China’s Jiaao allocated 370,000 mt of SAF export quotas in new pilot scheme

Chinese biofuel firm Zhejiang Jiaao Enprotech was allocated 370,000 mt/year of sustainable aviation fuel export quotas, which is around its current production capacity of the greener fuel, sources with knowledge of the matter told Platts, part of S&P Global Commodity Insights and also confirmed by Jiaao's spokesperson April 30.

This marks the first time a Chinese SAF producer has been allocated such quotas.

The move also indicates that the Chinese government has started to regulate SAF exports, by allowing surpluses from its annual production capacity of 3 million mt to be sold abroad after setting aside about 300,000-400,000 mt/year of SAF for domestic use, a Chinese biofuel trader said.

Other active Chinese SAF producers -- with a combined SAF output of around 800,000 mt/year -- are also expected to be issued their respective quotas soon, said an industry source.

Such producers include Shandong Haike Petrochemical, Shandong Sanju, Henan Junheng and Zhangjiagang Yigao, the source added.

Shandong Haike Petrochemical, which has a similar feedstock processing capacity of 500,000 mt/year with Jiaao, has applied for the export quotas and will likely be approved soon, a company source told Platts.

This follows the Ministry of Commerce's issuance of an SAF export whitelist dated April 28, which permits SAF to be officially exported under its own harmonized system (HS) code.

In a joint statement on April 29, China's National Energy Administration, State Administration of Foreign Exchange, General Administration of Customs of the People's Republic of China, and the Ministry of Commerce approved Lianyungang, Jiangsu province, to implement the pilot scheme for SAF exports on the whitelist.

China's Jiaao is currently the sole whitelisted producer under this new scheme, though more producers are expected to be included over time, sources told Platts.

The move will govern China's SAF exports under its existing quota scheme, whereby companies would be allocated export volumes in tranches by the commerce ministry each year. Exports must also be produced by the quota holder, a biofuel exporter added.

Before the whitelist was issued, Chinese producers would have to export SAF via different methods and HS codes -- including those starting with 271019 and 382600. One way would be through jet fuel quotas, which may make less economic sense for these producers, market sources said.

For instance, Sinopec exported 500 mt of SAF from its Zhenhai Refining and Chemical Terminal to the Hong Kong International Airport using its jet fuel quotas, according to sources familiar with the matter.

The export of products like jet fuel and gasoil from Chinese refiners is strictly regulated by the export quotas, and the exports must be produced by quota holders themselves.

Other biofuel plants -- which do not have such quotas as they are not linked to a jet fuel-producing entity -- may have had to circumvent such quota restrictions and export SAF using other categories, sources added.

Chinese companies with jet fuel export quotas include PetroChina, Sinopec, China National Offshore Oil Corporation, Sinochem, China North Industries Group Corporation, Zhejiang Petrochemical Corp, and China National Aviation Fuel.