INTERVIEW: Varying EU ethanol mandates cloud biofuel demand outlook: ePURE

After a surge in 2022, prices are likely to remain range bound through 2023.

Advanced fuel production most efficient when derived from crop-based fuels

Reliable demand projections for ethanol intake within the EU have been made difficult by the phasing in of fuel standards across the region, said an official at ePURE, the European renewable ethanol producers group, in an interview. said.

E10 gasoline contains up to 10% renewable ethanol and is the standard gasoline fuel offered at various service stations in an increasing number of European countries. It will take over the baton from the E5 and, in many cases, make way for the E20, but although the momentum for the E10 is increasing, with Poland recently announcing that it will become mandatory, there is a notable disconnect in the situation.

Spain and Italy do not yet have E10 available at the pump level and these represent a large gap, ePURE Executive Director David Carpintero told S&P Global Commodities Insights in an interview on June 5. told the following: Will Spain and Italy finally complete the implementation of E10? “It’s been a long time coming,” he said.

Producers and fuel blenders are already eyeing the E20, he said, and as the E5 and, eventually, the E10 become obsolete, companies that aren’t yet up to speed risk falling behind. “E20 will be a powerful tool for member states to comply with the new 2030 Fit-for-55 targets for de-fossilizing road transport,” Carpintero said.

Ethanol uptake has traction. The Polish government aims to make E10 the standard fuel for pumps from 2024, replacing E5. Poland’s ethanol production will increase by 21% year-on-year in 2022, with corn oil as the main feedstock. According to the Polish Biofuels Chamber (KIB), the introduction of E10 will increase the annual ethanol demand by another 200,000 cubic meters.

Demand for fuel ethanol is expected to increase in the future, and crude oil refiner and biofuel producer PKN Oren aims to produce E10 from January 2024, expanding its fuel ethanol blending capacity. plan to move up the investment by two years.

Other European countries have also adopted the E10 fuel standard. The Republic of Ireland He introduced her E10 fuel grade in April. Austria plans to introduce her E10 in September and has recently drawn up regulatory requirements for its imminent market launch.

Global fuel ethanol production will rise to 1.839 million barrels per day in 2022 and 1.962 million barrels per day in 2024, analysts at S&P Global said on June 2. In 2022, production in Europe will rise to 94,000 bpd, rising to 103,000 bpd. /d he will be in 2024, analysts said.

price concerns

Prices rose significantly following Russia’s February 2022 invasion of Ukraine and the accompanying international sanctions. These have affected the influx into Europe of both conventional fuels such as gasoline and diesel, of which Russia has traditionally been a major exporter, and renewable fuel feedstocks from the Black Sea.

Fuel ethanol T2 FOB in Rotterdam was €552/cubic meter ($590/cubic meter) in March 2021. According to data from S&P Global, it was €1,143/cubic meter in March of the following year, shortly after the invasion. Since then, trade flows have automatically reconfigured, easing initial alarms about the supply of fuel products. European fuel ethanol T2 FOB in May was €753/m3, while analysts at S&P Global expect it to reach €764/m3 in November.

Analysts at S&P Global said the May level was the lowest for 2023, but the start of the summer driving season should provide a lower floor for prices.

Crop-based fuel in combustion line

Lobby groups and legislators are increasingly calling for biofuels to be produced from non-crop-based feedstocks, but from so-called advanced feedstocks derived from residues.

Through the renewal of the Renewable Energy Directive, the EU did not phase out crop-based fuels, but limited their content to 2020 levels plus 1%, up to a maximum of 7%.

European Waste-Based and Advanced Biofuels Association (EWABA) Secretary General Ángel Alvarez Alvardi told S&P Global in April that although the group represents advanced feedstocks, it still has a strong focus on crop-based biofuels. said he felt the need for

Carpintero echoed this, adding that the best way to produce advanced feedstocks is through crop-based fuel production routes. “The highest efficiency is when advanced feedstock-derived fuels are linked to existing biorefineries,” Carpintero said, adding that there are 50 biorefineries in Europe.[feedstocksderivedfuelislinkedtotheexistingbiorefineries”Carpinterosaidaddingthatthereare50biorefineriesinEurope[feedstocksderivedfuelislinkedtotheexistingbiorefineries”Carpinterosaidaddingthatthereare50biorefineriesinEurope

In any case, production is now set up along these lines. Currently, the feedstock for Annex IXA, the EU’s list of approved advanced biofuel feedstocks, tends to be waste from crops.