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LONDON (ICIS)–Increasing sustainable aviation fuel (SAF) supply amid growing demand remains a major challenge for the aviation industry, which will see the first transatlantic passenger flight being powered entirely by the low-carbon fuel today, 28 November. Virgin Atlantic becomes the first commercial airliner to fuel a transatlantic flight from London to New York using 100% SAF to power a Boeing 787 running on Rolls-Royce Trent 1000 engines. The SAF used on the voyage, dubbed Flight100, is a SAF blend containing 88% HEFA hydroprocessed esters and fatty acids (HEFA) supplied by AirBP, the specialised aviation division of BP, and 12% SAK synthetic aromatic kerosene (SAK) supplied by Virent, a subsidiary of Marathon Petroleum Corporation. “I couldn’t be prouder to be onboard Flight100 today alongside the teams at Virgin Atlantic and our partners, which have been working together to set the flight path for the decarbonisation of long-haul aviation,” said Richard Branson, founder of Virgin Atlantic. Oil refiner and SAF producer Neste has been a supplier of the aviation-specific fuel to Virgin Atlantic in the UK. LanzaTech remains a SAF supplier to the airline in both the UK and US. Virgin Atlantic recently entered into an agreement to purchase 70 million gallons per annum of SAF produced by Gevo via its joint venture partner Delta. SUPPLY CRUNCH LOOMSDespite such initiatives, Virgin Atlantic and indeed the entire aviation sector is grappling with prospects of supply shortages amid growing demand. “There’s simply not enough SAF and it’s clear that in order to reach production at scale, we need to see significantly more investment” said Shai Weiss, CEO Virgin Atlantic.. “This will only happen when regulatory certainty and price support mechanisms, backed by Government, are in place. Flight100 proves that if you make it, we’ll fly it.” A lack of alternatives to decarbonise emissions in the aviation industry has resulted in engine manufacturers such as Rolls Royce and airplane manufacturers such as Boeing embrace the blending of SAF with fossil-based jet kerosene. SAF blending targets are slowly growing globally through both private and public sector initiatives, although the low-carbon fuel may continue to be blended with jet kerosene. “It will be very rare that any flight will actually use 100% SAF in the next decade. Most SAF refineries and plants will feed their output into existing airport fuel supplies, so it will be diluted to a small percentage of SAF in the actual fuel that gets loaded onboard the plane,” said Richard Evans, senior consultant at Cirium Ascend Consultancy. The EU is implementing a minimum SAF blend of 2% starting from 2025. Mandated SAF blending rates in airports across the bloc will increase to 6% by 2030, 20% by 2035, 34% by 2040, before eventually reaching 70% by 2050. A 10% blending target by 2030 has also been set by the OneWorld airline alliance, which includes British Airways, American Airlines, Qatar Airways, Cathay Pacific, Malaysian Airlines, and others as members. Earlier in November, the International Civil Aviation Organization (ICAO) adopted a global framework where member states committed to strive towards reducing carbon emissions in international aviation by 5% by 2030 using SAF, low carbon aviation fuels, and other clean energy sources. US Department of Energy (DOE) published a plan that sees the country potentially meeting 100% of its projected jet fuel demand with SAF by 2050. EXPANSION TUBUELENCE AHEADWith ambitious mandates set to carve out a steady growth in demand for SAF over the coming decades, the focus of the industry keeps increasingly turning towards supply and hurdles that need to be overcome before a global scale-up can be achieved. “The greatest hurdle is to scale up supply. A lot of investments will be needed. To facilitate that a range of policy tools will be needed to ensure regulatory certainty, help de-risk projects, and reduce the green premiums SAF has over conventional jet fuel,” emphasised Man Yiu Tse, Senior Analyst at ICIS. Currently, SAF makes up just over 0.1% in the global aviation fuel mix, which continues to be dominated by fossil-based jet kerosene. “Current global SAF capacity stands at around 2.7m tonnes. There is an addition of around 24.4m tonnes of SAF capacity announced through 2030. But only about 5m tonnes of which we consider as firm. ICIS expects jet fuel demand to reach above 390m tonnes in 2030, compared to 257m tonnes in 2022. So SAF capacity falls far short. Though the 5% reduction goal that ICAO adopted last week seems to be achievable,” explained Tse. SAF also costs approximately two to five times as much as fossil-based jet kerosene when made from waste oils, with other versions derived from green hydrogen racking up a higher cost. “To achieve meaningful levels of production, SAF requires use of unproven (at scale, at least) technology such as carbon capture and huge increases in renewable electricity availability to create green hydrogen. There will be many competing uses for renewable electricity, and creating SAF is not obviously the best use of this scarce resource,” added Evans. BEYOND FLIGHT100The aviation industry also needs to explore the variety of feedstocks that can be used to produce SAF and assess their life cycle emissions benefits before supporting types of production processes. Several types of SAF production processes exist and currently are approved for use in international flights; they include HEFA, Alcohol-to-Jet (ATJ), Fischer Tropsch (FT) synthesis, hydrothermolysis and microbial conversion.  ATJ and FT synthesis methods to produce SAF are gaining momentum, with several projects in Europe and the US expected to come on stream later this year. SAF produced from the HEFA process, which involves treating vegetable oils, waste oils and fats, is comparatively the most widely used process to produce commercial grade SAF in Europe. SAF derived through the HEFA process also partly puts it in direct competition for feedstocks used for road-biofuels such as hydrotreated vegetable oil, also known as renewable diesel. Waste-based feedstocks such as used cooking oil, along with other compatible feedstocks, remain scarce, which poses a growing challenge for producers seeking stable and ample supply for the production of SAF, HVO (hydrogenated vegetable oil) and bio-chemicals at biorefineries. The capital deployment required to develop infrastructure, scale-up production and support the commercialisation of new technologies and concepts is critical. Policymakers need to ensure financial mechanisms are provided on top of legislative frameworks to boost SAF supply and achieve decarbonisation across the aviation sector. Leading airlines and airports across the world can play an instrumental role through facilitating on-site SAF usage, which will be much needed to catalyse SAF adoption. Long-term offtake agreements between suppliers and the aviation industry will also be key in creating stable trading and distribution networks across the country. The issues surrounding the post-pandemic world grappling with a fragile supply chain rocked by geopolitical turbulence could also delay the onset of the necessary capacity expansion required for the SAF market. Insight by Nazif Nazmul and Shruti Salwan

SAO PAULO (ICIS)–Grepar will take legal action and seek compensation from Petrobras after the Brazilian energy major unilaterally cancelled the sale of its Lubnor refinery, the prospective buyer said late on Monday. Grepar agreed to acquire the Lubnor refinery in Fortaleza, in the northern state of Ceara, for $54m. The facility can process 8,200 bbl/day and is a major producer of asphalt and naphthenic lubricants, among other products. However, on Monday 27 November, state-owned Petrobras cancelled the contract citing a “lack of compliance” with conditions as well as a missed deadline. It took Grepar more than 10 hours to respond to Petrobras after being “surprised” to learn about the news from the media. “Grepar will adopt, in the appropriate jurisdiction, legal measures to protect its right to be compensated for losses and damages that Petrobras has deliberately caused it, frustrating the deal already contracted,” said Grepar. Grepar agreed to buy the Lubnor refinery and associated assets in 2022, when Petrobras was under management that had been appointed by Brazil’s previous administration. However, in March the new administration of Luiz Inacio Lula da Silva appointed Jean Paul Prates as CEO of Petrobras, who at the time hinted that the Lubnor refinery divestment could be put on hold as the company reassessed its strategy. After Petrobras’ cancellation this week, Grepar said it would not pursue the refinery’s purchase any longer. “Despite Grepar’s contractual right to demand from Petrobras compliance with the contract signed, Grepar will not insist on maintaining the transaction as planned, given the breach of trust as well as Petrobras’ unequivocal intention not to proceed with the transaction,” it said. “[This intention has been] explicitly reiterated in statements by CEO Jean Paul Prates as soon as he took command of the Petrobras in March this year.” During the sale process, there were issues surrounding land ownership at the site. As Petrobras failed to mention these issues when it announced the cancellation, Grepar linked it to land ownership. “The alleged impediment to business due to land conditions does not proceed. Such conditions over land ownership were linked to the precedent conditions that Grepar accepted months ago – Petrobras cannot raise this as a basis for the contract’s termination,” said Grepar. “Grepar has complied with all the precedent conditions set in the contract and did waive conditions to which Petrobras would have been obliged [as part of the contract]. Therefore, only Grepar could terminate the contract.” Front page picture: Entrance to the Lubnor refinery Source: Petrobras

LONDON (ICIS)–The latest draft of the Packaging and Packaging Waste Regulation (PPWR) – which passed its plenary vote in the EU Parliament on Wednesday 22 November – brings further sweeping changes to the proposed legislation, some of which are likely to prove controversial. The wide-ranging changes from the initial draft, many of which are in line with the European Parliament’s Committee on Environment (ENVI)’s proposed amendments from October, include: A watering down of minimum recycled content and collection targets at member state and company level The acceptance of bio-based material as potentially counting towards 50% recycled content targets Exemptions for linings in recycled content targets and recyclability assessments, which could encourage the use of difficult-to-recycle paper and cardboard food-contact packaging Exemptions from recyclability assessments for wood and wax packaging Bans on the intentional addition of bisphenol A (BPA) and per-and-polyfluoroalkyl substances (PFAs) in packaging Labelling obligations and data provision obligations – including making information publicly available An extension of Extended Producer Responsibility obligations, which would include member states using fees collected to support collection infrastructure and make producers/distributors responsible for covering recycling fees A push towards ‘regulated value chains’ Further amendments to the definition of recycling, tying the PPWR to directive 2008/98/EC, as well as the legislation’s own definition of recycling Amendments to mandated Deposit Return Scheme (DRS) proposals Changes to reuse and refill targets, including adding requirements that it must be reusable ‘multiple times’ to the reuse definition Including online retailers into many of the PPWR obligations The setting up of a ‘Packaging Forum’ made up of value chain stakeholders to vet future legislation and targets The legislation still needs to go through the trilogue stage, where recommendations from the EU Council and other stakeholders will be debated, before it is adopted, and the final version could look quite different from the version voted on by the Plenary. At a minimum it is likely to provoke heated discussion and lobbying from all sides of the various packaging value chains. RECYCLED CONTENT TARGETSWhat will most likely prove one of the most hotly-debated changes under the latest version of the PPWR is the incorporation of ENVI’s proposed amendment on the acceptance of bio-based plastics as counting towards up to 50% of mandated recycled content targets in packaging. This was something that was heavily criticised by many in the mechanical recycling and packaging chains, when it was adopted by ENVI under their proposed changes. This is not because the industry doesn’t support the development of the bio-based plastic chain, but because the acceptance of bio-based as recycled content could potentially harm investment in and development of the mechanical recycling chain. Many players have stated that there should potentially be bio-based content targets, but that these should be separate from the recycled content targets. Coupled with this, many do not view bio-based as a form of recycling – although it reuses biological waste – but as a form of virgin production. On those targets the minimum recycled content target for contact-sensitive plastic packaging has been reduced to 7.5%, from 10% by 2030, and food-contact material appears to have been granted an exemption from having to meet those targets. It also adds a 25% recycled content target for non-polyethylene terephthalate (PET) contact sensitive packaging. It also reduces member state packaging collection targets down from 90% in the previous draft, to 85%. Taken together, these changes amount to a significant dilution of the previous targets. Nevertheless, they remain ambitious, and would require a significant scale-up in packaging suitable recycled content production and collection, particularly in markets such as recycled polyolefins, given current structural shortages in Europe. Likely to be more warmly received by the industry, the latest version shifts the calculation of recycled content from a per packaging basis, to an average per format, per manufacturing plant, and per year, which would make the regulation more practical to enforce. The new version also deletes the clause in the draft version that would have allowed the Commission to amend the recycled content targets due to the lack of availability or “excessive prices” of specific recycled plastics. It would require the Commission to develop a methodology by 31 December 2025 to certify recycled content placed on the market. LINING EXEMPTIONS AND PAPER AND CARDBOARD PACKAGINGThe other area of the new draft likely to cause controversy in the market is the addition of exemptions for linings, coatings, varnishes, paints, inks adhesives, lacquers, and closures from definitions of ‘composite packaging.’ This would appear to remove them from key ‘recyclability at scale’ assessments, and from recycled content targets. Of these, it is the lining exemptions likely to cause the fiercest debate. This is because food-contact cardboard and paper packaging – outside of corrugated cardboard used in fruit and vegetable packing – typically includes a plastic barrier (now apparently exempted under the lining exemption) which makes it a multi-layer and typically difficult to recycle. Not including a barrier would expose the paper or cardboard to food-contamination and moisture, which would make the material non-recyclable. Coupled with this, non-plastic food packaging alternatives typically have higher energy usage, carbon dioxide (CO2) emissions, and higher weight (which results in higher emissions and fuel consumption when transported). While cardboard and paper packaging does have high recycling rates of 81.5% in the EU27 in 2020, according to Eurostat data (the latest year for which data is available, although 2021 rates have been estimated by Eurostat at 82.5%), much food-contact packaging falls in to the 18.5% not currently recycled. Coupled with this, recycling rates for cardboard and paper packaging have been falling from a peak of 85.4% in 2016 and 2017. Correlation is not causation, but this coincides with increased adoption of paper and cardboard in food-contact packaging. When this amendment was first proposed by ENVI a number of players in the industry expressed concern both that this would leave the impression in the consumer’s mind that paper and cardboard food-contact packaging is more recyclable and sustainable than it actually is, and that it would hasten a shift to alternative materials and away from plastic. Tempering this slightly, barriers are now included in the annex under the list of indicative parameters to be considered when establishing design criteria for recycling, along with: Additives Labels/sleeves Closure systems and small parts Adhesives Inks/printings Colours Material composition Coatings Products residues/ease of emptying Ease of dismantling Wood and wax packaging have been exempted from recyclability criteria. RECYCLING DEFINITIONS AND CHEMICAL RECYCLINGThe new version incorporates ENVI’s proposed rewording of the regulations definition of recycling, which appears to re-add the ambiguity for pyrolysis-based chemical recycling on whether pyrolysis oil would count towards the targets that exists in current recycling definitions under EU law. This is an ambiguity the original draft had seemingly sought to remove.  It also adds in requirements that material meets the definition of recycling under 2008/98/EC, which has itself created ambiguity on the legal status of pyrolysis-based chemical recycling. By tying chemical recyclers to both definitions it could potentially make it more difficult for pyrolysis oil – the dominant output of chemical recycling in Europe – to be considered as recycled material, depending on how definitions interpreted and enforced. REGULATED VALUE CHAINSThe new draft also adopt ENVI’s proposed wording in the recital portion of the regulation around developing ‘regulated value chains’ although there are no details around what this would mean in practice. It would also require member states to set up a system “to provide safe and equitable access to recycled materials for use in applications where the distinct quality of the recycled material is preserved or recovered in such a way that it can be recycled further and used in the same way and for a similar application, with minimal loss of quantity, quality or function,” by January 2029. Again, there is no detail or clarity on what ‘equitable access’ would mean in this context, but it has the potential to fundamentally reshape the value chain and existing pricing and contract mechanisms. EXTENDED PRODUCER RESPONSIBILITYThe changes stipulate that funds raised by Extended Producer Responsibility fees set out in the draft are earmarked to finance the cost of collection, sorting and recycling of packaging. Lack of sufficient infrastructure has consistently been one of the key challenges to reaching scale for recycled plastics commonly mentioned by players throughout the value chain. It is likely to be welcomed. Less likely to be welcomed are requirements for public disclosure of information collected under its Extended Producer Responsibility (EPR) proposals, online and free of charge. The new draft would also extend EPR costs to also cover the subsequent transport and treatment of waste, in addition to waste collection and infrastructure costs that formed part of the initial draft. OTHER MEASURESThe PPWR would create a number of new labelling obligations under a harmonized system, including pictograms and minimal language, to detail recycled content and recyclability. The latest version extends many of the proposed regulations’ requirements to online platforms. It also adds obligations on member states to reduce per capita packaging waste by 10% by 2030, 15% by 2035, and 20% by 2040, compared with 2018 levels. Lastly, the latest version would see the creation of a ‘Packaging Forum’ consisting of stakeholders throughout the value chain across member states – including waste treatment industry representatives, manufacturers and packaging suppliers, distributers, retailers, importers, SMEs, environmental protection groups and consumer organisations – to be consulted on the preparation of delegated and implementing acts under the regulation. The scope of the PPWR is wide-ranging, and with the trilogue period approaching – which will seek to harmonise the view of the EU Parliament, the Council, the Commission, and the industry – discussion is likely to be intense and the final form of the regulation currently unknowable. Whatever form it takes, it is likely to have major repercussions across the packaging chain and any players connected to the market will need to familiarize themselves with the proposals and ensure their voice forms part of the debate. Insight by Mark Victory

HOUSTON (ICIS)–The US corn harvest has reached 96% completion according to the latest US Department of Agriculture (USDA) weekly crop progress report. The current rate does trail the 99% mark achieved in 2022 but the ongoing pace is above the five-year average of 95%. The states surveyed by the federal agency for the update are now all above 85% completed on their corn crop except for Michigan at 79% and Pennsylvania at 80%, with both areas having experienced weather issues. Those challenges could continue for those finishing the last of the acreage this coming week as colder temperatures are spreading across the northern states with some areas having more snowfall over the weekend. While parts of the US southern crop regions are experiencing not only lower than average temperatures but should also have further rain with some expected to be beneficial across parts that are drought stricken. The more difficult weather conditions will not only impact the finishing of harvest but also the recent advancement seen for end of the year fertilizer applications. This was the last crop progress report for 2023 with the USDA set to release the first update of 2024 on April 1.

SAO PAULO (ICIS)–Brazil’s chemicals trade deficit is expected to reach $47bn this year as imports continue by far outpacing exports, the country’s chemicals trade group Abiquim said on Monday. In the January-October period, Brazilian chemicals trade deficit with the rest of the world stood at $40bn, following the trend observed in previous months. Abiquim said in October Brazil’s domestic chemicals production stood at a 30-year low as demand is increasingly being covered by abundant and unexpensive imports from overseas, notably from Asia. Consequently, capacity utilisation stood at 65% in average during the period. The $40bn trade deficit year to October was the result of $52bn in imports into Brazil but only $12.1bn in exports. To put the figures into context, Brazil’s chemicals industry posted sales of $187bn in 2022. According to Abiquim, the sector employs 2m people directly and indirectly, and would represent 12% of Brazil’s industrial GDP. “Up to October, significant increases [in imports] were recorded in plasticizers (up 79.1%), thermoplastic resins (16.7%), basic petrochemical products (12.6%), intermediates chemicals for detergents (6.5%), and other various chemical products for industrial use (12.8%),” said Abiquim. “[These imports are being] carried out at predatory prices – on average 22.9% lower year on year – which are unbalancing the domestic market and threatening national manufacturing of strategic products for various value-adding chains in the chemicals industry in the country.” “The government’s recent decision on the return of chemical import rates to the standard level of the Common External Tariff was a first and indispensable step towards reestablishing the real conditions of competitiveness of the national industry, and consequently, increasing the industry’s participation in GDP,” said Abiquim’s director of economics and statistics, Fatima Coviello. REIQ IS BACKThe Brazilian government in office since January has given the chemicals industry two concessions it had been lobbying for; in March, it hiked import tariffs for some polymers and rubbers, in a protectionist move aimed at protecting domestic producer. Meanwhile, earlier this year the cabinet said it would reinstate a tax break for chemicals which the previous administration had withdrawn, the so-called Special Regime for the Chemical Industry (REIQ). The tax break was finally reinstated as of November 23. Abiquim’s executive president, Andre Passos, said however REIQ “cannot be seen as a benefit” to chemicals in detriment of other industrial sectors, but rather as an attempt to reduce the “gigantic disparity” in costs between local players and peers overseas. “The turnover tax in Brazil is 40-45%, while competitors in the US and Europe pay only 20-25%. Raw material gas costs are three times higher in Brazil than in competing countries. Not to mention the high logistical and bureaucracy costs,” said Passos.

HOUSTON (ICIS)–US October sales of single-family homes fell 5.6%, well below market expectations, according to statistics released on Monday. The following table shows the seasonally adjusted annual rate (SAAR) of October new house sales. Oct ’23 Sept ’23 New houses sold 679,000 719,000 New houses for sale 439,000 433,000 Month’s supply 7.8 7.2 Median sales price $409,300 $422,300 Source: US Census Bureau The number of new houses sold in October was well below 720,000 units expected in the market, said Kevin Swift, ICIS senior economist for global chemicals. In addition, the Census Bureau revised its sales figures for July through September, sending them lower. The new home market has a 7.8 month supply. While this is up from September, it is down from 9.7 months in October 2022. Regardless, the supply of new homes is still above six months, the point that marks a house market in equilibrium. The slight oversupply supply of new houses is in contrast to the shortage of existing houses, which is well below six months. Builders have been targeting their homes towards first-time home buyers during the past year, a trend that is reflected by the decline in median sales prices, Swift said. Such efforts are working against high mortgage rates. Average rates for 30-year home loans reached 7.29% during the most recent week, according to Freddie Mac, a company that buys and securitizes home loans. For comparison, rates were below 5% before 2022. Slow gains in real incomes have further eroded home affordability, which remains near record low levels, Swift said. The following chart shows the historical new home sales and inventory levels. The housing market is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins and derivative products, such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibers, among many others. Thumbnail shows a home under construction. Please also visit the ICIS construction topic page.

LONDON (ICIS)–Setting up emissions trading and raising a domestic carbon tax are two of the measures that Ukraine is implementing to align its economy with the EU’s newly introduced cross-border adjustment mechanism (CBAM), given the rules will directly impact its power, industrial and agricultural sectors. As the EU is its main export market, Ukraine has a direct interest in reducing its carbon footprint and ensuring its companies are competitive when the CBAM mechanism is fully implemented in 2026. Under CBAM, which came in force on 1 October, non-EU exporters to the bloc are required to report greenhouse gas emissions. From 2026 they will be expected to pay a price difference between the carbon price in the country of origin and the price of carbon allowances covered by the EU Emissions Trading Scheme (ETS). The EU’s CBAM does not include any concessions for Ukraine despite the fact that its industrial base was severely damaged since the start of the Russia-Ukraine war. However, Olha Yevtsihnieieva, advisor to the head of the State Agency on Energy Efficiency and Energy Saving of Ukraine, told ICIS the country was working on multiple projects to reduce its carbon footprint and ensure companies remain competitive, while also meeting EU requirements. Prior to Russia’s full-scale invasion on 24 February 2022, Ukraine had a large industrial base and was exporting iron ore, semi-finished steel products as well as a variety of agricultural products. However, since the war, overall exports have dropped by 35% as the industrial base was damaged, she said. Nevertheless, Ukraine continues to export agricultural goods and has been increasing its electricity interconnection capacity with neighbouring EU countries to 1.2GW. This capacity is expected to increase further in the upcoming years. A LOWER CARBON FOOTPRINT To abate some of the carbon footprint, Ukraine has increased the renewable share target in the overall installed capacity from 9% to 27% by 2030. Around 90% of Ukraine’s wind capacity and around 50% of its solar capacity was destroyed or occupied by Russia since the start of the invasion. However, some companies are now working to expand the installed renewable capacity. For example, private power producer DTEK has brought online a 114MW wind power plant earlier in spring and is expecting to expand it to 500MW. Secondly, the parliament adopted a law for the establishment of a decarbonisation fund. A new decree is expected to be adopted in the upcoming weeks laying out the rules for the reimbursement of funds to companies taking active steps to decarbonise their operations. The government has already raised the tax on emissions from Ukrainian hryvnia (UAH) 10.00/tCO2e to UAH30/tCO2e (€0.76/tCO2e). But this is only a fraction of EU carbon prices, which are currently hovering around €80.00/tCO2e. UKRAINE ETS Ukraine is also working with the German Agency for International Cooperation to establish a functional emissions trading system which would help to plug the gap in the upcoming years, according to Yevtsihnieieva. Nevertheless, she said there are many issues to address including a strengthening of its greenhouse gas measurement, reporting and verification to ensure carbon emissions are properly reported. For example, in an article she published for the local Kyiv Independent, she pointed out that an audit conducted by the Accounting Chamber of Ukraine found that only 264 installations emitting greenhouse gases had officially submitted monitoring plans to the National Centre for Greenhouse Gas Emissions Accounting in the second half of 2021. This represented only 15% of Ukraine’s total installations at the time. She insisted that emissions would need to be accurately calculated before a proper carbon map was drafted to reflect science-based climate targets.

LONDON (ICIS)–European monoethylene glycol (MEG) editor, Melissa Hurley, looks at the global situation for MEG with Judith Wang, Cindy Qiu and Melissa Wheeler as year end approaches. China MEG post inventories hit their highest level in 2023 during November Contract negotiations for 2024 still ongoing in Asia, Europe US TEG spot prices continue to be elevated on strong demand, low availability Click here to listen in a separate window. Additional reporting from senior editor Judith Wang, Cindy Qiu and Melissa Wheeler.

LONDON (ICIS)–Germany’s Deutsche Energie Agentur and Norway’s Gassco have published the results of a joint feasibility study on a hydrogen value chain from Norway to Germany on behalf of the governments of those countries. governments, BACKGROUND Germany on track to become Europe’s largest consumer of hydrogen , with current demand for the fuel around 60TWh/year. According to the country’s National Hydrogen Strategy, demand is forecast to double by 2030 to reach between 95TWh/year and 130TWh/year. Germany is expecting to produce between 30% and 50% of its own hydrogen requirement, meaning that the country will be reliant on imports for up to 70% of its renewable hydrogen by the end of the decade. Germany has sought to develop hydrogen relationships with many different partners in various global regions, and already has strong ties with Denmark with a cross-border hydrogen corridor expected to start operations in 2028. Norway is expected to be a net exporter of hydrogen due it its large renewable potential in addition to geography with the Norwegian Sea and the Norwegian part of the North Sea. Norway’s hydrogen demand is forecast by ICIS to rise from 10TWh/year currently to 23TWh/year by 2030, but domestic production of hydrogen through a combination of electrolysis and steam reforming with carbon capture and storage (CCS) using natural gas as a feedstock will exceed domestic demand. PRODUCTION, TRANSPORT Gassco plans for the Aukra Hydrogen Hub (AHH), which will be located near the Nyhamna gas processing plant on Norway’s west coast, to produce 450,000 tonnes/year (15TWh/year) by 2030 in addition to the Clean Hydrogen to Europe (CHE) project with a similar production capacity by the end of the decade. Gassco estimates that the pre-tax levelized cost of hydrogen will be in the range of €70-110/MWh (€2.33-3.66/kg) excluding transport for production on the Norwegian Continental Shelf for the AHH and CHE projects. Norway is considering further hydrogen production using offshore wind as an energy source from Norway, Denmark, and Germany, s well as onshore wind in Norway. Gassco has also performed a feasibility study on a hydrogen pipeline from Norway to Germany, with two main concepts having been evaluated. The first concept is a re-use of existing infrastructure and new infrastructure for delivery into Dornum via the Europipe, with the second being new infrastructure for delivery into Wilhelmshaven. Estimated capacity for the two concepts is 4m tonnes/year, but is subject to change going forward before an estimated start-up date of the final quarter of 2030 with a final investment decision (FiD) slated for the third quarter of 2026. POTENTIAL PARTNERSHIP Germany will be reliant on hydrogen imports for its domestic use of the fuel, and Norway is aiming to become a hydrogen exporter, so the partnership could be beneficial to both sides. In the near term, Norwegian hydrogen production will be dominated by CCS-enabled gas-steam reforming before wind-power energy for hydrogen production via electrolysis comes online post-2030. If the hydrogen produced is in line with the definition of low-carbon hydrogen under the European Parliament’s Renewable Energy Directive (RED), this could be a valid option for Germany to aid in its hydrogen import requirement.

LONDON (ICIS)–In the approach to year end, thoughts have turned to the year ahead for the oxo-alcohols and their derivatives. But, before the curtain falls on 2023, ICIS examines whether there is any life left in the markets. Oxo-alcohols editor Nicole Simpson joins acrylate esters editor Mathew Jolin-Beech, butyl acetate (butac) editor Marion Boakye and glycol ethers editor Cameron Birch for the November edition of the oxo-alcohols and derivatives podcast.