Lower Thirds:

0:05	Report by Patrick Fok

1:00 	Marcus Chin |  APEIRON AGROCOMMODITIES GROUP HEAD 

1:31	Gustav Nybo | RYSTAD ENERGY SENIOR CONSULTANT

2:40	Gustav Nybo | RYSTAD ENERGY SENIOR CONSULTANT

Script: 

The empty barrels are unloaded… then taken to the back of the restaurant.

Nizam Ng is doing the daily rounds to collect used cooking oil from kitchens across Singapore.

He inspects the filled barrels for excess impurities…

before swapping them for the empty ones.

KITCHEN STAFFER/ NO NAME (MANDARIN DUB) C9334.MP4

“It’s about two weeks' worth.”

Nizam then takes the oil back to the lorry…and pumps it into a plastic VAT, ready for delivery.

The used cooking oil - or UCO as it’s known in the industry - will be converted into biodiesel.

It’s a renewable energy source produced from vegetable oils, animal fats or recycled grease.

A sharp rise in global crude oil prices, driven by the crisis in the Middle East, is increasing global demand for biodiesel.

MARCUS CHIN, APEIRON AGROCOMMODITIES GROUP HEAD 0623
“This Middle East War has propelled the biofuel industry forward by three to four years. (Trim) I would expect within the next year that most end users will be very very aggressive in trying to secure and compete within themselves for feedstock security.”

Biodiesel trades at a premium to crude oil, but a narrowing price spread is making it more competitive as an alternative.

It’s not the only reason why demand is shifting.

GUSTAV NYBO, RYSTAD ENERGY SENIOR CONSULTANT
“There are two main benefits to biodiesel, one being the emission reductions and the other one being the energy security aspect, and the recent developments in the Middle East really highlight the importance of this energy security aspect, which is now converging as the most important driver of biodiesel.”

At the production facility, the oil is filtered before it’s chemically treated to become biodiesel.

Most of the biodiesel that’s produced globally is shipped to Europe, where demand is fuelled by strict government targets to cut emissions.

But the Strait of Hormuz’ closure has piled supply pressure on Asian economies.

Several, including Malaysia and Indonesia are raising and accelerating biofuel mandates, and are providing subsidies to support it.

But if the price gap widens once more, such policies could unwind.

GUSTAV NYBO, RYSTAD ENERGY SENIOR CONSULTANT

“There's definitely a risk for that. I think governments will aim to the extent they can to maintain these mandates because the energy security aspect of it is really important. However, the current support schemes that we see are dependent on this price spread between biodiesel and conventional diesel. And if that price spread is set to increase again, then some governments will likely face challenges financing all these subsidies, which might force them to review their policies.”

For now, higher oil prices and geopolitical uncertainty are giving biodiesel a boost.

How long that momentum lasts may depend not just on markets… 

but on how much governments are willing to pay for energy security.