RTFC Year-11 values firm on UK biodiesel spec change fears

Certificate prices for Year 11 renewable transport fuel certificates have firmed as market sources seek further information on a rumoured specification change that may affect UK biodiesel requirements, market sources have told Energy Census.

The anticipated change looks set to affect the saturated monoglycerides standard of EN 14214 and follows complaints of small diesel engines choking, although details on timelines were hard to pin down.

“Some of the very small diesel engines in certain makes of car, they have this filter blocking problem that they’re blaming on the fuel,” one trading source explained.

He added that the problem would potentially force blenders to look for higher specification mineral diesel.

“People have been trying to buy B7 UK spec diesel, with the right cloud, mono combination, but they’re not prepared to buy at a premium so they might have to settle for B5 diesel,” the source said, referring to higher quality diesels that could cope with up to a 7% biodiesel component.

As the UK’s Renewable Transport Fuel Obligation ramps up, the monoglycerides dimension may deter biodiesel blending. The government unveiled a new scheme in April that commits the country to a steady increase in biofuel use through to 2032.

If blenders are unable to buy the higher quality diesel, they may fall back on the standard diesel that can accommodate a maximum of 5% biodiesel, but that may see biofuel blending decline and instead spur demand for RTFC tickets to meet their environmental targets.

“The UK will use less biodiesel through the winter than in the summer, which they’ve never needed to do before,” the trader said.

In the event that biodiesel blend volumes are affected, market participants may have to turn to trading certificates in order to meet their increased blend targets.

These jumped from 4.75% in the April 2017-April 2018 compliance year to 7.25% in the April-December 2018 period under the revamped RTFO.

From December onwards, the obligation increases through the next 14 years until it reaches 12.4% by 2032, with the scheme also introducing incentives to promote use of waste-based and advanced biofuels while capping crop-based biofuels.

RTFC prices for the April-December Year-11 period were heard trading at 17.3 p/certificate, slightly higher versus trades heard at 17.2 p/certificate the previous week, with offers heard at levels around 17.8 p/certificate according to market sources.

Alongside that, the first indications for Year 12 were also heard, with offers said to have been floated at 19.9 p/certificate, according to market sources.

“It might bring more movement on the buy side,” a second market source said.

UK biodiesel backbone

Biodiesel has formed the basis of UK compliance through Year 10, with 1.621 billion litres accounted for as of the most recent government data, published at the start of August.

Of that volume, 1.306 billion litres meets the sustainabilty requirement, with 48% coming from biodiesel, 47% from ethanol and the balance coming from biomethanol. 

The bulk of the UK's biodiesel is waste-based and imported from the US.

Year-10 compliance runs from April 16 2017 through April 15 2018.