05 Aug 2024 | 07:57 UTC — Insight Blog
Insight Conversation: Wataru Ikushima, Marubeni
Featuring Samyak Pandey
This seven-part Insight Conversation series examines the opportunities and challenges in Asia's biofuels sector. The last part of this series features Wataru Ikushima, general manager of Marubeni, a global trading firm focusing on industries like agriculture, energy and metals.
Marubeni has emerged as a key supplier and developer of sustainable aviation fuel in Asia as countries, including Japan, in the region look for ways to accelerate their decarbonization journey. Marubeni General Manager Wataru Ikushima speaks to S&P Global Commodity Insights Editor Samyak Pandey on how the company is accelerating biofuels development in Asia.
What strategies is Marubeni implementing to drive biofuels production and adoption across Asia?
In May, Marubeni signed a memorandum of understanding with the Investment Authority of Sarawak, Malaysia, and is now conducting a feasibility study jointly with the state of Sarawak for the production of SAF using the biomass resources in the state.
In addition, several other biofuels production opportunities are under consideration. Marubeni has a wide range of business portfolios in Asia, including forestry and agriculture-related businesses in addition to power, infrastructure, energy and chemicals, and we believe that synergies can be pursued with these existing biomass-related businesses in terms of biofuels feedstock procurement.
Moreover, Marubeni has begun supplying SAF to the Japanese market, and we intend to build and expand its SAF supply chain in the region, utilizing its petroleum product trading platform, infrastructure and marketing functions, too.
Can you elaborate on Marubeni's involvement in the SAF project in Malaysia? What is the project's status and how can it potentially impact the Asian aviation industry?
We have concluded an MoU with the State of Sarawak and are conducting a joint feasibility study of the production of SAF using biomass resources in the state.
We understand that the state has abundant biomass resources, including unused wood, agricultural residues and waste, and are investigating the possibility of their utilization. If a way can be found to effectively and economically utilize the unused biomass resources in the region, it is an important step for the Asian aviation industry, paving the way for efficient use of resources and fuel procurement in the region.
Also, the possibility of SAF production in other regions is under consideration in pursuit of synergies with our existing businesses.
How do collaborations like this help Marubeni advance the biofuels sector in Asia and what biofuels technology or feedstock is Marubeni interested in for the regional market?
For bio-related fuels, raw materials are related to various industries and from this perspective, a Japanese trading firm like us, with its connections to various industries, can pursue generating synergies. Also, we hope to take such a role in knowledge sharing and capacity building to support the development of biofuel industries in other Asian countries.
The potential for biomass feedstock such as forest residues, agricultural residues, waste and their utilization is a focus of attention.
Marubeni's co-processing initiative for biofuels integrates with existing refinery infrastructure. Can you explain this concept and its potential benefits for accelerating biofuels production in Asia?
Co-processing is expected to have competitive production costs compared to a newly constructed HEFA (hydrotreated esters and fatty acids) plant, since it does not require large additional capital investment and can utilize the facilities of existing refineries.
Although there is a cap on the percentage of bio-feedstock that can be fed into the system, we believe that co-processed SAF will be an effective solution during the transition period, in terms of being able to start production within a short period.
If it still takes time for the majority of governments in the region to put a regulatory framework in place for incentivizing and/or mandatory use of SAF, we believe that co-processing could play an important role.
Considering the abundance of ethanol feedstocks compared to used oils and fats in Asia, how do you see the potential of alcohol-to-jet or other pathways for large-scale SAF production in the region?
We believe that the ATJ pathway has potential in Asia, too, taking into account of the potential of the production of bioethanol in the region. (We) hope to see the technology demonstration in North America first.
We also believe that it will be extremely important to secure stable procurement of low-carbon bioethanol with competitive prices to materialize the ATJ project.
How do you see the biofuels market evolving in Asia over the next five to 10 years? What are the key factors that will drive this evolution?
We believe that financial incentives and support from governments will be important to promote the use of biofuels in Asia.
Currently, feedstocks, including UCO (used cooking oil), flow to Europe and the US market, where there is a regulatory framework of incentives and mandatory usage.
We believe that an institutional framework that allows the use of raw materials and products produced in the region within the same area needs to be in place. But securing a sufficient quantity of raw materials and obtaining government support would be the biggest challenges to achieving large-scale decarbonization of the energy sector in Asia using the biofuels pathway.
Considering the current significant price difference between SAF and conventional jet fuel, what are your price projections on SAF in the Asian market by 2030?
In the current new SAF market, there are many different views on what the optimal and appropriate price would be.
We believe that as trading volumes increase toward 2030, the price level will become more defined to reflect the nature of raw materials and the impact of CO2 emission reductions.
Also in this series:
Insight Conversation: Alexander Kueper, Neste
Insight Conversation: Pinaki Mukherjee, Zuari Envien Bioenergy
Insight Conversation: Ed Mason, Jet Zero Australia
Insight Conversation: Clarence Woo, Asian Clean Fuels Association