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APPEC: Industry uncertain on using palm oil as SAF feedstock

The use of palm oil to make sustainable aviation fuel would provide more flexibility to producers in terms of feedstocks, but sustainability concerns are a major impediment to its use, trade heads said at the Asia Pacific Petroleum Conference 2023 organized by S&P Global Commodity Insights.

The topic came into focus a day after Singapore’s acting transport minister Chee Hong Tat said at a regional meeting of the Association of Southeast Asian Nations (ASEAN) that palm oil should be considered as a feedstock for SAF production.

“We should take a pragmatic approach based on science and evidence, instead of an ideological approach based on pre-conceived bias and dogma,” Chee said, speaking on developing sustainable transport.

The industry view on palm oil as a SAF feedstock was less optimistic, however, citing problems with the EU’s perception of deforestation risks in Indonesia and Malaysia, the two largest palm oil producers in the world.

“The question of crude palm oil [as a feedstock] is highly challenging but residue and waste are not. We have novel vegetable oil and lignocellulosic biofuels which don’t affect land use availability, Sami Jauhiainen acting EVP and vice president APAC, Renewable Aviation, Neste told S&P Global.

Finland-based Neste recently finished an expansion project at its Singapore refinery. The ramp-up will double Neste’s production capacity in Singapore to 2.6 million mt/year, of which up to 1 million mt/year is SAF.

In May, Singapore committed $50 million to the Civil Aviation Authority of Singapore to set up a new aviation sustainability program and develop the country into a sustainable air transport hub.

Singapore’s nod to using palm oil for SAF could however increase flexibility in terms of feedstock availability, Doris Tan, head of Shell Aviation Asia Pacific and Middle East said at APPEC.

“This is a step in the right direction. We want to be practical and play to our strength,” Tan said, adding that palm oil is abundant in Southeast Asia but not in the EU.

The EU is looking to reduce its dependence on palm oil as a biofuel feedstock and has banned the use of palm oil in making SAF – which has led to protests from Malaysia and Indonesia, which contend that the stance amounts to a tariff-less trade barrier.

Platts assessments of Asia Sustainable Aviation Fuel prices were mixed on Sept. 5, with used cooking oil-based SAF climbing marginally to $1,819/mt since the end of August, while palm fatty acid distillate-based SAF fell 2.5% to $1,571/mt, S&P Global data showed.
Source: Platts

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