Singapore biofuel plant: Slow legislation may impede biofuel demand

This, in turn, could lead to problems or delays in building $1.2b S'pore plant
Ronnie Lim Business Times 9 Nov 10;

FINLAND'S Neste Oil - which is in the midst of starting up a $1.2 billion renewable diesel plant here - has warned that demand may be crimped by the slower-than-expected progress in biofuel legislation in Europe and the US markets.

Giving an update on the Tuas project, Neste president and CEO Matti Lievonen says in the company's third-quarter report that its 'first world-scale renewable diesel plant is due to start in the near future . . . and will be ramped up in steps to full capacity'. This will boost Neste's current biodiesel production from two smaller Finnish plants with a combined capacity of 380,000 tonnes per annum (tpa).

Start-up procedures at the 800,000 tpa Singapore plant - which will produce biodiesel from 100 per cent renewable materials such as palm oil and animal fat - 'have proceeded smoothly and the plant is expected to come on stream in Q4', the report says. A twin project - another 800,000 tpa plant in Rotterdam, Holland - is expected to start up 'towards the end of first half, 2011'.

Neste says that its Singapore NExBTL plant will be ramped up 'in steps to full capacity and there will be a time lag before output reaches the sales channel due to logistical reasons'. It has not spelled out what these issues are.

A bigger concern, it seems, is that 'progress in finalising biofuel legislation has been slower than anticipated both in Europe and the US'.

Neste officials had earlier indicated that about two-thirds of its Singapore-produced biodiesel would go to European customers and the rest to Canada and the US.

Discussing potential risks ahead, Neste says: 'The implementation of biofuel legislation in the EU and other key markets may influence the speed at which the demand for these fuels develop. Risks also include any problems or delays in completing the company's NExBTL renewable diesel investments or failure to capture the anticipated benefit from these investments.'

Recent European news reports have suggested that the European Union (EU) seems a long way off its Dec 5 target date for having biofuel certification schemes in place. From that day, in theory, oil companies will no longer be allowed to use biofuel in the EU unless the biofuel producer has an authorised certificate showing sustainably grown crops were used in its manufacture.

Neste officials told BT in May that the company - which will use a significant amount of Malaysian and Indonesian palm oil as feedstock for its Singapore plant - was confident that it would have an EU-sanctioned, in-house environmental audit system in place by the time the Tuas plant starts up.

The EU system will essentially allow biofuel producers to provide their own greenhouse emission savings data, audited by a third party, to establish the greenhouse gas savings.