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The premium for used cooking oil methyl ester (UCOME) over gasoil reached two-month lows this week, as sources pointed to low physical demand and downward pressure from an excess of biofuel compliance tickets in the Netherlands’ HBE renewable energy system specifically tied to sustainable aviation fuel (SAF) production and trade, which road blenders can buy to meet their mandate targets.
Fastmarkets’ assessment for biodiesel, UCOME premium, fob ARA was $788.75 per tonne on Thursday May 8, up from a two-month low of $785 per tonne on Wednesday May 7. The price had remained above $800 per tonne since March 13.
Sources told Fastmarkets this week that demand for physical waste-based biofuel for the road, such as UCOME or even UCO-based HVO, had been limited for several months, which together with dipping underlying diesel prices have weighed down on UCOME.
Fastmarkets assessed oil, ultra low sulfur diesel, fob ARA at $594.75 per tonne on Thursday, up from $583.75 per tonne day on day and from $590.75 per tonne week on week.
Road demand in the Netherlands for physical biofuels in recent months has mostly been focused on biofuels made from feedstocks outlined in Annex 9 part A of the EU Renewable Energy Directive (RED III), so-called 9A or advanced feedstocks able to generate advanced HBE tickets (HBE-G) such as advanced FAME and, especially, POME (palm oil mill effluent) based HVO.
Both SAF and UCOME can generate tickets under the Netherlands’ compliance system, as both are eligible under RED III’s Annex 9 part B or the Netherlands’ HBE IXB because they are produced using used cooking oil (UCO). SAF can also be produced using other wastes and advanced feedstocks, but most production and supply is limited to UCO-based product at present.
Trade and production of SAF at the beginning of the EU SAF mandate had also generated more tickets under the HBE system, with the Netherlands’ program including the maritime and aviation sectors alongside road transport.
As a result, buyers that need physical UCOME, or even category 1 and 2 tallow-based biodiesel, for the road are now incentivized to buy HBE IXB tickets, rather than physically blend fuels. This has further weighed on demand and prices for UCOME.
“KLM flooded the Dutch market with SAF tickets, so tickets were much cheaper than blending,” a source told Fastmarkets.
The Dutch Emissions Authority (NEa) releases data five times a year, in January, March, April, May, July and October.
According to the latest preliminary data released by the NEa in April, the number of HBE tickets registered under the Dutch biofuel compliance program for 2024 associated with SAF blending accounted for 11.5% of all HBEs registered, up from 9.2% in March and from 8% a year earlier.
SAF has claimed a total of 12.3 million HBEs so far for compliance year 2024 out of a total of 105.7 million registered HBEs, the data confirmed.
Comparatively, under the UK’s Renewable Transport Fuel Obligation, while UCOME can generate waste-based tickets or Renewable Trade Fuel Certificates (RTFCs), only road transport can currently take part in the program, with a separate process mapped out for the budding SAF sector.
In November, the UK SAF mandate was signed into law, requiring a 2% share of SAF be blended into jet fuel in 2025, 10% by 2030 and 22% by 2040.
Fastmarkets’ SAF price assessments provide airlines, aviation industry traders and finance managers with the clarity they need. Find out more about Fastmarkets SAF price data here.