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Viewpoint: HVO capacity growth to test feedstock supply

  • : Biofuels
  • 21/12/17

Decarbonisation pledges have increased during a landmark year for global climate diplomacy with the UN's Cop 26 climate conference, with investment in biofuels positioned centre stage of many transition plans. Asia-Pacific in 2022 will see an intensifying scramble to buttress feedstock supply chains ahead of several hydrotreated vegetable oil (HVO) capacity additions the following year, although shifting regulations may constrict supplies.

Shell has announced plans for a 550,000 t/yr HVO and sustainable aviation fuel (SAF) plant as part of its rebranded Pulau Bukom site in Singapore.

The facility, if the investment is finalised, will join a host of others in the vicinity vying for regional waste feedstocks.

The plant will share a gateway with HVO indicator Finnish biofuels refiner Neste, which is on track to double its Singapore capacity to 2.6mn t/yr in the first quarter of 2023. South Korean biodiesel producer Dansuk is seeking a partner to invest in a second 300,000 t/yr domestic HVO and SAF plant in Gusan, on top of a similar 300,000 t/yr Daesan project already under way for a 2025 start-up.

Chinese producers are lining up sooner for expansions, although run rates have continued to lag well below capacity in 2021. ECO Environmental planned to add 100,000 t/yr of HVO and SAF capacity to its existing 250,000 t/yr plant in Jiangsu province in the fourth quarter of 2021. Beijing Sanju in 2022 expects to open its fourth HVO plant with 200,000 t/yr in Baoshun, Shandong province, while Zhongdiyou New Energy aims to increase its Shandong capacity up to its nameplate 400,000 t/yr.

An additional 200,000 t/yr of fatty acid methyl ester biodiesel capacity at Jiaao's Zhejiang plant will also increase feedstock demand in 2022.

Adding to the competition will be unrelenting policy-driven demand growth from European HVO and biodiesel producers. Their demand for used cooking oil (UCO) will grow by 260,000t from a year earlier to 4.94mn t in 2022, according to Argus Analytics and Consulting, while "other" feedstocks comprising mainly palm oil mill effluent (POME) will rise by 1.2mn t to 3.9mn t. POME is designated as advanced under Annex IX, Part A of the EU's Renewable Energy Directive II, a category that receives ratcheting sub-targets to 2030 under EU legislation.

Policy barriers, bridges

While many large-scale producers are eager to secure limited feedstock supply lines through acquiring upstream collection companies in China, no known acquisitions have emerged. Local government policies promoting "closed loop" systems might make this increasingly difficult.

South China's Guangzhou became the latest municipality to issue measures on food waste management at the end of October 2021, joining Shanghai in ruling that unprocessed waste oils cannot be shipped out and must be processed to boost value-added industries within the city. Other smaller municipalities will possibly be eyeing Guangzhou's policy, which is the most comprehensive released so far, when forming their own regulations.

Traction on a national level has grown behind proposals to rescind China's current value-added tax rebate for UCO exports submitted by domestic biodiesel producers. Continuing discussions between the customs administration and finance ministry have yet to deliver, which many market participants see as reflecting the UCO industry's relative unimportance to Beijing with exports to just surpass 1mn t in 2021. But if UCO tax benefits are revoked as participants expect in the medium term, it will benefit HVO plants' access to raw materials by squeezing smaller overseas UCO methyl ester plants out of China's feedstock market.

Southeast Asian expansion

Expansion in Southeast Asian UCO sourcing will possibly continue after exports from Malaysia, Indonesia, Thailand and Vietnam all reached new highs in 2021.

But it might only be a matter of time before more insular policies emerge in some of these countries as well, especially Indonesia as it pursues ever more ambitious domestic biodiesel policies of its own.

The promise of EU part A frontrunner POME to fill in feedstock supply gaps may be tempered by tightened audit regulations for mills producing the waste oil from 2022, spurring higher costs that could deter new suppliers from entering the market.


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24/11/21

Cop: EU, four countries commit to 1.5°C climate plans

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US, Norway give $110mn to Brazil Amazon Fund


24/11/18
24/11/18

US, Norway give $110mn to Brazil Amazon Fund

Rio de Janeiro, 18 November (Argus) — The US and Norway will contribute a combined $110mn to Brazil's Amazon Fund to reduce emissions from deforestation and promote sustainable forest management. President Joe Biden announced the US' $50mn contribution to the fund from the Amazonian city of Manaus on Sunday. He is the first sitting US president to visit the Amazon rainforest. This adds to the $50mn disbursed by the US to the fund earlier this year, Biden said. Norway will contribute $60mn, citing a 31pc decrease in Amazon deforestation achieved from August 2023-July 2024. "Brazil's success in reducing deforestation is clear proof of the ambitions and determination of the Lula government," Norway's prime minister Jonas Gahr Store said from Rio de Janeiro. President Luiz Inacio Lula da Silva has pledged zero deforestation by 2030. Norway was the first country to contribute to the Amazon Fund, which was set up during Lula's first term in 2008. It was suspended in 2019 during the presidency of Jair Bolsonaro, a climate skeptic, and reinstated when Lula returned to power in 2023. Projects worth a record R882mn ($151.6mn) have been approved so far this year according to Brazil's Bndes development bank, which manages the Fund. By Constance Malleret Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Neste to supply renewable chemical feedstock to PCS


24/11/18
24/11/18

Neste to supply renewable chemical feedstock to PCS

London, 18 November (Argus) — Finland's Neste will supply Singapore-based chemicals company PCS with renewable material feedstock for production of plastics. The Neste RE material will be supplied to PCS for use at a site on Jurong Island, Singapore. Neste RE is based on waste products including used cooking oil (UCO) or waste residues from vegetable oil processing. PCS produces ethylene, propylene and butadiene for consumers across Asia-Pacific. The first deliveries from PCS will include butadiene, the company said. Initial buyers include Mitsubishi, Toray Plastics in Malaysia and Synthomer. Neste previously said beverage maker Suntory will produce PET bottles derived from bio-paraxylene converted from bio-naphtha by the Finnish refiner. By George Barsted Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Adv Fame marine blend premiums to fossil hit year lows


24/11/15
24/11/15

Adv Fame marine blend premiums to fossil hit year lows

London, 15 November (Argus) — The premiums of advanced fatty acid methyl ester (Fame) 0 ARA marine biodiesel blends to fossil fuel counterparts were marked at 2024 lows on 14 November, according to Argus assessments. Calculated B30 Advanced Fame 0 dob ARA prices fell by $31.54/t to $623.25/t, the lowest since March 2023. Calculated B100 Advanced Fame 0 dob ARA values tumbled by $102.77/t to just over $820/t, their lowest since 22 November last year. Consequently, the outright premium held by the B30 blend against very-low sulphur fuel oil (VLSFO) dob ARA narrowed by $30.54/t on the day to $123.25/t on 14 November — its narrowest since 29 December 2023. B100 held a $158.52/t premium to marine gasoil (MGO) dob ARA, down by $106.77/t on the day and its lowest premium this year. EU emissions trading system (ETS) prices were assessed at $71.79/t on 14 November. Accounting for EU ETS costs on the same day, ETS-inclusive premiums held by Advanced Fame blends against their fossil counterparts hit their lowest since the introduction of EU ETS into maritime at the turn of the year. B30 Advanced Fame 0's ETS-incorporated premium against VLSFO narrowed by $31.27/t to $96.11/t on the day to 14 November. B100 Advanced Fame 0's premium against MGO dropped by $109.28/t to $66.45/t when ETS costs were accounted for. Advanced Fame marine biodiesel blend values declined with thin spot demand owing to a shift in voluntary demand east of Suez. As a result, containerships seeking to deliver proof of sustainability (PoS) documentation to their customers, to offset the latter's scope 3 emissions, shifted their marine biodiesel demand to Singapore when feasible. PoS can be obtained on a mass-balance system, allowing shipowners flexibility with regards to the port at which a blend can be bunkered. Lacklustre demand for the blends was complimented by soaring values for Dutch renewable tickets. The calculated Advanced Fame dob ARA range prices incorporate a deduction for HBE-Gs. These are a class of Dutch renewable fuels units, or HBEs, used by companies that bring liquid or gaseous fossil fuels into general circulation and are obligated to pay excise duty/energy tax on fuels. Dutch renewable HBE-G tickets were marked at €22/GJ on 14 November, their highest since Argus assessments began. Soaring HBE-G values were attributed](https://direct.argusmedia.com/newsandanalysis/article/2628738) to gains in European hydrotreated vegetable oil (HVO) prices, tight supply because of a decline in tickets from biofuels used in shipping and less overall biofuel blending in the fourth quarter. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Advanced Fame ARA marine biodiesel blends hit 2024 lows


24/11/14
24/11/14

Advanced Fame ARA marine biodiesel blends hit 2024 lows

London, 14 November (Argus) — Marine biodiesel blends comprising Advanced Fatty acid methyl ester (Fame) 0 hit their lowest prices so far this year on 13 November, according to Argus assessments. Calculated B30 Advanced Fame 0 dob ARA prices fell by $15.05/t to $654.79/t, the lowest since 14 December 2023. Calculated B100 Advanced Fame 0 dob ARA values tumbled by $70.60/t to $922.79/t, their lowest since 29 December 2023. The calculated dob ARA range prices incorporate a deduction for HBE-Gs. These are a class of Dutch renewable fuels units, or HBEs, used by companies that bring liquid or gaseous fossil fuels into general circulation and are obligated to pay excise duty/energy tax on fuels. The sharp drop in blend values came despite firming prices in Advanced Fame 0 fob ARA range values, which rose by $11.50/t to $1,481.25/t on 13 November — their highest since 8 July. Fossil markets also rebounded from recent drops that day, with front-month Ice Brent crude futures and gasoil futures contracts edging higher by 16:30 BST. Market participants had pointed to sluggish demand for European marine biodiesel blends in recent sessions, which may have added pressure on Advanced Fame 0 blend prices. HBE-G values have soared, weighing on the blend values for which it is accounted as a deduction. Prices for 2024 HBE-Gs had almost doubled on the month at €18.75-18.95/GJ by 13 November, up from €9.70-9.90/GJ four weeks prior. Market participants attributed the increase in 2024 prices to recent gains in European hydrotreated vegetable oil (HVO) prices, tight supply because of a decline in tickets from biofuels used in shipping and less overall biofuel blending in the fourth quarter. HBE-Gs surpassed the like-for-like cost physical blending of HVO class IV by 13 November, albeit marginally, which could encourage physical blending. But high demand in a tightly supplied market in the Netherlands is continuing to drive HVO prices higher. The supply tightness is the result of a combination of fewer imports, with provisional anti-dumping duties in place on Chinese volumes, and some production problems. Italy's Eni confirmed on 7 November that it has halted output at its Gela HVO unit on Sicily, for planned maintenance. Finnish producer Neste said it stopped production at its plant in Rotterdam because of a fire on 8 November. France's TotalEnergies said that the shutdown of unspecified units at its La Mede plant would result in flaring on 8 November. By Hussein Al-Khalisy and Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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