Charlotte Radford

Global Manager – Price Group Partners

Emerging Benchmarks
and Challenges Ahead April 2023

S&P Global Commodity Insights

Agenda

1. Biofuel markets forces and feedstock trends

2. Policy influence on Biofuels pricing
3. Introduction to SPGCI Global biofuel prices and
methodology

S&P Global Commodity Insights 2

Global Assessments for 1st and 2nd Generation Biofuels
• Ethanol Chicago
• Biodiesel B100 SME Chicago
• Biodiesel B100 SME Houston
• Renewable Diesel & SAF USWC
• Ethanol T2 ROB Rotterdam
• FAME -10 FOB ARA RED
• FAME 0 FOB ARA RED
• SME FOB ARA RED
• RME FOB ARA RED
• PME FOB ARA RED
• UCOME FOB ARA RED
• HVO & SAF EXW NEW
• Ethanol CIF Philippines
• Biodiesel (PME) FOB SEA
• UCOME FOB China
• UCOME FOB Straits
• HVO & SAF (PFAD) Southeast Asia
• Ethanol FOB Santos
• HVO & SAF (UCO) North Asia
• Biodiesel DAP Paulinia
3
APAC Biofuel and Feedstocks Assessments

• Ethanol CIF Philippines

• Biodiesel (PME) FOB SEA
• UCOME FOB China
• UCOME FOB Straits
• HVO & SAF (PFAD) Southeast Asia
• HVO & SAF (UCO) North Asia

• Feedstocks
• Palm Fatty Acid Distillates (PFAD) FOB
Indonesia (APFAE00)
• UCO FOB Straits (UCFCC00)

4
Global Biofuels Demand

Source S&P Global Commodity Insights

S&P Global Commodity Insights

Southeast Asia ethanol demand and supply challenges

Philippines E10
1000
• Key ethanol consumer
900
800 • Ambitions to raise to E15 and E20 but shortage of
700 molasses as feedstock.
600
$/ cu m

500 Vietnam E5
400
300 • E5/ gasoline gap 2000 dong/l incentivizes demand
200 • Cassava mosaic disease added to production woes
100

India E10…E20
0
Mar-18
Mar-16

Mar-17

Mar-19

Mar-20

Mar-21

Mar-22

• Trial for E20 in Feb at 11 states, in 84 stations

• Capacity preceding demand

6
US ethanol stocks at 10-month high in mid Feb on strong margins
Ethanol cheaper than gasoline, encouraging high blend rates

Chicago ethanol in cents/Gal

350

300

250

200

150 2021 2022 2023

100
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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North America SAF/HVO Production: current and planned
US Refiners Jump on the Renewable Fuel Bandwagon
Decarbonising the Aviation Sector
CORSIA Timeline
Carbon Offsetting and Reduction
Scheme for International Aviation

PHASE 2

PHASE 1 2027–2035

PILOT • Mandatory for all

2024–2026 member states
• Exemptions for
• Voluntary Small Island
2021–2023 Developing states,
• Calculates basis of
offsetting Landlocked
• Voluntary requirement 2024, developing states
• Calculates the 2025 or 2026 etc.
basis of the •
offsetting
requirement for
2020, 2021, 2022
or 2023
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Strong legislative push for SAF in the EU under Fitfor55 and ReFuelEU

ReFuelEU Aviation proposes a volume-based target

Volumetric
SAF target 2% 5% 20% 32% 38% 63%

2025 2030 2035 2040 2045 2050

Source: IHS Markit © 2022 IHS Markit

• European Commission has proposed an EU-wide blend mandate for SAF of 2% in 2025, to
gradually increase to 5% in 2030 and 63% in 2050
• Seven EU Member States (Austria, Denmark, Finland, Germany, Luxembourg, the Netherlands
and Sweden) are advocating for the possibility to introduce their own SAF mandates that would
be more ambitious than those proposed at EU-level

The ReFuelEU Aviation regulation proposal under the EU Fit for 55 policy package is mandating sustainable fuel targets for aviation

Sustainable Aviation Fuels in Europe—Clear for Takeoff 10

Current and Proposed SAF Mandates in Europe
France, Norway & Sweden, among others, have blending mandates

Sustainable Aviation Fuels in Europe—Clear for Takeoff 11

Major European Airlines Target
10% SAF By 2030

Sustainable Aviation Fuels in Europe—Clear for Takeoff 12

Asia/Oceania’s SAF & Renewable Diesel
SUPPLY
• Current production leader Neste
• Highest potential capacity found in China.
• Japan seeks SAF mandate for 2030
• Feedstocks crunch if these plants come online
o Australia – Tallow
o China – UCO
o Indonesia – palm waste

DEMAND
• SQ to use blended SAF since Q3 2022.
• Qantas pledge for certain flights eg London, San
Francisco, 10% in fuel mix by 2030
• India considering 1% SAF mandate
• S.Korea to amend laws by 2023 to include SAF in
biofuel mandate now only for diesel but Korean
Air/Shell have supply contract from 2026

S&P Global Commodity Insights 13

Singapore Waste Imports
1.67mmt in 2022 vs 1.8mmt in 2021

2
0
2
2

2
0
2 UCO Tallow PFAD

1
S&P Global Commodity Insights 14
China: Urban Edible Oil Consumption and UCO generated 2015-2023 average

30,000

20,000
'000 mt

10,000

-
15/16 16/17 17/18 18/19 19/20 20/21 21/22* 22/23*

Urban edible oil consumption UCO generated (30% ratio) UCO generated (20% ratio)
Source: S&P Global Commodity Insights, CAOC (oct-Sep MY), *Forecasted

S&P Global Commodity Insights 15

Palm-based feedstock early dominance
UCO takes over as main feedstock

• RD/SAF expansion announcements

• 2025-2026 China Shanxi construction Investment Group and Malaysia’s Benalec, 500,000mt/year in Johor
• ENI, Euglena and Petronas have plans for a 565,000mt/year plant in Johor
• 2026-2027 Ecoceres plans a 300,350,000mt/year plant in Johor

S&P Global Commodity Insights 16

Asia HVO/SAF Feedstock prices: Used Cooking Oil and PFAD

Flexibag in a container
$/mt

China UCO
2000
FOB Straits
1800
UCO
1600 PFAD FOB
1400 Indonesia
1200 CPO FOB Indo
1000
M1
800

600

400

200

S&P Global Commodity Insights 17

European FAME 0 premium drop 32% since early March driven by low diesel
demand and high rapeseed supply

• Warmer temperatures
pressure demand for
heating

• Slowdown in economy
translates to low demand
for commercial trucking

• High diesel supplies pre-

Feb ahead of sanctions.

• High rapeseed supplies,

record crop in Australia

Source: S&P Global Commodity Insights

S&P Global Commodity Insights 18

 Daily price calculation: Cost-based values reflecting production through
hydroprocessing

Feedstock
Production
Asia – UCO+PFAD Hydrogen Fixed costs Byproducts
Europe – UCO cost
US- Tallow

* Yield * Yield
Propane Refrigerated CFR North Asia (AAWVD00)**
Naphtha FOB Singapore Cargo (PAABP00)
Japan Hydrogen SMR w/o CCS Including Capex Gasoil 0.001% S (10 ppm) FOB Spore Cargo (AAOVC00)
(IGYGC00)**

Palm Fatty Acid Distillates (PFAD) FOB Indonesia (APFAD00) Propane Refrigerated CFR South China (AABAK00)
Used Cooking Oil (UCO) FOB North Asia (AUCOC00) Naphtha C+F Korea Cargo (PAADE00)
Gasoil LP C+F South China Cargo (POAFA00)

**Normalized to Singapore using freight netback

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Asia HVO and SAF prices from UCO and PFAD feedstocks

Source: S&P Global Commodity Insights

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Offsetting remains a more cost-effective solution than SAF
Relative low cost of carbon credits in CORSIA markets drives down offsetting price

Offsetting can be viewed as a controversial solution, with concerns about carbon credit permanence and additionality fore-
front in the minds of end-users. Over-reliance on carbon credits rather than emissions abatement could add to market
concerns about broader commitment to decarbonization.

SAF vs Carbon Credits ($/b)

300

250

200

150

100

50

Source: S&P Global Commodity Insights

Jet Fuel Carbon Offset Premium Asia SAF Jet Fuel Spread Europe SAF Jet Fuel Spread

S&P Global Commodity Insights 21

CONCLUSIONS

Policy and regulation watch

• Asia SAF mandates
• US EPA proposal on year round E15 sales in 2024
• Sweden’s plan to change GHG reduction target from 2024
• Union Database for Biofuels (UDB) tracking all biofuel feedstocks sustainability information
• Feedstock expansion in the final REDII Annex IX Revision
• New technology for SAF production

Inflationary pressures on demand

Demand from EVs to compete for biofuels

S&P Global Commodity Insights 22