U.R.

Unnithan
Date : 7th March 2023
 Presentation Outline
1. Global Biodiesel Overview.
2. Palm Biodiesel Overview.
3. HVO update
4. UCO update
5. EU REDII & its implications on Palm
Biodiesel
6. Market Price Outlook
GLOBAL OVERVIEW
TOTAL ENERGY SUPPLY (TES)
 DEVELOPMENT OF THE
WORLD BIODIESEL CONSUMPTION

Source: OECD/FAO (2022), “OECD-FAO Agricultural Outlook”

 BIOFUEL PRODUCTION
RANKING AND MAJOR FEEDSTOCK
 WORLD BIOFUEL PRODUCTION FROM
TRADITIONAL AND ADVANCE FEEDSTOCKS

Note: Traditional feedstocks are here defined as food and feed crop based biofuels.
Value in Petajoules = 1015 Joules
 BIOFUEL TRADE DOMINATED BY
FEW GLOBAL PLAYERS

Note: Top five ethanol exporters in 2031: United States, Brazil, European Union, Pakistan, United Kingdom. Top five ethanol importers in
2031: Brazil, United States, Japan, Canada, United Kingdom. Top five biodiesel exporters in 2031: Argentina, European Union, United States,
Indonesia, Canada. Top five biodiesel importers in 2031: European Union, United States, United Kingdom, Canada, Peru. Classification of
biofuels by domestic policies can result in simultaneous exports and imports of biofuels in several countries.
PALM BIODIESEL OVERVIEW
 GLOBAL BIODIESEL MANDATES
Country Previous mandate New mandate
Indonesia B30 B35
Malaysia B10 B20
Thailand B7 B6
Brazil B12 B10
Philippines B2 B3 - proposed
 CPO vs. Gasoil - PO-GO negative spread dissipates from December as prices of both palm and
gas oil converge. Lower palm prices from escalating supply and lackluster demand in crude oil
kept palm and gas oil prices tracking each other closesly for 3 months
2,000

1,500
In US$ per-metric ton

1,000

500

-500

-1,000
Apr-22
Apr-22
Apr-22

Oct-22
Oct-22
Oct-22
May-22
May-22
May-22

Jul-22
Jul-22
Jul-22

Feb-23
Feb-23
Aug-22
Aug-22
Aug-22
Aug-22
Sep-22
Sep-22
Sep-22
Sep-22

Nov-22
Nov-22
Nov-22
Nov-22
Dec-22
Dec-22
Dec-22
Dec-22
Jun-22
Jun-22
Jun-22
Jun-22

Jan-23
Jan-23
Jan-23
Spread CPO-GO CPO third month on BMD in US$ Gasoil front month on ICE
 SOGO and POGO

800

600
In US dolalr per-metric ton

400

200

-200

-400

-600
Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23

Spread - SOGO Spread - POGO

 Indonesia biodiesel production and domestic usage
2021 consumption is expected to rise to 9.20 mil kiloliters in 2021 from
recovery in biodiesel usage from post-pandemic as more lockdowns are
eased. Widening POGO will likely retain the mandate at B30 (Sou
12.00

10.00
In million kiloliters

8.00

6.00

4.00

2.00

0.00
Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(est) (proj)
Production Domestic distribution
 INDONESIA JAN - DEC DOMESTIC BIODIESEL CONSUMPTION
Domestic consumption is on course to see another year of rise in 2023 after
recording 10.40 mil kiloliter of usage in 2022. Higher biodiesel mandate,
favorable POGO spread and resumption of travels after
14,000

12,000
In thousand kiloliters

10,000

8,000

6,000

4,000

2,000

0
Jan-Dec 2017 Jan-Dec 2018 Jan-Dec 2019 Jan-Dec 2020 Jan-Dec 2021 Jan-Dec 2022 Jan-Dec 2023
 MALAYSIA BIODIESEL EXPORTS
Biodiesel exports will see another year of reduction in 2023 to reach the lowest
in 6 years from increasing pursuit of de-carbon agenda in the E.U
(Source: MPOB & POA)
700

600
In thousand metric tons

500

400

300

200

100

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
(est)
 MALAYSIAN BIODIESEL STATISTICS
Biodiesel [PME] Biodiesel [PME] Biodiesel
Years Production Quantity Export Quantity Blended locally
(MT) (MT) (MT)
2011 173,220 49,999 20,343
2012 249,213 28,983 113,276
2013 472,129 175,032 185,039
2014 600,524 87,856 295,451
2015 763,532 178,942 382,000
2016 500, 857 83,581 350,000
2017 720,410 235,291 358,586
2018 1,089,964 515,467 429,213
2019 1,422,871 609,777 641,878
2020 906,156 378,582 803,307
2021 976,277 362,475 813,775
2022 1,162,734 309,735 1,174,551
MALAYSIAN BIODIESEL PROJECTIONS

Biodiesel [PME]
Biodiesel [PME] Biodiesel Blended
Production
Year Export Quantity locally
Quantity
(MT) (MT)
(MT)

2021 1,000,000 300,000 700,000

2022 1,162,734 309,375 1,174,551

2025 1,500,000 200,000 1,300,000

2030 2,500,000 300,000 2,150,000

Source: MPIC & MPOB

 GHG Savings from Malaysian Biodiesel

GHG Avoidance savings GHG Avoidance savings

Biodiesel Blending Mandate GHG Avoidance
@USD 50/MTCo2eq @USD 150/MTCo2eq
(Transport + Industry) (Million MT/yr, CO2eq)
USD Million USD Million

B10 + B7 2.83 141.5 424.5

B20 + B7 3.88 194.0 582.0

Source: MPIC & MPOB

Crude Palm Oil Used in Biodiesel
Production in Columbia
 PALM OIL USE IN BIODIESEL PRODUCTION
IN COLOMBIA 2010-2022
Published by Statista Research Department, Jan 25, 2023
Palm Biodiesel '000 MT
In 2021, Colombia's biodiesel production consumed 632
thousand metric tons of crude palm oil as feedstock, up from
800
498 thousand tons in the previous year. Palm oil use for
biodiesel production in the country was forecast to drop slightly
600
in 2022, amounting to 613 thousand tons. Colombia's biodiesel
400
production is derived from palm oil and, in smaller quantities,
from used cooking oil. 200
Palm Biodiesel from Columbia 0
2020 – 498,000 MT
2021 – 632,000 MT 2020 2021 2022
2022 – 613,000 MT
Palm Biodiesel '000 MT
THAILAND’S BIODIESEL PRODUCTION AND USE
Thailand’s Biodiesel Production
Million Liters
2000
1500
1000
500
0

2016
2013
2014
2015

2017
2018
2019
2020
2021
2022
Million Litres
UCO Update
 NORTH AMERICA USED COOKING OIL
MARKET SIZE, 2017-2028 (USD BILLION)
UCO BIOFUEL CONSUMPTION VOLUMES
AND SHARE OF TOTAL BIOFUELS

Source : Stratas Advisors

 Malaysia Used Cooking Oil (UCO) export
UCO exports jumped to the highest ever in Dec 2022 on strong demand
from the E.U to meet the increasing usage of UCO in biodiesel blending
In thousand metric tons 120
100
80
60
40
20
0
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec
2021 2020 2022

(Source: ITS & POA data)

 Malaysia UCO (used cooking oil) export
UCO exports rose 18% in 2022 compared to 2021 to the highest ever while
biodiesel shipment fell by around the same pace as plant based feedstocks are
increasingly reduced from the impact of the E.U RED II directiv
In thousand metric tons 800

600

400

200

0
Jan-Dec 2020 Jan-Dec 2021 Jan-Dec 2022
Used cooking oil (UCO) Palm methly ester (PME)
HVO UPDATE
 GLOBAL HYDROTREATED VEGETABLE
OIL PRODUCTION CAPACITY, 2019-2022
HVO BIODIESEL PRODUCTION VOLUME
WORLDWIDE FROM 2014-2021
(IN 1000 METRIC TONS)

Source : Statisca 2023

HVO Biodiesel capacity worldwide
in 2020 with forecast for 2025
Global HVO biodiesel capacity 2020-2025, by region Jan 31, 2023

In 2020, Europe had the largest hydrotreated vegetable oil (HVO)

capacity worldwide, at 3.5 million metric tons. North America was the
region with the second largest HVO capacity, at 1.9 million metric tons.
According to the 2021 study, HVO capacity in North America is forecast
to surpass Europe, reaching 12.6 million metric tons by 2025.

Published by Statista Research Department,

EU RED II & III IMPLICATIONS
 Delegated Act - High ILUC-Risk Criteria
High ILUC-risk fuels are those produced from feedstock with a significant expansion into land
with high carbon stock. The Delegated Act identifies the following, cumulative, conditions:

• The global production area of the feedstock has increased annually by more than 1% and 100,000 hectares
after 2008 more than 10% of such expansion has taken place on land with high carbon stock

• Only Palm fulfills the cumulative criteria

• 4th
round of inter-institutional trilogue negotiations for RED III were held on Feb 14, 2023:
- No change is expected on ILUC criteria and therefore no change to phase out Palm Oil from Biofuel by 31st
Dec 2030
- It is proposed to eliminate ‘ double counting’ for UCO- this could affect market dynamics significantly
especially for the HVO market
Sources:
DIRECTIVE (EU) 2018/2001 OF
THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
 What is Next?
Palm Oil (high ILUC) to EU commission will Palm Oil biodiesel will
be capped at 2019 review the criteria for low reach 0% by end 2030
consumption levels and high ILUC biofuels

Aug 2020 June 2021 Jan 2024

Jan 2021 Sep 2023 Dec 2030

Review of Directive (EU) RED II implemented by EU Palm Oil biodiesel will start
2018/2001. Getting member states to be phased out (High Risk
feedback on changing RED II (Implementing Act) ILUC)
targets or stay the course
EU BIODIESEL FEEDSTOCK FORECAST
 MARKET & PRICE OUTLOOK
1. Global Biodiesel production and consumption will increasingly shift to waste oils & UCO
2. The world is seeing rising HVO capacity but sourcing sustainable raw materials will be
the big challenge especially if RED III takes away ‘double counting’ for UCO
3. The EU REDII restrictions will see PME exports to EU further decline with a more than
proportionate increase in UCO/Waste oil exports.
4. The new EUDR will open up new opportunities and challenges for the biodiesel market.
5. Indonesian Biodiesel mandates will continue to support palm prices.
6. Price Outlook for CPO next 3 months 3800-4200 RM/MT, 2023 Average 3,900/MT.
7. POGO average for 2023 USD 50-100/MT