Dutch regulatory change could drive up biobunker prices: trader

Shipping companies should procure more biobunker fuels in the coming months with the Dutch government's proposed regulatory change set to push up prices next year, bunker trader Dan-Bunkering said Aug. 26.

Under the current regulatory regime, Dutch suppliers of both advanced biofuels listed in Renewable Energy Directive II's Annex IX-A and mature biofuels made from feedstocks like used cooking oil listed in Annex IX-B can both receive hernieuwbare brandstofeenheden, or HBE, a proof for compliance that can be traded.

The mechanism means suppliers can often discount their prices with proceeds from selling HBEs in the Dutch port of Rotterdam, the world's second-largest refueling hub for biobunker fuels. The hub is dominated by used cooking oil methyl ester blends due to their lower prices than Annex IX-A fuels.

But based on the Netherlands' draft implementation rules for Renewable Energy Directive III, due to come into force from next January, HBEs would be replaced by Emissions Reduction Units, and biobunker suppliers using Annex IX-B feedstocks will not be able to generate them.

Overall, EU countries under RED III are mandated to either achieve a share of 29% renewable energy in transportation by 2030 or reduce the emissions intensity of transport fuels by 14.5%. They also have a combined sub-target for renewable hydrogen and advanced biofuels of 5.5%.

"From now until year-end, the Dutch biofuels market could enter a perfect storm of rising costs and compliance pressure," Dan-Bunkering said in a LinkedIn post while suggesting that advanced biofuel prices could increase due to more renewable demand and mature biofuel prices could rise because of reduced subsidies.

Platts, part of S&P Global Commodity Insights, assessed the delivered bunker price for B30 containing 30% UCOME and 70% very low sulfur fuel oil at $800/mt in Rotterdam on Aug. 26, exclusive of HBE impact. The current year HBE generated based on Annex IX-B was assessed at Eur15.50/Gigajoule ($18.05/Gj).

The HBE price level is at the highest in a year but "unlikely to last," so shipping companies would be "smart" to secure biobunker volumes by Nov. 1, before the usual year-end rush to meet annual compliance requirements and the coming Dutch regulatory change, Dan-Bunkering said.

"Waiting exposes you to higher prices, fewer options, and compliance bottlenecks," the company added.