Neste to make 500kt/y SAF at Rotterdam plant; record Q1 production
London (Quantum Commodity Intelligence) – Finnish renewables producer and refiner Neste will be able to produce up to 500,000 mt per year of sustainable aviation fuel (SAF) at its Rotterdam renewables refinery starting in the second half of 2023, the company announced Thursday.
The increased potential for SAF production at the Rotterdam plant will be achieved by modifying existing capacity at a cost of €190 million and will bring Neste's total global capacity for SAF to 1.5 million mt by the end of 2023, up from a current 100,000 mt.
Focus on low-carbon drop-in replacement fuel for jet fuel has been accelerating with a number of airlines and producers announcing plans in the last 12 months to ramp up consumption and supply in the run-up to 2030.
However, capacity remains far below anticipated demand.
In an average year around 950,000 mt of jet fuel is used each day leaving the industry with a mountain to climb in terms of achieving meaningful decarbonisation in a sector that accounts for up to 3% of global annual emissions.
Policymakers, particularly in Europe, are moving to incentivise large-scale commercialisation of various technologies in order to meet demand, but the cost is also a factor with fossil jet likely to remain significantly cheaper for the foreseeable future.
Meanwhile, Neste also reported separately its Q1 results which showed record-high production of renewable products at 829,000 mt globally at a 104% utilisation rate, although second-quarter output is likely to be lower when the Porvoo refinery undergoes maintenance.
Production in the first quarter of 2020 was 4% lower at 795,000 mt.
Sales did not grow entirely in line with production with Q1 sales this year at 743,000 mt, up 1.6% on the year.
However, an increase in margin was achieved despite tight feedstocks markets and a greater utilisation of waste feedstocks which are typically more expensive, with Q1 this year at $699/mt up from $685/mt in the first three months of 2020.
This was helped greatly by a 255% rise in biofuel certificate prices in the US, where D4 RIN prices averaged $1.20/gal in the first quarter, up from $0.47/gal in the same period last year, said the company.
There was also a shift away from sales in Europe in Q1 this year, when it took a 65% share of volume compared with 75% last year.
Profits from Neste's oil products segment, which typically makes up only a fraction of the company's earnings now, turned negative in January to March with both sales volumes and margins significantly lower due to the impact of the Covid pandemic as a stronger differential for its feedstock Urals crude versus Brent.
The segment's comparable profit was minus €8 million, down from plus €74 million, while the sales volumes dipped 21% to 2.7 million mt and refinery utilisation rates dropped by 11 percentage points to 83% in Q1 this year.
