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Apr 2018

Advanced Producers at a Glance

Leader of Sustainable Biofuels (LSB) is a coalition of companies working together to promote the advanced biofuels mandate in the EU. The interview of its President, also the Director of Public Affairs at UPM, provided us with interesting background about how much advanced biofuels, according to Annex IX Part A of the ILUC directive, is currently available in the market.

We try this week to clarify the quantity of advanced biofuels that are and will soon be available in the market to fill the advanced sub-targets in a growing number of countries (The Netherlands and Italy to be followed by many others in 2020). The LSB is lobbying in the EU to make sure a stronger advanced biofuels mandate is secured for its members from 2021: producers, technology developers and distributors. According to its representative, a growing number of Member States are favorable to the increase of the advanced mandate. Indeed, based on the draft of the Parliament and the Council, there is a good chance that an aggressive advanced mandate will be finalized during the trilogue in the coming months but the main uncertainty remains from when: 2021 or 2025? Then the question will be to know by whom and with which feedstock/technology the advanced market will be supplied.

The LSB has 13 cooperating companies active in two main fields: forestry residues and cellulosic products. Interestingly, the LSB doesn’t lobby to change the list of feedstocks under the Annex IX Part A of the ILUC directive. Its members are already relying on technology suitable for forestry wastes and cellulose, which will remain the main focus in the long run. Interestingly, the model for each sphere is very different. All current and projected plants within the forestry sphere are significantly bigger (100-500 KT/y) than those of the cellulosic one (20-90 KT/y). This will remain the case in the future for technology and logistic reasons, so we believe the supply of advanced fuels will continue to be far greater on the biodiesel side than on the ethanol one.

Currently, LSB members run together a capacity of 218 KT/y, half of it being renewable diesel based on tall oil (UPM) and the other half, lignocellulose-based ethanol (4 other producers). Of course, they have many projects in store, the most promising ones totaling 1.2 million mt/y of capacity that may be running by 2021/2022. The bulk of it is constituted by two big tall oil-based HVO plants located in Finland.

Although LSB is lobbying for an ambitious advanced mandate based on Annex IX Part A for the period beyond 2020, its members have yet to concretely supply existing advanced markets. UPM is selling product mainly in Scandinavia, where blending of advanced fuels is mostly done on a voluntary basis rather than on an economic or legal one. Small volumes of UPM HVO were also reportedly sold as marine fuels in the Netherlands. Despite the advanced mandate in Italy, Biochem is struggling to supply the market with only few niche opportunities like public transport or small test projects. Its financial survival remains currently uncertain. Other cellulosic ethanol producers are based in Eastern Europe, with constructed plants but limited market opportunities.

Cellulosic ethanol remains an expensive way to fill advanced market. POME based Fame looks, by far, the easiest and cheapest way to comply with the Italian and Dutch obligations this year. Traditional players like Neste, ENI or Musim Mas appear to be far better positioned to provide end-users with cost effective and ready-to-use solutions for the fulfillment of the challenging advanced obligations.

Apart from LSB Members displayed in the table and the ones mentioned just above, other producers of advanced biofuels include traditional producers in Scandinavia with existing outlets: Preem (Sweden – tall oil-based HVO – 100 KT/y), Boregaard (Norway – cellulosic ethanol – 20 Kcum/y) and Sekab (Sweden – cellulosic ethanol – 18 Kcum/y). Outside Europe, several producers of cellulosic ethanol are also active: Dupont (US – 114 Kcum/y), POET (US – 76 Kcum/y), Granbio (Brazil – 82 Kcum/y), and Raisen (Brazil – 40 Kcum/y).