Following a formal public consultation, proposal and review, S&P Global Platts has decided to change the specification on fuel grade ethanol reflected in its Ethanol T2 FOB Rotterdam assessment, specifically with regard to greenhouse gas (GHG) savings, effective January 4, 2021.
GHG savings in the EU are measured as an absolute level of carbon intensity (CI), or as a percentage GHG saving compared to the fossil fuel comparator. From January 4, 2021, the Platts Ethanol T2 FOB Rotterdam assessment will reflect ethanol meeting a maximum CI of 33.52g CO2e/MJ. This is currently equivalent to a minimum GHG saving of 60% based on a fossil fuel comparator of 83.8g CO2e/MJ under the European Commission's Renewable Energy Directive (RED) I framework.
Platts had initially proposed defining the specification of ethanol reflected in its Ethanol T2 FOB Rotterdam assessment in terms of a minimum GHG saving of 60%. The proposal note published June 2 can be found here: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/060220-platts-proposes-to-increase-minimum-ghg-savings-in-ethanol-t2-fob-rotterdam-assessment-to-60
This change is in line with market feedback indicating that ethanol with a maximum CI of 33.52g CO2e/MJ represents the most fungible portion of the European ethanol market. Higher mandates in several European countries have supported increasing demand for product with a lower CI and therefore greater GHG savings against the same comparator.
The Platts Ethanol T2 FOB Rotterdam assessment currently reflects a minimum GHG saving of 50%, equivalent to a maximum CI of 41.90g CO2e/MJ. This is in line with the current legal minimum standard of 50% GHG savings under the RED I framework.
Platts understands that material meeting a maximum CI of 41.90g CO2e/MJ remains an important element of the European market. As such, in addition to publishing bids, offers and transactions for ethanol meeting a maximum CI of 33.52g CO2e/MJ during the Market on Close assessment process, Platts will also publish bids, offers and transactions for ethanol meeting a maximum CI of 41.90g CO2e/MJ. Pricing data reflecting material with a maximum CI other than 33.52g CO2e/MJ may be normalized back to this standard.
The EU intends to increase the fossil fuel comparator from 83.8g CO2e/MJ to 94.0g CO2e/MJ under the RED II directive. A maximum CI of 33.52g CO2e/MJ would imply GHG savings of 64.3%, using the fossil fuel comparator of 94.0g CO2e/MJ stated in RED II.
Platts launched a formal public consultation on its European T2 ethanol assessments March 16: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/031620-platts-opens-consultation-on-ethanol-t2-fob-rotterdam-assessments
This methodology change is one of three to emerge from this consultation, alongside the discontinuation of the Ethanol T2 FOB Rotterdam German Spec assessment, the launch of an assessment of Ethanol T2 FOB Rotterdam reflecting material with a maximum CI of 18.82g CO2e/MJ.
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