Q&A: Voluntary market, book and claim key to SAF growth
US sustainable aviation fuel (SAF) producer World Energy's vice president Adam Klauber spoke to Argus about the future of the global SAF market.
How could US SAF policy develop under a new administration?
[SAF tax benefits] need to be extended because they're expiring, but the agricultural lobby is quite strong in the US and will have the ear of either administration.
They will be pushing for extension — and potentially expansion — of the tax credit, and for modification to include some more purpose-grown crops, especially because corn-based ethanol needs to go somewhere beyond the road market as EV adoption expands.
[In a Harris administration] maybe what we would see is some type of prioritisation, or rewards, or higher status for lower carbon intensity waste feedstock-based fuels.
With the start of the EU-wide and UK mandates next year, how do you see SAF flows changing?
Some of the SAF will potentially come from the US depending on the value of credits.
It may be more favourable initially to export, and there seems to be some appetite for that within the EU mandates for an interim period. There will be some questions about how much support there will be in North America for SAF use, and this is where the voluntary market comes into play, and that if there are entities in the EU that want to go beyond the mandate they might buy credits from the US to achieve higher levels of ambition.
We're going to start to see volumes out of Brazil. There are a number of different enterprises that are developing there, and in Asia.
Is the difference in sustainability requirements and accepted SAF feedstocks in the US and the EU challenging for producers?
Yes, because there are different classifications — tallow is one of our major feedstocks, and our suppliers will not use the European definition of technical tallow even though they could meet those requirements.
On the flip side, there's a greater ability to track used cooking oil (UCO) in the EU. We hope the US EPA will adopt clear requirements around tracking UCO so that will be able to use that, increase supply, and ensure its sustainability.
Some of our customers are EU-based, and in our contracts they stipulate that when we have available supply for intermediate crops [also called cover crops] such as carinata, they would prefer shifts towards specific feedstocks like carinata or UCO.
Are World Energy projects to grow production in California and to build a new plant in Houston moving forward as planned?
We're lucky that we have generous government incentives, and then we can stack voluntary contributions on top of those, so that enables us to proceed in California and Houston.
Currently we don't expect to address our plans due to the macroeconomic landscape, but we do acknowledge that as a challenge and we are advocates of a hybrid system where there's government support to de-risk investments and cover some of the technological risks, but also provide low interest capital and loans.
Incentives for production are very helpful. They may not cover the full price gap, but that's where the voluntary market may be instrumental because they can then pay a price premium to cover that differential.
Growth in interest from corporate users is maybe the number one demand factor in the US. Airlines in the US, to abide by [emissions measuring model] Corsia, just have to buy carbon offsets, and those are a fraction of the price per ton of carbon abated. Corporations are looking for potentially insets — carbon reduction within the value chain — so SAF competes against carbon removals which are quite costly, upwards of $500/t. And SAF is less than that so we can compete.
Any additional projects in the pipeline?
We are talking with a major infrastructure investor and looking at additional plants.
The investors want de-risked technology, so it may limit us to HEFA production for the foreseeable future. We are looking at green hydrogen and developing a project off Newfoundland that we call GH2, where we could develop electro-fuels or other products for transport.
What regions beyond north America and Europe do you expect will become large SAF demand centres in the next 5-10 years?
Demand may persist in the US and the EU because business travel represents about 20 or 25pc of aviation, and there's going to be significant pressure on those companies to decarbonise, so they're going to be looking for SAF certificates and credits.
Certain parts of Asia, I think Japan and South Korea, will be strong demand centres. But supply may become more global if acceptance of SAF certificates and book and claim increases.
How do you see the development of book and claim?
While policymakers may only view book and claim as having a limited time horizon or an expiration date, for the corporate users that isn't really true.
There are many corporations that want to get to net zero by 2030, so they're going to have to buy credits for a long time, because SAF at best can maybe get to 90pc carbon reduction. And then there are a number of companies, like Microsoft and others, that want to advance new technologies that may not be as cost effective.
So we know that HEFA right now is the most economically competitive, but let's say there is a desire to buy electro-fuels and PTL volumes, a corporation may then pay for those credits what governments and airlines cannot pay because it's too expensive.
All players need to be responsible and think about how we maximize the credibility and the trust in the system, so we make sure we have digital registries that are independent and audited and achieve certain requirements, so there's confidence that we've built something that is robust and worthy of trust.
Related news posts
Japan’s NYK to charter methanol-fuelled bulk carrier
Japan’s NYK to charter methanol-fuelled bulk carrier
Tokyo, 19 August (Argus) — Japanese shipping company Nippon Yusen Kaisha (NYK Line) plans to charter a bio- or synthetic methanol (e-methanol)-fuelled bulk carrier after its construction by the spring of 2025. NYK Line announced on 19 August that its affiliate NYK Bulk and Project Carriers signed a charter agreement with fellow Japanese shipping company Kambara Kisen on 1 August. The 65,700dwt vessel is being built by Japanese shipbuilder Tsuneishi Shipbuilding at its Tsuneishi dockyard in west Japan's Hiroshima prefecture. It will be NYK Line's first methanol-fuelled bulk carrier. The bulk carrier will be equipped with a dual-fuel engine, which can burn methanol and conventional fuel oil. NYK Line aims to use biomass-based methanol or e-methanol, which is generated by using renewable hydrogen and carbon dioxide, to further reduce greenhouse gas (GHG) emissions. NYK Line expects it to cut GHG emissions by 70-80pc compared with fuel oil. The firm has not decided yet where to buy the low-carbon methanol. NYK Line is also involved in developing a biomass-fuelled biomass carrier , targeting to build it by the end of 2029. The vessel will be equipped with a pyrolysis gasifier system, burning wood pellets from storage to generate gas for use in a gas-engine power generator. The electricity will be used to propel the ship. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
ACBL sets upper Mississippi closure schedule
ACBL sets upper Mississippi closure schedule
Houston, 16 August (Argus) — Major barge carrier American Commercial Barge Line (ACBL) this week issued tentative dates for final loadings before the upper Mississippi River closes for the winter. The final loading date for Houston shipments to Dubuque, Iowa, through St Paul, Minnesota, will be 26 September. Houston vessels with a stop between Louisiana, Missouri, through Clinton, Iowa, will have their final loading date on 10 October. St Louis, Missouri, vessels heading north to Dubuque through St Paul must leave before 22 October, and vessels stopping between Louisiana, Missouri, or Clinton, Iowa must leave before 5 November. Final southbound departure dates for vessels from St Paul and Dubuque will be 24 November and 1 December, respectively. Vessels in Clinton must begin moving south by 8 December. Crews need 10 days to prepare and unload barges, ACBL said, which added that dates may be pushed forward or back depending on operating conditions and weather. Other barge carriers are expected to release final loading dates in the coming weeks, along with the US Army Corps of Engineers official upper Mississippi River closure date. The upper Mississippi River officially closed on 3 December last winter and reopened around 12 March. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Agunsa offers biodiesel bunkers in Argentina
Agunsa offers biodiesel bunkers in Argentina
New York, 15 August (Argus) — Chile-based marine fuel supplier Agunsa, which also sells marine fuels in Argentina, is now offering biodiesel for bunkering in Argentina. Agunsa's subsidiary Total Bunkering — not affiliated with France's TotalEnergies — entered into a partnership with an unnamed local Argentinian supplier to procure used cooking oil methyl ester (Ucome), which it can blend with either very low-sulphur fuel oil (VLSFO) or with marine gasoil. The fuel is International Certification in Sustainability and Carbon (ISCC)-certified. It can be supplied via truck to the ports of San Nicolas, Campana, San Pedtro, Rosario and the Ternium-Siderar terminal. Globally, one of the most popular biodiesel blends is B30, a blend of 30pc Ucome and 70pc VLSFO. An Argentinean B30 biodiesel bunker blend could command a premium of about 80pc to the price of VLSFO, Agunsa told Argus . Buenos Aires, Argentina, VLSFO was assessed at an average of $599/t on 1-14 August, which would place B30 at around $1,078/t. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK to exclude SAF from China biodiesel investigation
UK to exclude SAF from China biodiesel investigation
London, 15 August (Argus) — The UK has proposed revising the scope of its an anti-dumping investigation into China-origin biodiesel and hydrotreated vegetable oil (HVO) to explicitly exclude sustainable aviation fuel (SAF). The investigation, which was launched on 5 June, was never intended to include SAF, but the UK's Trade Remedies Authority (TRA) subsequently asked interested parties for feedback on whether it should be included after it was brought to its attention that SAF could be considered to fit the description in the initial notice. That notice stated that the inquiry would cover "fatty-acid mono-alkylesters or paraffinic gasoils obtained from synthesis or hydrotreatment of non-fossil origin, in pure form or as included in a blend" in the period from 1 April 2023 to 31 March 2024. The TRA has now proposed amending the description to explicitly exclude "sustainable aviation fuel, in pure form or as included in a blend". But there will be no change to the commodity codes as a result of the revision. The written scope of the investigation is the primary focus at this stage, with the commodity codes serving merely as reference points and not binding criteria, according to the TRA. SAF should be excluded from the investigation because it has distinct production processes and raw materials compared to HVO and fatty acid methyl esters (Fame), limited interchangeability with road transport fuels, a higher selling price and a different regulatory framework under the UK's SAF mandate starting in January 2025 , the TRA said. SAF also benefits from a tax rebate for aviation use, making it economically unviable for road transport use, and has a different customer base, it said. Interested parties have until 21 August to submit any comments, after which the TRA will make a final decision on the scope of the investigation. The investigation follows an application by the Renewable Transport Fuel Association (RTFA) on behalf of UK biofuels producers Argent Energy and Olleco, which alleged that exports from China to the UK were below market value, adversely affecting the UK biofuels industry. The RTFA advocated for including SAF, HVO and Fame in the investigation, citing their potential interchangeability and the minimal amount of investment needed to increase production of HVO and SAF in the UK. But Chinese biofuels producer Ecoceres argued that SAF should be excluded, arguing that it is not interchangeable with Fame and there is limited supply-side substitutability. Ecoceres also pointed out that the UK did not have a domestic SAF industry during the period under investigation, which means that imports from China could not have caused injury. The airline group IAG also supported excluding SAF, emphasising the aviation industry's reliance on imports due to limited global production capacity. The UK government officially confirmed last month that subject to parliamentary approval it will introduce a SAF mandate starting next year. Obligated suppliers will have to deliver a 2pc share of SAF in 2025, increasing to 10pc in 2030, 15pc in 2035 and 22pc in 2040. The obligation will remain at 22pc from 2040 "until there is greater certainty regarding SAF supply", the government said. Under the mandate, hydrotreated esters and fatty acids (HEFA) SAF can be used to meet 100pc of SAF demand in 2025 and 2026, but it will be capped at 71pc in 2030 and 35pc in 2040. HEFA is the most common type of SAF today, and is expected to account for over 70pc of global production by the end of the decade, according to Argus data. By Evelina Lungu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D-1%26hash%3DFC2BEDE406483FEF5FDB9549159BAC11&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more