Dutch ERE biotickets trigger strong biomethane gains

The Netherlands transitioned from an energetic model under the HBE mechanism (renewable energy units) to a carbon emissions-based model, ERE (emission reduction units) for the 2026 compliance year on Jan. 1 under the new Renewable Energy Directive (RED III) legislation.

Fuel suppliers that deliver more than 500,000 liters/year of fuel, including the bio component, will have an obligation under RED III. Parties can choose to meet their obligations by blending physical biofuels or by buying tickets, thus creating a correlation between the two products as players optimize blending economics.

LRE-Advanced, the most widely traded Dutch ticket type, represents biofuels derived from feedstocks listed in Annex IX A of the RED legislation. LRE-Advanced prices rose 13% in the first week of January, mirroring gains in the renewable diesel market due to improved liquidity and bullish positioning following Germany's regulatory update on the implementation of RED III, before easing in the subsequent weeks as RD demand waned amid ample supplies. Further legislative discussions in Germany supported RD prices in late February, providing strength to ERE prices. Platts, part of S&P Global Energy, assessed current year LRE-Advanced for the 2026 compliance year at 49 euro cent/kgCO2e on March 4, up 6.52% since the start of the year.

Outright prices for European renewable diesel hit multi-month highs on March 2 in response to the war in the Middle East, driven by strength in the underlying fossil contract. Traders typically adjust biofuel premiums when the underlying fossil contracts see significant gains, to insulate the outright prices from volatility, but a delayed response to gasoil volatility only saw RD premiums slump on March 5.

In the European tickets market, one source said that the entire complex was down, while another said bio premiums were declining due to the strength in gasoil, pulling RTFC prices lower. However, activity in the Dutch ERE market has been subdued in recent days amid price volatility in associated markets.

Biomethane seeks value in ERE

Biomethane has been a constant in the previous HBE system, where the trade in the green value of the renewable gas has been represented by the changing hands of certificates or guarantees of origin. Dutch unsubsidized waste had previously been the preferred type of biomethane certificate for the HBE, but with the new GHG-linked nature of the ERE, unsubsidized manure with its lower carbon intensity has gained greater favor.

Platts assessed spot unsubsidized certified Netherlands manure at Eur123.625/MWh on March 4, up 21% since the start of the year. Biomethane market participants said this was largely driven by buyers seeking to maximize the return on the ERE due to the negative carbon intensity of minus 85g CO2e/MJ and below for manure.

At the same time, some gains were seen for spot unsubsidized certified Netherlands waste, which Platts assessed at Eur49.00/MWh on March 4. This is a gain of 6.2% from the start of the year. Source said the ERE pull on waste was less apparent; biomethane from this feedstock was less sought after by market participants as it offered less greenhouse gas savings compared to manure.

The strong demand for manure in the ERE has also flipped the spread between spot NL unsubsidized certified manure compared to the equivalent specification of German origin. Historically, Dutch unsubsidized manure certificates traded at a discount to German unsubsidized manure, as buyers for the THG quota preferred domestic supply.

ERE demand puts NL prices at premium to DE

However, since the start of the ERE in the Netherlands, Dutch manure certificate prices have overtaken German values, with German unsubsidized certified manure reported as being bid at Eur103.00/MWh and offered at Eur107.00/MWh on March 4. This puts the German certificates at a discount of around Eur18.75/MWh to the equivalent Netherlands volumes.

"The spread between the Netherlands and Germany for the manure is due to the ERE, as the demand is so strong," a Europe-based trader said. "However, the demand pool for the EREs is still small, as it's mostly just the same few obligated parties buying."

Other sources also said that demand for Dutch unsubsidized volumes has received additional support following the national registry's joining of the AIB hub.

"The unsub AIB volumes with a low CI score of around minus 95 have increased a lot," another trading source in Europe said. "But it's a combination of factors, I think tickets (ERE) is one of them."