Chinese firms invest in 'green' jet fuel, anticipating blending rule
First SAF plants able to produce over 1 mln t/y by end-2025
Industry awaits SAF mandate for 2030, likely 2%-5% of fuel mix
Plants process used cooking oil; to cut into China UCO exports
Plants eye exports initially, in talks with majors, airlines
By Chen Aizhu
SINGAPORE, May 17 (Reuters) -Biofuel firms are pouring more than $1 billion into building China's first plants to turn waste cooking oil into aviation fuel for export and meet domestic demand once Beijing mandates the fuel's use on airplanes to cut emissions.
The world's second-largest aviation market, with about 11% of global jet fuel use, China is expected to unveil this year its policy on sustainable aviation fuel (SAF) use for 2030 that could spur billions of dollars of investment, industry executives told Reuters.
Companies such as Junheng Industry Group Biotech, Zhejiang Jiaao Enprotech 6003822.SS and Tianzhou New Energy plan to start up plants over the next 18 months to produce more than one million metric tons per year (tpy) of SAF combined, six SAF investors told Reuters.
That figure would be equivalent to 2.5% of China's current annual demand for aviation fuel.
Once online, the projects would soak up supplies of used cooking oil (UCO) feedstock that China currently ships out as world's largest exporter, company executives said.
Last year, China exported a record 2.05 million tons of UCO, mostly to the United States and Singapore, and providing feedstock to biofuel refiners such as Finnish firm Neste NESTE.HE.
"We're taking positions to prepare for the future," said Eason Chen, a vice president of Tianzhou New Energy, which is building a 200,000 tpy SAF plant in the southwestern province of Sichuan.
"We're in discussion with airlines and oil majors for first exports and have proposed to the Chinese government to announce a clear SAF target," said Chen, a former jet fuel marketing executive with oil major BP.
The plants process UCO collected from millions of restaurants using a technology called hydrotreated esters and fatty acids (HEFA), one of a few commercial pathways.
Although the process faces feedstock constraints in the longer run, state utilities such as State Power Investment Corp may become the next wave of investors betting on a newer but costlier technology for the conversion to aviation fuel.
China now produces less than 100,000 tons of SAF, mostly at a plant operated by Bain Capital-backed EcoCeres, which began making the fuel in 2022 in the eastern region for export.
CHINA MANDATE
The companies preparing to make SAF expect a mandate for a compulsory blend of 2% to 5% of SAF into an aviation fuel market forecast to reach 50 million tons in 2030, said industry executives familiar with policy discussions, who spoke on condition of anonymity.
In the near term, China may unveil pilot airports in cities such as Beijing, Shanghai, Chengdu and Zhengzhou for initial SAF adoption.
A 5% mandate would equate to 2.5 million tons of SAF use in China by 2030, modest compared to the European Union's target of 6% and Japan's 10%, but a jump from the 50,000-ton SAF target for 2025 Beijing outlined a few years ago, the executives said.
Key policy deciders the Civil Aviation Administration of China (CAAC) and economic planner the National Development and Reform Commission did not respond to requests for comment.
Globally, airlines consumed between 450,000 and 500,000 tons of SAF last year, double the 2022 figure but still making up just 0.1% of jet fuel, the International Air Transport Association (IATA) says.
Amid scant production capacity and higher costs, as SAF is nearly three times as expensive as jet kerosene, IATA estimates SAF production could rise to 0.53% of total fuel consumption in 2024 and add $2.4 billion to the sector's fuel bill.
Fuel typically makes up a third of airlines' operating cost.
"Once the market demand and policy becomes clearer, the sector will grow quickly, which can then drive down the cost," said Ye Bin, chairman of Jinshang Environmental Protection Technology Co Ltd, which is set to start building a 400,000-tpy facility in July in Sichuan.
EXPORTS EYED
With almost no near-term domestic demand, the new SAF refiners are initially targeting exports, which industry executives expect China will eventually manage through a system of quotas.
Apart from courting oil majors, the companies are turning to airlines in Asia Pacific as well as in the Middle East, the executives said.
"The next few years will be a period of heated competition among producers as demand is limited and prices are high," said Wang Yantao, head of SAF at Zhejiang Jiaao Enprotech Co, which counts global oil majors Shell and ExxonMobil as clients.
"Luckily pioneer producers like Neste have opened some markets, so we will just need to follow suit as long as our products are competitive," said Wang.
Neste agreed this month to supply 1,000 tons of SAF to Singapore Airlines, the latest of a series of deals the Finnish refiner has struck with carriers such as Ireland's Ryanair and British Virgin Atlantic.
China's used cooking oil exports https://tmsnrt.rs/4dItkoX
Reporting by Chen Aizhu; Editing by Tony Munroe and Clarence Fernandez
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.
