery capable of producing up to 170,000 t/yr of biojet from 2024. Swedish refiner Preem will focus on renewable diesel and jet fuel production at its Gothenburg and Lysekil refineries, after cancelling plans to install a new residue hydrocracker at the latter. BP wants to reduce refinery throughput globally from 1.5mn b/d to around 1.2mn b/d by 2030 as it ramps up its renewables and power business. And Spain's Repsol will decarbonise its 240,000 b/d Bilbao refinery, to include a net-zero emissions synthetic fuels plant that will use CO2 from the refinery along with green hydrogen generated from renewable energy.
Increased biojet availability in Europe could reduce prices, which would be necessary to promote uptake. Argus assessed UCO-based SAF (HEFA-SPK) at $2,120.99/t at the end of last week, a $1,803.99/t premium to conventional jet fuel as of 30 September.
But all this will be broadly dependent on the return of travel demand when and if pandemic-related restrictions lift. And this is unlikely to be soon. The International Air Transport Association (Iata) this week revised its traffic forecast for 2020 to a fall of 66pc in revenue passenger kilometres (RPKs), reflecting a "weaker-than-expected recovery", down from its previous estimate of a 63pc year on year drop.
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Singapore, 30 August (Argus) — Australian airline Qantas Airways recorded a higher fuel bill in the 2023-24 fiscal year to 30 June, as more flights, sustainable aviation fuel (SAF) expenses and carbon offset programmes weighed on costs. Qantas saw its fuel costs rise by 17pc from a year earlier to A$5.32bn ($3.62bn) in 2023-24, according to the company's full-year financial results released on 29 August. The airline group's passenger carrying capacity was up by 21pc on the previous year, with growth in domestic and international capaicty. This saw the group's overall fuel consumption grow to 29mn bl (79,000 b/d), or 18pc up on the previous year. Qantas expects fuel costs in the first half of 2024-25 to remain stable from a year earlier at about A$2.7bn, including hedging and gross carbon costs, with the group forecasting to consume 15.6mn bl of fuel, including SAF. Qantas forecasts domestic group capacity to rise to 104pc of pre-Covid 19 pandemic capacity in the first half of 2024-25. Its international capacity guidance, excluding Jetstar Asia, is expected to rise by about 16pc from the previous year to achieve 102pc of pre-Covid levels in the first half. The group's passenger carrying capacity, measured by available seat kilometres (ASKs), was up on a year earlier by 21pc to 141mn ASK by 2023-24, although this was still about 93pc of pre-Covid levels. Qantas has agreements to offtake SAF, renewing its agreement to buy SAF for flights out of London Heathrow and doubling the size of its corporate customer SAF programme in 2023-24. But the group saw its 2023-24 profit fall, with underlying profit before tax down by 16pc on the previous year to A$2.08bn. By Cara Wong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India lifts curbs on use of sugarcane juice for ethanol
India lifts curbs on use of sugarcane juice for ethanol
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Sweden to up biofuel mandates again after slashing them
Sweden to up biofuel mandates again after slashing them
London, 28 August (Argus) — Sweden's government announced that the country will raise its greenhouse gas (GHG) reduction obligations to 10pc for gasoline and diesel from 6pc, with changes due to come into effect on 1 July next year according to Swedish bioenergy association Svebio. The country announced in May last year that it was planning to lower GHG reduction mandates for 2024-2026 to 6pc for both diesel and gasoline, from 30.5pc for diesel and 7.8pc for gasoline in 2023. The government at the time said this was because higher GHG reduction targets in Sweden, compared with the rest of the EU, were pushing diesel prices up at the pump. The biofuels industry in Sweden welcomed the new 10pc mandate, as it will support domestic demand for its fuels. The drop in Sweden's mandates to 6pc had a significant effect on domestic biofuels usage and wider biofuel prices in Europe, particularly hydrotreated vegetable oil (HVO). Because fatty acid methyl ester (Fame) biodiesel has a 7pc physical blend wall into diesel under the EU Fuel Quality Directive, Sweden relied on drop-in HVO to meet its high diesel mandates. As a result of the 2024 mandate cuts, HVO deliveries were down by 95pc on the year in June and total biofuels deliveries were down by 79pc in the same period, according to data from government data provider Statistics Sweden . Lower mandates in Sweden cut domestic HVO demand, redirecting supplies to the wider European market, pushing values down as a result. Prices for HVO Class II fob ARA range, made from used cooking oil, were down by $715.42/t year on year, or 31.5pc, on 27 August. Tomas Ekbom, programme director at Svebio, told Argus that Sweden's government understood it could not rely mainly on the electrification of the transport sector to meet targets and that biofuels had a larger role to play. He added that the government likely also considered that it would be too costly to pay for credits if, in the end, EU targets were missed. Sweden's government estimates that the country will meet its Effort Sharing Regulation commitments for 2030 — a binding emissions reduction target for domestic transport (excluding aviation), buildings, agriculture, small industry and waste of 50pc compared with 2005 levels — by implementing this new 10pc reduction obligation, as well as a new climate action plan. But the parliament previously abolished GHG reduction levels for 2027-2030, taking a wait and see approach. And ministers did not include any plans to scale up the mandated levels from 10pc. The re-cast Renewable Energy Directive requires a 14.5pc GHG reduction target, or 29pc share of renewables by energy content, for transport fuels by 2030. Sweden's new obligation will allow fuel suppliers to credit electricity from public charging stations towards meeting their emissions reduction obligations, but how this will work in practice remains unclear. Last year, battery electric vehicles were 5.75pc of Sweden's total passenger car fleet and plug-in hybrid electric vehicles were 5.37pc of the fleet, based on data from the EU's alternative fuels observatory. Sweden will also include a proposal in its 2025 budget to reduce fuel taxes to reduce impact on fuel prices at the pump. The gasoline tax will be reduced by 0.75 krona/litre ($0.07) next year while the diesel tax will be increased by 0.11 krona/litre ($0.01) — the EU minimum. By Simone Burgin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US, Italy, Germany miss goal to cut fossil fuel finance
US, Italy, Germany miss goal to cut fossil fuel finance
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