UN delivers blow to HVO producers as airline biofuel targets scrapped

In what appears another blow to producers of hydrotreated vegetable oil (HVO), the UN’s aviation body earlier this month tore up a plan to mandate airlines to source 50% of their fuel from biofuels by the middle of the century.

The original proposal by the International Civil Aviation Organization, entitled 2050 vision for sustainable aviation fuels, had sought to pass measures that would have seen aviation biofuel demand reach 128m mt by 2040 and then almost double to 285m mt by 2050 – around three times more than global biofuel production.

Such a move would likely have seen demand for HVO soar, as it is only one of four pathways for biofuels to meet jet specifications and the only one that can be produced in commercial quantities.

Indeed it can be blended at rates of up to 50% in jet fuel.

Instead, ICAO merely said that airline should replace conventional jet fuels with “sustainable alternatives” to a “significant percentage” by 2050.

It is the second blow to HVO producers in the last two months. In September the UK government ruled that HVO would not be classed as an “advanced fuel” in its amendment to the Renewable Fuel Transport Obligation.

As each supplier from April will have a target to buy RTFCs from advanced fuels or pay 80p per litre to buy out, classifying HVO as an advanced fuel could have been a cash cow for producers such as Neste and ENI, who currently sell HVO into the road transport market at a significant premium to diesel and other biodiesel grades.